H11SD APR P2021-2022 Pre-released Article

Developing and Executing Strategy

Answering Questions 1 and 2 in the Exam

This document provides an outline of relevant models for conducting your analysis in questions 1 and 2 of the exam. You do not need to use every tool, framework or idea in each section; rather you should use ones appropriate to the situation.

Question 1: Strategy Past and Present

This question requires you to diagnose and analyse the current state of the organisation and its strategy. The underpinning modules for this question are 3,4,5 of the text. You need to address the following areas of strategy.

For each model you use, you need to apply it to the organisation using relevant information and then draw a conclusion about the implications of your analysis. For each area, you should also provide an overall conclusion on the outcomes of your analysis.

Finally, at the end of your answer, summarise your analysis from question 1 into a SWOT at the end and provide an overall conclusion on the current statement in light of your analysis above.

Question 2: Strategy Futures

This question requires you to propose a strategy for the future based on both your analysis and the scenario provided in the examination.

Area 1: Strategic Intent

For strategic intent, you need to articulate your new strategy and compare it to the existing one. There are two ways of doing this.

1.   Use the comprehensive strategy statement format to articulate your new strategy and then reflect on how this compares to the existing strategy.

OR

2.   Set out the EXISTING mission, vision, strategy of the organisation (however it happens to be presented) and then present an ADAPTED or NEW version.

Area 2: Strategic Options

For strategic options, you need to set out your chosen option(s) at the different levels and justify why these have been chosen as opposed to alternatives. You could use the SWOT at the end of Q1 as a starting point for this.

You also need to evaluate your chosen option(s). This can be accomplished by assessing your proposed strategy using the A3S framework.

Area 3: Execution

For execution, you need to consider what will need to happen in order to realise your strategic intent and develop recommendations across three areas.

Finally provide an overall conclusion at the end of your discussion of proposed strategy.

APPENDIX 1

Developing and Executing Strategy April 2022

Greggs: Food on the Go. Is it all about the food?

Greggs, the Bakers, had long been the classic high street family business, loved for its fresh bread smells and even more for catering to the British love of a hot sausage roll.

Analysts suggested Greggs was increasingly losing out to consumers who would rather spend their cash at coffee shops such as Costa and Starbucks. Both of these managed to do the opposite to Greggs and continued to grow store numbers throughout the recession of 2008. Also, the fresh bread market had now been decisively entered by the supermarkets with their economies of scale and ability to use products as attractive loss leaders. They had realised that fresh bread smells attract customers and could sell it more cheaply than Greggs, the Bakers.

Enter Roger Whiteside

Roger began his career at Marks and Spencer, where he spent 20 years, eventually becoming head of its food business. With his thinking that Marks and Spencer had no ambition and was missing out on the opportunities the internet had to offer, he was then one of the founding team of Ocado, the online grocery store. From 2004 to 2007, Roger took on yet another challenge, a successful turnaround as Chief Executive of the Thresher Group, an off-licence chain, which had to be repositioned in the market. Roger was appointed as Chief Executive of Greggs on 4 February 2013.

After joining, Roger went straight into a store and shadowed the manager to understand the business better when he joined. According to Mintel data, the UK launched more plant- based food products in 2018 than any other nation. This could have been a challenge for a baker specialising in meat patties. However, news reports suggest that Roger Whiteside became vegan as well, and Greggs started developing an ever-increasing vegan menu. The same year he came up with a 5-year plan to end Greggs’ heritage as a baker and to move into ‘food on the go’. This was essentially selling affordable and freshly made takeaway snacks from the eternal sausage roll to new innovative products such as their famous and market-leading Vegan sausage roll. All this involved ‘taking Greggs to where our customers are, making sure our shops are open when they need them and that we offer modern attractive shopping environments’.

This plan initially involved closing 79 in-store bakeries, cutting over 400 jobs (none forced: all through natural transition and voluntary redundancy in line with the firm’s family and caring image) and completely updating its supply chain in the process. The strategy also involved refreshing the Greggs brand and using marketing to position itself more as an alternative to McDonald’s and Starbucks than your local bakery. However, in 2020 a new challenge hit Greggs. An acute shortage of truck and tanker drivers has led to a petrol supply crisis, and many supermarket shelves remain empty.” Julie Palmer, a partner at the business recovery firm Begbies Traynor, said: “Like many businesses, Greggs now faces the harsh bite of the supply chain crises. However, the baker may have been more prepared than most competitors as it stockpiled ingredients and equipment from 2019; its early actions may have seemed extreme at the time but will now help it shake off some supply chain challenges others are facing.”

Greggs have the ability to move stores as 94% of stores are leased, so it can close and move fast to a new location. In 2022, Greggs is planning to open 150 stores. In February

2022, the UK National rail started offering Free Greggs breakfast to commuters in an English borough to boost passenger numbers.

As Roger Whiteside approached retirement age, the company’s Retail and Property Director Roisin Currie is appointed to be the next CEO, to be effective from the date of the Company’s Annual General Meeting in May 2022. “In the interim period pending appointment as Chief Executive, Roisin will be appointed as CEO Designate and as an Executive Director with effect from 1 February 2022.”

According to Greggs’ CEO succession announcement document, “Roisin currently holds the position of Retail and Property Director, with responsibility for Greggs’ retail operations

across the UK and its central support team. Additionally, Roisin leads the development of the Greggs shop estate and its growing delivery business, in partnership with Just Eat. As a member of the company’s Operating Board, she has played a key role in the development of the strategic plans set out last year. Prior to joining Greggs in 2010, Roisin worked at Asda where she held People Director roles responsible for the organisation’s retail and distribution operations. She is a trustee of the Greggs Foundation and is Chair of the Employers Forum For Reducing Re-offending.”

It is a critical period for Greggs where they plan to double their revenue by the year 2026 and the new CEO would have to play a vital role to achieve this target.

The 2020 Annual Report

There are several elements highlighted in the annual report such as the growth plan, vegan success, gender and work workforce and how Greggs emerged through the critical COVID 19 times. They have highlighted future plans and partnerships. https://corporate.greggs.co.uk/sites/default/files/Greggs_ARA_2020.pdf

CEO Succession

Roger Whiteside approached retirement age and Roisin Currie, currently Greggs Retail and Property Director, will be the next Chief Executive to be effective from the date of the Company’s Annual General Meeting in May 2022. In the interim period pending appointment as Chief Executive, Roisin will be appointed as CEO Designate and as an Executive Director with effect from 1 February 2022. https://corporate.greggs.co.uk/sites/default/files/Greggs%20CEO%206%20Jan%202022.pdf

Fourth Quarter Trading

Greggs made great progress in 2021 despite tough trading conditions. Sales for the financial year to 1 January 2022 were £1,230 million, a two-year increase of 5.3 per cent compared with the equivalent period in 2019 and Greggs ended 2021 with a cash position of £198 million.

https://corporate.greggs.co.uk/sites/default/files/220106%20-%20Greggs%20-%20Fourth%20Quarter%20Trading%20Update%20FINAL.docx_.pdf

The Changing Food Attitude

Greggs is working to offer vegan versions for all its best-selling products with the growing demand for vegan options. This proved to be a strategy as Greggs offered £35 million special dividends to investors in the year 2019. https://www.theguardian.com/business/2019/aug/23/greggs-to-develop-vegan-versions-of- all-its-bestselling-foods

Greggs Pledge

In February 2021, Greggs launched the Greggs Pledge, which announced ten things that they are doing to help make the world a better place by 2025 - and beyond.

1.  Growing Greggs Breakfast Clubs: By 2025, we will support 1,000 school Breakfast Clubs providing some 70,000 meals each school day.

2.  Putting an end to food waste: By 2025, we will create 25% less food waste than in 2018 and will continue to work towards 100% of surplus food going to those most in need.

3.  Supporting our communities: By 2025, we will have 50 Greggs Outlet shops providing affordable food in areas of social deprivation, with a share of profits given to local community organisations.

4.  Helping our customers make healthier choices: By 2025, 30% of the items on our shelves will be healthier choices and we will attract customers through education and promotions.

5.  Going carbon neutral: By 2025, we will be on our way to achieving carbon neutrality by using 100% renewable energy across all of our operations.

6.  Building the shops of the future: By 2025, 25% of our shops will feature elements from our Eco-Shop store of the future design.

7.  Using less packaging: By 2025, we will use 25% less packaging, by weight, than in 2019 and any remaining packaging will be made from material that is widely recycled.

8.  Embracing diversity: By 2025, our workforce will reflect the communities we serve.

9.  Sourcing sustainably: By 2025, we will have a robust Responsible Sourcing Strategy in place and will report annually on progress towards our targets.

10. Protecting animal welfare: By 2025, we will secure and maintain Tier 1 in the BBFAW Animal Welfare standard

https://corporate.greggs.co.uk/the-greggs-pledge/

https://corporate.greggs.co.uk/responsibility/the-greggs-pledge

Further Resources

Greggs at a Glance

https://corporate.greggs.co.uk/at-a-glance

Strategy, Business Model and Strategy in Action

https://corporate.greggs.co.uk/strategy

Investors

https://corporate.greggs.co.uk/investors

Staff and Supply Chain

https://www.theguardian.com/business/2021/oct/05/greggs-costs-shortages-sales-prices https://www.ft.com/content/ab7e4912-e414-11e9-b112-9624ec9edc59 https://www.bloomberg.com/news/features/2022-01-20/rising-energy-price-cap-tax- increases-high-inflation-coming-to-u-k-in-april

Expansion plan

https://www.chroniclelive.co.uk/news/north-east-news/greggs-outlines-major-expansion- plans-21763096

https://www.mirror.co.uk/money/greggs-open-150-new-branches-25868677

https://www.reuters.com/article/greggs-results-expansion-idUKL8N2AW6EO