The success of every business hinges on a few critical strategic decisions. HMV’s decision in 1998 to spend £300 million on Waterstone’s bookshops was an important cause of HMV’s sad decline. In constrast, Whitbread plc made a brilliant decision in 2006 to sell off all its pubs and refocus the business on Costa Coffee bars and Premier Inn hotels. From one Costa Coffee bar at Waterloo station, Whitbread has developed this rising star into more than 2,000 outlets worldwide, including more than 100 in China. Whitbread is targeting 3,500 Costas with sales of more than £1.3 billion within the next 5 years.
A strategic decision is one so significant that it cannot be reversed without causing major damage to the business. In the 1990s senior managers in Honda’s car division decided to focus on Pakistan rather than India. The business is still suffering from that mistake today, as Pakistan’s economy struggles while India’s car market has grown hugely.
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