In our last blog entry we discussed the impact of the “lipstick factor” on the performance of some cosmetic companies in the recession. Another company that has performed well in the current challenging business environment is Greggs bakery.
Those of you that are in the UK have probably heard of the Newcastle based bakery chain, Greggs. Despite there being a recession the chain has achieved impressive results. Yesterday they announced their results for the 53 weeks to 2 January 2010 with sales up 5% to £658 million and profits up 8% to nearly £50 million.
Greggs were reported as saying that their success was down to “great quality, great taste and great value” and it’s no doubt that customers wanting value in this recession have helped them achieve their impressive results.
Greggs would make a great case study for ACCA paper P3 and the papers in the enterprise pillar of the CIMA exams. For example, Ansoff’s Matrix (or the product-market mix as it is commonly known) could be discussed (click here for our ExPress notes on P3 which provide more details on Ansoff’s matrix).
Highlighting a couple of areas within the product – market mix we can see:
1. Present product, present market.
Greggs is predominantly UK based but they also had operations in Belgium. In other words, they were selling their existing products in an existing market (Belgium). The options in Ansoff’s matrix for this area are withdrawal, consolidation and penetration. The operations in Belgium were loss making and the view was that this would not change in the foreseeable future so Greggs decided to withdraw from the Belgium market.
2. New product, present market.
Greggs has said that they have removed all artificial colours and trans fats from their products. In other words they are introducing new healthier products in their existing markets. This is an example of product development.
3. Present product, new market.
There are currently in excess of 1,400 Greggs stores in the UK. Greggs are planning on opening another 600 stores in the next few years. This is a classic case of market development where existing products are released in new markets.
Bakeries can very much be considered to be a traditional industry but if Greggs has anything to do with it then it will become a growth industry as well.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-03-19 09:58:152010-03-19 09:58:15Baking a profit but is the future product or market (or both)?
One of my best ever trips was when I visited Iceland. It is a fantastic country with some great people and some truly dramatic scenery. There are also some very large whales and some very cute puffins!
Their financial crisis has been in the headlines over the last year or so but there was an interesting piece of news that was recently reported. Iceland has a year round cool climate and chilled fresh water. At the same time the number of computer servers that are needed around the world to store the ever increasing amount of data that the world is generating is growing rapidly.
A key component of data storage is to keep the servers cool. With Iceland’s below average temperatures it means that the cost of cooling servers is significantly less than in other countries with average or above average temperatures. Some businesses are now putting the cool Icelandic climate and the increasing server storage demands together and data parks are being designed and built in Iceland.
The cool temperatures and developed business environment in Iceland make it an ideal place for such a scheme to work.
Now, back to the exams. What exactly does this news have to do with exam? Given the exam is just around the corner I’m hopeful that I don’t need to explain what PESTEL analysis is and I’ll leave it up to you to decide which out of P, E, S, T, E and L the cool climate of Iceland relates to!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-08-15 19:17:162009-08-15 19:17:16Iceland, Computers and PESTEL Analysis
I had to recently go into hospital for a minor operation on my knee. The nurses and doctors were fantastic there and thankfully everything is now fine with my knee.
The hospital I was in was a classic not-for-profit (NFP) organization and during my time there it really made me appreciate the challenges that NFPs face when setting objectives.
Hospitals have a significant number of stakeholders with a high level of interest. Patients like me are stakeholders with an obvious high level of interest in matters. Other local individuals who are not patients are also interested in case at some stage they need to use the hospital. The doctors, nurses and admin staff are also stakeholders with a keen interest in the activities and the government is another stakeholder interested in the hospital.
In summary, NFPs are different from most other organizations when it comes to stakeholders in that there tends to be a wider range of stakeholders with a high interest in a NFP organization than compared with other organizations.
Another issue that occurred to me during my stay was that there are a number of objectives that the hospital needs to balance. Two obvious ones are the quality of care given to a patient when he’s in the hospital versus treating more patients.
A final area I thought about was the classic finance term of Cost Benefit Analysis. Costs within hospitals are easy to measure but the benefits can be inherently difficult to measure. For example, how would they measure the benefit of reducing the waiting time for a knee operation by one month or 6 months?
You are not necessarily expected to be able to provide all the answers to the challenges of running a hospital in the exam but it is important to have an understanding of the challenges that a NFP organization faces when running its business.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-08-01 18:29:542009-08-01 18:29:54Not-for-profit organisations face several challenges.
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