Work, Change, and Competition: Managing for Bass

By David Preece; Gordon Steven et al. | Go to book overview

9

Performance assessment of the change programme

As we saw in chapter 6, it was clear to the Bass Taverns and PLC Boards that the medium-term profit objectives for the division from 1994 onwards could not be achieved by cost-cutting alone. The Bass Taverns managed estate five-year plan included elements that were largely under management control and elements which were a function of movements in the marketplace and changing demand patterns. Put simply, the management action arising from the BPR initiative was forecast to result in financial returns in excess of £40 million. This included price increases for products over and above projected increases in the retail price index, benefits from the New Retailing Initiative in terms of teamworking, more cooperative working relationships, and a more responsive retail outlet team. Other assumptions underpinning the forecast included that the transfer price from Bass Brewers to Bass Taverns would remain constant, and that there would be no significant changes in government taxes or duties. There was a recognition that there was a need for reductions in support costs, to be achieved via an overhead reduction programme. The contribution from investment in terms of the acquisition of new sites, the development of new concepts and the refurbishment of pubs was projected to generate a sum of some £100 million. When all this was added up and related to projected overall market movements and inflation, this was expected to have a negative impact over the five-year period, perhaps approaching a £20 million net downturn in profit projections.

In the context of the expected relatively flat overall marketplace, the key objectives for bridging any profit gaps were to be an attempt to sustain and maximize core estate profitability, to achieve efficiencies in overhead and support costs, to build more new pubs, and to introduce new concepts into these pubs and the existing estate. The churning process would continue, and the main objective was to improve Taverns’ overall portfolio whilst ‘sweating the assets’ that much more.

What of the actual results? Table 9.1 shows that turnover from 1991 through to 1995 was relatively flat and that there was a modest increase in 1996. This, of course, masks activity relating to the trading of pubs within the company and the ‘churning’ of the estate. Bearing this in mind, Taverns’ operating profit contribution to the PLC was £205 million in 1993, £220 million in 1994, £240 million in 1995, and £282 million in 1996. This was the major contribution amongst all the divisions to Bass PLC’s profits, and thus the division remained key to the overall

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Work, Change, and Competition: Managing for Bass
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Figures x
  • Tables xii
  • Acknowledgements xiii
  • Glossary xiv
  • 1 - Introduction 1
  • 2 - The Changing Nature of Public House Retailing 9
  • 3 - Bass PLC 27
  • 4 - Management and Managing 50
  • 5 - Change and Changing 67
  • 6 - The Emergence of a Change Strategy in Bass Taverns 89
  • 7 - Changing the Organization 117
  • 8 - Managers and Change 139
  • 9 - Performance Assessment of the Change Programme 188
  • 10 - Conclusion 196
  • Bibliography 217
  • Index 225
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