University of South Wales

Business School

Strategic Analysis; Tools and Techniques (13686)

MBA

Lecturer: Amarachi Amaugo

Assessment 1

Student No. Name Enrolment

R1509D1016434 Lawrence Onaibe ST4S38-V1-13686

Topic: Critical Strategic Analysis of the Current Strategic Change within

Post Holdings buying Weetabix

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 Table of Contents

1.0 Introduction _________________________________________________3

2.0 Strategic Position of the Company _______________________________4

3.0 Stakeholders Analysis and Mapping _____________________________6

4.0 PESTEL Analysis ____________________________________________8

4.1 Political ______________________________________________8

4.2 Economical____________________________________________9

4.3 Social _______________________________________________10

4.4 Technological_________________________________________10

4.5 Environmental_________________________________________11

4.6 Legal _______________________________________________11

5.0 Industry Analysis __________________________________________12

5.1 Degree of Rivalry______________________________________13

5.2 Threat of Entry________________________________________13

5.3 Threat of Substitute____________________________________13

5.4 Buyer Power _________________________________________14

5.5 Supplier Power _______________________________________14

6.0 Conclusion________________________________________________15

References________________________________________________17

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1.0 INTRODUCTION

This paper critically evaluates the strategic evaluation of the Post Holdings buying

Weetabix further investigate the analysis and strategic position of Weetabix which

includes stakeholders that comprise internal and external and the overall industry

analysis. Players like Cheerios, Kellogg, Nestle, Cinnamon toast, Malt-O-Meal and even

Weetabix are the bedrock of the cereal industry with the vying for an enhanced market

share, the stake has never been this high. Through the years, there has been a change

of approach towards the market and these companies evaluate their environment

together with their competitive edge, position in the market and the ability to challenge

the competition and take into consideration the competitive risks involved. It’s safe to

say that the volume of competitive pressure companies is faced with stems from

globalization which has made these companies turn up with tight niche ways to function,

grow, compete and have a competitive edge.

Malik et al. (2014) illustrate acquisition to be a global business strategy that enables

businesses to dive into new markets, which is one of the strategic concepts these

businesses have employed. Weetabix, a UK breakfast cereal company saw Post

Holdings, a US company acquire it, this gave Post Holdings a door to the UK market

which has been the intention Post and his goods that is in need for a spread to a more

diverse market like that of the UK landscape and the rest of the world due to the global

presence Weetabix has as well. Acquisitions are now seen as one of the master keys in

strategic choices for organizations to grow and achieve their business objectives which

consist not only on competitive advantage but also revenue, longevity, and appreciation

of shareholders’ power.

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2.0 STRATEGIC POSITION OF THE COMPANY

Porter (2008) suggests that the competitive forces and their elemental causes show the

core of an industry’s present profitability while providing a structure for anticipating and

influencing competition; a company focus on understanding the system in which the

industry is set up is the strategic position of the company. This requires the company to

set up a preferred perspective stand with the present and predicted development and

knowing the best way to execute that stand. The company’s approach to the

competition together with its competitive edge on which it can be based in the

distinctiveness of its strategy as described by Porter (2012).

In the light of Weetabix excelling in diverse market space, certain strategies have to be

inculcated in the aligning approach to the company which should secure the competitive

advantage that can withstand the market irrespective of their economic, social and

geographic attributes.

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Porter’s (2012) generic competitive strategies centers on cost leadership, differentiation

strategy and fixate strategy which for Weetabix, it can be based on differentiation focus.

An instance of this differentiation focus strategy as it applies to Weetabix when the

company has to innovate for the new market after the acquisition to engage specific

customers was when in 2013, it brought in a variety of breakfast biscuits which is

supposed to accommodate customers that scorn its cereal breakfast. This is to say that

the firm fixates on a specific spot market which Tanwar (2013) calls a Niche Strategy.

According to the Business Professor website in 2018, Weetabix employed the

differentiation focus strategy in its global markets which enables it to adapt to certain

specific attributes of the market where these said attributes make a greater value of the

proposition.

Further understanding Weetabix’s plight in differentiation focus strategy, it conducts

researches about its existing and potential customers and the market to engage in value

creation for its timing customers. In the bid to achieve such great feat, Weetabix

developed and launched Weetabix protein and protein crunch to challenge the cereal

category which has players like Kellogg competing for market share and this move

made Weetabix a stand out from the rest of its competition (Rogers, 2017).

Subsequently, in 2014, there was this new introduction of Breakfast-On-The-Go drinks

by Weetabix which is a product of its researches conducted on its customers and the

market saw Weetabix take a step further in the distinction of its brand. The open sales

of this meal drink saw it shot above forecasts which is a result of customers in need of

healthier sources of protein and Weetabix was there to meet that specific niche market.

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This move typifies Bowman’s Clock on how businesses and their products can position

to bargain a great competitive stand in the market.

3.0 STAKEHOLDERS ANALYSIS AND MAPPING

‘’A stakeholder is any group or individual who can affect or is affected by the

achievement of an organization’s objectives.’’ (Freeman, 1984. pp. 46)

From the perspective of stakeholder value, Davies (2017) suggests that companies are

a joint venture which is dependent on several stakeholders, the demands of

stakeholders require management and primary and secondary stakeholders should be

identified.

Source:lumenlearning.com - The Strategy Map

ProAction Dev. (2017) illustrates identifying stakeholders to be internal and external

where internal stakeholders can further be simplified as primary and secondary. Primary

stakeholders are those that define the business and are key to its continuous processes

such as customers, suppliers, and employees while secondary stakeholders are those

who could ruin the relationship with the primary stakeholders such as business partners,

competitors, and regulators (ProAction Dev.,2017). For this paper, we are looking at the

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internal primary stakeholder that are employees mainly top management. The relevant

stakeholders in Post Holdings acquiring Weetabix can be seen as:

1. Internal stakeholders

A. Primary Stakeholders

i. Employees of Weetabix

ii. Customers

iii. Suppliers

iv. Top management of Post Holdings and Shareholders

B. Secondary Stakeholders

i. Business partners

ii. Competitors

iii. Regulators

2. External stakeholders

i. Customers

ii. Suppliers

iii. Banks

iv. Local community

v. UK government

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 Top management of Post
Customers
Holdings and Shareholders
Power

Government,
Employee of Weetabix Agencies and
Competitors

Interest
Power-interest grid mapping

4.0 PESTEL ANALYSIS

4.1 POLITICAL

Daneshkhu (2017) suggests that the price of Weetabix breakfast cereal may go up due

to the fact that the UK market has been hit with a weaker pound which Giles Turrell, the

CEO of Weetabix confirmed when he mentioned that the company is battling with the

high cost of dollar-denominated wheat market, and Weetabix is more likely to top up its

products' prices. It’s as a result of the ever-lingering Brexit, UK leaving the European

Union which has caused instability especially to UK businesses with uncertainties. Both

Weetabix and Post Holdings have to manage the circumstances profitably; also,

following the acquisition of Weetabix by Post, the politically frontier is now different,

Weetabix has to accommodate the US political landscape that is quite different from the

conventional one.

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As observed in its employment legislation, the UK government since 2010 is seen to

have risen each year with its rates of wages accumulative which will companies such as

Weetabix incur larger wage bills due to the variance in the employment laws. Weetabix

will have to identify alternatives to cut down costs like biting down on costs like

employing cheaper raw materials which substantially can put its brand at reputational

risk. Weetabix has a global market share, so it has to consider standards and

regulations in other economies and government policies which are unique with every

region.

4.2 ECONOMIC

Serven and Solimano’s (1992) research paper on ‘Private Investment and

Macroeconomic adjustment’ suggest that rates such as inflation, savings, interest,

foreign exchange, and the economic cycle determine the aggregates of demand and

investment in any economy in a macro environment and in a microenvironment,

competition norms impact the competitive advantage of a firm. Post Holdings makes

use of a country’s economic factors like growth rate, inflation and industry’s economic

indicators to forecast the growth trajectory.

Chance (2017) on economic growth in Britain observed that that same year, 2017, the

in understanding of Britain exiting the EU, saw a 1.7% decrease in her economy growth

while that of US was fix on 2.2% and saw a further increase of 0.1% the following year

due to tax breaks by the current Trump’s administration. This indicates that Post

Holdings acquiring Weetabix will see Post impacted on different fronts of economic

activities in the UK, US and the rest of the world; one way to go about mitigating the

variance is basically the cost of the product which seems to be a major decision in

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consideration of strategic economic approaches as it relates rates such as inflation and

purchasing power in the different countries of operation. Customers turning to less

expensive products due to the economic recession which is the peak external economic

factor that Post considered in the process since the growth rates economically are

different in different countries and also in the UK.

4.3 SOCIAL

‘Society’s culture and way of doing things impact the culture of an organization in an

environment’ (Gordon, 1991) borders on common beliefs and attitudes of a population

which is a major player in how marketing understands the customers and structure the

marketing idea. With that in perspective, the outcome from the survey done by ‘Bakery

and Snack’, a UK based website in 2017, saw that consumers prefer breakfast cereal

as to hot breakfast which is Post’s specialty that signifies a potential huge level of

success from the acquisition. For market penetration and stability as it relates the UK

market, Post was required to come up with new options of breakfast cereal which

according to Dye (2017) led to the acquisition of Bob Evans which is a US-based

sausage making company to meet the consumers’ expectation of tastes and

preference.

4.4 TECHNOLOGICAL

The disruptive nature of technology in the modern industry is pacey. Let’s consider the

introduction of Artificial intelligence (AI) to the work environment and how the intrusive

nature is has made it be, such as target customer-based advert, relative search, voice

assistant and the rest of them as seen players and practitioners finding it hard to keep

up with the pace of innovation and evolution.

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Technology is doubt creates for everyone great opportunities not only for efficiency and

effectiveness but also for improvement and development. Weetabix drinkable cereal

referred to as Weetabix Breakfast-On-The-Go is a great product of technological

advancement and the product proved to be a huge success after it outshines the set

forecast after sales (Happen, 2018).

4.5 ENVIRONMENT

Before a company goes into a new market, it's expedient that carefully evaluates the

environmental standards that are required to function in that market. The different

market has its environmental standards or what can be referred to as norm differently

and this can impact profitability in such a market. For European countries, UK inclusive,

give healthy tax breaks for the use of renewable energy in operations. Other factors as

they involve the environment are the weather, climate change, laws regulating

environmental pollution (air and water), waste management and recycling, etc.

4.6 LEGAL

Consumer protection and e-commerce, employment law, health, and safety law, anti-

trust law in food are amongst several legal factors that Post Holdings will incorporate

and function with since Weetabix already use these laws as it relates to the UK and

Europe when it comes to consumer products. Employment law in the UK has seen tax

bill in the past years increase when drives several businesses operating in the region to

consider lesser ways of production without comprising on quality seem to be ‘donkey

through the aisle of the needle’, these are one of such regulations that Post Holdings

will have to accommodate in the acquisition of Weetabix.

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5.0 INDUSTRY ANALYSIS

Source: https://www.business-to-you.com/top-5-business-frameworks/

Porter’s framework for industry analysis broadened the supply-demand analysis of

individual markets in several aspects’ (Karagiannopoulos et al., 2005. pp.69) which

helps in the development of a company’s competitiveness strategically as to gain that

competitive edge over its competitive forces. According to Karagiannopoulos et al.

(2005), this can be achieved by non-emphasis on numbers and homogeneity, the flow

show be along the chain on suppliers, rivals, and buyers instead of just supplier and

buyers on the horizontal dimension and finally, on the vertical dimension, accounting for

potential entrants and the substitution of rivals. Porter’s Five Forces Model is the degree

of rivalry, the threat of entry, the threat of substitutes, buyer power, and supplier power

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5.1 Degree of Rivalry

the intensity of rivalry according to Karagiannopoulos et al. (2005) is the ‘most obvious’

of the five forces in an industry, it describes the extent by which value created by an

industry released through the stand-off competition. The cereal industry has seen the

continued introduction of new products to the market which sustains and most times

increase the rivalry between top players of this sector which mostly drives down cost

and reduces the general benefits of the business. Seeing the introduction of Weetabix

Breakfast-On-The-Go has seen them live to the bit of the intense rivalry (Happen, 2018)

and to be considered as one of the big players. Porter (1989,1996) insight of rivalry

sees it as one of several forces that determine industry attractiveness.

5.2 Threat of Entry

Entry barriers are a two-dimensional trait in Porter’s Five Forces, they can be used to

analyze the threat of new entrants and also applied when it's not economically feasible

for an outsider to repeat the position of the existing player. As in this case, Post

Holdings in terms of the cereal industry, it has a vast inside experience from the US

operation and market which could have been a major fall out on their part as it regards

the entry barrier into the UK market, though the rigid competition from existing

businesses may hamper new entrants from market penetration, Weetabix existence

already in the UK market as an insider is a competitive edge to Post Holdings in

acquiring Weetabix.

5.3 Threat of Substitutes

For customers to be satisfied in their basic needs, it's dependent on the certain ratio

which is relative to price-to-performance of different products that the threat of substitute

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products introduces to the industry’s profitability. Breakfast alternatives like fruits, bread

and drink like yogurts which are perceived to be more convenient and affordable and

not only be worth the threat but has also increased the competition and competitors.

Cost such as retraining, retooling and redesigning are incurred when a customer

changes to a different products type which also affects the threat of substitute.

5.4 Buyer Power

The determinant of buyer power is the size and the concentration of customers which

influences the segmentation of value creation by the industry. Buyer power in the

functionality of one of the two horizontal forces. To sustain this bid of increased value

through the force of buyer power, Drakakis (2017) mentioned how Weetabix executed a

strategy where they will work closely with wholesalers to grown sales and consequently

get bigger shelf space as a reward since supermarkets and grocery stores make up

their main buyers and definite distribution channels, and the competition in the industry

sees buyers seeking alternatives brand in the market due to profit margin and access.

Weetabix has a large customer base in the UK but the UK Essays in 2013 projected the

negative impact the acquisition of Weetabix by Post Holdings will have on its customer

base due to the fact that most customers may see the process as a loss of native

company to a foreign multinational and could further weaken the brand value.

5.5 Supplier Power

When customers are charged different prices in line with the difference in the value

created for each of those buyers, this then means that the market is a characteristic of

high supplier power and low buyer power at the same time (Porter, 1986). Supplier

power focus on size and concentration of suppliers relative to industry participants and

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also the extent of differentiation in the inputs supplied; in this case as mentioned by

Weetabix in 2017, it can control the quality of its main raw materials being used

because it has a dedicated supplier and its focus on the source of wheat from farmers

of a 50mile range from the production plant.

6.0 CONCLUSION

The acquisition of Weetabix by Post Holdings is a signal by Post Holdings to become

not just a global brand but a force in the industry. Post Holdings has a huge market in

the US and Weetabix can still boast of the same huge market share in the UK, that

simply means the coming together of both has open a big platform to seize the

competitive advantage that will enable Post Holdings venture into other markets in

Europe and the rest of the world.

Weetabix has been about innovation in the last few years now and that has created a

niche for them in the market amongst competitions and not just innovations but that

which is aligned to customers' taste and preferences as a result of detailed research

done in such aspects.

Consolidation and projection in the UK market have seen dimed so far since the

inception of the BREXIT plan from the European Union, these have placed a lot of

restrictions to business operating in the region due to the uncertainties of how policies

and regulation will pan out if the BREXIT plan pulls through or eventually fails.

Therefore, Post Holdings has to be strategic not only in operations but also in the

development of entry into a new market as the UK is concerned.

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In terms of having a dedicated supplier for its raw material is so effective in term of

quality control but the over-dependence on this supplier may affect production is

something were to happen to the farm or the supplier fails to meet up with the

scheduled supplies, so there ought to be an alternative arrangements in place for the

supply of the raw material to further increase their supply power.

Supply chain in terms of product distribution has mainly been based on wholesalers that

flow from them to supermarket and grocery stores’ shelves which is an efficient process

but this can be further simplified and make it effective through the application of

technology in its distribution process and sales points.

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