Post Holding’s Strategic Position , Essays (university) of Strategic Management

Download Post Holding’s Strategic Position and more Essays (university) Strategic Management in PDF only on Docsity! A critical strategic analysis of the current strategic position within Post Holdings- Weetabix. Bolu Olatunji – 74112105 Lecturer: Amarachi AMAUGO Strategic Analysis; Tools and Techniques (ST4S38) 28th February, 2021. 1 | P a g e 74112105 Contents 1.0 Introduction .............................................................................................. 2 2.0 Post Holding’s Strategic Position ............................................................ 2 2.1 Porter’s Generic Strategy Grid ......................................................... 3 2.2 Bowman’s Strategy Clock ................................................................. 4 3.0 Stakeholders Analysis and Mapping ....................................................... 5 4.0 External Environment PESTLE Analysis ................................................ 6 4.1 Politics .............................................................................................. 7 4.2 Economic .......................................................................................... 7 4.3 Social ................................................................................................. 7 4.4 Technological ..................................................................................... 8 4.5 Environmental .................................................................................. 8 4.6 Legal .................................................................................................. 9 5.0 Industry Analysis – Porter’s 5 Forces ................................................... 10 5.1 Threat of new entrants ..................................................................... 10 5.2 Bargaining power of buyers ............................................................ 11 5.3 Threat of substitute products or services ..................................... 11 5.4 Bargaining power of suppliers ....................................................... 11 5.5 Competitive Rivalry .......................................................................... 12 6.0 Conclusion and Recommendation ........................................................ 12 7.0 References ............................................................................................ 13 4 | P a g e 74112105 surpassing Treehouse Foods which is valued at $2.4Bn. According to craft.co (2021), Post Holdings, has the least number of staff (10,200 employees). One could deduce through the revenue they generate, that it will be difficult to be a cost leader in this fierce competition. An attempt to reduce the selling prices of products, may be unsustainable and will thus lead to a possible downsizing of staff in the future. On the contrary, because of the myriad of their product offerings, they stand a great chance go forward in their chosen strategy (Differentiation focus). This is because, from their acquisitions in time past, we can see that they like to aim for niche markets. This opinion, is backed by Visionone (2017), who points us to the fact that, meeting customers unique needs is Weetabix’s chosen strategy of focus. 2.2 Bowman’s Strategy Clock As an addendum to Porter’s generic strategy grid, Bowman’s strategy clock, extends porter’s model by examining a company’s value proposition to its customers. This opinion was made by “thebusinessprofessor.com”. According to ‘Four-week MBA’, they said that the Bowman’s Strategy Clock is “a marketing model concerned with strategic positioning”. They said “The Bowman’s Strategy Clock seeks to illustrate graphically that product positioning, is based on the dimensions of price and perceived value”. Source: https://fourweekmba.com/bowmans-strategy-clock/ 5 | P a g e 74112105 Taking a more granular look at Weetabix’s strategic positioning through this illustrative clock developed by Cliff Bowman and David Faulkner (who concentrated on ‘price of a product’ in relation to ‘perceived value to the customer’ to point out 8 strategic stances of an organization’s products), it is quite apparent to place Weetabix at a differentiation strategy position on the clock. This reason for this, is owed to their participation in R & D which is supposed to introduce their product to emerging markets in the bid to fulfil the ever-changing consumer patterns (Drakakis, 2017). In 2017, BBC highlighted that Weetabix exported its various cereal brands to more than 80 countries with unique consumer needs. 3.0 Stakeholders Analysis and Mapping People who have vested interests in the activities or welfare of an organization can be considered to be stakeholders. Being abreast of the Weetabix acquisition by Post holdings, one easily could deduce that a re-mapping of stakeholders would ensue. Stakeholder matrix of Post Holdings and Weetabix High power Keep satisfied 1. Customers 2. Partners 3. Investors Key players 1. Senior executives 2. Shareholders 3. Employees 4. Competitors Low Power Minimal effort 1. Public 2. Pressure groups, Unions. 3. Media/Press Keep informed • Regulatory bodies • Supplier • Government Low interest High interest 6 | P a g e 74112105 This pretty much summarizes the stakeholders of many companies. Weetabix’s priority is to keep their customers, partners and investors satisfied; customers because, they are the whole essence of the business. Investors, because they are the ones who help to fund the operations necessary for meeting the consumer needs. Partners because, they are the ones who will help connect their products to the customers. They also need to be informed and keep the government informed of their activities in order to ensure that they are playing safely within the stipulated regulations in order to deliver quality products to their customers. 4.0 External Environment PESTLE Analysis Without properly understanding the environment a business operates in, it will not be around for long if it ever gets to lift off the ground. Source: https://fourweekmba.com/pestel-analysis/ 9 | P a g e 74112105 through innovation, they found a way to stay profitable which reducing the impact that their products have on their operating environment. 4.6 Legal Various countries have different ways they coin their constitution from the processes involved in registering the companies, to intellectual property infringement, health and safety laws etc. The degree of strictness of these laws could hamper corporate productivity. The head of the Legal team in Weetabix, Helen Wilson (2018) said, “I do a lot of Intellectual Property work for our brands, while food safety and competition laws are also key areas for us. We also spend time looking at legislation in new territories to ensure we have considered everything before launching in a new market.” In 2018, there was a class action Lawsuit in New Zealand against Weetabix by an Australian company named ‘Weet-Bix’ for allegedly infringing on New Zealand’s copyright laws by the importation of Weetabix. They claimed that the products confuse their customers owing to the fact that the Australian company got there before the British company. The court ruled in favor of the Australian food giant ‘Sanitarium’ which was the parent company of ‘Weet-Bix’. 10 | P a g e 74112105 5.0 Industry Analysis – Porter’s 5 Forces In order to gain a better understanding of the industry and the competitive forces at play in Post Holdings’ space, we will use Michael Porter’s 5 forces model. Source: https://fourweekmba.com/porter-five-forces/ 5.1 Threat of new entrants Every business should be well aware that there will always be an opportunity for new competition. The new entrants usually come with differentiation and an attempt to be a cost leader. In Nigeria, St. Louis sugar was the in-thing until Dangote sugar stepped in. Dangote’s strategy was to enter with a very competitive price strategy which was less than half the price that a single unit of St. Louis Sugar was going for. Dangote studied the market and realized that Nigerians favored cost leadership over differentiation. Weetabix has its products in Nigeria as with other products like Kellogg’s, Golden morn and other cereals. Their strategy has been to drive home their differentiation strategy but their high competition has reduced their profitability margin owing to the Nigerian market culture. Weetabix in Nigeria however, is more popular among the upper middle class who have access to disposable income. 11 | P a g e 74112105 5.2 Bargaining power of buyers Owing to the diverse product offerings that Weetabix provides, the power of buyers to reduce Weetabix’s profitability in the UK is quite significant as the Brits tend to prefer choices as opposed to the Nigerian market where their choices are driven significantly by a product pricing. In the UK, businesswire.com (2017) recorded Weetabix is the most recommended cereal brand. In 2021 however, Statista (2019) recorded Kellogg’s as the most recommended cereal brand. This is because other competitors added more variety to their product offerings at a competitive price; Weetabix came in 3rd only after Nestle. 5.3 Threat of substitute products or services As described earlier that there was a correlation in bargaining power of buyers with variety. In other words, the increase in variety in cereals is directly proportional to the sway in buyers’ choices as seen in the competition of the number one spot between Kellogg’s, Nestle and Weetabix. This analogy is however only akin to the British market as other markets are simply permutations of differentiation and pricing. 5.4 Bargaining power of suppliers One of the ways a company can remain sustainable competitive, is if they know their value chain and they have a control on a substantial part of it. Wheat for instance, is the main raw material for Weetabix. There is however a lot of wheat farms within and over 40 miles from their head office. This means that suppliers cannot properly bargain unless they posed a united front through association where their pricing for raw materials are independent of their own selfish gain. 14 | P a g e 74112105 knowledge-into-weetabix-an-insight-into-their-legal-team/ [Accessed on: 27th February, 2021]. Malik, F. M., Anuar, A. M., and Khan, A. W. (2014). ‘Mergers and Acquisitions: A Conceptual Review.’ International Journal of Accounting and Financial Reporting. Available at: www.macrothink.org/journal/index.php/ijafr/article/view/6623. [Accessed on: 27th February, 2021]. Orr, G. and Xing, J. (2007). ‘When Chinese companies go global: An interview with Lenovo´s Mary Ma’. McKinsey on Finance, 23, 18-22. Available at: http://corporatefinance.mckinsey.com/knowledge/knowledgemanagement/mof.htm. [Accessed on: 27th February, 2021]. Porter, M. E. (2008). ‘Competitive Strategy: Techniques for Analyzing Industries and Competitors’, New York: Simon and Schuster Porter, M. E. (2008) On competition. Boston, MA: Harvard Business School Pub Post holdings (2021), Available at: https://www.postholdings.com/about/post-history/, [Accessed on:25th February, 2021]. Post Holdings competitors (2021). Available at: https://craft.co/post-holdings/competitors [Accessed on: 25th February, 2021]. Small Business (2014) Available at: https://smallbusiness.com/start/jason-fried-starting- business-easy-staying-business-hard/ [Accessed on 25th February, 2021]. 15 | P a g e 74112105 Statista (2019). ‘Leading Breakfast Cereal Brands in Great Britain’ Available at: https://www.statista.com/statistics/301914/leading-breakfast-cereal-brands-in-the- uk/#:~:text=This%20statistic%20shows%20a%20ranking,third%20were%20Nestl%C3% A9%20and%20Weetabix. [Accessed on 28th February, 2021] Thebusinessprofessor.com. (2021). Bowman's clock. [online] Available at: https://thebusinessprofessor.com/knowledge-base/bowmans-clock/ [Accessed 25th February, 2021]. Weetabix Corporate. (2021). Weetabix Corporate | Post Holdings Completes Acquisition of Weetabix. [online] Available at: https://www.weetabixfoodcompany.co.uk/press/news- archive/post-holdingscompletes-acquisition-of-weetabix [Accessed 25th February, 2021]. Weetabix On the Go Breakfast Drink Chocolate 250ml (2021). Available at: https://www.indiamart.com/proddetail/weetabix-original-wholegrain-cereal-450g- 18958200491.html. [Accessed at: 27th February, 2021]. Weetabix nutritional value (2020). Available at: https://www.weetabix.co.uk/our- products/weetabix/weetabix/. [Accessed at: 28th February, 2021]. Weetabix-on-the-go (2021). Available at: https://www.weetabixonthego.co.uk/our- products/original/vanilla. [Accessed at: 27th February, 2021].