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Business Culture and Strategy: J D Wetherspoon

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Business Culture and Strategy: J D Wetherspoon

Introduction

J D Wetherspoon is a retailer which sells soft drinks and alcoholic drinks at an affordable price. It was founded by Tim Martin in 1979 when the first pub was opened. It now operates in more than six hundred pubs. This report is about the changes that JD Wetherspoon has gone through in relation to the external environment. It gives the SPELT and SWOT analysis of JD Wetherspoon, the organizational culture and the relationship between organizational culture and behaviour. It also gives examples of business strategies and the strategies adopted by the business since it started operating.

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SPELT analysis

Socio-cultural

  • Lifestyle trends and consumer preferences
  • Demographic changes
  • Major events and influences

Lifestyle trends and consumer preferences affects the business’s performance. To ensure that all customers are satisfied it provides children’s cutlery with convenience meals for children and has a family dining area where a family can eat together. The demographic composition changes with time and so the business has to keep on revising its strategies to ensure that all customers are satisfied. Major events and influences are also likely to affect the business’s performance in future and the management should take note of them as they occur.

Political

  • Government regulation on the number of pubs that can be opened in a given year
  • Taxation Policies
  • Restrictions on ownership on the type of business operation

Government restriction on the number of pubs that can be opened in a year as well as taxation policies are likely to have a negative effect on the performance of the business in the 21st century.

Economical

  • Increased competition as a result of an increase in the number of pubs owned by other companies
  • Interest rates, exchange rates against the pound
  • New economic powerhouses

There likelihood of competition becoming stiff is 8:9 and therefore the business has to search for other strategies to make its products more attractive. This may result from the increase in the number of pubs in a given area and development of new economic powerhouses. Interest rates are also likely to shut up and this may result in reduced production.

Legal

  • Competition regulation
  • Technical standards
  • International pressure groups

Competition regulation for instance introduction of non-smoking zones as well as the requirement of certain technical standards will result in an increase in the operation costs. There is a possibility of emergence of international pressure groups which might force the business to review its pricing strategy.

Technological

  • Replacement technology and rate of system redundancies
  • Timing, effectiveness, and costs of upgrades and Technological developments

Through Technological advancement, the business is in a position to increase its productivity through the adoption of effective systems. However, this may result in an increase in its operation costs for instance, the adoption of a ventilation system that is worth more than £100,000

The external forces outlined above could help determine the retailer market growth or decline and the implications for a company like JD Wetherspoon, which has a rapidly evolving business model that responds to trends in the economy, technology, and the industry in general. An economic downturn could see economic factors having a considerable bearing on future strategies through ripple effects on socio-cultural and political factors.

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SWOT Analysis

Strengths

  1. A strong brand name
  2. Strategic leadership and effective management
  3. Strategic expansion through organic growth
  4. High technological innovativeness

Weaknesses

  1. Prioritising the customer over strategic relationships
  2. Inflexibility
  3. Low profit margins during the 21st century

Opportunities

  1. Merging with global retailers
  2. International business expansion
  3. Market development
  4. Increasing technological advancements.
  5. Emerging markets.

Threats

  1. Global competition
  2. Intense rivalry
  3. Political problems
  4. Price competition
  5. Counterfeit products
  6. Strong value chain and business model- reliable and speedy fulfilment activities

JD Wetherspoon has a strong and close relationship between its suppliers and distributors. It has expanded its markets in the social and cultural contexts and this has contributed to its success. JD Wetherspoon has been using high technology which has been rising over the years leading to success in all its activities. An effective procedure is followed in order to establish new and attractive ideas for the success of the organization.

Sometimes it is not able to make the expected profit margins due to competition. It has an opportunity of merging with global retailers and to expand into other countries. However, it is often faced by the threat or intense rivalry, price competition, and government regulations.

SWOT Analysis Guidelines

The SWOT analysis is, by definition, a summary of the key issues emanating out of the marketing audit. It should be generated from internal debate; it is not just one person’s opinion. JD Weatherspoon management team answer the following questions when preparing the SWOT analysis.

  • What do our customers need?
  • How do they buy?
  • How well are we meeting our customers’ expectations?
  • What are our competitors doing?
  • Where do we expect to be in future?

It should be interesting to read, contain concise statements, include only the relevant and important data, and give greater emphasis on creative analysis. A crucial role for the management of J D Wetherspoon is to differentiate their company from their competitors. They should be able to identify and pin down the real issues which should be addressed in the future as a matter of priority. The SWOT analysis should contain clear indicators of the key determinants of success in the segment being focused on. It should, in effect, encapsulate the perception of the marketplace; summarize what the management is trying to do; and point out required future actions. If pursued aggressively, this approach will make competitors into followers (Pahl and Ritchter 25).

Organizational Culture

Organizational culture can be defined as the values, norms or pattern of assumptions shared by members of a particular organization. These values or assumptions have been found to be important in improving the effectiveness of an organization. Employees learn about the important aspects of the organization they are working for through values. By critically examining JD Wetherspoon organization, we can explain its culture in terms of socio-technical and systems theory. Great attention is focused on listening and responding to views from staff on issues related to the performance of the business. Such views are normally brought up during the weekly meetings and members of staff are rewarded accordingly for the suggestions they make. Weekly newsletters and monthly videos are used to update and to keep in touch with members of staff since the company has realized that employees are a valuable asset to the success of the business. This illustrates how the principal of shared values is practiced at JD Wetherspoon. All members are kept up to date with all the activities in the organization and this boast their morale and motivate them to work harder. They understand that they are valued and are willing to bring in more ideas and pay much attention to the success of the organization.

The organizational culture in JD Wetherspoon can also be explained in terms of “taken for granted assumptions”. This is in regard to the adoption of some of the suggestions made by the staff, for instance, starting training courses later in the day thereby saving on the travel costs. Employees are guided on how to think or observe things by the assumptions made by the managers for instance through learning opportunities for career growth for example the one offered by the British Institute of Inn keeping.

Task culture

JD weatherspoon practices task culture. In this type of culture, all employees are experts in their work and often come together in specific projects or for task groups. They work in groups which makes problem solving an easy task. Work practices include sharing of knowledge and information freely, risk taking, and tendency to promote and follow rules. For a methodical discussion of these practices, they have been grouped into support, rules, innovation and coordination. Influence is based on expert power rather than on position. Task culture puts more emphasis on getting the job done and this is done uniting the power of group members. This ensures that work is done efficiently and that the organization is able to meet its objective. Support aspect in the model is related to the help or support an employee gets from the organization and fellow employees. Innovation is the introduction and implementation of new ideas that positively benefit the organization and its members. Coordination refers to amalgamation of efforts to ensure successful attainment of objectives. Coordination can be achieved by means of planning, organizing, actuating and controlling (Harris 311).

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The Relationship Between Organizational Culture And Organizational Behaviour in J D Wetherspoon

The success or failure of any business or organization depends on the organizational behaviour perceptions. The way the management team together with the employees handles these perceptions in J D Wetherspoon determines whether the organization will close its operations or it will continue. This is because management and employees are responsible for the future development of the organization. Through task culture, employees in J D Wetherspoon are able to meet the targets set for them. They understand that they are responsible for the future development of the company and this is determined by their efforts. An employee is given a task which he is expected to accomplish within a set deadline. This has been seen to work perfectly in increasing company’s revenue and general performance. J D organization behaviour is based on goal setting theory. This is becoming more and more in use in many organizations. Managers in J D Wetherspoon have realized that it is the only way forward (Harris 316).

Management Difference

JD Wetherspoon aims to create the amiable atmosphere of the conventional pub combined with attributes found in contemporary bars and restaurants. If the company had adopted a different culture other than the task culture, the management would have taken a different approach. For instance, if it had adopted role culture, Employees would have been less cooperative and this would have forced the managers to seek for consultation elsewhere. This is because power and influence in role culture is related to the position one holds in the hierarchy and this can result in biasness where some employees are looked down upon by their seniors. But since employees have been treated as a valuable asset through task culture, management has had an easy time and did not require to source for experts from elsewhere even when the company was hardest hit.

Business Strategies

There are many strategies used by different organizations in their operations. For instance market penetration, diversification among others. However, for this to be successful in increasing a business’s revenue, the business has to use a promotion method such as advertisement or change its branding although the product remains the same. Such a strategy can be used in marketing of magazines.

Another type of marketing strategy is called market penetration. This entails selling (new) products to the existing customers. In this strategy, organizations develop new products that replace the old ones. Last but not least, (market) diversification entails coming up with new products solely for new clients. The new product can either be related or unrelated to the previous line of business. An example of market diversification would be a case of an alcohol manufacturer diversifying into the manufacturing of soft drinks (Harvard Business School Press 65).

Market development

Market development of the company’s business in the domestic market has ensured increased returns for JD Wetherspoon. By capitalizing on its existing potency and unique resources, the company has effortlessly gained a competitive advantage in the UK and has realized high returns on the capital invested. Through market development, the company has been able to choose suitable locations for its pubs in the city centres and towns. Through this strategy, JD Wetherspoon was able to succeed in its expansion strategy because it was able to capitalize on changes in the public house market. The company was able to expand its operations in many parts of the country as opposed to the other pubs which were reluctant in deciding how to adapt the changed environment.

Through market development, JD Wetherspoon has realized a high turnover growth which offsets its low profit margins and enables sustainability of the cooperation’s price-based competitive advantage. In addition to reinvestment of margins, J D Wetherspoon has achieved differentiation of its products as well as imperfect mobility of its brand name, which is inimitable

Market diversification

By the start of the 21st century, J D Wetherspoon was already facing stiff competition and had to change its marketing strategy. Many retailers had adapted the changes in the ‘tied house’ system and were developing their businesses. Supermarkets were allowed to sell drinks and they sold them at a through away price creating price wars for the pubs. Other changes were made which forced J D Wetherspoon to adopt another strategy. The number of pubs that could be opened in a year was reduced to 30 and JD Wetherspoon had to change its growth strategy. Instead of market development, it started to diversify its products to new customers so as to meet its growth target. It acquired the Lloyds pub chain and through it, it was able to offer new range products such as breakfast to new customers. Unlike JD Wetherspoon’s pubs, the Lloyds pubs are music based and show TV programs which attracted a big number of customers forcing the management to re-brand some of its J D Wetherspoon pubs. The two strategies adopted in the 20th century and the 21st century led to almost similar results. The difference is that the one adopted in the 20th century helped the business to be known nationally and was able to expand its products into many parts of the UK. However, this strategy could not be relied on in the 21st century because of the changes made in the market. The 21st century strategy was able to return JD Wetherspoon on truck as a market leader in the provision of different range of products.

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Factors that J D Wetherspoon has had to consider before changing its business strategy

Before changing its strategy, J D Wetherspoon had to consider the changes in the market in regard to licensing, the number of pubs that each company could open in a given year and the tastes and preferences of its customers. As the number of pubs increased in towns and city centres, J D Wetherspoon suffered from low profit margins and had to change its marketing strategy in order to maintain its market share. By diversifying its products, J D Wetherspoon was able to meet its target and also meet the customers’ expectations as competition was very high. It is upon the management to make a choice in which is the best strategy taking into account the business operations and the needs of the market. J D Wetherspoon’s strategy is an example of a business strategy that was strategically chosen. This is because it meets both the company’s expectations as well as the expectation of the external environment.

The connection between the terms ‘business strategy’ and ‘strategic choice’

Before choosing a business strategy, one has to evaluate different options and only chose the best. There are many different strategies that can be used in a business but all of them do not give equal results. In making a strategic choice, a business has to consider the type of business it deals with, the products it offers, its customers, its prices, competitors and the basis on which to compete on.

The key issues that J D Wetherspoon has had to take account of in order to manage its business strategy

In order to manage its business strategy, J D Wetherspoon had to take into account the external forces that were influencing its operations. These include the legal, political and socio-cultural factors. First it had to meet the legal issues by ensuring that its business only dealt with retailing services as required by the ‘tied house’ system. After acquiring Lloyd’s pubs, it started offering other meals including breakfast in order to meet its sales target and still maintain its market share since the operating time for pubs had been adjusted by the government.

Forces of change

Change is inevitable and things change when least expected. It is unavoidable in the modern workplace. To remain effective and competitive, organizations must continually adapt their business processes to manage the rapid changes demanded by the dynamic nature of the marketplace or service environment (Cameron and Quinn 72). It is also the case that, even in the most structured processes, deviations or unpredicted events will occur with almost every instantiation. Therefore, so that the benefits of workflow management system may be offered to the broader organizational spectrum, the ability to deal with change must be effectively addressed. Changes in a business strategy are caused by changes in the business environment. This can either be internal or external. J D diversification strategy may change over time due to new innovations, technology, or change in senior managers. The senior management can be in a better position to deal with these changes if they apply the Force Field Analysis. This would help them in identifying the driving and restraining forces. The restraining forces should be removed in order to allow the driving forces to push the change forward. This can be through adjusting the business strategy to suit the present market just like what J D Wetherspoon did.

Business ethics

Business ethics could be one of the factors that can lead to change in J D Wetherspoon. This means that J D has to change at a group and individual level. It can not be successful in a new environment if it is not able to influence the behaviour of its stakeholders. In order to adapt change effective, employees have to be exposed to new experiences, such as going for seminars, which is a long-accepted pedagogical tool. Requiring that managers make the organization more ethical, however, is very contentious. Many managers assess their organization’s ethical integrity, brainstorm how their organizations can expand their social responsibility, and develop action plans for improving their organization’s ethics. Managers do not want to be accused of being unethical and that’s why they have to change some of the business processes from time to time.

Role of management in dealing with change

The role of the management of J D in dealing with change could be to help improve the skills and knowledge of its staff, to plan work and accomplish actions that will improve quality and increase productivity. People have a very difficult time dealing with change, and yet, continuous improvement is all about continuous change. J D mangers have to involve the entire work force in the change process so that, they too feel as part of the organization (Harvey and Brown 163). They have to clearly state their personal goals and expected end results and also review the same regularly.

Ways of analysing a change situation and dealing with it

My advice to the management of J D Wetherspoon on change management would be to use a force-field analysis. This is a technique that analyses the forces working for change and the forces working to maintain the status quo or resisting change. In its simplest form, this involves listing the forces working for and against the desired change and then planning ways to increase the forces for change and reducing the forces against change. After analyzing the forces of change, the next step would be to develop a change strategy. Developing a change strategy for implementing the desired change is as important as the actual changes because how change is accomplished will determine whether or not change is accomplished (Harvey and Brown 170). Even the right changes implemented the wrong way will fail and may have far-reaching consequences for present and future change efforts.

References

Cameron, Kim S. and Quinn, Robert E. Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework. London: The Jossey-Bass Business & Management Series, 2005.

Harris, Stanley G. “Organizational Culture and Individual Sense making: A Schema-Based Perspective.” Organization Science, 1994 Vol. 5,(3): pp. 309–321

Harvard Business School Press. Essentials of strategy Harvard Business Literacy for HR Professionals’ Series. Harvard: Harvard Business Press, 2006.

Harvey, Donald F. and Brown R. Donald. An Experiential Approach To Organization Development. New York: Prentice Hall, 2001.

Pahl, Nadine and Ritchter, Ann. SWOT Analysis – Idea, Methodology and a Practical Approach Akademische Schriftenreih. London: RIN Verlag, 2009.

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