Strategic Analysis: Tools ; Techniques – Coursework 1

Strategic Analysis: Tools & Techniques – Coursework 1

Present a critical strategic analysis of the current Strategic Change within the following case:
Post Holdings buying Weetabix

You are required to cover the following topics covered in the module:

Strategic Position of the company
• Stakeholder Analysis
• External Analysis
• Industry Analysis

News & Web Links
The links below provide some starting points but students MUST add their own detailed research to develop the analysis:

https://www.essaybishop.com/write-my-essay/bbc.co.uk/news/business-39625715
https://www.weetabixfoodcompany.co.uk/press/news-archive/post-holdings-completes-acquisition-of-weetabix

About Post Holdings


https://www.ft.com/content/1c98e144-23aa-11e7-8691-d5f7e0cd0a16
The following structure is required for the submitted report:

Introduction to the report
• An evaluation of the relevant levels of strategy
• A critical evaluation of the key stakeholders
• External Analysis – using PESTEL to identify and explore key trends
• Industry Analysis – using 5 Forces to critically analyse the relevant industry factors
• Conclusion

Please note that text in diagrams or tables will count towards the word

It is important that attention be focused on a strategic appraisal of the company as opposed to providing lots of interesting facts over what interests you or what you find on the internet. Assessment will focus on students’ abilities in applying strategic models and frameworks in a coherent manner that enables them to develop a clear strategic view of the strategic position being studied. You do not need to reference many academic sources in this element of the assessment, but you must reference sources of company or market information. Furthermore, you must reference sources for any theoretical background that you decide to include.

An evaluation of the levels of strategy relevant to this case i.e. Corporate, SBU
a. Students should identify the generic position that guides the company activity
b. Use Bowman’s clock (using products/services to illustrate the way the strategy is being met) to structure the analysis of strategic position
c. Come to a clear understanding of the company’s position. They need to clearly determine how and why a differentiation strategy has been developed
d. Use rivals sparingly to clarify the strategic intent of the company. Should avoid overcomplicating models
e. Link to the Industry analysis that is to follow

• An evaluation of the key stakeholders
a. Identify and consider the relevance of a range of stakeholders that are impacted by the case study
b. Map the positions of main stakeholders and analyse the impact on the company

• A critical analysis of the main external factors driving the strategy/ ies being explored
a. Need to do a PEST or variation first then 5 Forces
b. Analysis should focus on the KEY drivers of change rather than cover every issue found
c. The PEST must not focus on what the company is doing but identify trends in the environment
d. Models will probably contain more examples than the analysis explores. This is fine as long as the analysis has picked on the main themes

• A critical analysis of the industry factors impacting on the competitive position of the company
a. There should be an awareness of how the PEST and 5 Forces are linked
b. Draw out and analyse the key themes that are impacting on the varied forces
c. Avoid just listing a series of bullet points that offer no discussion of impact
d. Develop the competitive advantage analysis with an understanding of group mapping
e. Provide examples of competitive characteristics that illustrate the nature of the competitive position

• Conclusions & Recommendations
a. Draw the main aspects of the analysis together
b. Set out key points considered for strategic development

Strategic Analysis of Weetabix Acquisition by Post Holdings
Name
Institution affiliation

Introduction
Globalization in the current economic world has put massive competitive pressure on many organizations globally. This pressure has forced many organizations to review, revise, re-evaluate and finally develop dynamic strategic plans and methods or approaches which aims at gaining a competitive advantage and also increasing their market share at the long run. Acquisition or buying it is one of these strategies (Yücel, & Görener, 2016). This method also regarded as entry method has been in use in the 21st century. Post Holdings Inc., US based company headquartered in St. Louis, Missouri, recently entered the United Kingdom (UK) market through the acquisition of Weetabix, a drinks and breakfast cereals company which was owned by Bright Foods, a Chinese firm. The acquisition of the firms means a change or alteration of the firm management and also the development of new marketing techniques which will boost their competitive advantage on the new market ventures (Yücel, & Görener, 2016). This paper will critically analyze the changes emanating from the acquisition of Weetabix by the Post Holdings Company.
Strategic Position of the Firm
As affirmed by Shakhshir (2014), the strategic position of a company entails the process in which an organization defines and maintains a distinctive place and position in the share of the market for its products with the view of devising the target population or market appreciate or understand the standpoint of the firm with respect to its opponents. This process comprises the firm trying to form or establish their imminent goals, positions centered on the foreseeable and present developments in the firm and also making plans on how to attain these goals and position (Galal, 2013). Being the leader in an industry or market is the ultimate aim of every company. Since positions help a firm reflect its value choices, both the market segmentation and positioning helps an organization define their particular niche within their domain of influence from its competitors. This has helped many firms shape their market strategies.
According to Porter’s model, there are various genetic competitive strategies which can be adopted by a firm to ensure their success while gaining a competitive lead over its opponents (Dobbs, 2014). These strategies include product or strategy differentiation, cost leadership, and also the focus strategy. The focus approach is broken further into leadership or product differentiation depending on the target market. A firm which uses the distinction focus approach concentrates massively on a specific niche, vividly understands the consumers’ needs and also understands the market dynamics (Dobbs, 2014). They then use this to differentiate itself by marketing its product depending on the niche. Over the recent years, this strategy has been used by Weetabix to emphasis on the appropriate or right products for the appropriate market.
The model of Bowman’s Strategy Clock has been used in analyzing how firm products can be positioned in the market to gain or obtain competitive positions. This is obtained through the establishment of the customer value map. The consumer value map establishes the correlation between the value or price a buyer is ready to offer and the apparent customer’s value or utility drawn from the product. With this strategy, Weetabix is under the distinction or differentiation strategy since it actively engages in developing unique values for its customer. Since the Bowman’s model offers strategic options to the organization, it is an extension of Porter’s generic forces. In a competitive market, a firm ought to develop and implement strategies which ensures that they outdo their competitors in the long run despite having similar products or offering similar services. The top Weetabix competitors are the Kellogg Company, Nestle, and the General Mills, Inc. Despite the stiff competition, Weetabix has successfully gained a high competitive advantage through the creation of unique value for the diverse market segments.

Shakhshir, (2014)
Using the innovation approach, Weetabix has successfully differentiated itself from its opponents. The firm has established a robust RandD team which usually helps in the market investigation and also offers some useful comprehensions for their advertising campaigns. For instance, the introduction of Breakfast in the Go beverages in 2014 was a brilliant idea which emanated from an inventive process which entailed building on study from their main rival Nestle. From, the research it was found that people take or eat something “to go” and nearly 70% of these people use less than fifteen minutes taking breakfast (BBC, 2017). Basing on this study, Weetabix was able to attract or capture their market niche through the combination of healthy protein source and convenience for breakfast.
In international markets, Weetabix has successfully obtained high market share due to its differentiation focus strategy. For instance, in Kenya, the company has obtained approximately 71% of the cereals sold in the republic. The firm realized that the Kenyan market is made up of individuals who prefer small transaction. They capitalized on this unique feature by establishing small distribution nationwide. In the UK, the company uses emotional position to differentiate itself from its competitors. This is attained through the emphasis on how the product will help the people during a busy or tough day or even help curb the health complications such as obesity and diabetes. For instance, the Weetabuddies market campaign aimed at inspiring kids to eat fruits alongside their breakfast (Weetabix, 2018). Through this marketing strategy, Weetabix captured the attention of the health-driven parents who constantly believed in healthy breakfast. This strategy saw the company sales rise by 14% in 2015 (Harper, 2018).
Stakeholders
Stakeholders are the persons or groups who have interest in an organization and maybe owning some shares in the firm. These individuals and groups are majorly involved in organizational decision making, and those persons who fail to participate aggressively in the policymaking process are negatively impacted by the results of the firm resolutions. The firm stakeholders are broadly categorized into two primary groups; that is the external and the internal stakeholders. The firm internal shareholders are primarily involved in the inside activities of the firms, and they comprise of the investors, shareholders, and the employees. External stakeholders on the other hand, are those have interest in the organization but do not participate in firm’s internal actions. They include the suppliers, public, and the customers.

Stakeholders Involved
In the acquirement of Weetabix Inc. by Post Holdings Company, many stakeholders are involved in the process (BBC, 2017). The Post Holdings stakeholders are obtaining Weetabix while the stakeholders of Bright Food, Chinese firm, who were highest shareholders are vending their stake or shares. The other primary stakeholders involved are the Weetabix employees, UK government, and the investors. The government is usually involved in the acquisition process so as to ensure that it is legally and lawfully completed (Harper, 2018). The returns for the investor will be impacted by the deal while the employees will be impacted by the decisions. Some employees may lose their jobs while other may change their positions and also their earnings will also be altered. Other firm stakeholders are the suppliers, the general public, customers and the agencies which deals with the firm indirectly such as the insurance agencies.
External Factors Driving the Strategy
Pest Analysis
Political
Due to the change in the region of operation, the organization ought to put up with the new employment regulations in the UK where the Weetabix firm is situated. Every year the government changes the minimum pay with the view of improving the employees’ welfare. The table beneath indicates the minimum earnings for numerous ages in the UK for the last three years.
Year Apprentice Under 18 18-20 21-24 Above 25
2015 $3.3 &3.87 $5.3 $6.7 $6.7
2016 $3.4 $4.0 $5.55 $6.95 $7.2
2017 $3.5 $4.05 $5.6 $7.05 $7.5
National Minimum Wage (2018)
The table shows the minimum wages for specific ages the UK. The wages are increasing on an annual basis thus Weetabix will face increasing wage bill as a result of the changing occupation laws in the nation. Since the firm has to put up with the different laws, they ought to look for other means of reducing the cost of production maybe through the sourcing of cheaper raw materials.
In the US, the firm will enjoy political stability. In June 2016, UK voted for Brexit. The political future of the nation is unclear. The exit of UK from the European Union (EU) is not yet over. The nation is still in talks and the exit will not be that simple and may have negative impacts on the economy of the country which will, in turn, affect the firm’s operations. Since the exit is not a factor which can be influenced by both the Post Holding and the Weetabix, the firms have just to wait and deal with the exit outcomes.
Economic
The acquisition deal between the Post Holdings and Weetabix will be affected by the economies of the UK and US. Since these economies are faced with varying inflation rates and different economic growth rates, the firm needs to implement ways of managing it. For instance, in the third quarter of 2017, the UK economy expanded by 0.4% while the US economy expanded by 2.7% in the second quarter. Also, the inflation in the UK rose to 3% in September 2017 (Weetabix, 2018). These show that the deal has to develop a mechanism for dealing with various commercial trends. For instance, the firm may generate new goods and also venture into new markets across the globe. This will help in spreading the threat of slow growth incomes which may be triggered when one of the markets slows down.
Social
Some of the social factors which may affect the operations of the firm are the taste and preferences of the customers. This affects the products being offered by the organization. Currently, the UK and US have a upper taste for taking cereals as breakfast as compared with customers in China and the Asian nations, the Chinese fancy hot breakfast therefore consuming rice in the morning. In the west, consumers prefer cereals in the morning hence having a high chance of buying the Weetabix. This shows a high probability of success for the acquisition. Since the Post Holdings Inc. is situated in the US or west with high consumption of breakfast cereals, it poses a high market opportunity for the firm. However, the success may not be direct since there is declining market for breakfast cereals in the UK where the Post Holdings hopes to thrive in. For example, in 2014, the turnover for Weetabix declined by 4% whiles the pre-tax profits decline by 7% in the same year. The decline was due to the decreasing consumption of ready-made cereals for breakfast. Thus, for the firm to be successful, they ought to introduce or develop new breakfast selections which will be in track with the preferences and tastes of the customers. For instance, the firm may open restaurant which offers cereals as a breakfast meal.
Technology
With the rising technological innovations which produce snacks of various shapes, the firm faces stiff competition. There are technologies which produce snacks in shapes of rings, hats, sticks, tubes, bars, and curls. These varied shaped snacks have turned to be favorite for most consumers since they can be eaten at a go. With this, Post Holdings have to keep up with the new technologies which will produce breakfast cereals meeting the tastes and preferences of the consumers.
Industry Analysis
The industry analysis aids in understanding the competitive forces which exist in the environment of operation which affects its profitability. Understanding the industry analysis will help in providing the firm with a platform to influence and anticipate the competition by altering the firm’s strategies. Drawing from Porter’s model, there are five forces which affect the competition intensity in the market. They are the competitive rivalry, the bargaining powers of buyers, and bargaining powers of the supplier, the threat of new entrants and lastly the threat of substitutes (Dobbs, 2014).
Competitive Rivalry
This examines the strength and the number of competitors in the market (Dobbs, 2014). The existence of a great number of opponents offering similar products with much exit barriers is unattractive to invest in. There is stiff competition in the cereals market share. The main competitor in the cereals market is the Kellogg, General Mills, Nestle, and the Quaker. The intense competition necessitates the creation of new brands to capture the target market and to invest highly in marketing campaigns.
Bargaining Powers of Suppliers
This examines the supplier’s ability to raise the price and affect the buyer’s profitability (Dobbs, 2014). This is influenced by some suppliers, the product uniqueness, and the costs of switching between suppliers. Since the main raw materials are wheat and grains, the suppliers have relatively low power.
Bargaining Influence of Buyers
This studies the ability of the buyers to drive the prices down. The main buyers and distribution channels of breakfast cereals in the nation ate the grocery and the supermarkets (Dobbs, 2014). With a high number of suppliers, the power of the buyer is quite high. It is easy and quick for the buyer to switch brands if they sense the quality is poor or the price is too high.
Threat of New Entrants
This examines the number of barriers or difficulties for a fresh or new competitor eyeing to enter the market (Dobbs, 2014). The risk is affected by economies of scale of the present competitors, accessibility to raw materials, price advantages, intellectual properties and the government policies. Since the existing competitors hold huge market share, there is the low threat of new entrants. They also hold added the advantage of understanding the customer’s needs in advance which makes them enjoy the customer loyalty.

Threat of Substitutes
This examines the chance of consumers finding alternative ways of satisfying their needs without the consumption of the firm’s products (Dobbs, 2014). There is a high threat of substitutes since breakfast cereals can be subsisted by fruits, yogurts, bread and other fats foods.
Conclusion and Recommendation
Post Holdings acquired Weetabix in 2017. The firm specializes in the production of breakfast cereals and drinks using the differentiation strategy. Utilizing this strategy, the firm produces various products for specific market niches, for instance, weetabuddies for kids. The firm is faced with some challenges such as the unclear political stability in the UK, new entrants, and threat of substitutes and technological innovations which renders their technologies obsolete. They are also faced with changing consumer taste and preference. Since the firm cannot change the preference and taste of the customer, they ought to develop products which satisfy the customers’ needs. Since the suppliers have low power, the firm ought to negotiate for high-quality inputs at a low price. This will counter the established high wage bill in the UK. The company should also keep up to date technologies. They should incorporate new technologies in their production line and also develop new marketing strategies and campaigns. With the implementation of the aforementioned recommendations, the acquisition will be successful and the company will thrive in the new ventures.

References
BBC (2017). Weetabix to be sold to US company Post Holdings. BBC News . [Online].Available at: https://www.essaybishop.com/write-my-essay/bbc.com/news/business-39625715 (Accessed: 1 January 2018).
E. Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Galal, K. (2013). Strategic positioning in the consulting industry: An empirical analysis of strategic groups and performance . Köln: Eul
Harper, B. (2018). Weetabix Corporate | Post Holdings Completes Acquisition of Weetabix. Weetabix Corporate. Retrieved 1 January 2018, from https://www.weetabixfoodcompany.co.uk/press/news-archive/post-holdings-completes-acquisition-of-weetabix
National Minimum Wage and National Living Wage rates – GOV.UK. (2018). Gov.uk. Retrieved 1 January 2018, from https://www.gov.uk/national-minimum-wage-rates
Shakhshir, G. (2014). Positioning strategies development. The Annals Of The University Of Oradea, 977, 416-437.
Weetabix to be sold to US company. (2018). BBC News. Retrieved 1 January 2018, from https://www.essaybishop.com/write-my-essay/bbc.co.uk/news/business-39625715
Yücel, M. G., & Görener, A. (2016). Decision Making for Company Acquisition by ELECTRE Method. International Journal of Supply Chain Management, 5(1), 75-83.