W H Smith Development Bookseller

Introduction to strategic management: W H Smith

WHSmith one of the UK’s leading retail groups.

1. Executive summary.

WHSmith Company conducted this research to see how well WHSmith has been managed and if they have been following the right steps to reach their goals and what is affecting the company at the present time. This study sought to identify:

• The company mission statement and stated goals.

• What main external and internal factors affect their development.

• Performance of WHSmith.

• Main factors affecting the success or in the 2008-2009.

In the United Kingdom, there have developed many new companies that are affecting huge organizations in the market, for example WHSmith is one of the most popular bookseller, stationer and newsagent worldwide but since many year ago their economic situation it has been changing a bit due to their competitors such as TESCO, ASDA, OTTAKAR’S, HMV GROUP, WATERSTONE’S booksellers, BORDERS and independent bookshops where sometimes sell cheaply and give a better customer service so in this aspect WHSmith get affected in their development now and in the future as much again.

However, WHSmith know how to compete and they are always planning new ways to protect themselves but in certain point WHSmith is affected by their poor administration and mess.

The research found that this organization will be losing market and customers if they do not fix their administration side and also they should provide a faster service to the customer.

Introduction

WHSmith is one of the most popular retail companies in the United Kingdom and it is Britain’s most popular bookseller, stationer and newsagent. The company has 543 high street stores and 259 travel outlets at airports, train stations and motorway services areas located in the UK. I have chosen WHSmith because it is successful and highly recognizable company that attracts a high percentage of the target market.

This report will look at the mission statement and stated goals of the company, external and internal factors affecting the strategy development in the organization, the performance of the company in the past 2 years and finally identify what the main factors are affecting the success of WHSmith now, and in the next 2 years.

2. WHSmith

The company has been growing since 1792 when it begun. With many stores around England and Wales, the company has a diverse kind of shops in different areas as a travel stores at the train stations and airports, on the high streets, which manage the majority of the products like magazines, newspapers, stationary, books and entertainment section and the motorways.

Being a traditional shop, it has expanded the business reaching different markets as Boston in USA. It also has improved their sections adding music and movies for make better options for the customers.

2.1 Mission statement

“WHSmith aim is to be Britain’s most popular bookseller, sationer and newsagent.” (WH Smith PLC Media Centre. 2007. FAQ No.6,( Whsmith’s mission statement){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-MC-FAQ.htm)

Looking at the mission statement given above we can see that WHSmith has accomplished most of their purpose, WHSmith sells a wide range of newspapers, magazines, stationary, books and entertainment products every year in their 543 high street stores they have got. On average, just over 1.2 million people visit a WHSmith high street store every day of the year. And every year 70% of the UK’s population visit a WSHmith store. There are also 259 travel outlets at airport, train station and motorway service area locations across the UK. Every year 125 million travellers pass through WSHmith, and the busiests travel store is London’s vistoria station. WHSmith sells 1.5 million magazines every week; 24,000 magazines every hour they are open and every year WHSmith sells in excess of 40 million books and an average WHSmith sell 3,000 A4 pads a day.

2.2 Stated Goals.

WHSmith main goal is to be known as the leading company in the market and keep standards of excellence in all they do such that anything WHSmith do will characterized from their competitors focusing on businesses in which their skills and experience in retailing and distribution can be brought to bear.

WHSmith’s business goal is to build the position as britain’s most popular stationer, bookseller and newsagent. They strive to be an outward facing, customer focused, store responsive Organization that delivers in their promises.( WH Smith PLC Our Company.2007.Values,(WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm)

To achieve this goal they have stated four values, which are very important to complete this goal.

2.2.1 Customer Focus

WHSmith will keep their customers up to date with new sales, bonuses, new products and anything that they do in order to gain more Customer because the more you care about and offer the customer the more you profits you gain and the better you treat customers, the more likely they are to be repeat customers. (WH Smith PLC Our Company.2007.Values Customer Focus.(WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm)

2.2.2 Drive for Results

WHSmith works hard in order to get competitive results. (WH Smith PLC Our Company.2007.Values Drive For Results.(WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm)

2.2.3 Accountability

When WH Smith say that they are going to achieve something then they will try their best to do it but if they don’t then they won’t blame anyone else. (WH Smith PLC Our Company.2007.Values Accountability.(WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm)

2.2.4 Value their people

WH Smith is comprehensive with their staff and make them feel like they are valued by giving them opportunities for promotions, have flexible working hours and providing good time off work and for pregnant women or even new fathers. (WH Smith PLC Our Company.2007.Values Value Our People.(WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm)

3 External and Internal Factors

3.1 External factors – PEST

3.1.1 Political.

“WH Smith’s operational costs are affected by underlying cost inflaction and legislative and fiscal changes in relation to paper, packing, fuel, utilities, rates and salaries”. (WH Smith, 2005. Annual report 2005. {Online} Available at: http://www.whsmith.co.uk/grp/WHSPLC-IR-AR05.pdf).

Taxation and employment law are affecting the strategy development in the organization as well because the government is always changing taxes and changing employment law for a better control of the country so every time that government wants to do this WH Smith get affected.

Talking about the relations between the government and the organization is understandable that they have a good relation but sometimes when government want to change something from the organization a new law or new alignments the organization will have to fallow what they say no matter in what position the organization is at.

3.1.2 Economic.

Hight street is sensitive to the economic climate and can be affected by the general condition of the UK retail and travel markets.

An outbreak of a pademic disease such (as a via flu) acts of terrorism of wars can reduce the number of custome who visit WH Smith outlets, creating a decline in revenue and profit.

A part from that there is a risk in the management by dealing with banks and financial institution, now banks stop lending huge amount of money to organizations in the USA because economic factor. On top of that this will affect many organizations worldwide in between other WH Smith.

3.1.3 Socio- Cultural.

Stike ballot over Franchising crown post offices to WHSmith, 500 post offices staff in Greater Manchester and South West Wales have been taking for strikes over franchising out of Crown office services to WHSmith. Many of the members are not very happy with continuing downgrading of the service and they are alarmed at emerging partnership between Post office Ltd and WHSmith.

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Good Staff with excellent skills are being lost to retailers who refuse to take on Post Office employees and WHSmith hasn’t got the history of providing good services that the Post Office supplies. If this happen in the future there will be approximately the loss of over 124 highly trained Post Office staff. This is not good due to many workers will lose their jobs and this is not fear with the workers who have been working for so long with Post Offices, I say this because over 60 jobs have been lost in the last few weeks already. This is a socio cultural factor that will be affecting many workers.

3.1.4 Technological

Looking at common retail business, Hight street relies on a number of important IT systems. Any systems performance problems could seriously affect WH Smith ability to trade.

WH Smith has to be attentive with their competitors new products because organizations such as amazons.com and more other put the product in the market first and gain all the share market causing bad factors for WH Smith. Talking about products as well WH Smith should improve the quality of their products so that people prefer to buy in WH Smith than in other retailer stores just for the better quality. It is a good advantage to sell products focusing in the technological future.

(Businessballs.com.1995-2006.PEST analysis method and examples, with free PEST template.{online}Available at: http://www.businessballs.com/pestanalysisfreetemplate.htm)

3.2 Internal Factors – SWOT

3.2.1 Strengths.

WH Smith is a recognized brand and very respected, it has got high street retail locations, experienced senior management team, high customers football, purchasing and sourcing scale, driving value for the customer and allowing the customer to shop in the shops or online if customers prefer to have a delivered home. (WH Smith, 2006. Annual report 2006. {Online} Available at: http://www.whsmith.co.uk/grp/WHSPLC-IR-AR06.pdf).

3.2.2 Weaknesses

WHSmith has been struggling to cope with intense competition from specialist retailers and supermarkets that also sell books and magazines on the high street. This can be a lack of competitive strength because sometimes WHSmith hasn’t got products that other retailers and supermarkets has got. Retail profits slumped 66% to £25m in the year to the end of 31^st august while overall sales, including WHSmith better-performing newspaper distribution arm, slid 3% to £2.8bn. WHSmith recorded a pre-tax profit- before the exceptional charges of £200m- of £67m, compared to £ 102m last year.

(BBC news 24 Business.2004. Focus: WH Smith plunges into the red. BBC Online,{internet}.14october.Availableat:http://news.bbc.co.uk/1/hi/business/3741684.stm)

However company has cut costs, is trying to change its management and is improving their range of stock and look. This is a main internal factor that is affecting the strategy development in WHSmith. Besides that, The reputation of WHSmith isn’t the same because there are more companies such TECO, ASDA, wchich sells basic stationary, magazines and newspaper more cheaply so people prefet to buy in TESCO or ASDA getting the same product but cheaper so this is also affecting the strategy development in the organization.

3.2.3 Opportunities

“Retailer WHSmith is setting up a portal to put all the newsagents it supplies on the internet, this company is joining up with Axon, the e-business technology group, to provide the system. The aim is to improve treading links and the flow of information between WHSmith and the newsagents”.

(BBC news Business.2000. Focus: WH Smith puts newsagents online. BBC Online,{internet}.02March.Availableat: http://news.bbc.co.uk/1/hi/business/664124.stm)

WHSmith sales have decreased a lot because of their competitors so they should develop more new products that local competitors do not have only in this way WHSmith can gain more and more customer. An important fact is to know how to compete and to surprise competitors. Could seek a better supplier deals too this is always going to help the organization, skimming new ways of selling more and gaining more profits for the organization.

3.2.4 Threats

Environmental effects would be affecting the development of the organization. It is understandable that WHSmith have responsibilities of managing its business on the environment. Whsmith has the responsibility for the environmental impacts of the products that they sell but still there are some products that can affect the environment. Even if they have been doing practices and new plans for solving this problem by raising campaign targeting all staff in High street and travel stores and for their head office staff to teach them about best practice. They need to improve this more with new and better plans.

4. Performance of WHSmith during the past 2 years.

4.1 Year 2005 – Delivering value to their shareholders.

WHSmith company has made a good progress over the past 2 years in terms of all their business, Travel retail and News Distribution and the High Streets showed a very good profit growth. In the second half of the financial year the customer service was not very good thought. 2004 and 2005 WHSmith returned £205m to shareholders in Asia pacific and USA. Travel retail have had a strong sales since then and WHSmith found that out by their travel team working in London stations stores on 7^th of July, WHSmith showed to have a strong well-established brand with good customer loyalty and leading positions in the market of news and magazines, books and stationery.

(WH Smith, 2005. Annual report 2005. {Online} Available at: http://www.whsmith.co.uk/grp/WHSPLC-IR-AR05.pdf).

4.2. Returning to profitability.

WHSmith progressed very well in 2005 but they continued focusing in the customer service development, Travel retail delivered strong profit growth of 24% and good sales growth 3% and High streets improved its profitability by 87%compared with 2006.

4.3 Rebuilding authority in their core categories.

There were some key changes over 2005 to their products categories. In special in their stationary, they introduced new ranges for the Home Office and new arts and craft materials for all the family. In entertainment they have rebalanced their space so that they could grow entertainment subcategories like DVD. While doing this they developed a strong proposition doing strong promotional offers to improve. In their airport stores they did a strong sales growth of 7%, 2% ahead of passengers growth, in improving their products that they sell to the public.

4.4 Business improvement.

WHSmith begun growing more profitable categories like drinks and confectionery, The travel business has also been success in 2005 gaining new business. In 2005 they opened a bookstore WHSmith books for the first time at London airport Luton.

4.5 Year 2006 – Shareholder value.

A year of good progress, although group revenues were down 6% at £1.3 billion, group profit before tax and exceptional items was 31% ahead of last years at £51m and Profitability increased by 18%. Was announced their intention to separate their rail and news business to allow to benefit from greater focus on their respective strategies as independent business.

4.6 Profitable growth.

WHSmith sold a huge range of newspapers, magazines, stationery, books ans entertainment products. WHSmith retaile’s outlet are frequently first choise for customers on the high street and WHSmith trusted convenience retailer for customers at travel locations. WHSmith was on the London stock exchange (SMWH) and is part of the FTSE mid 250 Index in 2006.

4.7 Adding value

Pofitability has increased in 2006 by 31% despite the challenging trading conditions in their market. Travel delivered a strong performance through sales and marging growth from improved ranges and more efficient use of space in combination with tight cost control. In august 2006 Retail and new business were separated via a demerger, allowing both business to benefit from greater focus on their respective strategies as independent business.

5. Main factors now affecting the success and in 2008 and 2009.

The main factors now affecting further success in WHSmith is the competition between other organizations, Organizations such as TESCO, ASDA, OTTAKAR’S, HMV GROUP, WATERSTONE’S booksellers, BORDERS and independent bookshops sell similar or sometimes the same products but different prices so they all compete very hard to gain more and more customer. A part from these organizations that are competing with WHSmith there are the websites like Abebooks.com, amazon.co.uk, bookseller.com, ardenbooks.co.uk, Macmillan.com, independent online booksellers and so many othesr that sell same products and often a cheaper prices. Buying books online is a issue because more and more people prefer to shop at home and get goods delivered to their homes and this is an area where WHSmith are losing many sales. A part from that WHSmith used to have better customer service, now their service has decreased a lot. People when shopping like to shop quick and people like to be being well treated, looking at different stores of WHSmith in the UK it’s very clear that in the busiest stores people queue for quite long time to pay what they want. Some people get upset or stress because of that and prefer to go to the next independent bookshop and buy the same product much quicker, and possibly cheaper sometimes. Another factor that is affecting the success of WHSmith now is the administration that it’s got, it is very poor and there is so much mess in the administration. In the future next two years (2008-2009) there will be bigger factors affecting the success if these it is not treatable now and also this will definitely affect the economic side of the organization. Looking at the future as well seems like technology is going very quick and in the future years people will just buy online products instead of visiting the stores because it is cheaper, quicker and people do not have to go out of their homes.

Conclusion

• What I can conlcude with this report is that WH Smith should improve more their customer service to make it quicker so that they gain more and more customers. Also WH Smith must be ready for the future technology in the next 2 year because for sure its competitors are planing renovations in their stores with new and great ideas so WH Smith must be thinking in doing something fabulous as well like making WH Smith outlets with cafes inside for their customers so customers feel more pleasant.

Finally I can conclude that WH Smith have had good and bads changes in the las two years.However, there is much left to impove to achieve their goals and velues.

Recommendations

• WH Smith should be always attent to competeing with other organizations at all times.

• They should imporve the quality of their products.

• They should search for a better manage of their economi.

• They must find the solution to compete with the shops online maybe they are having problems when delivering the products.

• Finally and the most important if to maintain the good name of the company in the tops organizations best retailers worldwide.

Bibliography

• Concepts of strategic Management. Fred R. David. 1995,1993,1989,1987.Fifth Edition.

• Strategic management issues and cases, Paul Dobson, Kenteth Starkey and Jhon Richards,2004.

• (WH Smith PLC Media Centre. 2007. FAQ No.6,( Whsmith’s mission statement){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-MC-FAQ.htm)

• WH Smith PLC Our Company.2007.Values,(WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm

• WH Smith PLC Our Company.2007.Values Customer Focus.(WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm)

• WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm

• WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm

• WH Smith PLC Our Company.2007.Values Value Our People.(WH Smith’s Values){online}Available at: http://www.whsmith.co.uk/grp/WHSPLC-OC-Values.htm

• WH Smith, 2005. Annual report 2005. {Online} Available at: http://www.whsmith.co.uk/grp/WHSPLC-IR-AR05.pdf

• Businessballs.com.1995-2006.PEST analysis method and examples, with free PEST template.{online}Available at: http://www.businessballs.com/pestanalysisfreetemplate.htm

• WH Smith, 2006. Annual report 2006. {Online} Available at: http://www.whsmith.co.uk/grp/WHSPLC-IR-AR06.pdf

• BBC news 24 Business.2004. Focus: WH Smith plunges into the red. BBC Online,{internet}.14october.Availableat:http://news.bbc.co.uk/1/hi/business/3741684.stm)

• BBC news Business.2000. Focus: WH Smith puts newsagents online. BBC Online,{internet}.02March.Availableat: http://news.bbc.co.uk/1/hi/business/664124.stm