1University of South Wales Business School Strategic Analysis, Tools and Techniques (ST4S38-V1) MBA Lecturer: Rajeev Bali Topic: Critical Strategic Analysis of Weetabix Acquisition by Post Holdings Student No. Name Enrolment R1701D2182513 Naledi Katlego Melamu ST4S38-V1 R1701D2182513 ............................... 12 Conclusion ......................... 14 References ............................................................................................................................................................................................................................. 15 R1701D2182513 ......................................................................................................................... 9 Industry Analysis ............ 6 Stakeholders Analysis and Mapping ................................................................................................................................. 2 Table of Contents Introduction................................................................................................................................................................................................................................................................................................................................... 4 Porter Generic Strategy Grid ................ 7 PEST Analysis ....................................................... 3 Strategic Position of the Company ..................................................................................................................................................... 11 Porter’s Five Forces Analysis ........................ 5 Bowman’s Strategy Clock ....................................................................................................... competitive advantages. Nestle. It will cover the analysis strategic Position of Weetabix in cereal industry and including stakeholder. The amount of competitive pressure facing organisations around the world is a result of globalisation. Weetabix and Quaker. The cereal industry is exceedingly competitive with various organizations competing to dominate the market. Strategy has evolved throughout the years and organisations can analyse their environment. position and to withstand advantage in the face of challenging competitive threats. Post Holdings as of late entered the UK market by obtaining Weetabix.. The key players in the cereal industry are Kellogg’s. increase market shares and most importantly to gain competitive advantage. 3 Introduction This paper is to do a critical strategic analysis of the acquisition of Weetabix by Post Holdings. Post holdings wanted to expand to other markets and this was an opportunity for them as Weetabix already has an international foot print that Post holdings can leverage on. 2014 acquisitions are a global business strategy that enables firms to enter into new potential markets or to a new business area. R1701D2182513 . According to Malik et al. competitive advantage and long haul survival and most importantly maximization of shareholder value. Cheerios. Malt-O-Meal and Cinnamon toast crunch and this makes the industry to be highly competitive with numerous businesses competing for an increased market share. It has influenced businesses to come up with strategic approaches to survive. Post Holding has guaranteed to expand the Weetabix business by entering the growing breakfast cereal market globally. Acquisitions are progressively turning into a vital strategic choice for organizational growth and accomplishment of business objectives including revenue. Acquisition is one of the strategic approaches. a breakfast cereal company that was beforehand owned by a Chinese corporation called Bright Foods. external and industry Analysis. ability while providing a framework for anticipating and influencing competition (and profitability) over time.lying causes. reveals the roots of an industry’s current profit. Weetabix have a considerable market share and continue to be competitive within the industry. social or demographic. Porter 2012 discusses that strategy defines the company’s distinctive approach to competing and the competitive advantages on which it will be based. 4 Strategic Position of the Company Strategic Position of the Company concentrate on understanding the way an industry is organized. regardless of whether they are geographic. economic. 2008. According to Porter. understanding the competitive forces. in principle there are a few strategies that can be embraced in the positioning approach of the brand and they should hold competitive advantage so that they can withstand the market R1701D2182513 . and their under. It involves an organisation attempting to set up desirable future position in view of the present and foreseeable improvement and subsequently making arrangements on the best way to achieve that position. For Weetabix to succeed an ideal positioning on various markets. 5 Porter Generic Strategy Grid Source: Mindtools. differentiation strategy. and focus strategy Porter’s generic competitive strategy for Weetabix is Differentiation focus. 2013 in this strategy the firm focuses on a chosen few target markets. Differentiation focus strategy in regards to Weetabix means that organisations can be able to be innovative for new markets after the acquisition to attract specific customers. R1701D2182513 . For example in 2013 Weetabix introduced a range of breakfast biscuits this was to cater for customers that do not like the cereal breakfast. According to Tanwar. 2018 Porter’s generic competitive strategies include cost leadership.com. Bowman’s Strategy Clock model is considered to be an addition of Porter’s generic strategies. it is likewise called a niche strategy. Bowman's Clock has been developed as part of breaking down how an organisation’s product can be positioned to bargain the most competitive position in the market. 2017 Weetabix for the past years has launched Weetabix protein and protein crunch to dominate the cereal category. which was an innovative procedure involving research and development.com. 6 Bowman’s Strategy Clock Source: Marketingteacher. The product tested positively and initial sales results are above expectations. a sector which includes competitors like Kellogg’s.com. 2018 Expanding Porter’s generic strategies was Cliff Bowman were Porters strategic positions were expanded to eight identifiable positions which were mainly focusing on the value proposition to customers (Thebusinessprofessor. this R1701D2182513 . Weetabix partake in diversification it develops products that stand out from the rest of its competitors for example. In relation to Weetabix it falls under differentiation strategy because it actively conduct research and development in relation to their customers and market so it engages in creating unique value for their customers. In 2014 Weetabix introduced Breakfast on The Go drinks. according to Rogers. 2018). 7 was because there was an increase in numbers of consumers who were looking for healthy sources of protein so they wanted to cater for that certain niche market. 2012).com. Primary Social Stakeholders: Customers Investors/ Shareholders Employees of Weetabix suppliers and partners Public/community 2. 2018). and Shelley (2008) stakeholders are groups and persons who have interest in a business. Secondary Non Social Stakeholders: Regulator R1701D2182513 . The acquisition of Weetabix by Post Holdings involved different stakeholders in with the key stakeholders being the shareholders/investors of Weetabix and Post Holdings. According to Walker. Stakeholders Analysis and Mapping Stakeholders have different levels of power and interest. Secondary Social Stakeholders: UK Government and society Competitors Media 3. In Kenya Weetabix has found a distribution strategy that suits the mode of consumption by the use of bicycles to deliver their product (Allchin. Weetabix also used the differentiation focus strategy in global markets because it has to adapt to the unique attributes of that particular market these attribute create a higher value proposition (Thebusinessprofessor. Bourne. Primary Non Social Stakeholders: Breakfast cereal Industry 4. The stake holders relevant to the acquisition of Weetabix by Post Holdings are: 1. Other stakeholders are customers. R1701D2182513 . the public and agencies. suppliers and partners. 8 Stakeholder Map high UK Government and society Customers Shareholders Competitors Power low Weetabix employees Agencies that deal with the Breakfast cereal organization indirectly Industry low high Interest In analysing the government is a major stakeholder because it oversees and watches the acquisition procedure to assure that it is done legitimately. Investors of Weetabix are impacted by the acquisition because their returns will be affected while employees are affected some may lose their jobs because of the new deal. Turrell. Lastly. since the UK voted in support of Brexit in 2016 June. 2017 the price of Weetabix breakfast cereal is going up as the UK was hit by the weak pound. This is the situation essentially in light of the fact that the UK has not yet finalized the move to exit the European Union therefore Weetabix and Post Holdings have to wait and manage the result of the exit. because Weetabix will be operating different countries R1701D2182513 . 2018 The government of the UK continues to increase every year since 2010 it has gradually been rising as seen in the above employment law. According to Daneshkhu. the political fate of the nation is obscure. The table shows that wage rates are accumulative and Weetabix will face larger wage bills because of the change of the employment law with that the company will have to discover ways to reduce costs like cutting down on costs by using cheaper raw materials which also be reputational risk. mentioned that the company was absorbing the higher cost of dollar denominated wheat but that Weetabix prices were likely to go. 9 PEST Analysis Political The acquisition of Weetbix means that the organisation will have to deal with the US politics and not the UK only. Source: Minimum Wage. chief executive of Weetabix. Weetabix will have to consider political elements like tax assessment. This means 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. import export regulations. according to Dye.2% for 2017 and 2. UK and that of China. 10 respect the standards and controls set by the governments as they are distinctive in various regions . However to be competitive it needs to introduce new breakfast options. 2017 UK leads breakfast cereal consumption and the Chinese prefer hot breakfast however consumers the US prefer breakfast cereal therefore there is a high chance of success from the acquisition. These economies’s growth rate is different therefore they will have to ways to deal with various challenges. 2017 economic growth in Britain for 2017 had already been revised sharply lower to 1. For example.7% in the wake of the nation's vote to leave the European Union.3% in 2018 because tax breaks under President Trump's organization have not yet appeared and lastly China forecast is 6. Economic The acquisition of Weetabix by Post Holdings means that it will be affected by different economies being the US. The global economic recession is the prime external economic factor which can persuade customers to move to less expensive options from Weetabix competitors. Economy of nations varies all over the world and countries have diverse level of development.8% growth for 2018.com. United States was unaffected at 2. According to Chance. The cost of the product is a critical decision to take while strategizing the economic approaches according to the different inflation rate and the purchasing power of a country. Social Weetabix has considered the social perspective because they have to understand the company has consumers changing attitude for example people are now inclined to the healthy life style so customers now prefer healthier products which have low sugar. 2017 Post holding acquired Bob Evans after R1701D2182513 . Weetabix will need to set distinctive economic approaches for various countries. According to Bakeryandsnacks. 2018 this Weetabix On the Go tested positively in concept research and initial sales results comes about are above expectations. and 5) Competitive Rivalry Porter’s Five Forces Analysis R1701D2182513 . 2) threat of substitutes. Technological Technology gives many opportunities for research and development of new products or improvement of existing ones. The most important thing is to understand the sources of the competitive forces. For example in past Weetabix introduced Drinkable Cereal called Weetabix on the go. Bob Evans is a US based maker of sausages to add another breakfast alternative to meet different consumer tastes and preferences. E-commerce as a platform is used for supply and people use to understand nature of product through the Weetabix website Industry Analysis Industry analysis helps organisations in understanding and developing its competitive strategy so that it can be able to gain competitive advantage against its competitive forces. 3) power of buyers. 4) Threat of entry. Porter’s Five Forces Model can be used to analyse the industry based on these five forces: 1) Bargaining Power of Suppliers. 11 Weetabix. According to Happen. The intense competition in this industry enables Weetabix to be more innovative for example it developed Breakfast On the Go this was to increase its market share and gain competitive advantage over its competitors (Happen. Almost every one of the organizations in the industry purchases their raw material from various R1701D2182513 . 2013) Competitive Rivalry In the event that the competition among the current players in an industry is exceptional then it will drive down costs and reduction the general benefit of the business. exclusivity of product /service. Bargaining Power of Suppliers This force looks at bargaining power of supplier’s which is driven by the: number of suppliers. 12 Porter’s Five Forces Analysis Source: (CGMA. The continuous introduction of new products helps to ensure that rivalry between all the companies remains high. There is high competition within the cereal industry with organizations like Kellogg’s and Nestle fighting to dominate the market. cost of substituting of suppliers so a strong bargaining power permits suppliers to raise prices to their buyers. 2018). For example in China the sale of Weetabix demonstrates that the brand has failed to get a substantial market share because Chinese prefer hot meals like rice. Threats of substitutes When substitute products exist in a market.Buyers are demanding. In relation with Weetabix. porridge for breakfast (Businesswire. 2017). Bargaining Power of Buyers Supermarkets and grocery stores are the main buyers and distribution channels and with a high number of competitors it will be easy for buyers to switch to other alternative brand in the market. 2017). 13 suppliers.com. bread/toast and yoghurts which could be thought to be more convenient and affordable. in this case The Weetabix brand has successfully reflected a positive brand image with the British markets. 2013). 2017). When substitute products exist in a market. it has control of the quality of raw materials as it has a dedicated supplier. It decided on to source wheat from farmers of a 50 mile range from the production plant (Weetabix. On the other hand. The bargaining power of suppliers is low because grain and wheat are the main raw materials being used. This will cut the bargaining power of the buyers. The threat of substitutes in this industry is high because of the increase of competitors in the industry and with breakfast alternative like fruits. they need to purchase the best offerings accessible by paying the minimum price and this put weight on Weetabix profitability over the long haul so Weetabix have to build a large customer base. As a result Weetabix implemented a wholesale strategy by working closely with wholesalers to grow sales and consequently get bigger shelf spaces as a reward (Drakakis. it surges the probability of consumers changing to alternatives because of price increases. it surges the probability of consumers changing to alternatives because of price increases. the recent 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. R1701D2182513 . 14 Threat of entry The barrier to entry for breakfast cereal industry is high as potential new companies may encounter trouble in entering the market as the companies may lack the appropriate experience of the market. The organisations will have to be innovative and come up with marketing strategies that can maintain and surge sales. It will allow the organisation to remain competitive in the market. In spite of the fact that this can be seen as a positive pledge to the community. Another challenge that the organisation does not have control over is Brexit. it might adversely have an effect on production when the weather changes. Recommendation is that the organisation should invest more in suppliers and its employees to encourage international growth during the acquisition and apply better R1701D2182513 . For example innovation of the Breakfast on the Go which caters for consumers that do not have time for breakfast cereal. it affects the organisations production which is based in the UK a nation whose future political security is vague in view of Brexit. The organisation is getting raw materials from farmers of a 50 mile radius of their production plant in the UK. the invention was successful and the organisation was able to survive in the market. Entry to the US market will be significantly at ease because the majority shareholding of the Weetabix brand is by the US firm Post Holding. Conclusion Weetabix is one of the most recognised brands and the Acquisition of Weetabix by Post Holding means that there is an opportunity for growth of the brand and they will gain a larger market share worldwide as it opened up new markets. The bargaining power of suppliers is low therefore they are able to negotiate prices. Also the tough competition from the existing organisations may hinder the new entrants from making progress inside the market. One of the advantages of the acquisition is that Weetabix will be promoted in collaboration with products that Post Holding offer within the US and the global market. Consumer taste and preferences are constantly changing therefore the organisation will have to research and develop products that consumers prefer. 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