UNIVERSITY OF SOUTH WALES

Assessment 1

Strategic Analysis; Tools and Techniques

Module Code:

ST4S38-V1-12713

Module Lecturer:

Christodoulos Kakouris

Date of Submission: 13/10/2019

Student Number: 74108567

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Contents
Introduction ................................................................................................................................................... 2
Strategy Exploration ..................................................................................................................................... 3
Generic position ........................................................................................................................................ 3
Differentiation Strategy......................................................................................................................... 3
Cost Strategy ......................................................................................................................................... 3
Focus Strategy ....................................................................................................................................... 4
Bowman’s Strategy Clock ........................................................................................................................ 4
Stakeholders Analysis ................................................................................................................................... 5
External factors driving the strategy ............................................................................................................. 6
Political factors ......................................................................................................................................... 6
Economic factors ...................................................................................................................................... 7
Sociocultural forces .................................................................................................................................. 7
Technological factors ................................................................................................................................ 8
Environmental forces ................................................................................................................................ 8
Legal and regulatory factors ..................................................................................................................... 8
Internal factors driving the strategy .............................................................................................................. 9
Rivalry among Competing Sellers ............................................................................................................ 9
Competitive Pressures from Potential Entrants ........................................................................................ 9
Competition from Substitute Products ...................................................................................................... 9
Bargaining Power of Suppliers ............................................................................................................... 10
Bargaining Power of Buyers ................................................................................................................... 10
Conclusion .................................................................................................................................................. 11
References ................................................................................................................................................... 12

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Introduction

Global businesses are going forward for more mergers and acquisitions aiming for increasing the
company’s development and enhance its growth. These mergers and acquisitions are intended to
add various benefits beside the financial growth. Many aspects of business are expected to
improve as operating and technological enhancements, gaining more market share and power
and the improvement of competencies and reputation (Mittal and Jain, 2012).

To get to understand a company’s performance, we cannot depend solely on the financial

performance indicators, as these indicators present the results of past decisions. Strategic analysis
and strategic performance is mandatory for maintaining the desired objectives and growth
(McGraw-Hill Education; Unicaf, 2017).

Strategic decisions as in mergers and acquisitions are focusing on the long term goals and
development of the company (Segal-Horn, 2004). It is the decisions that influence the direction
and scope of the business on a long term vision and aiming for achieving positive effect on
stakeholders and meeting market needs within a globally changing markets (UNICAF, 2019).

As in Weetabix company which is a leading British cereal maker, found in UK since 1932. It
was in 2012 when the Chinese manufacturer Bright Food bought 60% of the British (BBC News,
2017). Then the American Post Holding purchased Weetabix in 2017 (Weetabix Corporate,
2017)

The following article will be discussing and critically analyzing the acquisition of British
Weetabix by the American Post Holding company and the underlying competitive forces and
advantages in the industry and different geographic markets.

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Porter said that strategy is to make choices and trading off and it is concerned with how to be
different (McGraw-Hill Education; Unicaf, 2017). In order to understand the strategy making
and choice process, we have to explore the external and internal factor affecting the strategy
making and the company’s overall strategy. Four levels of strategy should be considered when
addressing the strategic analysis of a company. These levels are used as a unit of analysis to the
strategy content. Levels are network, corporate, business and functional (UNICAF, 2019).

Strategy Exploration
Generic position
First we will discover the generic position of the company is research. Porter has put The Five
Generic Competitive Strategies in order to help in understanding the strategic position of a
company, these five strategies are: Low-Cost Provider Strategies, Broad Differentiation Strategy,
Focused Low-Cost Strategy, Focused Differentiation Strategy and Best-Cost Provider Strategy
(McGraw-Hill Education; Unicaf, 2017).

Differentiation Strategy
Companies need to be differentiated between competitors, producing products or services which
are tailored for more customer satisfaction and loyalty. Differentiation in products allows the
company to put a good price for products, gaining more customers thus increasing unit sales and
raising customer loyalty (McGraw-Hill Education; Unicaf, 2017). Weetabix has broad line of
products, which are highly differentiated. They offer series of cereal products, refrigerated side
dishes, farm products, energy shakes and nut butter (Post Holdings, 2018). This strategy in
products differentiation helped the company gaining more market share and competes for strong
market position.

Cost Strategy
Companies are trying to lower the production costs in order to gain more market shares by
introducing cheaper competitive products. Companies adopting low cost strategy have to pay
attention to the many factors driving the cost. The merge of the two companies in research, this
raises the opportunity to implement economies of scale, utilize capacity more efficiently and
increase supply chain efficiency. Also, it can have a high influence on the inputs cost and could
use the learning and experience advantage to lower costs.

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The company in discussion is aiming for more differentiation with proper production costs, in
which it is not aiming for cost leadership as to maintain the differentiation advantage (McGraw-
Hill Education; Unicaf, 2017).

Focus Strategy
According to Porter, focus strategy can either by utilized in two directions, Focused Low-Cost or
Focused Differentiation. Companies implementing focus strategy are concerned with a niche or
narrow market segment, in which they are providing highly differentiated products or low cost
products (McGraw-Hill Education; Unicaf, 2017). Post Holdings is offering its customers a wide
range of differentiated products such as nutrition bars and other snacks and butters beside the
wide range of cereal products and refrigerated food (Post Holdings, 2018). Post Holding should
be aiming for more products differentiation, as the healthy eating trends are expanding, a lot of
customers especially in UK are looking at the sugar intake and looking for a healthy diet
(Martinne Geller, Adam Jourdan, 2017).

Bowman’s Strategy Clock

According to Bowman, he introduced the Bowman’s Strategy Clock which helps in visualizing the
strategic position of a company, putting the product specific value to customers on an axis and product
price on the other axis. We can get a range of eight categories a company can fall in demonstrating the
generic strategic position (UNICAF, 2017b). Post Holding company operating with Weetabix in hand, we
found that Weetabix in UK market is not offering the cheapest price in market and also may be offering
products at a high average price (Good Housekeeping, 2017). While when it comes to offering products,
as mentioned earlier, Weetabix is offering a wide range of products that is targeting a specific market
segment, in which increased differentiation of products can be noticed. Post Holding also is approaching
targeted market segments by expanding in the geographical presence in international markets and
providing products with special concern on healthy and organic ingredients (Post Holdings Inc., 2017).

Utilizing Bowman’s strategy clock, we can conclude that the company in research can be positioned in
the Focus Differentiation position.

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Bowman’s Strategy Clock

(UNICAF, 2017b)

Stakeholders Analysis
According to Freeman, he explained in 1984 that stakeholders are a group or single individuals
that are affecting and can be affected by the work of the company and achieving its goals
(UNICAF, 2017). There are many techniques to discover and understand stakeholders interests
and effect on businesses as mentioned by Bryson in 2003 (Bryson, 2003). We will be utilizing
the power versus interest grid, which classifies stakeholders according to their interest and the
power to affect business in a two by two matrix.. With the acquisition of Post Holdings to
Weetabix which was owned by the Chinese Bright Food company by 60% in 2012, we will
discover various stakeholders whom are widely distributed geographically (BBC News, 2017).
First we have to differentiate between primary and secondary stakeholders as per Clarkson’s
classification in 1995. Primary stakeholders are the stakeholders whom are continuously
involved and business cannot survive without their involvement and concern. In our case, these
stakeholders can be the shareholders, employees, customers, regulatory entities, policies and
regulations and suppliers. While secondary stakeholders, whom are described as the group which
can influence and affect also, can be affected by the business but they are not in direct relation
with the business. We can consider market competitors, interested groups and media (Benn,
Abratt and O’Leary, 2016). In our case in study, the geographic expansion of the business
through US, UK, Asia and Africa (Post Holdings Inc., 2017) has increased the number of
primary stakeholders within different cultures and working environments. There are high interest
and high power stakeholders whom are called players as transportation vendors and

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shareholders. Subjects who have little power on the business but interested in it as employees
and there are the context setters who are with little interest but high power to the business as
governmental and regulatory entities. The last category is the crowd which has little power and
interest, which can be other customers whom are using another products in the market (Bryson,
2003).

Due to the acquisition, many employees can find themselves having to work abroad or even
leave their jobs, while others may have been promoted or working in a better location which will
certainly affect the business. Suppliers also can be affected by this acquisition, new plant and
geographic expansion can lead to loss of work for some of the suppliers and giving this work to
another suitable ones. Transfer of products can be affected, as vendors and service price vary
from one country to another.

Porter has introduced the Forces Model as an analytical tool to discover market competitiveness
factors and forces both internally and externally.

External factors driving the strategy

Porter has defined six components for the external factors affecting the strategy in a company,
these components are the political, sociocultural, technological, environmental, economic and
legal factors, as known as PESTEL (McGraw-Hill Education; Unicaf, 2017).

We are going to explore the main components affecting the strategy formation for the company
in research.

Political factors
These are the factors involved with the governmental laws and regulations, political environment
and regulatory entities. The UK is facing instability due to the Brexit, the global financial issues
and also the slow growth rate Weetabix is facing (Martinne Geller, Adam Jourdan, 2017). All of
these direct the company to adopt more low cost strategy to increase the profit margins and raise
the employees’ wages.

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Economic factors
These are the factors forming the economic environment as banking and financial rates and
economic growth. Exploring the UK economic climate, we will find that GDP (purchasing
power parity) by 2017 was $2.88 trillion in UK while $19.36 trillion in US and GDP - per capita
was $43,600 for UK and $59,500 in US by 2017 (CIA Factbook, 2019). The GDP growth also is
declining in UK. These readings tell that in UK Weetabix should decrease the cost of production
without risking the products differentiation in order to maintain customers’ loyalty and retention.

(O’Leary, 2018)

Sociocultural forces
These are the forces including the social values, culture, attitudes and individuals’ lifestyles.
Analyzing the buying of Chinese Bright Food of Weetabix by 60% in 2012, we can find that the
breakfast norm in China is rice based hot meals, in which the Chinese culture did not embrace
much the new cold cereals in market. While in the same time Weetabix has doubles its sales in
China, but UK market still makes the big share (BBC News, 2017). Another cultural factor is
affecting Weetabix, the growth of other competitive breakfast items as bars and Greek yogurt.
Also, many customers nowadays are watching their sugar intake and searching for alternative
healthy breakfast choices (Martinne Geller, Adam Jourdan, 2017). The social factor is playing an

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important role in the spread and growth of Weetabix, the company has to decrease the cost in
order to maintain the current customers and profit margins and producing new lines of products
which has high differentiation than other competitors to achieve market growth.

Technological factors
Technology and new technical developments are essential for business sustainability and growth.
Weetabix is competing in highly competitive markets as US, UK and Chine. When
manufacturers are implementing the latest technology in production, packaging and product
quality. It is mandatory to keep up with the technological advancements in order to provide the
customers with the needed quality and help in other factors as process improvement and cost
reduction.

Environmental forces
These forces are the natural and ecological factors affecting our world and businesses. Climate
changes, weather statuses and climate stability can affect a multinational operating company as
Post Holdings. Shipping, storing and transporting the products have to be planned in accordance
with the changing environmental and climatic factors. Also, some products can be seasonal;
some products are prospering in summer while others in winter, the company should pay
attention to the fluctuating factors of the environment.

Legal and regulatory factors

Factors including the laws and regulations applied in a country or industry specific. In which can
affect the company in study here, as the minimum wages in UK are different from those in US
and China. The company has to adjust the salary scale accordingly.

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Internal factors driving the strategy

Porter has developed also a model consists of the main five forces affecting competitiveness in
various markets and industries. He divided the competition forces into competition with market’s
new entrants, rival sellers, substitute products and the bargaining power of the suppliers and
customers (McGraw-Hill Education; Unicaf, 2017). We will discuss the effect of these forces on
the competition of Post Holdings Company in different markets.

Rivalry among Competing Sellers

It is the competition rising from other companies in the industry; these companies are producing
competing products which have to be analyzed in order to assess its competiveness. The cereal
market competitiveness is high, in US for example, 94% of US adults are having cereals either
hot or cold on their breakfast (Topper, 2015). The customers also bear low cost for changing
their products with a noticed slow growth in buyers demand (Attractive Consulting Group, 2015)
and can find alternative products, thus, the competitiveness and rivalry of sellers is considered
high in his industry. In fact these rivalry conditions can cause the company to squeeze its profits
to accommodate the high market competiveness.

Competitive Pressures from Potential Entrants

The competition from introducing new products to the market is considered to be low in the case
of Post Holdings (Attractive Consulting Group, 2015). The high entry barrier for other
companies is weakening the new rivals’ competiveness. A new entrant will have to face the high
costs of competing in such market, searching for proper distribution channels which are not
occupied by the market’s incumbents. The high capital needed for entering the market,
manufacturing, distribution and marketing activities, strong branding and customers loyalty for
other products together with the other factors affect the new entrants chance in the market,
therefore weakening the competitiveness of potential entrants.

Competition from Substitute Products

The competition rising from substitute products in the cereal market is considered high. There
are various products that are offering competitive products, quality and pricing. Customers do
not have high cost for changing their products and substitutes are widely available. The high
competiveness forces the companies to properly put the selling price and adjust production costs.
Customers in cereal industry have a wide range of preferable products, according to the age

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group, culture and other factors (Topper, 2015). Weetabix is trying to vary the products to
maintain high competiveness with other rivals and products. Products with low sugar, non-GMO,
gluten free and organic products are being introduced by Weetabix in markets (Post Holdings
Inc., 2017).

Bargaining Power of Suppliers

The suppliers in any industry would have a strong bargaining power when there is shortage in
supply, suppliers are providing highly differentiated products or there is a lack of other suitable
substitutes. This is not the case in Weetabix operations; Weetabix is not facing a high bargaining
power of suppliers because the above situations are not applicable. The raw materials and
production materials are widely available in UK and US and there are no huge differences
between suppliers. The suppliers in cereals market are put in a position where they have no
influence on the product availability or price.

Bargaining Power of Buyers

Buyers in any industry are having a range of influences on the competitiveness of a product.
Competitive pressure increases with buyers’ strong bargaining power. This power is strong when
customers are price sensitive and the market is full of similar products with low cost of switching
between them. Also, the power of buyers would be strong when they are concerned with the
quality and cultural norms; this is also found as an external sociocultural competitive force.
Combined forces can be demonstrated as found in China after Bright Food bought 60% of
Weetabix, Chinese where not attracted by cold cereal breakfasts while they preferred hot rice
based breakfasts (BBC News, 2017). The bargaining power of buyers in this situation is
assessed as moderate. Weetabix is producing a wide range of healthy, organic and balanced
products to accommodate the buyers’ needs and selection criteria. Weetabix also has launched
The Weetabuddies campaign in 2015, which has a great success in attracting customers and
building customer loyalty (Talking Retail, 2016). The company is implementing the
technological advancements in transporting and packaging its products to achieve more customer
loyalty. Buyer also, are reflecting the external economic competitive forces, as the buying power
of customers and products’ selection criteria can be altered by the changing global and regional
economics, as in case of UK and Brexit.

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Porter’s Internal Competitive Five Forces. Post Holdings competition analysis (Attractive
Consulting Group, 2015)

Conclusion
A geographically wide spread company as Post Holdings acquiring Weetabix, a UK based brand,
and supplying customers with goods in different continents. It is facing both external and internal
competitive forces. Customers upgrading needs and health concerns are forcing Weetabix to
develop products with the needed qualities and market competitors also, are forcing the company
to aim for low cost of production and higher products’ differentiation in order to maintain the
market share growth. Post Holdings should pay attention to the environmental and cultural
aspects of the market it wants to invade. Some markets can be resisting to products as they are
not culturally or health wise accepted, as in the case of Chinese breakfast habits and the people’s
rising search for healthy products and different food preferences and criteria. Technology and
legal forces also contribute to the growth of the company. Varying wages and packaging
procedures can affect the production cost and thus affecting a price sensitive customer to shift to
another product. If not keeping competitive prices, product differentiation and gaining more
customer loyalty, Post Holdings would not be able to compete in a highly competing market.

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References
Attractive Consulting Group (2015) Post Holding Inc. - Strategic Marketing Analysis. Available
at:
https://www.lib.purdue.edu/sites/default/files/directory/butler38/TheAttractiveGroup_presentatio
n.pdf. (Accessed: 11 October 2019).

BBC News (2017) ‘Weetabix to be sold to US company Post Holdings’. Available at:
https://www.bbc.com/news/business-39625715 (Accessed: 11 October 2019).

Benn, S., Abratt, R. and O’Leary, B. (2016) ‘Defining and identifying stakeholders: Views from
management and stakeholders’, South African Journal of Business Management, 47(2), pp. 1–11.

Bryson, J. M. (2003) ‘What to do when stakeholders matter: A guide to stakeholder analysis and
techniques’, Public Management Review, 6(1), pp. 21–53.

CIA Factbook (2019) United Kingdom vs. United States - Economy. Available at:
https://www.indexmundi.com/factbook/compare/united-kingdom.united-states/economy
(Accessed: 12 October 2019).

Good Housekeeping (2017) Why M&S beats Weetabix in the cereal bowl wars. Available at:
https://www.goodhousekeeping.com/uk/food/food-reviews/g676501/wheat-biscuits/ (Accessed:
12 October 2019).

Martinne Geller, Adam Jourdan, L. H. (2017) ‘U.S. Post Holdings tucks into British breakfast
cereal Weetabix - Reuters’, Reuters. Available at: https://www.reuters.com/article/us-weetabix-
m-a-post-holdings-idUSKBN17J1Q4 (Accessed: 11 October 2019).

McGraw-Hill Education; Unicaf (2017) UniCaf: Strategic Analysis: Tools and Techniques.
McGraw-Hill Education. Available at:
https://unicaf.vitalsource.com/#/books/9781307106244/cfi/30!/4/4@0.00:0.00 (Accessed: 11
October 2019).

Mittal, A. and Jain, P. K. (2012) ‘Mergers and acquisitions performance system: Integrated
framework for strategy formulation and execution using flexible strategy game-card’, Global
Journal of Flexible Systems Management, 13(1), pp. 41–56. doi: 10.1007/s40171-012-0004-7.

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O’Leary, J. (2018) Full Fact - UK Economic Growth in G7. Available at:

https://fullfact.org/economy/uk-economic-growth-within-g7/ (Accessed: 13 October 2019).

Post Holdings (2018) Annual Report - Unlocking Value. Available at:

http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_POST_2018.pdf.
(Accessed: 11 October 2019).

Post Holdings Inc. (2017) Post Holdings to Acquire Weetabix. Available at:
https://www.postholdings.com/wp-content/uploads/2017/04/Post-Investor-Presentation-
Weetabix-Acquisition-FINAL.pdf. (Accessed: 11 October 2019).

Segal-Horn, S. (2004) ‘The Modern Roots of Strategic Management’, European Business

Journal, 16(4), pp. 133–142. Available at:
http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=16503439&site=ehost-live.

Talking Retail (2016) Weetabix to relaunch Weetabuddies campaign, Talking Retail. Available
at: https://www.talkingretail.com/products-news/grocery/weetabix-relaunch-weetabuddies-
campaign-15-01-2016/ (Accessed: 13 October 2019).

Topper, A. (2015) Top Breakfast Cereal Trends in 2015, Prepared Foods. Available at:
https://www.preparedfoods.com/articles/115129-top-breakfast-cereal-trends-in-2015 (Accessed:
13 October 2019).

UNICAF (2017a) Topic 2 – Overview - Analysing Stakeholders and Organisational Purpose – A

View of the Future Learning outcomes : Analysing Stakeholders & Organisational Purpose
University of South Wales ( USW ) University of South Wales ( USW ).

UNICAF (2017b) ‘Topic 3 – Overview – Competitive Advantage and Positioning and Industry
Analysis Learning outcomes : University of South Wales ( USW ) s Bargaining Intensity of
Rivalry within the Industry Buyer Bargaining s University of South Wales ( USW )’.

UNICAF (2019) Topic 1 – Overview – Strategic Context.

Weetabix Corporate (2017) Post Holdings Completes Acquisition of Weetabix, The Weetabix
Food Company. Available at: https://www.weetabixfoodcompany.co.uk/press/news-
archive/post-holdings-completes-acquisition-of-weetabix (Accessed: 11 October 2019).

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