Wh Smith

What are the key strategic issues the company is facing?
MBV analysis




 

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WHSmith is a company which in the face of falling profits began to expand in all directionsThe ideal strategy for WHSmith in the last decade would have been to focus on its core activities and increase efficiencies with new technologies, improve buying power, sell more higher marginitems and follow their customers habits with sales of newer lines.

WHSmith did not follow this path but instead decided to try to leverage its brand, stretching the brand as WHSmith described it,andexpand vertically, horizontally and diagonally searching for new revenue.WHSmith should build on its position as the UKs most popular stationer, bookseller andnewsagent by continuing to grow itsstrongly performing Travel business and delivering itsHigh Street plan. Travel should focus on delivering value to shareholders through organicgrowth in its existing outlets, securing new contracts,trialling new formats, increasingaverage transaction value and making improvements to trading efficiency. They must investwhere they will achieve a return on investment above their cost of capital.While externaleconomic and other factors might affect them, they need to monitor the externalenvironment more closely with contingency plans and adopt appropriate strategies. It is alsoimportant torespond to changes quickly unlike their response time to launch the onlinetrading. The market was already mature by the time WHSmith entered this form of distribution.The key problem was expansion usingvarious strategy methods without adopting thecorrect strategic plan and neglecting all other business forces such as legal changes,recession, and industry bargaining power and consumer patterns. WHSmithneeds to focuson their strengths, resources, employees, technology changes that can improve businessactivities, perform better speculation, forecasting methods and political movements. Forexample,...