STRATEGIC ANALYSIS OF WEETABIX ACQUISITION BY POST HOLDINGS
Among these strategies, acquisition is very important since it enhances the diversification of an organization’s products, its services and its long-term prospects. In addition, acquisitions enables organizations to access a wider customer base besides increasing its market share. They facilitate organic growth and can serve as a strategy of entering a new market. Through this acquisition, Post Holdings will enter the United Kingdom market. Post Holdings will benefit from an increased customer base and market share. According to Porter establishing an understanding of the competitive forces as well as their causes reveals the foundations of the current profitability of an organization besides providing a framework with which to anticipate and influence competition overtime (Tanwar, 2013). Strategy determines the distinct approach of a company towards competition and the competitive advantages that underlie that approach.
Based on its current position, Weetabix is have a significant share in the market and are competitive within the breakfast and cereal industry. Therefore, for Weetabix to succeed the brand must be positioned in a way that allows it to hold a competitive advantage within the industry. This call for a few strategies as illustrated in the porters generic competitive strategies grid. 2018 This model expands Porter’s strategic positions to eight distinguished positions which majorly focus on the value proposition to the customers. Bowman’s clock helps in simplifying how the product of an organization can be appropriately positioned to bargain for the most competitive position in the market (Marketingteacher. com, 2018). Weetabix falls under differentiation since it is engaged in active R&D in relation to its market and customers so that it is able to create unique product and value for the market.
Besides, Weetabix also employs diversification since it seeks to have its product stand out in the market. c) Primary nonsocial stakeholders: Breakfast cereal industry. d) Secondary nonsocial stakeholder: Regulator. Stakeholders can have different levels of interest and power. For example, the government is a major stakeholder since it overseas and monitors the acquisition procedure to ascertain its legitimacy. The investors in Weetabix are affected by the acquisition since will affect their returns (Rogers, 2017). UK, 2016). b. Economic The UK is the 5th largest economy in the world in terms of nominal GDP (Jackson, 2017). The economy has been on a recovery path since the financial crisis of 2008. In 2017, the prices of household items went up even as the weak pound increased the cost of importing goods into the UK.
It is expected that by 2039, the population will rise to 79 million. Besides, the UK population is getting older with 18% of the population aged 65 years and above while 2. 4% are aged 85 years and over (Santander, 2016). This affects the labor market and the healthcare system. Even then, there are industries that have benefited from this population such as insurance, holiday, healthcare and real estate. Weetabix scores in this category. In addition, the UK leads in the consumption of breakfast cereal while the Chinese prefer rice or porridge for breakfast. People in the US also prefer break cereal and are likely to be a huge market for Weetabix. However, Post Holdings will need to add additional alternatives so that it increases its position in the market.
After acquiring Weetabix, Post Holdings acquired Bob Evans which is USA based maker of sausages (Post Holdings, 2018). The overall goal is to have more efficient and cost effective production processes. Therefore, the ability to make more nutritious and delicious food products will increase the desire of customers to purchase from a company and that will increase their profits. Besides, the question of using genetically modified food products as raw material is still a challenge that will face Post Holdings in the UK. Studies have indicated that such foods have potential negative effects on consumers (Weetabix Corporate, 2017). The population is also aware of such effects and therefore they are very keen on the source of ingredients that are present in food products they consume.
This process is costly and it implies that food processing companies must invest more on their products. On the hand, when done successfully, it will increase the consumers trust in a product which will help to improve customer loyalty and sales. Industrial Analysis The cereal industry in the UK is very competitive. Some of the key players include Quaker, Malt-O-Meal, Nestlé, Cinnamon toast crunch Cheerios, Kellogg’s and Weetabix (Weetabix Corporate, 2017). With these players, it is very competitive for any player in the industry to acquire more market share. b. Bargaining Power of Suppliers The bargaining power of suppliers depends on the number of suppliers in the industry, the exclusivity of the product or service, and the cost of substitution or alternatives.
Depending on how these factors are in the market, suppliers can have low or high bargaining power. In the breakfast cereal industry, the main raw materials are grain and wheat. These are available from many suppliers which then reduce the bargaining power of the suppliers since there are several alternatives. So far Weetabix has a good brand image in the UK and the new acquisition will help improve the brand name further among the consumers (Weetabix Corporate, 2017). d. The Threats of New Entrants The threat of new entry usually exists in industries where there are no strict policy entries. Besides, if there is proper protection of intellectual property rights then it becomes difficulty to have imitations by competitors. However, in UK there are stick standards in the food industry in general.
As a result of its international expansion strategy, Post Holdings acquired Weetabix. In the UK, Weetabix is a household name in the breakfast and cereal industry. Its acquisition by Post Holdings with further increases its position in the industry as well as expands its market into the USA. One of the key strategies that Weetabix will use is differentiation. This will help the company remain competitive while opening new niche markets within the industry. Z. , Daspit, J. , McLaughlin, E. and Jones III, R. J. gov. uk/government/publications/corporation-tax-to-17-in-2020/corporation-tax-to-17-in-2020 [Accessed 14 October 2018]. Jackson Gavin. UK inflation breaches target as it climbs to 3. 1%: Bank of England governor forced to write letter to chancellor after prices surge. Tech sector growing faster than UK economy with 72pc of investment outside London, report says.
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