The paper “ Compass Group PLC – Business, Dividend Policy, Financial Performance, and Position of the Hospitality Company” is an engrossing example of case study on business. Compass Group Plc. is a British multinational company that specializes in the delivery of food items and support services in different countries on the global platform. The company operates on a clear and consistent strategy which allows it to create value for its shareholders (Zambon et al 2007, p. 100). Through the company’ s sustainable business model that endeavors to ensure continued growth and expansion in the food and service industry, the company ensures that it derives its organic revenue from its ability to operate effectively and efficiently (Compass Group PLC 2013, p.
14). In addition, through numerous strategies that endeavor to improve its positioning in the market the company has been able to establish its presence in North America, Europe, and Japan and in the fast-growing and emerging regions around the world (Compass Group PLC 2013, p. 14). The main objective of this report is to provide a detailed analysis and evaluation of Compass Group Plc.
in terms of business, dividend policy, financial performance, and position. BusinessBeing a food catering and hospitality company, Compass Group Plc. provides its services to customers in different sectors of the economy such as those in education, healthcare, constriction, sports and entertainment (Hoover 2011, p. 107). The company operates in about 90 countries globally with a high percentage of its market in North America and in Continental Europe. In an attempt to satisfy the interests of its customers the company operates in seven market areas and these include business and industry, healthcare, education fine dining, sports, defense, and offshore sites.
The revenue that the company generates from these sectors of the market is divided between contracts and vending which are the major business divisions of the company (Hoover 2011, p. 109). Being a Multi-national company, the organization has been able to realize successful penetration of different markets especially those that are trending and emerging markets through a combination of organic growth and strategic acquisition of markets (Zambon et al 2007, p. 105). The company’ s acquisition strategy is based on the assumption that the growth of the business is not realizable through organic growth strategy alone.
This enabled Compass Group to acquire and merge its services with companies that could ensure significant growth and improve the company’ s profit margins (Compass Group PLC 2013, p. 30). Since 2001 strategic acquisitions have been helpful in leveraging the position of the company as the world’ s leading caterer. It has also affected the cash flow of the business, therefore, pressuring its margins and returns (Zambon et al 2007, p. 105). Despite these challenges, the company has been able to realize its 6% annual growth through the combination of the acquisition strategy with the organic growth strategy. The expansion of the business into different markets around the world are ways through which the company ensures that it remains focused on the delivery of food and increase its ability to ensure the delivery of effective services (Hoover 2011, p. 110).
In the short term, the strategic acquisition model and organic growth model are bound to impact the company’ s organic revenue growth due to the fluctuating nature of the economic environment (Zambon et al 2007, p.
100). However, in the medium term, the company through the strategic acquisition is bound to enjoy benefits of outsourcing its services as this will ensure structural growth considering the possibility that the weak economies will begin the process of recovering. The creation of value infill acquisition enables the company to reward its shareholders appropriately (Hoover 2011, p. 111).