Strategic Management: Kellogg’s

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Introduction

The publicly traded corporation that one would like to work for is Kellogg’s Company. The company, which has been in existence for 100 years, produces cereals, toaster pastries, crackers, bars, beverages and fruit flavored snacks among other breakfast food for 18 countries and distributes to 180 countries. According to the company’s mission, it tries to brighten its client’s future. It promises to constantly improve the clients’ nutrition through its products. It also aims at catering for the clients taste and goodness by producing sweet tasting food. The company is thus dedicated to making quality products for a healthier world.

The management of the company always strives to make it the greatest possible place that one can work from. That is because the management of the company, just like W.K Kellogg, knows that the employees are the people who make Kellogg’s food great. The management ensures that the workforce is diverse and employees are selected from all areas of the world. The inclusive workforce has strengthened Kellogg to prove that goodness shines from inside out. The company, through W.K Kellogg Foundation, donates millions of dollars and gives breakfast to charitable organizations yearly around the world. The company’s charitable giving aims at giving the children the nutrition they need.

1. Determine the impact of the company’s mission, vision, and primary stakeholders on its overall success.

Kellogg’s mission, vision and primary stakeholders drive the company towards success. The clear mission statement of the company defines the organization’s purpose and the approach the company takes in its effort to achieving its goals and objectives. To achieve the company’s goal of profit maximization, the company is aimed at satisfying the customer first before any other thing. In its mission statement, the company is dedicated to making quality products for a healthier world. The mission acts as a reminder and that leads to the company ensuring that the quality of the food it produces is not compromised in any way. Customers will therefore be loyal to the company and that will increase the sales and thus profits (Abrahams, 1999).

The mission dictates the business structure of the firm. The structure is designed in a way that makes it possible to achieve the goals in the statement. The business structure of Kellogg is as it is, due to the achievements it wants to make as per the company’s mission. Kellogg’s has adapted to the new e-business to business so as to meet the demands of the clients. The many middle men that resulted to increased cost to the final consumer have been eliminated. The adapted structure, which is dictated by the organization’s mission and stakeholders, is more effective and efficient. Through the structure the goals of the firm are likely to be realized. The costs are going to be reduced as much as possible thereby reducing costs.

The mission statement also increases the organization’s marketability. The shareholders and investors of the company see in the mission statement that the company has set goals and objectives in mind. The shareholders and investors of Kellogg were likely motivated by the company’s mission and vision statement. The statement built the investor confidence as they knew that the company was geared towards a brighter defined course. They were assured that the company does not just changing its approach at every event. It therefore convinces them that the company is geared towards achieving the goals that are set out in the mission statement.

The mission statement eases the definition of the company’s benchmarks for success. The benchmarks are thus set and are used to know the company’s progress towards the set goals and objectives. From the customer response, Kellogg gets to know that it meets and exceeds the customers’ expectations. If the customer response is negative, the management controls the company’s performance, using the mission and vision statement as the yardstick to gauge the progress of the organization towards the goals.

Implicitly understanding the mission statement makes the employees of the organization more motivated. Kellogg’s mission, to create the best working environment for the employees makes the employees feel appreciated and that leads to increased productivity and performance. The employees thus work harder and show dedication in their duties. The teamwork spirit of working towards the common goal of the firm is also as a result of the clearly stated mission statement.

2. Analyze the five (5) forces of competition to determine how they impact the company.

Being in the food industry, Kellogg’s is in an industry that has fierce competition. The company therefore has to work extra hard so as to change the threats posed by the forces of competition into opportunities. The company’s power against its competitors is at the mercy of the threat of new entrants. In Kellogg’s market, it is not hard to enter the industry. that is because there are few barriers to entry. Kellogg’s therefore puts extra effort in its marketing strategy. It advertises its products using the most effective channels. Through their website, the new products that the company produces are swiped continuously while one is at it. Through the website, clients are given an opportunity to interact and share experiences. The company has also differentiated its products, and it produces a wide range of products so as to grab the market share in the competitive environment.

The high level of competitive rivalry in the market impacts Kellogg’s performance. There are many competitors who have capabilities of producing what the company produces. The buyers and suppliers are easily drawn to do business with the competitors. Kellogg faces rivalry form Nestle, mead Johnson Nutrition Company, General mills, Inc among others. The companies are also high performers in the industry and attract a large piece of the market.

The bargaining power of the buyers impact the company since the company has to reduce its prices to retain the clients who have a wide range of similar food products. The company is therefore not able to dictate the prices. That greatly interferes with the firm’s profitability. The company sales the products at cheap price considering the production cost it incurred.

Threat of Substitute products and services also impacts on Kellogg’s competitiveness. Kellogg’s customers have the ability to buy from its competitor, Nestlé. Nestlé Company also produces a variety of breakfast cereals, which are more or less the same with Kellogg’s products. Kellogg’s therefore has less power in the market since the clients have a wide range of options. The company is thus controlled by the market in terms of price and supply.

Bargaining power of the suppliers in the industry that Kellogg’s operates in is likely to raise prices of the raw materials. That too interferes with the company’s profitability. Since they cannot do much when the prices of the suppliers are raised, they succumb to the increased cost of production.

3. Create a SWOT analysis for the company to determine its major strengths, weaknesses, opportunities, and threats.

The environment that Kellogg operates in poses threats weakness strength and opportunity. Its Strength is that the company has experienced Solid Revenue Growth as from the 2006 ad 2011 reports. In 2006, the company reported that its revenue was $10.907 billion and that had increased to $13.198 billion in 2011. It had continuously increased in revenues over that period. The company’s brand is found on many supermarkets with customers constantly coming back for more. The company’s products are sold in over 180 countries around the world. One market condition is thus less likely to negatively impact the profitability of the entire organization.

The weaknesses presented in the market are that, the company’s products are all over the global market. There is therefore less room for geographical expansion. The company was also reported to be having a large debt burden to the tune of $7.366 billion. The debt proportion weighs heavily on the core business of the company. The company also depends highly on its cereal brands for the majority of its revenue.

The opportunities that the market brought fourth lead to the acquisition of the Pringles brand which belonged to Proctor & Gamble. That is likely to increase the company’s growth potential. The company has also invested in the innovation of new brands. The innovations will most likely lead to increased sales.

The threats that exist in Kellogg’s market are competition, shifts in markets and rising food prices. The drought that is experienced in the world over has lead to high food prices thus increasing the company’s production cost. The fierce competition in the market ahs lead to margin contraction. That is due to the fact that the company operates in the food industry.

4. Based on the SWOT analysis, outline a strategy for the company to capitalize on its strengths and opportunities, and minimize its weaknesses and threats.

From the analysis, the company should maintain the annual growth rate and sustain it into the future. That should be done by ensuring that the cost of production is minimized. The company’s products should be lowly priced as compared to that of the competitors.

The company should adapt the most efficient and effective marketing techniques. It should ensure that as much people as possible are reached with the marketing content. That could be by making their websites are market sensitive and that apps are developed to function on mobile phones. That is because mobile phones are available to many people and the market trend is shifting towards mobile browsing. Basing on the opportunities, the company should encourage its employees to innovate and come up with products that exceed the customers’ expectations.

5. Discuss the various levels and types of strategies the firm may use to maximize its competitiveness and profitability.

To maximize its competitiveness and profitability, the company should lay down a well planned strategy. It should give much attention to operational excellence, customer intimacy and product leadership. The company should ensure that it leads the market in terms of price and convenience. To effectively lead the market in terms of price, the company ought to reduce the production costs as much as it can.

The company should research the market and understand the client’s tastes and preferences. The organization should be able to predict the customer’s needs and the needs should be met. Long term customer loyalty and long-term profitability should be the company’s objective. The products should state of the art since the needs and tastes of clients do change over time.

6. Outline a communications plan the company could use to make the strategies you recommend above known to all stakeholders.

In the communication plan that the company could use, the purpose; to communicate the strategies will first be identified (Ferguson, 1999).

The audience will then be identified. In this case, the audience is the company’s stakeholders. They are the ones to be reached in the communication.

The message will then be planned and designed. Here, the message will be created, giving consideration to language, mood, and the content. There will be translation of the message contents into different languages used by the society in which the company operates in.

The resources will be considered, to know how much is there to spend and the worthiness of spending that much.

The obstacles and emergencies will then be anticipated. The likely problems to be encountered while implementing the strategies will be anticipated and a plan of dealing with them will be created.

Strategies of how to connect with the media so as to spread information will be made. That will include making a relationship with media outlets and with influential individuals in the society.

An action plan will be created. The plan will then be put together and acted upon.

Lastly, decision will be made on how to evaluate the plan and adjust it based on the results of carrying it out. Adjustment for improvements will also be made.

7. Select two (2) corporate governance mechanisms used by this corporation and evaluate how effective they are at controlling managerial actions.

The two corporate governance mechanisms used by Kellogg are: I) Board of Directors and II) Audits.

The board of governors chaired by James M. Jenness protects the interest of the company shareholders. The boards of directors of the company are usually selected at the end of the year in the annual shareholder’s meeting. The board reviews the company’s management and ensures that the mangers who do not improve the company’s overall financial performance are removed from the positions.

Audits are carried out regularly by internal as well as external auditors so as to review the company’s financial operations and business. The mechanism is carried out to ensure that the organization follows the accounting standards. The investors depend on the information of the audits in their assessment of the organization. The mangers use the audit results to detect the financial errors that hinder the firm from achieving its main objectives.

8. Evaluate the effectiveness of leadership within this corporation and make at least one (1) recommendation for improvement.

The leadership team, led by James M. Jenness has effectively communicated the company’s objectives to the entire workforce of the company. The management has instilled the values and discipline that the workforce should adhere to, so as to meet the general objectives. With presidents, vice presidents and senior vice presidents heading the different organizations departments, the operations of the firm have been channeled towards maximizing profits and increasing the shareholders wealth.

Under the leadership of the management team, the company has grabbed itself a considerably large market share in the very competitive food industry. The company is well rated by the company’s customers and the company has gained brand loyalty as a result of the control of the management team. Majority of the supermarkets around the world have products that bear the red Kellogg’s logo on a section of their shelves.

The leadership of the firm could further be improved by setting aside a large amount of budgetary allocation for the purpose of its employee management training. The management training will equip the leadership team with the necessary know how on fighting the competitive forces in the highly competitive market. The training will also ensure that the leaders of the firm communicate with the other staff rather effectively. The entire employees of the firm will be aware of the ethical issues that would likely get the organization into financially as well as socially detrimental law pursuits.

9. Assess efforts by this corporation to be a responsible (ethical) corporate citizen and determine the impact these efforts (or lack thereof) have on the company’s bottom line. Provide specific examples to support your response.

The company has put effort to be an ethically responsible citizen by helping to create brighter days for its customers, employees, communities and the environment at large. For instance, in the 2012 company report, the company made commitment to operate ethically according to the global codes of ethics. The company maintains an ethical and transparent supply chain. That will be done without having to force the laborers.

The company also set environmental goals aimed at reducing green gas emissions by 15% at the end of 2015. The company also pledged in 2010 to achieve zero net deforestation by 2020, in its Consumer Goods Forum.

The efforts have made the customers aware that the organization is not only interested in profits and its shareholders. The company has gained a good reputation from the stakeholders at large since the company has proven its commitment to improving the well being of its employees, the environment and the entire community that it operates in. for instance the well being of the community at large was improved in 2013 the when it announced its commitment to reduce hunger by providing 1 billion cereal and snack servings to families around the world by 2013

Conclusion

Kellogg’s company’s mission, vision and stakeholders have had a great impact on the company’s success. The company, which has been in existence for 100 years, has managed to stay afloat the competitive industry for a long time. It has been able to convert the threats and weaknesses in the market into opportunities and strength. It has had good managers who have laid down strategies that give the company a competitive edge and has also defended its market position. Among its strategies, it has showed commitment to improving the quality of life of its clients. It has also catered for the environment and the well being of the entire stakeholders.

The management of the company has always strived to make it the greatest possible place that one can work from. The management of the company knows that the employees are the people who make Kellogg’s food great. The management has throughout the period ensured that the workforce is diverse by employing staff from all areas of the world. The inclusive workforce has strengthened Kellogg to prove that goodness shines from inside out. The company, through W.K Kellogg Foundation has donated and continues to donate millions of dollars and breakfast to charitable organizations yearly around the world. The company has thus gained a good reputation that one would wish to work for the company, or to be associated with it by buying its products and investing in the firm.

Reference

Abrahams, J. (1999). The mission statement book: 301 corporate mission statements from America's top companies. Berkeley, Calif: Ten Speed Press.

Armstrong, M., & Stephens, T. (2005). A handbook of management and leadership: A guide to managing for results. London [u.a.: Kogan Page.

Ferguson, S. D. (1999). Communication planning: An integrated approach. Thousand Oaks, Calif: Sage Publ.

Lawriwsky, M. L. (1984). Corporate structure & performance: The role of owners, managers, and markets. London: Croom Helm.

Magretta, J. (2012). Understanding Michael Porter: The essential guide to competition and strategy. Boston, Mass: Harvard Business Review Press.