Table of Content

Introduction…………………………………………………………………………………………………………………………. 2

Strategic Position of the company………………………………………………………………………………………… 3

Industry Analysis…………………………………………………………………………………………………………………...6

Stakeholders Analysis …………………………………………………………………………………………………………… 9

Stakeholders Mapping ……………………………………………..……………………………………………………………10

External Analysis ……………………………………………………………………………………………………………………12

PEST Analysis…………………………………………………………………………………………………………………………12

Conclusion……………………………………………………………………………………………………………………………..17

References……………………………………………………………………………………………………………………………..17
Introduction
Over the years acquisitions and merger has been a means of growth for companies especially

when it comes to entrance into a new market. Globally organizations are faced with increase in

competition due to globalization, improved technologies and in other to remain relevant

strategies, research and proven exercise need to be adopted in other to achieve a successful

market share.

Post Holdings, Inc. a company specialized in consumer packaged goods decided to buy

Weetabix Limited (Weetabix) a UK based company that specializes in ready- made cereal meals

Prior to the acquisition Weetabix a United Kingdom based company which was established in

year 1932, sorted for expansion beyond UK market. The company was able to enter the Chinese

market when Bright Food Chinese Company bought about 60% stake in 2012, by the reason of

preference Bright food experienced struggle within the China market as China consumers would

rather have a breakfast of hot rice than a cold cereal. These failures lead to the Post Holdings’

acquisition.

Over the years Organizations have evolved in strategizing, putting their environment, industry,

customers, government, regulators and technology into consideration in other to create a market

niche that is unchallenging for themselves.

This paper will be using Bowman’s clock and Porters generic analysis strategies, stakeholder’s

analysis and mapping, PEST analysis and industrial analysis to critically evaluate the current

strategic change in acquisition of Weetabix by Post Holdings.

STRATEGIC POSITION OF THE COMPANY

Three things comes to mind when I think “strategy”; direction, Profit to organization,

surrounding environment and evolving environment.

The Institute for Strategy and Competitiveness of the Harvard Business School defines strategic

position as the choices organizations make towards an envisaged value and the process, at which

the value will be achieved differently from their rivals. This process is important for performance

as it takes the changing environment into consideration in other to establish the desired position in

the future with reference to their present strategic positioning which is aimed at ensuring

continuity of the organization.

According to Subroto Sengupta, 2005 , the first step to success is to position the brand in such a

way the target market’s attention is achieved and in so doing the brand is observed to be distinct

from the competitors , an influential customer service which is better than competitors, a process

called competitive advantage and strategic positioning.

Bowman’s strategic clock and Porter’s generic strategy analysis are important tools for

companies to derive a competitive advantage over their rivals, both tools help distinguish a

company and help them create a focus which is essential for companies working on long-term

goals.
The Porter’s generic strategy analysis includes; cost leadership, differentiation strategy, focus

strategy. According to Tanwar, 2013 Weetabix strategy is focused on its target market also called

“niche strategy” Based on the articles found it is obvious that the Weetabix adopted the

differentiation focus strategy, For instance in 2013, Weetabix created a new range of products,

breakfast to suit consumers that doesn’t like cereal, the introduction of breakfast on the go was

also an advent that was created to focus on consumers that prefer ready, fast meals and don’t like

cereal, these unique market strategy has put Weetabix at an advantage over her competitors in

the UK market likewise Post a bigger brand compared to Weetabix has be observed to adopt

different market strategy by producing different product to target different market niche also

acquiring smaller companies within the industry. Roger 2017 also recorded that Weetabix have

been launching Weetabix protein and protein crunch back to back for the past years in other to

dominate the cereal market and create a competitive advantage, creating these alternative
products have make it difficult for new entrant in the industry and it has make competition

between rivals high, this will be further discussed when analyzing the industry. The

businessproffessor.com 2018 also recorded that Weetabix has adopted this differentiation focus

strategy globally has it has been observed to create high value proposition for example in

Kenya, Allchin 2017 states that Weetabix adopted the use of bicycles as a means of delivery in

other to suit their consumers.

INDUSTRY ANALYSIS

Industry analysis is the tool organizations use to access market; it also helps organizations in

understanding and creating its competitive strategy so that it can be able to achieve competitive

advantage against its competitive counterparts. It is very important to understand the sources of

the competitive forces. The Porter’s Five Forces Model by Michael E. Porter of Harvard

University is an important tool and can be used to analyze the industry. These five forces : 1)

Bargaining Power of Suppliers, 2) threat of substitutes, 3) power of buyers, 4) Threat of entry,

and 5) Competitive Rivalry Porter’s Five Forces Analysis is applicable in various industry

varying from Food to airline etc, Popular companies like Virgin Atlantic have tried this Model

with limited success , using the differentiation model to improve profit. Focusing on Post

Holding and Weetabix,

Source ; LOGIQ3.com

Competitive Rivalry

The competition within the industry is high as Weetabix as to compete with the likes of Nestle,

Kellogg. The constant introduction of new products helps the company to keep their market

share within the industry, This rivalry also helps Weetabix to stay innovative for instance the

introduction of Breakfast on the go has help increase their market share and gain competitive

advantage (Happen 2018). Also price conscious consumers are able to switch from one

competitor to the other especially when the rivals are competing based on price. However

Weetabix market share within the industry is still unchallenging due to their excellent market

strategies.
Bargaining Power of Suppliers

The supplier bargaining power here is ranging from low to moderate being that the organization

has dedicated farmers which supply wheat the basic ingredient for cereal production, there is

agreement between these partners , the farmers have to always produce high quality wheat at

agreed cost (Weetabix, 2017). Weetabix production is in huge amount the suppliers tend to

focus more on Weetabix in other to meet their demands hence the supplier power is low.

Bargaining Power of Buyers

With Price conscious consumers putting pressure on the cereal products in the market which is

putting Weetabix profit at low rate over the long haul Weetabix have to build a large customer

base, despite their consciousness to buy at cheaper rate they still prefer to consume cereal of high

quality wheat form British farms, about 78% of consumers prefer to have British food in their

stores and about 86% want to buy foods that can be traced to British farms. Drakakis 2017 also

stated that Weetabix have special deals with distributors and wholesalers which helps them to

meet their target market and in turn reward for success. Hence the buyers bargaining power is

ranging from moderate to high. This acquisition could have negative impact as it could be seen

as the loss of native company to a foreign multinational and may weaken the brand value (UK

Essays, 2013).
Threats of substitutes

The entrance of a substitute product in a market, increases the probability of consumers changing

to alternatives because of price difference.

The threat of substitutes in this industry is high because of the increase of competitors in the

industry and with breakfast alternative like fruits, bread/toast and yoghurts which could be

thought to be more convenient and affordable

Threat of entry

The threat here is low, as potential new companies may encounter trouble in entering the market

as the companies may lack the appropriate experience of the market. Also the tough competition

within the industry might hinder new entrant from making wave.

STAKEHOLDERS ANALYSIS

The success of every organization projects is directly or indirectly affected by certain people,

these people are referred to as stakeholders (Walker, Bourne and Shelley 2008). These categories

of people have interest in the organization and they are in one way involved in decision making,

All stakeholders broadly fall either under external or internal. Internal stakeholders are

shareholders, workers, and investors while significant public, buyers, suppliers and government

fall under external category. Based on the current scenario, main stakeholders involved are the
shareholders of both Weetabix Company and Post Holdings. Post Holdings

Shareholders are buying Weetabix Company while Weetabix shareholders most

particularly the Chinese Bright Foods are involved in that they are selling their shares (BBC,

2017). Employees of the Weetabix Company are also involved as the management is bound

to change with the acquisition. Other stakeholders are the farmers, Consumers, Advertising

agencies, Board of Directors. This Acquisition will directly affect staffs of each company, some

staffs might lose their jobs while some might get promoted due to restructuring, some will be

relocated as this merger is interracial, The UK government is involved in that it provides

regulations to be followed and they are also probably involved in price regulation.

Investors of both Companies are involved as their returns will be affected by this deal.

Stakeholders Mapping

Bourne and Shelley (2008) stated that there are different levels of power to each

stakeholder. The analysis of all these stakeholders are important as it helps to identify the values

of each stakeholder, to achieve early alignment of all the stakeholders on all organizations goals

and plans and to get prompt ideas and conclusions on issues to be resolved.
 Stakeholders Map

High People that need to be satisfied

(High Influence, Low Interest) Manage (High Influence, High
 Regulators Interest
 Consumers  Share holders
 Breakfast cereal  Investors
Industry  Board of Directors
 Government

Power
Monitor (Low Influence, Low
Inform (Low Influence, High
Interest) Interest)
Media
 Community/Public
 Farmers/ Suppliers
 Employees
Low

Interest

This Map, analyze the strength power, influence and Interest of each stake holder, the

government of each parties of the acquisition, Board of directors, shareholders, investors are all

categorized has strong influence and strong interest, These set of people need to be well

managed, their support is much required, they will be well engaged and they involved in decision

making, The employees, community, farmers, all belong to the category of low influence and

high interest, these category of people need to be well informed so as to ensure their continued

support, their expertise is much required for the success of the organization. Regulators and
consumers have strong influence but low interest, they are not actively involved in projects, their

opinions are considered, and they will be kept satisfied in other to always get their support.

EXTERNAL ANALYSIS

PEST Analysis

The External Factors driving the strategic move of Weetabix acquisition to buy Post Holdings are

obvious and they can be analyzed using PEST Analysis. PEST Analysis will carefully identify the

Political factors, Economic factors, social factors, and the significant effect of Technology.

Political

The UK labor law will become a major influence on Post Holdings as that is where

Weetabix is located. The employment law in UK stipulates that employees from

25 years get paid a minimum wage of £7.5 which is a raise from the previous £7.2

(Minimum Wage UK, 2017).Different age groups are paid different minimum wages and

this has been changing annually. This gradual increase in minimum wage is must for Post

Holdings as they now operate in the UK, they have to create a strategic plan that will

accommodate this increase in salary expense by increasing revenue, this law as to be

followed in other to avoid legal battles with labor union.

The uncertainties with Brexit is another political factor that might either affect negatively

or positively, therefore Post Holdings will have to make plans to accommodate whatever

changes emanate from these negotiations and conclusions, neither Weetabix nor Post

Holdings can control this planned exit but the situation has an effect on the both organizations

hence it is an external political factor.

The chief executive of Weetabix, Turrell indicated that the company was taking in the higher

cost of dollar denominated wheat as such the Weetabix prices might go this, also Daneshkhu,

2017 stated that the price of Weetabix breakfast cereal is increasing due to weakness of pound

sterling, The fate of USA’s politics is not clear since the country voted in support of Brexit in

2016, this is the situation as the United Kingdom is yet to finalize their exit from the European

Union.

Source: Minimum Wage, 2018

The gradual yearly increase in wages of UK citizen by the government since year 2010 is

displayed in the above chart representing the employment law.

This table clearly shows that the gradual increase of employees wage will bring Weetabix to risk

of facing wage bills, these gradual changes will make the organization to re-strategize on how to

cut cost, various ways of reducing cost include using cheaper raw materials which will bring the

organization to reputational risk

Lastly, because Weetabix will be operating different countries respect the standards and controls

set by the governments as they are distinctive in various regions .Weetabix will have to consider

political elements like tax assessment, import export regulations.

Economic

Post Holdings –Weetabix will now be influenced by economies of both USA and the

United Kingdom. The growth rates of these two economies are different and the company

needs a strategic plan to handle the difference. Chu, (2017) show that in September, the UK

economy experienced an increase in inflation rate by 3%, and only witnessed a 0.4%

growth in third quarter while that of the US witnessed a growth rate of 2.7%.

The acquisition of Weetabix by Post Holdings means that it will be affected by The economy of

both countries, United Kingdom and USA and China. Economy of nations varies all over the

world and countries have different level of development. Weetabix will need to set specific

economic approaches for each country. It is critical to put cost of the product, inflation rate and
purchasing power into consideration when trying to strategize the economy. Each countries

economic growth rate is different therefore the organization will have to deal with various

challenges in both countries. The global economic recession is the main external economic factor

that can Influence consumers to shift to less expensive options from Weetabix to their

competitors. According to Chance, 2017 economic growth in Britain for 2017 had already been

abruptly adjusted to 1.7% in the wake of the nation's vote to leave the European Union, United

States was unaffected at 2.2% for 2017 and 2.3% in 2018 due to tax break under President

Trump's tenure, and lastly China forecast is 6.8% growth for 2018. This means the organization

will have to implement new arrangement on how to deal with the different economies for

example when one of the economies sales or growth decline they will have to come up with new

product to boost sales across the world.

Social

One of the main reasons Weetabix failed in China market was because of their preference,

despite the fact that Weetabix was bought by Bright food, the largest Chinese firm at the time,

the Chinese consumers would rather have a plate of hot-rice for breakfast to cold cereal,

Weetabix has to put social perspective into consideration, as a company they have to understand

the evolving market which could be influence by consumers life style for example people are

now inclined to the healthy life style so customers now prefer healthier products which have low

cholesterol and sugar in their diet. According to Bakeryandsnacks.com, 2017 UK leads breakfast

cereal consumption, also Dye, 2017stated that Post holding acquired Bob Evans after Weetabix,
Bob Evans is a US based maker of sausages to add another breakfast alternative to meet different

consumer tastes and preferences.

Technological

Opportunities created by technology are enormous, opportunities for research and development

of new products, improvement on existing ones. E-commerce as a platform is used for supply

also the advance of media has enabled this organization to increase their customer reach through

advert.

Environmental:

Post announced that due to global warming and climate change, the organization will focus more

on environmental laws, the management concluded that will introduce degradable materials to

their packaging and avoid / minimize the use of hazardous materials like plastic in their package

(Postholdings.com/new 2017)

Legal : The Red Tractor assured food standards in England and Wales has helped the farmers to

adhere to producing high-quality product with this Weetabix will definitely continue to produce

products of high standards.

Conclusion

Post Holdings and Weetabix are both big brand in their own rights, The Acquisition is a means

of expansion for both organizations, The Innovation of Breakfast On The Go would be a great

means of profit gain to Post Holdings in America market, for both Post and Weetabix this

acquisition is a great deal as Post will be able to leverage on Weetabix’s global recognition,

Weetabix suppliers and distributors for their various products. Since Weetabix is a house hold

name in many counties, also Post Holdings Management will have to make plans and strategize

on how to accommodate the gradual increase in employment wages in UK so as not run on loss.

The entrance of Weetabix into USA market will be much easier than expected as Post has the

biggest share in the acquisition. Weetabix has been known for their excellent market strategies,

in conjunction with Post, they can produce a great surge of sale in US market, also the two

partners will have to continue work together in other to create innovative products that match

consumers life style, taste, culture, health and other social lifestyle using the means of

technology for research and invest more in advertisement as Weetabix is already known for

Another challenge that these two organizations have to watch out for is Brexit, has both

companies have no control over, also the future of both countries political security is still in

obscurity in view of Brexit. Post should also invest more in suppliers and its employees to

encourage international growth and apply better internal correspondence mechanism to improve

strategy implementation this will permit smooth transition.

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