Strategic analysis; tools and techniques

To cite this, reference to: Agbedzavu, E., Amarachi (2021); Analysis and Critical Evaluation of
Strategic Change within the context of Post Holdings Inc’s acquisition of Weetabix Limited
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FACULTY OF BUSINESS AND SOCIETY
Master of Business Administration (MBA)
University of South Wale, UK
Tutor’s Name: Dr. Amarachi Amaugo
Student’s Name: Agbedzavu Emmanuel
Module Code: ST4S38 Module Title: Strategic Analysis; Tools & Techniques
Work Tittle:
Critical Evaluation and Analysis of Strategic Change within
the context of Post Holdings Inc’s acquisition of Weetabix Limited
Submitted by,
Agbedzavu Emmanuel
Enrollment ID: R1708D3236685 Date: 31/01/21, 4:37 pm

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INTRODUCTION
The growth of businesses become an itching issue that always cross the mind of industry players,
researchers and other stakeholders. One of the strategic moves by managers to have a
competitive edge, market share and growth is to acquire another business in targeted areas as a
strategic expansion plan of the organization. According to Ramakrishnan, (2010), as quoted in
the work of Anshu M., P. K. Jain (2012.p1), mergers and acquisitions have become a corporate
strategic tool for a fast growth and building of organizational capacities.
Post Holding Inc, is an American business entity which produces and sells cereal food products
to the market segments and acquired other companies in the food industry. Post Holdings
swallowed the second largest UK’s food company, Weetabix Limited in 2017 through
acquisition which saw Post Holding Inc. exchanging $1.76 Billion as a market value for the deal.
This move gives America company opportunity to enter UK market in anticipation of growth,
sustainable expansion and profitability, and capacity building in food industry.
In light of this strategic move of acquisition, this paper seeks to critically analyze Post Holdings
Inc.’s acquisition of Weetabix Limited in 2017. This analysis covers the thematic areas of
strategic position, stakeholders’ identification, external environment and industry analyses of
Post Holdings Inc as it takes over Weetabix Limited. These strategic analysis tools and
techniques such as PORTERS’ FIVE FORCES MODEL, BOWMAN’S STRATEGY CLOCK,
STAKEHOLDERS’ MAPPING, and PESTEL are used to unravel forces that affect business
operations and the strategic direction to accomplish objectives and goals. This work relies on a
qualitative methodology to construct this piece of work in order to infer the reliability of tools
and application of theory in case of acquisition of Weetabix Limited by Post Holdings Inc.
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EVALUATION OF THE RELEVANT LEVELS OF STRATEGY.
Strategy formulation, implementation, monitoring and evaluation usually takes place in three
levels in an organization, especially in the large businesses. Proper communications among
employees at these levels interweave the deliberate efforts of all which enhances strategy leading
to target, and goal accomplishment.
These levels include CORPORATE, STRATEGIC BUSINESS LEVEL AND FUNCTIONAL
LEVELS.
Corporate Level of Strategy is the high governance body of the organization which comprises
of Chairman, Executives, Directors and others. At this level, organization is mirrored through its
mission, value creation and growth, diversified lines of operations of large spectrum or scope.
However, the rigidity of strategic choice direction at corporate level can stifle growth. It is at this
juncture that Prasad, Junni (2016); Gilmore el al (2013) averred that the participation of
employees in decision making processes enhances innovation and boost competitive advantages.
Therefore, representatives of all stakeholders in framing the strategic choice of business is
empirically recorded.
Strategic Business Level as a second to above level, is an aggregate competences of business
managers charged with responsibilities to gather, process and analyze the forces mitigating the
desired expectations of organization and response to each diversified lines of business by
drawing on the strategic paths design of the corporate level. According to (Melnyk et al. (2014);
Pereira, Vila (2016) business exist because they are guided with good decisions. At this level, a
line of business focus is to develop strategies in areas of production processes, marketing,
product developments, competitive advantage strategy, et cetera, and integrate these strategies in
effort to response to rivalries in the industry.
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The development of competitive advantages is unique that competitors find it difficult to copy,
therefore, ensuring long term competitive edge over rivalries. Creation of competitive value can
be cost leadership, differentiation, technology advancement and other customers’ value
proposition.
Functional Strategic Level comprises of departments making efforts to meet strategic
objectives of corporate and business level strategies. A clear characteristics of this strategy level
from the first two above is the short term objective concentration and engagement of managers.
Production department, Marketing, Research and Development department, Human Resources
Management department are all have specific strategic objectives.
STRATEGIC POSITION OF THE COMPANY
Businesses are operating in uncertain dynamic environment, that plans of achieving objectives
are shortened than expected. This calls for a careful configuration of resources in responding to
unexpected eventualities in organization. As opined by Johnson et al, (2017), they view strategy
as a deployment of needed resources within the changing environment to meet the needs and
expectations of customers and other stakeholders in order to achieve competitive advantage in a
long run. Therefore, rolling-out a connected activities that are difficult to imitate by competitors
by creating values for target customers foster a competitive advantage.
The strategic positioning of the company as stated by Wickham (2001), is a manner in which an
organization distinguishes itself from the crowd of rivalries in the market. Post Holdings inc’s
acquisition of Weetabix Limited in United Kingdom food industry or market analyzed its
position in relation to existing competitors, and market segments which this paper seeks to
analyze by using Michael Porters’ generic model and Bowman’s strategy clock to comprehend
the market it operates and the competitive advantage position it employed over competitors.
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3.1 Michael Porter’s Generic Strategy Model
Both new entrants and existing companies risk liability of being inexperienced and limited
resources, thus new companies (Hannan, M., T., Freeman, J. (1984), which they have to learn
and find pattern for survival (Hannan M.,T, Freeman, J., 1989) , and same as the existing ones
can face liability but may survive due to their diverse stock of resources (Fichman M, Levinthal,
D.,A 1991). Therefore, to overcome failure and increase market share, growth and offer value
products and services to market segments, organizations have to strategize towards their
successes in the competitive market space. To achieve this, Porter’s generic strategy will be used
as a cue or torchlight being switched on, in the darkness to show the path.
PORTER’S GENERIC STRATEGIES
Sources: Islami et al. (2020) , https://doi.org/10.1186/s43093-020-0009-1
According to Porter, M., E. (2008,1980), believes that with one of above approaches to market
context will yield a positive results within a turbulent and organizational changing environments.
Low Cost Strategy or leadership is an approach adopted to offer company’s products or
services at lower cost and achieve cost advantage by the innovative processes in manufacturing,
experience curve advantage, large economies of scale, and other capabilities that lower the
production cost better than competitors Griffin, R., W (2005; Pulaj, E. (2014) ,
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Low Cost Strategy
Differentiation Strategy
Focus Strategy
Firm Performance

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therefore, it induces the low pricing strategy in order to capture a significant share of market.
Porter, M., E (1985) has proved the relationship between low cost strategy and company’s
performance, thus encourages that organization reduces and controls its costs of production and
provide efficient performance of goods to customers in order to maintain competitive advantage.
This approach is relevant in Post Holdings Inc case, where needed technological assets are
acquired and cross fertilization of competence of managers from acquisition is utilized in cost
effective processing of cereal food products and others which position Post Holding to compete
rivalries on price in the market.
Differentiation Strategy is used to provide customers with a distinct products or service and
with perceive cost effective benefits (Porter, M., E 1985; Pulaj, E.(2014). The use of this strategy
is ripe when company provides unique and better value to customer by offering quality products
and its benefit features. Here too, most of the inherited or acquired products by Post Holdings are
labeled with consumers’ information and other features that convey a perceived value of
products on markets to the buyers, and helps to maintain customer loyalty to the brands,
therefore, increases chance of getting market share and growth.
Focus Strategy is a means by which company concentrates on specific regional market, product
line or a specific market segment. The main objective of this approach is to serve customers in a
close market (Davidson, S. 2001; Griffin, R., W (2005). Focus strategy is successful where the
demand is sufficient to keep firm going and buyers have a special preference for the product but
there is absence of competitors.
Bowman’s Strategy Clock
Bowman, Faulker (1997) aligned their work to Porter’s generic strategies and other researchers
on company positioning by developing eight (8) clock-like positions on Clock and impact of
each position on company’s performance in relation to customers’ perceive value and cost.
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Source: (Bowman, Faulkner (1997)
Bowman believes organizations can achieve a competitive advantage with category 1 to 5,
but unattractive position at 6 to 8. However, this work is limited to strategy adopted by Post
Holdings in Weetabix acquisition notably positions 3, 4 and 5 on the clock.Before the
acquisition, Weetabix is known with its differentiation, focused and hybrid positioning in
the market, which are consolidated by the acquirer as a competitive advantage positioning.
Firstly, hybrid position is where Weetabix-Post Holding moderately price their products
with high added value which buyers perceive to be of quality and at low price. Royal
customers are gained through this position. Post Holding Inc achieved this by reliance on its
capabilities of competence,
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technology and efficient processing which helps drive down cost of production and offers
value to its target markets.
In addition to above, Weetabix –Post Holding uses differentiation position in offering its
products to markets in Canada, Ireland, Uk, and others parts of the world through retail,
wholesale and third party engagement along the distribution channels. This method presents
high quality products and differentiated in manner that rivalries find it difficult to imitate the
value offered to buyers, and helps to maintain the large products portfolio brands in different
geographic locations and markets.
STAKEHOLDER ANALYSIS
Stakeholders are actors (individuals and group of individuals) who have interest in an
organization, and who affect and impacted by the result of organization (Freeman 1984,
2010). This entails the identification of these groups and individual interests and their influences
(power) over the performance of organization, and how the intra and inter-relationships can be
managed. These actors can be grouped as primary and secondary stakeholders (Meixell, Luoma
2015). In the context of acquisition of Weetabix by Post Holdings Ltd, stakeholders are grouped
as primary stakeholders such as owners, employees, customers, investors and financiers,
suppliers and partners while the secondary stakeholders are government, media, competitors, the
public, unionism, trade association (Seuring, Muller 2008b). Above actors influence and exert
pressure on an organization that shape and improve on its performance or sometime leads to a
failure which affects all concerned stakeholders in various degrees. Bryson (2003) states that
identifying stakeholders to the project is the analytical cue to comprehend actors, and helps to
develop strategy to manage primary and secondary stakeholders and to attain organizational
goal. These stakeholders are identified through stakeholder mapping which helps to reveal each
actors interest, influence and thereby incorporate into a framework in order to address any
influence that may affect strategic direction of the organization.
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This paper employs interest and power matrix quadrant to illustrate how interests and influences
of stakeholders on organization.
Stakeholder Mapping: The power and Interest Matrix
Low High
Low
Power
High Source: A. Mendelow, Proceedings of the Second International Conference
on
Information Systems, Cambridge, MA, 1991.
With above matrix, it reminds the managers who formulate strategy to bear in mind the kind of
relationship ought to be kept with each group of the quadrants, in order to sail the strategy
smoothly towards objective accomplishment. According to above illustration, stakeholders of
quadrant denotes ‘A’’ have low interest and low power such that their influence on strategic
move is insignificance but to be managed well. Businesses can also address stakeholders like
public, government in quadrant ‘’B’’ through communication but have power to frustrate the
strategic move of the organization. That is why Post Holdings has to comply with regulatory
stances in the food industry. Region ‘’C’’ group has a high interest and wield a significant
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A
Minimal effort=
media, public
B
Keep informed=
government, public, state
agencies
D
Key players = Owners,
employees, rivalries,
industry, union etc
C
Keep satisfied=
customers, suppliers,
partners.

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influence which can jeopardize the strategy. A good example is customers’ budget,
consumerism, product injury claims and their willingness to switch to other producers, thereby
defeating the notion of loyalty. The quadrant ‘’A’’ comprises with shareholders (owners),
executives and other employees who play a major roles in framing and accepting the strategy,
therefore, their interest and power is high that their interests are to be closely monitored and
managed.
EXTERNAL ENVIRONMENT ANALYSIS
Businesses do not operate in vacuum, they interact with environmental forces that influence and
impact on its operations. In these changing environments, managers have to rely on and be
guided with data, analytical tools and skill for their decision making. Therefore, PESTEL
analysis is a tool use for scanning external environments of business operations (Vasileva, 2018).
PESTEL analyses are done through an acronym of political, economic, social, technology,
ecological and legal (Kalios, Read, 2013; Gamble et al, (2015, pp.38), and will be applied to Post
Holding Inc taking over the Weetabix.
Political environmental force of business encompasses the political climate, bye-laws,
regulations, industry focused policies, tax policy, fiscal policy and other policies of various
governments and how they impact on the business operations. United Kingdom witnessed a
political stability which attracts investors, like Post Holding Inc to invest in Weetabix. Again,
wage increment in 2017, increased a purchasing power of households and this means that
consumers may increase their purchases for what is offered by Post. However, the decision of
political actors on Brexit plummets the pounds against other currencies and the deregulation
heightened the competition in the industry.
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Economic environment represents a general economic views, trends and its effect on the
business. Business supporting mechanism through flexible finance package by Banks, lending
and interest rates, exchange rate, inflation, GDP et cetera affect the performance of the
organizations.
Post Holdings –Weetabix operates in many countries, therefore, a country and geographical
specific strategies be tailored to suit the market segments and the prevailing economic
dynamisms. Instance like Brexit plan plummets the pounds against other currencies and reduces
purchasing power of households and firms.
Social factors of business environment analyses how demographic patterns, societal values,
culture, level of education, lifestyles and others impact on the growth and influence the choice of
organizational strategy need to be assessed in business environment context. Acquisition of
Weetabix and globalization, Post Holdings Inc has to develop its products to meet socio-cultural
dynamism of local, regional and national values. As opined by (Allchin, 2012), the research and
creativity will be necessary tool to understand various cultures, change in behavioural patterns
and craft values for niche markets. This cultural differences manifested as Weetabix experienced
incomparable turnover in United Kingdom market than in China, due to preference of hot cereal
breakfast by Chinese customers and cold cereal breakfast in UK.
Technological forces are fast changing the business environment that new processes of
production have emerged, e-marketing space, new products development, improvement of
existing goods, and communication bring a drastic change in business environment. It is
therefore, important for organizations to analyze this development and its effects on organization
and society which may presents both threats and opportunities.
Ecological forces of business environment include climate change, control and reduction of air,
soil and water pollutions and recycling of wastes. Healthy business relationships with others, fair
treatment of employees, suppliers and others also form an ecosystem of business.
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Awareness of government regulatory policies on ecological issues, and knowing the effect of
environmental forces help strategists to incorporate good practices of green policies in
production, environment, and fair treatment towards ecosystem members.
Lastly on the PESTEL analysis is the Legal aspect concerning the industry, firm, labor, foreign
investment, health and safety laws with which organizations have to comply. These laws differ
from one country to others, therefore, it is imperative to abreast with specific country’s laws and
regulations regulating the industry within which firm competes.
However, PESTEL analyses as a tool is highly criticized that all factors considered in it are fast
changing, so its reliability in entirety is flawed. It is also argued that all data on this analysis are
not readily available for use and in the age of information overload, everyone expresses his or
her views subjectively and not from right sources for analysis, thereby churning out inaccurate
data.
Industry analysis
Industry is made up of number of organizations that produce and offer similar goods and services
to the market (Johnson, el al 2017). This means each of the firms has to strategize to survive in
the industry. In this regard, Michael Porter developed framework in 1979, five forces analysis to
help practitioners and organizations to figure out how attractive (profitability) the sector or
industry is. Porter, E., M. (2008) emphasizes that where there are high intensity of these five
forces, such market or industry is not profitable and vice versa.
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Below illustrates how competitive firms battle in the industry
Porter’s five forces framework (Porter, 2008)
Threat of entrants is identified as more firms coming into industry to produce and sell the same
goods and service as the existing firms. This heightened the competition within the sector, except
there are barriers to deter entry. These barriers to entry in form of government protection policy,
economies of scale and experience of existing firms, Access to raw material and distribution
channels advantages , retaliations and differentiation efforts from existing companies need to be
overcome by entrants, and can serve as enough barrier to new firms. Post Holding consolidates
on strategy of differentiation in food industry and this gives a perceived value offers to the
customers and their loyalty to the brand.
Bargaining power of buyers have a significant influence on firm’s performance. Power of
customers increases when there are few major concentrated buyers of the products and low cost
of switching to alternative. However, Weetabix-Post Holdings covers a wide range of market
segments in global market about eighty countries.
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According to (Drakakis, H. 2017) it is only Weetabix records growth in value and volume of
sales in the industry.
The threat of substitutes encompasses goods and services that give same benefits to sector’s
products or services, but in different manner of processing. Substitutes can decrease the sale of
some products if customers switch to other brands. Weetabix-Post Holdings experiences influx
of other products into the market, but the synergy derived after acquisition forms stock of
resources at its disposal to stay competitive and good position in the market.
Bargaining power of suppliers affects firms’ performance in the industry. Suppliers are
individuals and organizations that supply raw materials, tools, and other services for production
of firm’s products. Suppliers’ power increase where there are few suppliers, monopoly, and a
high cost of switch for the manufacturer. In relation to Weetabix-Post Holdings, suppliers’ power
and influence is low such that Post Holdings engage in backward integration where it owns
cereal farm as one of its sources of raw materials for production.
Competitive rivals are companies targeting same market with their similar offerings of products
or services. If there is low entry barrier, competition will increase and vice versa.
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Conclusion
This paper mirrors the efforts of organizations, especially the Weetabix –Post Holdings Inc to
survive the impact of environmental forces through analytical tools and techniques of Porter’s
generic strategies, Bowman’s strategy clock, stakeholder analysis, Pestel and Porter’s five forces
framework. This empirical work establishes that Post Holdings Inc will consolidate on its gains
as the industry experiences low entry due to resources based view capabilities and large
economies of scale. It is worthy to note that backward integration has lowered the influence of
suppliers of raw materials, the differentiation and cost leadership will keep Post Holding relevant
in the industry. And also, it is a fact that merger and acquisition is a strategic choice direction of
an entity to enter and compete in the global market with its enormous competitive advantages
and growth attached if well managed.
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