Post Holdings buying Weetabix analysis

Through acquisitions, a company can diversify their product base, able to access a wider customer base and also increase its market share. Acquisitions also help a company in creating organic growth and also can be used as means of entering new markets. For instance, the acquisition of Weetabix by post holdings will enable the company to penetrate the United Kingdom market and other compelling strategic and financial advantages. Post holding Inc. is a "consumer packaged goods holding company that has its headquarters in St. " (Tanwar, 2013, 15) One of the key contributors to strategic positioning knowledge is Michael Porter who argues that generic competitive strategy is a strategy that organizations can best use to gain a competitive advantage in the market. According to Porters, an organization can gain a competitive advantage by adopting any of the three generic strategies that include cost leadership, differentiation, and focus (Tanwar, 2013, 11).

For instance, a company can choose to apply cost leadership by becoming the low-cost producer in the industry as a result of economies of scale, preferential access to raw material and proprietary technology. Also, the generic strategy of focus involves narrowing the competitive scope in industry through either cost focus or differentiation focus. In our case, Weetabix applies differentiated strategy by choosing to be unique in the industry. A clear understanding of the eight fundamental strategic positions helps a company better analyze and also evaluate their current strategy hence make changes to improve their competitive position. Fig 2. Bowman's strategy clock. (Bowman &Faulkner 1997) In reference to Bowman's strategic clock model, Rogers (2017), argues that Weetabix has been very successful in improving the value of their products for the target consumer segments by creating products that are unique, meets the breakfast need of the consumers and also suits their lifestyle.

Therefore, this strategic differentiation of their products has made Weetabix unique from its competitors in the breakfast and cereal market. On the other hand, external stakeholders are the ones who have interests in the organizations but are not engaged in the daily activities and includes the general public, regulators, and suppliers. In the acquisition of the Weetabix by the Post Holdings the internal and external stakeholders have a huge part to play to ensure the deal is sealed. While the internal stakeholders such as the shareholders and investors of Post holdings will be more concerned with making a deal that is worth their money, the stakeholders of Weetabix will be seeking to leap maximum sale (Allchin, 2012, 24). Another internal stakeholders who should be factored out in the deal are the employees who will be concerned about their job transfers, security, and salaries that may change or vary in the two organizations.

In addition, the current Weetabix customers are key stakeholders who will closely evaluate if the deal will result in better quality and pricing. Political environment Political factors play a significant role in determining the operations of a given company and also its performance. A key factor to note is that Post holding Inc is an American organization, therefore, by acquiring Weetabix, the organizations will be bound to abide by the various laws and regulations that are in the United Kingdom. Both United States and the United Kingdom have different employment laws, labor laws, minimum wage requirement, taxes on income, and employment age limits (Williams, 2015). These differences in laws and regulations may, therefore, affect the cost of production and Labour. For Post holding to make or maintain the profits, it must be ready to explore other cost minimization options Another key political factor that should be factored out is the issue of political stability.

However, Williams (2015) notes that the cereal breakfast market in the United Kingdom has been declining. This decline could be compensated by the market in the US which is known for being a leading market in cereal breakfast. Therefore, it is important for Post holding to pay great attention to this social consideration and base its strategies on the preference and culture of breakfast in that given country. For instance, the increasing levels of obesity in UK and Americans, in general, has discouraged them from purchasing the wrap and go breakfast hence bringing a perfect opportunity for the cereal breakfast. Therefore after acquiring Weetabix, Post holdings Inc should seek to understand the preferences, culture and health needs of their American consumers. Weetabix Company has been so keen on ensuring that their products or services and operations promote environmental sustainability.

For instance, the company usually purchases their wheat from the farmers who are located within 50 miles of their factory (Monaghan, 2017). Apart from buying from the farmers, the company has established an environmental stewardship program which promotes less usage of fertilizer and protection of the environment. Although such arrangement might be altered after the acquisition, Weetabix will have set an example that the palm oil and egg suppliers of Post holdings to adopt similar sustainability requirements. Legal factors Different countries have different legal frameworks, requirements, and guidelines that define the operations of the company in a given industry (West et al. For instance, the Post holding company operates in a diversified food industry that is very competitive hence taking a big share of its profits.

In addition, the breakfast industry is very competitive with various players in the United States such as Post, General mills, Kellogg and PepsiCo which make up 85% of the total market share in the cereal breakfast (Monaghan, 2017). Notably, key players such as Kellogg who began offering breakfast cereals in the US has over the years grew into an international company. This company has experienced selling and marketing subsidiaries in most parts of the world that enables it to make good contacts with supermarkets, and other retail or chain distributors. In addition, other relevant industry players with recognizable brands include Dailycer France, Weetabix and Nestle. Therefore Weetabix has sought to establish itself as a family breakfast cereal company that pays great attention to children differentiated packages and healthy breakfast hence forming a strong customer loyalty, reputation, and base.

Threat of substitution When a new service or product meets similar needs of the customers differently, the profitability of the industry will greatly suffer (Porter, 2008, 36). For instance, the consumers in Britain and US may opt to substitute the family cereal breakfast with the pack and go products such as a sandwich, donuts, and bread. Therefore due to the corporate life and fast-paced city life, the traditional family breakfast which usually contains cereals is being eroded. The threat of new entrants This force analyses the ease of new competitors to enter in a given industry. https://www. postholdings. com/about/. "Post Holdings Completes Acquisition of Weetabix. " Weetabix Corporate. , (1997), “Competitive and Corporate Strategy”, London: Irwin, Institute for Strategy & Competitiveness. Strategic Positioning - Harvard Business School.