Takeovers and Mergers - A Casino Gamble?
Hot on the heels of the Vue takeover of Apollo Cinema Group, here is another significant takeover in the UK leisure sector. This one will certainly attract the attention of the competition regulators. Two of the UK’s largest operators of casinos are being brought together as Rank buys Gala Coral’s casino business for £205m.
read more...»Takeovers and Mergers - Vue on the Growth Trail!
News of a £20m takeover here which will be particularly relevant to colleagues and students who joined us recently for the BUSS4 revision workshops at cinemas around the UK…
read more...»6 Essential M&A Cases: BA & Iberia Merge to Form IAG
This M&A briefing note provides an overview of the merger of British Airways and Iberia which led to the formation of a new firm - International Airlines Group (“IAG”)
read more...»More on “up-selling” (adding value) the budget airline way
So you’re used to the idea of the ‘basic’ price being increased by additional ‘extras’ offered by retailers. Budget airlines are experts at this approach (spoofed brilliantly by David Walliams here), inviting us to pay more for drinks, snacks, priority boarding and the rest.
read more...»Life and leadership at BA after Willie Walsh
This is an interesting article that I came across while looking for updates on how industrial relations and strike threats have been progressing at BA over the last year or so - the article was published last September so apologies if you are already familiar with it, but I think it is well worth reading. When studying leadership for BUSS4 we often use the example of Willie Walsh, and the rather deeply entrenched conflicts that became established with BASSA (the cabin crew branch of Unite). So it is interesting to see what has happened since Walsh moved on from the position of CEO of British Airways at the start of 2011 to become CEO of IAG instead.
read more...»It’s Time for a Global Luxury Chinese Hotel Chain - for the Chinese
You’ll recognise some of these brands: Crowne Plaza; Holiday Inn, Hotel Indigo. They are all owned by InterContinental Hotels Group and you’ll find them in just about every major city in the world, from Chicago to Munich; from Mumbai to Sydney. IHG is a global hotels group with more guest rooms than any other hotel group in the world – over 645,000 rooms in more than 4,400 hotels in over 100 countries. But have you heard of Hualuxe? You might do soon…
read more...»Pampering - demand booms as consumers seek an affordable treat
Consumers might be feeling the pinch, but despite the downturn, demand for nail treatments is booming. Is having a nail and other spa treatment an affordable luxury what some of us simply can’t do without in times of austerity? This great BBC video looks at the history of products that have boomed in tough economic times.
read more...»Froth on the beer versus froth on the coffee?
A short BBC video on Whitbread’s huge strategic shift from brewing to retailing coffee and budget hotels.
Whitbread abandoned beer brewing and pub retailing and off licence sales, an industry in which had been a significant presence since 1742. By 2001, the sector had low profits growth and declining sales. Capital has been diverted into areas with higher growth coffee shops and budget hotels. Whitbread’s main brands include Costa Coffee, Premier Inns.
read more...»Bullet point 5 and stakeholders again
Competitors and customers are both stakeholders, and can both be significantly impacted by a takeover or merger. Sir Richard Branson can always be relied upon to have a comment to make about anything that British Airways do, and he doesn’t let us down here as Virgin Atlantic have lodged a formal complaint on the proposed merger between IAG (owners of BA) and BMI to the European Commission.
Virgin has said passengers would be left with a “choice of one” on flights between Aberdeen and Edinburgh and Heathrow. There is some great data in this article about the complaint from both sides, about Virgin’s claims of reduction in services and increase in prices for passengers which are likely to result from the merger, and BA’s counter-claims about increases in viability of services between Heathrow and Scotland. There is clear reference here to bullet point 6 - the reasons why governments might support or intervene in takeovers and mergers - as well as Sir Richard calls on “regulatory authorities, in the UK as well as in Europe, give this merger the fullest possible scrutiny and ensure it is stopped.” Definitely one to add to the BUSS4 resources!
The Strategic Challenges Facing International Airlines Group - Interview with Willie Walsh
A superb interview here absolutely packed with relevant topics for all A2 business students. Willie Walsh, CEO of IAG (the merged firm that brought together British Airways and Iberia) provides a wide-ranging overview of the strategic issues facing IAG and the airline industry. He talks at length about the strategic rationale for the BA/Iberia merger and the benefits that the merger (as part of a broader process of airline industry consolidation) is starting to generate.
This interview is perfect for students preparing for AQA BUSS4 2012 on Takeovers and Mergers. Take a look at the section starting at about 5 mins 45 seconds, where Walsh talks about the difference between mergers and acquisitions.
Walsh also explains his view on what is meant by leadership in business and explains something about what is involved in being a CEO. He talks about the need to address stakeholder concerns.
BUSS4 gold dust!
read more...»PEST - IAG and BMI acquisition
International Airlines Group or BA and Iberia are trying to acquire BMI from Lufthansa.
A move which would allow IAG would gain c. 56 additional take-off and landing slots at Heathrow. Lufthansa had bought up most of BMI’s shares in 2008 but has failed to prevent the group losing money.
How to turn threats into an opportunity at Ryanair
Michael O’Leary, quoted in Management Today, describes the situation facing Ryanair towards the end of last year. He highlighted the threats from the EU recession and higher oil prices, but typically O’Leary found the opportunities more compelling: the “unfolding failure of the package tour operator model, significant competitor fare increases and capacity cuts, created enormous growth opportunities for Ryanair, as large and smaller airports across Europe compete aggressively to win Ryanair’s growth” he said.
read more...»Who has what it takes for this job description?
Here is a real job description for a job vacancy currently being handled by head hunters. The job? Head Coach for the England Rugby Team. A great example of how the functional areas of a business (in this case HRM) link through the the corporate (or strategic) objectives of an organisation.
read more...»The Business of Football - Everton explain where the money goes
This is superb - a really useful resource to help explain the concept of an income statement and cash flow too.
read more...»Thomas Cook begins down the long road of retrenchment
Here we go. Embattled tour operator, hotel owner and travel agent Thomas Cook has signalled the start of a prolonged period of retrenchment in a bid to ensure its short-term survival and long-term future. A terrific research case study for students to follow in the months ahead, but an awful lot of pain for stakeholders in the business, not the least thousands of employees who face an uncertain future.
read more...»Thomas Cook opts for a different generic strategy for success
Fans of Porter’s Generic Strategies (yes, that should include all A2 business students) should keep an eye out for an important strategic announcement from troubled tour operator Thomas Cook in the next few days. We’ll post an update to this blog when the details are made public.
read more...»Time for this Dragon to Cut Costs to Keep his Health Clubs Fighting Fit
The downturn in consumer confidence and spending is hitting just about every business in the retail and leisure sector - and even a Dragon like Duncan Bannatyne is not immune.
read more...»Pandanomics - Can Edinburgh Zoo Get a Return on its Cuddly Investment?
It was business class all the way for Tian Tian and Yang Guang on board the suitably-sponsored FedEx Panda Express (as this exclusive snap suggests!). However, will the Pandas prove to be a worthwhile investment for Edinburgh Zoo?
read more...»Optimism and expansion in consumer leisure markets
Consumers are cutting spending, unemployment is expected to rise over the next year and in a week of ever-gloomier forecasts for the economy, business and consumer confidence has been dropping like a stone. So what do Starbucks, Hilton and Marstons know that the rest of us don’t? All three have chosen this week to announce expansion in the UK - Starbucks with a market development move to open 200 drive-through outlets, Hilton with expansion of over 20 new hotels (part of a plan to open 110 across Europe) and Marstons with a market penetration plan to build 19 new pubs this year and a further 25 a year from 2012.
Good news all round - how nice to see some evidence of growth amidst all the dire news about the economy. But it is intriguing to see these plans just now - where do they get their confidence from?
Retrenchment not enough as the lights go out for Luminar
Britain’s leading operator of nightclubs has gone bust - in spectacular style. In the last year of trading, Luminar plc lost £200 million through its network of 75 nightclubs. The banks have finally pulled the plug and have appointed administrators to handle the closure/sale of the remaining business. Eleven clubs have already closed and buyers are being sought for the rest.
read more...»Consolidation on the cards as IAG claims deal to acquire BMI
Willie Walsh is at it again (on the takeover trail) - this time claiming success in IAG’s chase to acquire loss-making BMI (British Midland) from its current owner Lufthansa. Virgin Atlantic, the main competing buyer for BMI, will undoubtedly fight the deal, pointing to concerns that customers will suffer from a loss of competition as IAG (which includes British Airways) take control over even more slots at Heathrow.
read more...»Business studies lessons from Britain’s best pub
Step aside Heston Blumenthal and his pub (The Hinds Head in Bray). The couple who have invested their heart and soul into a pub near Hull have awarded the Michelin Guide’s coveted pub of the year award.
This article in the Telegraph takes us behind the scenes at The Pipe and Glass Inn in South Dalton, and there are some useful lessons for business students to pick up from the success of James and Kate Mackenzie. I jotted down the following (I’m sure your students will pick up some better points):
read more...»The business benefits of Olympic sponsorship
I am taking my A2 students to visit the Olympics site next week, and have just come across an excellent article published by the FT a week ago. Sponsorship of the event is huge, with the International Olympic Committee’s revenue from sponsorship running at around £1bn. What are the corporate and marketing objectives for those sponsors, and how do they ensure that their strategies will mean that it meets those objectives?
Sponsorship deals are arranged in tiers, from the IOC’s worldwide Olympic Partners who contribute around $100,000 each to tier one domestic sponsors of London 2012 who pay £50m on average,and Official Supporters (such as Cadbury’s and Thomas Cook), Official Suppliers (Holiday Inn, Glaxo). In the FT ‘Olympic sponsors seek podium for brands’ examines the objectives of those major Olympic Partners such as Visa and domestic sponsors such as Lloyds TSB, as well as considering why it may not suit some organisations, the danger of ‘ambush marketing’ crowding out the official sponsors, and whether it is as effective as providing backing for the World Cup. There is plenty here for students to analyse as part of their A2 Marketing course.
Movies and money: the top film franchises
OK Harry Potter fans: you love your hero (and friends) so much it’s very likely that you’ll push the Harry Potter ‘franchise’ up the Box Office rankings to the point where the movies’ total takings will rank as the 2nd biggest ever for any series.
So who is top? And why does Hollywood put so much effort into their sequel productions? Some good material in here for end of term quizzes…
A Festival for business
Each year festival season seems to get bigger and better, with this year’s Glastonbury a reminder of the scale of the business enterprise. Before you read on, have a guess at what are some of the biggest jobs for suppliers to the event.
read more...»Whitbread goes for organic growth
Whitbread plc emerged as one of the clear winners during the recent recession in the UK and it appears to be putting its competitive advantages to good use by announcing an acceleration of its internal (or “organic”) growth strategy. This is a terrific case study on growth to use with students - it covers so many specification areas and is especially useful for AQA BUSS4 students who need to gather some evidence-based research data for their Section B essays.
read more...»Horizontal integration in action - Virgin grabs Esporta
A great example of horizontal integration and external growth on the news wires this morning. Virgin Active (which is majority owned by Branson) has agreed to pay £77.6 million in deal to buy 55 Esporta gyms - a move that will nearly double Virgin Active’s size in the UK. The scale of the takeover means that it will need to be cleared by the Competition Commission, but no signs as yet that the competition authorities will block the deal.
This is a good takeover for students to look at. Some of them may be familiar with the UK health club market and the Virgin Active brand in particular. A good starting point would be for students to consider the strategic rationale and direction behind the takeover. Hopefully concepts such as economies of scale and market share / market leadership would feature in their discussions. Virgin Active recently passed the milestone of having 1 million members in its club portfolio, although it did not open any new clubs in 2010, suggesting that it has been able to achieve decent organic growth without expanding the number of locations recently. Virgin Active currently operates a total of 194 clubs, in the UK, South Africa, Italy, Spain and Portugal. The Esporta takeover will double the number of health and racquets clubs that it operates in the UK.
Is the golf business coming out of the bunker?
For those of you grappling with the OCR A2 F297 Strategic Management case study (like us at T2U), the golf business might be on the list of things you’re wondering about. Or maybe you just think about golf anyway. As usual, the BBC is packed full of interesting background on the business of golf.
read more...»CSR - Sport and Business Rediscover the CSR Buzz
I’m indebted to Julie Turner from The Castle School at Thornbury for spotting this excellent BBC article which examines how businesses are returning to the support of local and junior sport as part of their CSR activities. Some great examples in here and links to follow up. Here is the link to the BBC feature.
Sustainability is an objective of the 2012 Games themselves - you can read more about this here.
CSR - Salad Slaves - Supermarkets and Corporate Irresponsibility?
A terrific and detailed video resource here from the Guardian - perfectly timed for students wanting something substantial to discuss as part of their research into corporate social responsibility…
read more...»
