Strategic Marketing Management
Weetabix has been in operations since 1932 but the strategic change has been initiated by Bright Food – a holder of 60% stake in Weetabix. Bright Food had bought the stake in Weetabix in 2012 even though it is making the sale for strategic reasons (Geller, et al. The paper presents a strategic evaluation of the sale and dives into the different aspects relating to the sale as well as accompanying critical review and analysis. Evaluation of levels of strategy In terms of generic position, the acquisition was made as an ambitious step to make Weetabix a commonly consumed product within the Chinese market. Bright Food had bought a 60% stake in 2012 hence representing the largest stake by a Chinese firm at the time (BBC, 2017). Based on the operations of Weetabix in the Chinese market, it is clear that position 4 was taken.
It involves offering customers the highest levels of perceived added value. Needed elements in this case are branding along with product quality. However, the market is needed to supplement with strong brand awareness along with product loyalty to meet the relative high prices (Fontanella-Khan, et al. From a strategic standpoint, this position was the best fit with operations in the Chinese market. On the other hand, Bright Foods is taking the position since it has struggled to market Weetabix and reinvent it as a credible breakfast option within the Chinese market (Geller, et al. Though Bright Foods has sold off its stake in Weetabix, the plans on internationalization strategy are still on course. From a critical standpoint, such funds must be utilized in other expansion activities within international markets.
Its financial resources have been untied hence its firepower has been increased should the management identify potential bids. Further, the deal is motivated by macroeconomic and political factors. With consumer tastes unlikely to change in the future, the strategic intent by Bright Food has been to counter the lack of expected growth by leaving the Chinese market altogether. For Post Holdings, the intent is adding Weetabix to other cereal brands including Alpen and others such as Grape-Nuts and Honey Bunches of Oats (Best, 2017). In addition, Post Holdings will have an expanded access to international markets. These justifications imply that the strategic intent by both organizations is aligning with their overall growth strategies. Given the factors shaping the strategic decision, analysis of the industry is necessary to determine the context within which the decision is being undertaken.
Since there will be new owners, the leadership positions have been realigned for implementing necessary changes going forward. A case in point is the current director of marketing at Weetabix who is poised to become the managing director of Weetabix UK and Ireland (Fontanella-Khan, et al. The current chief executive will be the new chairman. Based on the implications, it is evident that strategic changes have to encompass the whole picture whereby financial resources have to align with human capabilities. Overall, Weetabix is the main stakeholder since the other two are partners to the company. The UK market is specifically lucrative to Post since it is seen as an active nutrition market. Given its picture of the market as a whole, there is a signal that the perspective applied in this case is that of geographical as opposed to product approach.
Post can be seen as being attracted by the nature of the UK market without limiting itself to the products offered. The perspective of looking at the market in its entirety has encouraged other moves such as introducing other differentiated products to serve the active nutrition market within the UK. Post Holdings will be introducing PowerBar and Premier Protein all of which are meant to serve active people and sports individuals (Best, 2017). The first model to be applied is the PEST analysis. The first factors will relate to the political environment. These factors involve the degree of government involvement within the economy (Analoui & Karami, 2003). In this case, the UK political environment is fairly stable. The main political shock came after Brexit since such expectations were uncommon even before the referendum.
The growth will ultimately increase the purchasing power of UK consumers hence leading to more revenues for Post. The same report further projects that UK households will reduce their spending on transport, food and clothing in the long run. The trend shows that Post will have to offer differentiated products especially on the nutritional front to promote sales within such an environment. Social factors revolve around trends in consumer tastes and their preferences. Notably, consumer tastes have shifted to consumption of healthier foods that have less sugar. When it comes to technological factors, usage of technological devices and software applications has been growing in the UK. At points of sale, customers have been using Electronic Points of Sale and paying using Electronic Fund Transfer Systems (Best, 2017).
In addition, there have been growing trends of online based purchases commonly executed through mobile phones. This trend can be capitalized on by Post since Weetabix can be offered through the online platform. Integrating the social trend of busier schedules and technological trend of online purchases can be combined through online sales. In order to include the whole picture inculcating the risk element, it will be sound to consider the bargaining power of suppliers as medium. The other point will relate to the purchasing power of buyers. Entities buying the breakfast cereals comprise of grocery stores and supermarkets in Ireland and the UK. They have considerable power given that price setting is based on their terms. Main buyers are those who use the products within the production process hence they have more considerable power over suppliers.
From the social trends, it is apparent that new entrants must appreciate the demand for breakfast meals that are quick to prepare yet healthy. In addition, Post Holdings has engaged in the deal to gain from operational efficiencies held by Weetabix. This implies that new entrants will lack such capabilities hence making the threat low. The final factor is competitive rivalry (Hill & Jones, 2009). This factor is under pressure from changing consumer tastes that lead to introduction of new products. Based on the findings in the different sections, Post Holdings has to engage expertise in making its decisions concerning Weetabix Corporation. If there are planned changes to the ingredients or manufacturing techniques, each factor under PEST must be analyzed carefully to avoid disastrous consequences that would lead to loss of value for Weetabix Corporation and ultimately the stake by Post Holdings.
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