Current Strategic Position of the Company

Globally, organizations are faced with diverse competition. The competition has made some organizations to offer lower prices, fast technical adaptation, better customer care services, and narrower or wide varieties of products in an attempt to gain competitive advantage. Furthermore, these organizations needs to venture into the new market for them to increase market share and remain competitive. According to Gillet et al. (2012 p.111), acquisition in strategy is the atypical method employed by a various organization that intends to penetrate into new markets easily, gain market share and survive in the the competitive environment.

Post holding is a consumer-package organization that markets, manufactures and sells private and branded cereals. In 2017, the company strategized and came up with the excellent strategy of entering markets of British through the acquisition of Weetabix limited that is also a breakfast cereal company. The acquisition indicated that the company intended to bring changes to the internal and external stakeholder. Furthermore, the pressure from synergy sharpened the focus of Post holding company and the growth has driven the company to create and reappraise better methods and strategies for achieving set long-term, short-term goals and objectives.  The pressure also has facilitated the business to gain a competitive advantage and large market shares. Therefore, the report seeks to focus on the current strategic position of the company, stakeholder’s analysis and internal and external environment of the company.

The key step to define business strategy is through ascertaining its current strategic position. The current strategic position defines actuality of how business functions as in comparison with the competitors and how it serves the services and products to the customers (Chew, 2009 p.1). Strategic position is the way a company differentiates itself from its competitors so that it can utilize the customer segments. The strategic competition takes into account the SBU position in the future with consideration of constant changing environment and required methodologies to achieve its position. Strategic position is important because it makes it easier for an organization to select an odd niche.  The niche selection reflects the choices of companies about the intended values it creates in the market and how these values are set to differ from the competitors. Bowman’s strategy and Porter’s five forces are the main strategic framework that are adopted in the efforts of gaining competition rivals over the rivalries. Porter (2008 p.76) indicates that understanding of competitive forces and its effects and causes helps the company to reveal the industry’s current profitability and provides a framework for adapting and influencing profitability and competition.

Bowman’s Strategy and Porter’s Five Forces

There are three generic strategies applicable to different organizations. The three generic strategies include differentiation, focus and cost leadership. The organization that employs cost leadership gains competitive advantage by focusing on building “edge” which pull and takes sales away from the competition. Cost leadership strategy is achieved through cost reductions or cost-cutting that indeed increases profits while providing prices that are average for the products and service. Furthermore, the strategy focuses on cost cutting expenses for delivering products and services. Differentiation strategy focuses on creating products and services that are unique and attractive than the competitors. The products of companies that adopt differentiation strategy have a brand name that customers values and adds extra values and functions better. Focus strategy is ideal for organizations that is centered in a specific niche in the market of the industry. Furthermore, the strategy undertakes market’s unique dynamics and need of customers by developing well-specified products or low-cost products. In addition, the strategy is divided into either differentiation focus or cost focus. All the subdivisions add extra value to customers as a result of serving a specific niche.

From the three strategies, research conducted by Spotts and Weinberger (2010 p.591) has indicated that Weetabix Company has currently employed differentiation focus strategy. The strategy has been made effective by the company’s ability of prioritizing essential of providing the consumers with differentiated products that sasitisfies needs. Furthermore, Weetabix has diverse products that are designed to cater for consumers need. Bowman’s strategy clock transverse the strategic position of choices. Shakhshir (2014 p.416) defined Bowman’s strategy as an extension to porter generic strategy emphasizing that business must possess a diverse option of how to conduct a product positioning based on apparent customer value and aggressive prices that are flexible and convenient for customers. Therefore, Weetabix is considered to fall under differentiation strategy on Bowman’s strategy since the company intends to perceive customers with suitable prices and a higher level of perceived. The company has also been successful through the implementation of different products which serves a broad perspective of customer in diverse market groups.

Weetabix uses differentiation strategy with aim of providing the customer with valued products by incorporating research and development into its key mandate. The research and development provide the company with shrewd market research and surveys. Back the year 2014, Weetabix company launched “breakfast on Go” after a successful research from its competitor nestle company.  Furthermore, the research indicated that out of ten people six would prefer having “to go breakfast” and approximately thirty percent would spend over ten minutes preparing the breakfast.  From the research, the company is in a position of capturing target markets using product quality and branding. The research helped the company significantly in tracking the product development by a period of 10 months. In addition, Weetabix has successfully captured over seventy percent of cereals in diverse regions by adapting to differentiation strategy. Through the differentiation strategy, the company has also found a distribution strategy that is suitable for consumption method. Previously, Weetabix has successfully adapted to odd market conditions. In 2015, the company increased its sales by fifteen percent because it captured the minds of health-conscious parents who believed that kids should eat healthy and also stay healthy.

Differentiation, Focus and Cost Leadership Strategies

According to Waters, Burnett, Lamm and Lucas (2009 p.102) Stakeholders are defined as a group or individual that is affected or can affect the achievement of an organizational objective. The shareholders have stake for the company’s success. Furthermore, diverse organizations have varying stakeholder’s management approaches.  The stakeholders are classified as internal shareholders also known as “primary shareholders” and external stakeholders also known as “secondary shareholder”. Internal shareholders controls all internal activities taking place in an organization. Internal stakeholders include shareholders, business partners, customers, equity shareholders, employees and suppliers. On the other hand, external or secondary stakeholders have no control of internal operation of the company although they have interest with the company. The external stakeholders include media, government, the public, competitors and trade bodies. During the Weetabix acquisition by Post holding company, several stakeholders were involved. The internal stakeholders included both Weetabix and post holding shareholders, employees from both companies, investors, suppliers and business partners. The shareholders governed the operations of both organizations. Furthermore, the shareholder had a high power level and interest in the company. The Weetabix shareholders have a selling stake with employees, British government and investors of both Post Holding Company and Weetabix determining the strategic, and continuity of the organization. The British government plays a key role to maintaining transparent and legal sale/ acquisition process. The employees are affected either negatively or positively. In the negative impacts, some employees might loss their incentives, benefits, compensations and even their jobs. In positive impacts, some employees might enjoy benefits of increased salaries and wages and others have new job roles. Investor’s returns will also be affected. The external stakeholders would also be affected indirectly or directly.

PEST analysis creates an opportunity for evaluating organizational external environment. PEST is a strategic tool used in the macro-environment analysis. Organizations employ PEST as a tool for tracking an environment change that companies need to penetrate and launch a new product, service or project.  PEST analysis examines the political, economic, social, and technological factors that gives a clear view of the organization-operating environment from diverse perspectives.

For post holdings to acquire Weetabix, it should have followed all laws that are imposed by the British government either indirectly or directly. Post holdings should further act in accordance to business operating legislative laws, employment laws and foreign trade regulation. In 2017, the British government increased minimum hourly wage of employees to 7.2 pound in an attempt to improve employee’s welfare. Furthermore, there is a trend in the market that the hourly minimum wages will be increased in the near future from the current 7.5 pounds to 8.0 pounds. With consideration of Weetabix Company being located in the United Kingdom, Post Holding Company encounters increased salary wages as compared to what the company pays in the USA. Furthermore, in the UK, the work time regulations mandates employees to enjoy benefits of getting a minimum of twenty-eight paid leave days and there is a trend that the government is planning to increase paternity leave. In addition, the employment rights permit the workers right for demanding working hours that are flexible. Failure of organization compliance with the laws, it can lead to contract termination by the government. Furthermore, Post Holdings will need to look for other ways in order to cost cut salaries and wages.

Weetabix’s Differentiation Focus Strategy

The acquisition of Weetabix by Post Holdings significantly affected the United Kingdom and USA economy. With US and UK economies growing at different rates, the Post Holding Company must figure out the way of catching up with new experiences. The economy of US developed by 2.7 percent in 2017 second phase while the UK had a small growth of 0.4 percent as a result of inflation rates that rose at the end of the year by 3 percent (Chu 2017 p.1). The inflation rates changed the costs of Weetabix in the UK and affected the economic supply and demand model. Furthermore, with the trend in UK that GDP is expected to rise; the costs of Weetabix products will be changed. Therefore, Post Holding organization need to come up with strategic goals of dealing with diverse economic trends. In addition, the company must differentiate new products and sell to diverse markets globally hence distributing retarded growth risks that occur when there is a slow growth rate and negative trends in the economies.

Social factors touch market environment and models demographics, cultural trends, population analytics and consumerism. Furthermore, social factors take into account future and present consumer’s proclivities and taste. For example, UK consumers and the US prefers breakfast cereal as opposed to China’s consumers who go for a hot breakfast. On that account, it is clear that UK and US has a higher likelihood of purchasing Weetabix as compared to China. With trend of Furthermore, Post Holding Company has an upper hand of success in the receptive markets of UK. Further research by Chu (2017 P. 1) indicated that in 2014 when Weetabix sold food to a Chinese company, there was a 4 percent decline of total turnover. The turnover was contributed by cereal consumption decline. Therefore, in order for the company to maximize sells, it must start selling other differentiated products that are at par with customer’s proclivities and tastes.

Post holding must use technology in order to be in tune with constant consumer changing needs. Recently, consumers have preferred to eat cereals on go and therefore it is upon Post Holding to come up with technology that monitors changing customer needs. The company needs to come up with breakfast cereals matching consumer needs. Post Holding must implement machines and technology that cuts cereals into various forms and shapes like rings, bars and tubes and rings

The cereal industry is flooded and therefore there is a need for an organization to understand the factors that affect profitability. Through an understanding of factors provides the organization with a platform for influencing competition by turning their strategies. The five forces for analyzing the competition include bargaining power of suppliers, competition rivalry, the threat of new entrant, bargaining power of customers and threats of substitution.

Stakeholder Analysis

Suppliers of raw materials have power over the organization in a situation where the substitutes are fewer. Furthermore, the suppliers are conscious of the differentiated product and know the switching of the product is not easy. The suppliers for wheat and grains needed for production purpose are relatively low in the breakfast cereal industry. Furthermore, Weetabix Company prefers to get raw materials within its operational diameter.

Bargaining power of customers

Bargaining power of customers is also known as a market of outputs. Bargaining power of customers measures the buyer’s abilities to drive down and change prices of products. Grocery outlets and supermarkets serve are the main channels for distribution for cereal and breakfast industry. The availability of cereals in the stores makes bargaining power of customers higher. Furthermore, it becomes easier for a consumer to change to substitute products if the quality reduces and prices increases. In order to increase sales, Weetabix closely works with distribution channels.

Competitive Rivalry

The competitive rivalry intensity is determinant of the breakfast industry. In the United States of America, cereal industry is flooded with key players such as Nestle and Post Quacker holding.  Therefore, Weetabix must be aware of the strategies implemented by rivals and be more proactive so that it can hold its current market share.

Threat of substitutes

A substitute product uses a technology that is different in order to solve the needs of the economy. The breakfast cereal markets have a high availability of breakfast meals. Therefore, the threat of substitute is high. For example, Weetabix failed to break into the Chinese market successfully because a high number of Chinese preferred hot breakfast as compared to cold breakfast  

Threats of new entrants

The breakfast cereal industry has high profits that attract new competitors. The threats have influenced the accessibility of raw materials, government policies, labor and expertise. Cereal industry has low threats of entrant because the key player holds a market share. Furthermore, the leaders also understand all the needs of customers and have maintained customer loyalty through the creation of trust brands.

Conclusion and recommendation

Weetabix Company has implemented a differentiation strategy.  The company produces diverse products and diverse marketing strategies that suit different markets. An external environment that country control include political stability and change in tastes and frivolities of consumers.  Continuous evolution and innovation are required for the company to maintain a competitive advantage. Post holdings must maintain averaged prices with strong perceived value for it to remain competitive.

References

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Chu, B. (2017) UK economic growth dwarfed again by Eurozone in third quarter. Independent. [Online]. Available at: https://www.independent.co.uk/news/business/news/uk-economic-growth-eurozone-q3-2017-third-quarter-gdp-france-eu-brexit-a8028891.html (Accessed: 7 November 2018)

Chew, C. (2009) Strategic Positioning in Voluntary and Charitable Organizations London: Routledge

Porter, M.E., 2008. The five competitive forces that shape strategy. Harvard business review, 86(1), pp.78-93.

Spotts, H.E. and Weinberger, M.G., 2010. Marketplace footprints: connecting marketing communication and corporate brands. European Journal of Marketing, 44(5), pp.591-609.

Shakhshir, G., 2014. Positioning strategies development. The Annals Of The University Of Oradea, 977, pp.416-437.

Waters, R.D., Burnett, E., Lamm, A. and Lucas, J., 2009. Engaging stakeholders through social networking: How nonprofit organizations are using Facebook. Public relations review, 35(2), pp.102-106.