Business Strategy

Sara Aldridge, Iain Blinko, John Cubbin, Richard Marrett and Vicky Palmer

Licensed Houses

Licensed Houses : Environmental Analysis

Identify key opportunities and threats

Assess the nature of the environment

Audit environmental influences

Identify key competitive forces

Strategic position

Identify competitive position

Source: Exploring Corporate Strategy 4th Edition, Johnson, G & Scholes, K 1997

Licensed Houses : Drinking Trends

• A shift away from full-bodied dark drinks, like stout,whisky and dark rum.• A growing liking for lighter coloured drinks like lager and vodka.• The rise of the wine-drinking habit.• A major shift in the place of consumption away from the on-trade towards the off-trade.• Growing appreciation of foreign, imported, premium beers.• 12 million + people visit a pub at least once a week (second only to T.V. viewing).• In a Mintel survey of 25,000 people from 1995 to 1999 the percentage of pub visitors varied by approximately 1%.

Licensed Houses : Annual Pub Turnover

TOTAL OUTLETS TOTAL TURNOVER £BN TURNOVER PER OUTLET £ WEEKLY TURNOVER £

1996 72,329 20.6 284,804 5,4771997 71,846 21.3 296,400 5,7001998 71,700 21.9 305,292 5,8711999 71,048 22.4 314,600 6,0502000 70,504 22.7 322,400 6,200

2001 (EST) 70,675 23.3 329,680 6,340

19

19.5

20

20.5

21

21.5

22

22.5

23

23.5

1996 1997 1998 1999 2000 2001

Turnover £Bn

Licensed Houses : Turnover of Chains/Independent Pubs

0

2

4

6

8

10

12

14

16

18

1996 1997 1998 1999 2000 2001

Pub Chains £BnIndep. Pubs £Bn

INDEP. OUTLETS INDEP. OUTLETS £BN INDEP. AS % OF OUTLETS INDEP. AS % OF TURNOVER

1996 36,113 8.3 49.9 40.11997 34,888 8.2 48.6 38.51998 30,664 7.4 42.8 33.91999 29,579 7.3 41.6 32.42000 28,352 7.2 40.2 31.5

2001 (EST) 26,891 7 38.0 30.0

Licensed Houses : Catering RevenueFAST FOOD PUB CATERING RESTAURANTS OTHER CATERING TOTAL

£Bn £Bn £Bn £Bn £Bn

1990 4.49 2.94 4.14 2.37 13.941991 4.86 3.02 4.24 2.41 14.521992 5.20 3.17 4.23 2.47 15.071993 5.57 3.36 4.32 2.57 15.811994 5.95 3.57 4.46 2.69 16.671995 6.25 3.75 4.59 2.85 17.441996 6.55 3.93 4.84 3.07 18.381997 6.91 4.14 5.10 3.27 19.431998 7.38 4.41 5.36 3.43 20.591999 7.96 4.59 5.62 3.49 21.652000 8.42 4.80 5.83 3.64 22.69

0

1

2

3

4

5

6

1990

1992

1994

1996

1998

2000

PUBCATERINGTURNOVER£Bn

Licensed Houses: PEST Analysis

POLITICAL• 24 hour licensing laws• Minimum wage• Monopolies• Disabilities Discrimination Act

ECONOMIC• Customer PDI rates• Recession• Euro• Expansion

SOCIAL• Leisure trends• Population trends• Fashion• Consumer spending• Transportation

TECHNOLOGICAL• Increased use of I.T.• Centralised purchasing• Automatic measuring systems• New innovations

Licensed Houses: Scenario Analysis

• 24 hour licensing laws

• Increase in price of home sports viewing

• Drink driving• Smoking ban in

pubs

• War on Terrorism • Foot and Mouth

Outbreak• Decrease in

popularity of alcohol

Licensed Houses : 24 Hour Licensing - Stakeholders Map

Minimum Effort Suppliers (+) Lenders (+)

Keep Informed Local People (-) Customers (+) After hours food outlets (+) Police (+)

Keep Satisfied Employees (+)

Key Players Government (+) Bar Owners (+) Nightclub Owners (-)

Licensed Houses: 5 Forces Analysis

POTENTIAL ENTRANTS

SUBSTITUTES

SUPPLIERS BUYERS

Economies of Scale Capital Requirement Distribution Competition Differentiation Takeovers Legal

Male and Female Aged 16+

Breweries Drinks Suppliers Food Suppliers

Eating and Drinking at home ‘Doing without’

Threat of Entrant

Threat of Substitutes

Bargaining Power

COMPETITIVE RIVALRY

Balance of Competition Product Lifecycle

Fixed Costs Differentiation

Takeovers

Bargaining Power

Source: Exploring Corporate Strategy, 4th Edition Johnson, G & Scholes, K 1997

Licensed Houses: Organisational Structure

Licensed Houses : Pub Market Segments in Bournemouth

A3%

B36%

C3%D

16%

E29%

F13%

A – Local PubB – Modern PubC – Family PubD – Café/BarE – Yuppie BarF – Pre-Club Bar

Licensed Houses : Directional Policy Matrix

Strong Medium Weak

High

Medium

Weak

A

C

B D

F

E

A3%

B36%

C3%D

16%

E29%

F13%

Licensed Houses : Product Life Cycle

AB

C

D

E

F

A – Quiet LocalB – Modern PubC – Family Eating D – Café/BarE – Yuppie BarF – Pre-Club Bar

Licensed Houses: SWOT Analysis

STRENGTHS• Good social environment• Chance to escape/relax• More choice

WEAKNESSES• Unemployment rise, fall in PDI• Current licensing hours

OPPORTUNITIES• Home deliveries• Expansion of chain brands• 24 hour licensing

THREATS• Supermarkets, off-licenses etc• Home delivery of alcohol• Growth of ‘pre-club’ bars

Licensed Houses : Predictions 1-5 Years

• Industry expansion after initial downturn

• Increase in chain owned SBU’s

• Commercial branding will saturate the market

• 24 hour Licensing will become available to all

• The catering percentage of public houses total revenue will increase

Licensed Houses

Any Questions?