Strategic Analysis of Post Holdings' Acquisition of Weetabix: A Report

This report offers a comprehensive strategic analysis of Post Holdings' acquisition of Weetabix, examining the move as a market expansion strategy into the British market. The analysis delves into Post Holdings' strategic positioning, utilizing frameworks such as Bowman's Strategy Clock and Porter's Five Forces to understand its competitive advantages and market dynamics. The report evaluates key stakeholders impacted by the acquisition, including shareholders, the British government, employees, customers, and suppliers, highlighting the importance of stakeholder management. Furthermore, it employs PEST analysis to assess the external factors influencing the strategy, including political, economic, social, and technological environments. The report emphasizes the value of Weetabix's differentiation strategy and its impact on Post Holdings' overall strategic goals, providing a thorough understanding of the acquisition's implications.

STRATEGIC ANALYSIS 1
Strategic Analysis: Post-Holding’s Recent Acquisition of Weetabix
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STRATEGIC ANALYSIS 2
Strategic Analysis: Post-Holding’s Acquisition of Weetabix
Introduction
There is a conventional agreement among researchers, academicians, business leaders
and policymakers regarding the highly competitive nature of the international business arena.
Businesses tend to outperform each other through a broad range of competitive advantages
including low prices, advanced technology, diversification, specialization, and effective
customer service among others. Essentially, the promotion and maintenance of competitive
performance (perhaps dominance) in business necessitates organizational expansion: this
happens through venturing into new markets to enhance a business’s market share (Pelzman
2015). One of the commonest market expansion strategies in the business world is acquisition. It
is highly preferred by most multinational companies since it involves purchasing established
organizations to tap into their markets. When approached diligently, this strategy allows a
company to serve markets that would otherwise repel its products. The North American ready-to-
eat food brand Post Holdings Inc.’s recent acquisition of Weetabix is quite illustrious in this
matter.
Post Holdings Inc. is a company that deals primarily with consumer-packaged products:
it manufactures, promotes, and sells private and branded label cereal products. This United States
market leader has initiated a potentially successful strategy to promote its entry into the British
market through the 2017 acquisition of Weetabix Limited. Note that the move aims at
strengthening Post Holdings’ position in the British sphere now that it already emerges among
the leading breakfast cereal companies in the region. For now, it suffices to claim that the
acquisition is bound to trigger internal and external stakeholder transformations. In that regard,
there is a need to comprehensively evaluate the brand’s new market position to enhance the

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management’s grasp of the emergent roles and objectives in the pursuit of a smooth transition as
well as global dominance.
On that note, the current paper presents a comprehensive strategic assessment of Post
Holdings’ recent acquisition of Weetabix Ltd. Immense focus will be placed on strategic
management frameworks to enhance the readership’s understanding of the dynamics in play with
respect to Post Holdings’ 1.8 billion dollar European market penetration strategy (Drakakis
2017).
Post Holdings’ Strategic Positioning
The most fundamental aspect of any strategic analysis is a clear definition of an
organization’s strategic positioning: it involves a comparative assessment of the brand alongside
its rival company in terms of service. Such a line-of-thought has also been expressed by Kumar
and Steenkamp 2013) as he believes that strategic positioning refers to a firm’s way of
differentiating itself from its rivals through unique utility allotment to the consumers. Similar
sentiments are made by Williamson. According to him, an organization’s unique position in its
product and target market is the most basic definition of its strategic position (Williamson 2016).
One should note that strategic position allows an analyst to understand the future position of a
SBU regardless of the highly transformative business environment. When viewed from this lens,
it is apparent that strategic positioning reflects an organization’s selected niche in a competitive
environment. Bowman’s Strategy Clock and Porter’s Five Forces Analysis are strategic models
that improve an analyst’s perspective on such matters.
According to Porter, the five forces assessment technique exposes the extant competitive
forces within an industry. Such a factor allows a company to understand the roots of profitability
(in the industry) as well as the opportunities to influence profitability and competition in the

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long-run (Wolff 2014). Porter’s model offers three generic strategy options that remain
applicable in most if not all industries and firms (Backaler 2014). These approaches include
differentiation, focus, and cost leadership. As far as cost leadership is concerned, it allows an
organization to create a competitive edge that attracts sales at the expense of its competition.
Cost leadership can be implemented by cutting the production costs. Such a move makes it
possible for a firm to make sales at relatively lower prices than its rivals. Below is a graphical
representation of Porter’s generic strategies: pay attention to the scope.
Meanwhile, differentiation promotes competition through the provision of products or
services that are more attractive than the ones delivered by the competition. Some of the
common differentiation techniques include enhanced product functionality and effective
customer care. Lastly, the focus strategy revolves around organizational concentration on a
specific niche (Zollo & Singh 2004). Such an approach calls for immense understanding of the
customer needs and the market dynamics at large. This strategy can be categorized as
differentiation or cost: they involve designing goods/services or pricing strategy – respectively –
to meet the needs of the chosen niche. At this point, it suffices to note that Weetabix utilizes the
differentiation focus approach to enhance its position in the British market. The company has

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made colossal investments in the exploration of the unique customer needs: such a factor is
evidenced in the wide range of brands it produces to serve distinct needs.
Like Porter’s five forces framework, the Bowman’s strategy clock demonstrates an
organizations strategic positioning. It achieves this through exploration of product placement
options in the wake of immense industrial competition. Some researchers argue that this model is
a vital extension to the preceding strategy (Bian & Marchione 2018). Such a bold declaration is
grounded on the fact that the framework focuses on product positioning based on its perceived
market value. Here, emphasis is placed on the customers’ ability to purchase the product. When
placed into perspective, Weetabix’s position on the Bowman’s strategy clock is differentiation.
Such is the case as the company focuses on offering highly valued products at convenient prices.
This approach to business is quite necessary in the breakfast cereal production sector considering
the fact that all industry participants use similar raw materials – mainly cereals – to create
different products. Clearly, differentiating the final products offers Weetabix a unique
competitive edge (Datta 1991). It appears wise to mention that an in-depth exploration of
Weetabix is vital in enhancing one’s grasp of Post Holdings’ strategic position since the benefits
were transferred to the new owner as soon as the acquisition was completed (Hanemann &
Huotari 2015). Below is a graphical representation of the Bowman’s strategy clock: note how
Weetabix’s differentiation strategy enhances its products’ value in the eyes of the consumers.

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Clearly, Weetabix’s product positioning offers a greater level of value in the global
market. Such a commendable performance explains why Post Holdings proceeded with the
acquisition. In its successful attempt to enhance its product value, Weetabix invests heavily in
Research and Development. The Breakfast on the Go campaign is quite exemplary in this regard:
it was a product of an extensive survey on its competitor Nestle. The investigation revealed that
60 percent of breakfast cereal consumers prefer eating ‘on the go’. It also showed that less than
30 percent of the remaining consumers spend roughly 15-30 minutes in breakfast preparation.
This informative project allowed Weetabix to design its products to meet the unique demands:
portable healthy cereals for ‘on the go’ clientele. The differentiation strategy saw it account for
approximately 70 percent of the Kenyan cereal market in FY 2017. Similar trends are witnessed
in its British operations. Such a bold supposition is founded on the fact that most of the
company’s campaigns in the country appeal to the consumer’s emotions. For instance, it
positions its products as a convenient option for busy families with high demand for healthy
products (e.g. the ‘Weetabuddies’ campaign).

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***Note that the immense emphasis on Weetabix’ strategic position is intentional since it is now
Post Holdings’ fully-owned subsidiary. Such a perspective allows the reader to grasp the
strategic value of the acquisition.
Evaluation of Key Stakeholders
The term stakeholder has a considerably broad meaning in the business context.
According to Meunier, Burgoon, & Jacoby (2014), it refers to an individual or a group that is
affected by or can affect (both directly and indirectly) the attainment of organizational goals.
According to him, they have a stake in the success of the firm. Stakeholders are categorized as
primary or secondary depending on their control on the organization’s internal activities. The
first lot includes equity shareholders, suppliers, employees, customers, business partners,
investors, and shareholders while the latter includes the public, global society, competitors,
media, government, and trade bodies (Moat 2000). Clearly, the secondary stakeholders have
limited control over how an organization is operated. Post Holdings’ acquisition of Weetabix
involved a plethora of stakeholders.
During the purchase, the shareholders of both companies governed the operations and
activities of the companies in collaboration. Note that shareholders from the acquiring company
had a buying stake while their counterparts had a selling stake (Angwin & Meadows 2015). After
the acquisition, Post Holdings shareholders control both organizations. The fact that Weetabix is
a foreign brand also places the British government as a primary stakeholder. The preceding
statement presents a peculiar scenario especially since the government is usually considered a
secondary stakeholder (Shi, et al. 2017). In this case, the British government’s role as a primary
shareholder involved the assessment of the legality of the acquisition process as well as Post
Holdings’ adherence to corporate policies. It is also important to note that the employees were

STRATEGIC ANALYSIS 8
also affected by the transaction. Such is often the case since the merged companies have to
streamline their human resource to enhance the production process. Customers and suppliers
were not affected by the acquisition since each company maintained its previous market status
(Richards & Hamilton 2015). This is to imply that the sale was quite successful in the sense that
most of the key stakeholders remained unaffected. The matrix below illustrates how Post
Holdings ought to manage its stakeholders after the acquisition: note that the ones with high
power and interest must be managed closely to facilitate success.
The External Factors Driving the Strategy
PEST Analysis
PEST Analysis is an effectual tool that improves an analysts understanding of an
organization’s external environment. This strategic tool enhances organizational preparedness
particularly as the management utilizes knowledge garnered from the evaluation to align its
objectives, strategies, and procedures (Ormanidhi & Stringa 2008). As a rule, the framework is
limited to political, economic, social, and technological hence the acronym PEST. This type of
assessment presents a lucid picture of an organization’s operating environment from multiple
perspectives.

STRATEGIC ANALYSIS 9
Political Environment. By now, it is obvious that Post Holdings’ acquisition of Weetabix
represents a bilateral corporate contract. Such a postulation implies that the entire process –
inclusive of its future – is highly dependent on Post Holdings’ adherence to the British political
demands. The organization will be subject to the foreign country’s employment laws, foreign
trade regulations, legislative laws, and national stability (Williamson 2013). This factor presents
a challenge since the British government increased the minimum hourly compensation rates for
employees aged 25-years and above by 0.3 pounds. The table below presents a detailed overview
of the unprecedented increase in hourly wages for the past few years:
YEAR 25 + yrs. 21 – 24 yrs. 18 -20 yrs. Under 18 Apprentice
2017 7.5 7.05 5.6 4.1 3.5
2016 7.2 6.95 5.55 4.0 3.4
2015 6.7 6.7 5.3 3.87 3.3
2014 6.5 6.5 5.13 3.79 2.73
When placed into perspective, Weetabix’s affiliation to the United Kingdom is bound to augment
Post Holdings’ operation costs. Furthermore, the British Work Time Regulation 1998 and the
Employment Rights Act 1996 twist the arms of business entities through their promotion of
employee autonomy (Berning & Rabinowitz 2017). The ‘regulation’ mandates firms to offer 28
days paid leave to their workers while the ‘act’ gives employees the right to request flexible
shifts for personal reasons including child care. Such a scenario places Post Holdings on a tight
rope in the sense that its management must seek alternative means of minimizing its operating
costs. Failure to adhere to these rules might paralyze Post Holdings’ United Kingdom operations.
Economic Environment. The economic environments in the United States and the United
Kingdom are quite distinct. This is quite true considering the stagnating impact BREXIT has had
on the country’s economic growth. According to research, the United States economy in FY

STRATEGIC ANALYSIS 10
2017 had escalated by 2.7 percent while the UK recorded barely 0.5 percent growth. Analysts
attribute this detrimental trend to BREXIT and the inflation recorded in the third quarter (FY
2017) (Zollo & Singh 2004). The economic dilemma faced by Britain can potentially affect the
demand and supply of various products, especially snacks. In the wake of such a realization, Post
Holdings’ present options are cost reduction and market diversification to counter the economic
uncertainties: not to mention the fact that operation costs are high following the hourly wage
increase.
Social Environment. Social factors such as cultural trends, consumerism, demographics,
and tradition are also critical influencers of organizational success in foreign nations. At this
point, the reader is urged to reflect on the popular sociocultural differences between British and
American citizens. It is apparent that the company will have to align its foreign activities to the
local social demands. At this point, the concept of glocalization emerges. This novel theory holds
that multinational entities should customize its operations to meet local needs inasmuch as it
pursues global goals (Longacre, et al. 2017). Failure to apply such an approach proves futile for
most organizations: China’s Bright Food’s failure to capture the Chinese market during its
ownership of Weetabix is quite illustrious. Note that Bright Food considered selling Weetabix (to
Post Holdings) since its Chinese operations proved futile since consumers prefer hot meals to
cold cereal for breakfast. As much as the UK and the US share a plethora of sociocultural traits,
they are somehow distinct. For this reason, Post Holding is faced with the challenge of
understanding the fundamental social dynamics in the UK. It is worth noting that Weetabix’s
strong brand position in the country serves as a cushion to the new owner.
Technological Environment. The current digital revolution has had a tremendous impact
on the retail sector. Consider novel business models such as Amazon and Alibaba. These

STRATEGIC ANALYSIS 11
disruptive forces have transformed various industries including retail and transportation; hence,
one cannot confidently conclude that the breakfast cereals market is safe (Mkandawire, et al.
2015). For this reason, Post Holdings needs to capitalize on the Information Communications
Technology (ICT) to improve its service delivery. Perhaps, a graphical user platform can allow it
to deliver cereals for the ‘on the go’ cereal consumers. It can also invest in machines that highly
customize Weetabix’s final products in terms of shapes and forms. Either way, the acquisition
places Post Holdings on a competitive position in case disruptive models emerge.
Critical Industry Analysis
At the moment, the breakfast cereal sector is characterized by many industry participants
and products. Such a competitive environment necessitates a clear understanding of the factors
that define organizational profitability. The knowledge garnered from industry evaluation allows
an organization to fine tune its strategies to foster dominance amidst the competition (Jeswani,
Burkinshaw, & Azapagic 2015). Porter’s five forces analysis is quite instrumental in such
evaluations. The model holds that an industry is characterized by five primary dynamics
including supplier power, competitive rivalry, buyer power, threat of new entry, and threat of
substitution. This section provides a detailed view of the British breakfast cereal market.
Supplier Power
Also termed as the market of input, supplier power refers to the impact raw materials,
expertise, and labor suppliers have on product and service prices. Porter’s model conveys the
rational assumption that supplier power is high when their products lack substitutes (Ormanidhi
& Stringa 2008). In this sense, their power is high in the breakfast cereal industry since the
suppliers of wheat and grain are relatively low (Shi et al. 2017). This factor does not challenge

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Post Holdings since Weetabix had strategically positioned its British factories to foster timely
delivery (from suppliers). This is to imply that the suppliers’ power has been neutralized.
Buyer Power
Also known as the markets of output, it assesses the buyers’ ability to influence the price
of products/services. The buyers’ bargaining power is usually high when there are various
substitute and alternative products (Williamson n.d). As far as the breakfast cereal industry is
concerned, it is characterized by intense competition. Not to mention the fact that the main
distribution channel (retail stores) offer a broad range of cereal products to the end buyers
(Drakakis 2017). Such a factor gives more power to the buyers since they can easily switch to
alternative brands in case of any inconvenience. Weetabix has close relationships with its
distribution channels to enhance its grasp of the emergent consumer needs. Such a factor will
have a positive impact on Post Holdings’ UK operations.
Competitive Rivalry
By now, it is obvious that the breakfast cereal industry is highly competitive on a global
scale. The industry boasts of giant brands such as Nestle, Kellogg, Post Quacker, and Weetabix
among others. When viewed from this perspective, the acquisition of a major competitor was
vital in enhancing Post Holdings’ global position. For now, its newly-acquired British subsidiary
should focus on maintaining industry leadership to promote progress in the competitive
environment.
Threat of New Entry
This force revolves around the industrial barriers facing potential market entrants. It goes
without saying that highly profitable and competitive industries attract new players. As far as the
breakfast cereal industry is concerned, it is highly impenetrable since its current players hold

STRATEGIC ANALYSIS 13
significant market portions (Jeswani, Hellwig, & Azapagic 2018). Most of the brands in the
market are owned by giant corporations including Post Holdings, Nestle, and Bright Food among
others.
Threat of Substitution
This force emphasizes the competitors’ ability to meet their buyers’ needs through
alternative brands/products/services. From an economical perspective, a substitute product is one
that utilizes different production technique to solve a similar need (Anonymous 2002). When
placed into perspective, there are various breakfast meals options including fast food options.
Such a factor makes it hard for the breakfast cereal producers to dominate the food sector.
Therefore, the industry is characterized with intense threat of substitution. Post Holdings’ new
subsidiary should diversify its production to capture various consumer segments (e.g. the
Chinese breakfast consumers).
Conclusions
Post Holdings’ 1.8 billion dollar acquisition of Weetabix is a strategic move that will
augment its entry into the United Kingdom. Its new subsidiary’s differentiation strategy places it
on top of most if not all of its British rivals. A rigorous exploration of its macro-environment has
shown that little impact can be faced from the external environments including political (due to
BREXIT) and economic (due to the overlapping economic performances in the US and the UK).
On the other hand, the industry is highly competitive: the suppliers have limited power while
buyers define the pricing strategies. Such a scenario demands intense investment in the brand’s
perceived value. Failure to do so might jeopardize the acquisition’s profitability.
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