Strategic management

Text 6: Grand Metropolitan
Peter Williamson
Bernard Rix

This text is a London Business School case study, and was released in 1988.

The subject is the Grand Metropolitan company and the way its corporate strategy has evolved from the creation of the business in 1947, to nowadays.

My work will be based on the analysis of the different styles of corporate strategy seen in the lecture, and how they can be applied to Grand Metropolitan. To explain those changes, I will follow the history of the company, and describe the strategy used during those 60 years.

Max Joseph, the founder of the company, bought his first hotel in 1947 in London. He continued expending its hotel chain until 1961, time the company went public. The first strategy used was a strong marketing around the hotels, and a centralized buying policy. However, there was at this time no financial department in the company. The idea was mainly an acquisition strategy: “trading property assets” against debts. This can indeed be qualified as an opportunism strategy. There was not any particular logic in the buying of the properties.

In 1966, the company broke into the food and drinks business (restaurants, pubs, food distribution. With those acquisitions Grand Met became the UK’s largest hotel and catering group. The idea was probably to create a synergy between the hotel and the drink business (hotels are large buyers of drinks).

The next step in the diversification of the business was the acquisition of Mecca, a gaming company. That made Grand Met be present in bingo halls, dance halls and casinos.
In 1972 the company increased its activity in “beerage” by acquiring Truman and Watney Mann, which own some respected wines and spirits brands.

The first oil shock made Max Joseph realize the necessity of a finance director for Grand Met, who was appointed in 1975. At this time Grand Met also realized the importance of increasing productivity and cutting costs.

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