Business Strategy of Kelloggs - Case Study Example

Part A Definition of term Application to the organisation Mission A mission simply elaborates the general reason of a firm’s existence. After all, why a firm exists in the first place is the ultimate point of a mission (Strydon et al., 2008, p.79). This particularly speaks of a firm’s purpose. Kellogg’s purpose is shown on how they would love to nourish families for them to flourish and thrive. “Nourishing families so they can flourish and thrive” is Kellogg’s purpose of existence. Without this main purpose, Kellogg’s would eventually not existent today. This purpose seems to fuel the firm to move on and pursue whatever it is that it is capable of doing in its industry. People and well-being are primarily one of the most important components of Kellog’s ideals. These ideals are what strengthened Kellogg’s purpose in its industry. Specifically, Kellogg’s communicates its objectives and ideals to its staffs to let their mission prevail. Vision The vision is what the company or firm looks forward to see where they will be in the future (Angelica, 2001, p.14). It is what they expect that their company will achieve, but it is quite more general than objectives and goals. Kellogg’s vision states, “To enrich and delight the world through foods and brands that matter.” In this statement, it is clear where Kellogg’s would want to place itself in the future. It is clear that it would want to be somewhere in a situation where its product offerings and brands would mostly matter to its target market. At some point, it looks forward to see its brand as the people’s priority choice. For example, Kellogg’s allows its staffs to see where it is heading by showing its objectives and ideals to them. Objectives These are what would an organisation or an individual want to achieve in the future as specific targets that are in line with aim (Gutbrod and Wiele, 2012, p.90). Objectives are “narrow, precise, tangible, concrete, and can be validated” (SDSU, 1996). Kellogg’s looks forward to achieving specific, measurable, achievable, realistic and time-related (SMART) objectives, because having this in mind will become a way for them to know if they have achieved each of their objectives. One indicator that the objectives have become among the primary important factors leading to the success of Kellogg’s is its actual capability to formulate strategies. It can be clearly observed that the formulation of strategies for Kellogg’s has been made possible because it has primary objectives to obtain. Objectives in the case of Kellogg’s allow the firm to formulate the right plan for its strategy so that in the end it could finally achieve what it wants to specifically fulfill. Kellogg’s is a company that is implementing plans. It is hard to employ the appropriate courses of actions without plan. However, it is clear that in the case of Kellogg’s, its plans are based on its set objectives, leading to the actual formulation of objectives. For instance, as part of Kellogg’s objectives to increase its market share, it has eventually formulated the need to go for sponsorship programs, for further brand exposure, leading to its potential specific market share or percentage increase of it in the future. Kellogg’s is known for its ability to employ clear, specific and measurable objectives, because this is the only way for them to find out if their objectives are achieved. Kellogg’s also communicates its objectives to the staffs so that it will ensure they are achievable. Furthermore, Kellogg’s sets its objectives to be somewhere in a realistic time period of three years, so in this case, the firm establishes the direction where it will want to be in the three-year span of time. For instance, in Kellogg’s sponsorship program, the objective is “to increase market share by “specific percentage” compared last year or last month’s share to increase overall market share within three years.” This is specific, because the figure is clear to understand and it specifies what to be achieved. It is measurable, because at the end of the month, the actual share will be compared to the previous performance. It is achievable because all the staffs are informed about what they need to do. It is realistic because just as it is communicated to everyone, the evaluation of whether it is achievable is generated. Finally, the objective is time-related as there is a point where Kellogg’s market share should be heading in three years. Goals These are what would an organisation or an individual want to achieve in the future as general targets that are in line with aim (Radliff, 2008, p.5). Goals are “broad, general intentions, intangible, abstract, and cannot be validated” (SDSU, 1996). There are potential goals that are associated with Kellogg’s. Primarily, financial goal is its important future achievement. This is important to bear in mind because most firms in order to survive should have financial health standing. However, as a firm that also competes with other prevailing brands, Kellogg’s created in mind to excel and be committed to quality. Commitment to quality is one important goal of Kellogg’s in order to survive in a tough competition. This is something broad, a general intention, intangible and even abstract and at some point, cannot be validated. However, this kind of goal, commitment to quality exists in the firm. In this goal, there are major things that have to be taken into account, prior to its realisation. This is the reason why commitment to quality might be a broad or a too general intention that a firm should consider. In the first place, commitment to quality might have to be specified in various departments at Kellogg’s. In the production department, commitment to quality might mean other things compared to how it might be viewed from the accounting or marketing department. Thus, a goal like “Commitment to Quality” is a broad and at some point, a general intention and abstract. In the case of Kellogg’s it remains to provide to set the appropriate goal for its brand expansion. Core competencies These are core capabilities of an organisation or individual to succeed, because these are more likely to differentiate the firm or an individual from the existing competition (Quick, 2012). In other words, core competencies are remarkable instruments for an organisation’s or individual’s success in the future. It is clear that “cereal” for instance, is Kellogg’s core competence. This product offering is what makes Kellogg’s widely known for in its industry. At some point, this line of product could be its competitive advantage too, because it is what makes its brand to be known in the market amidst the other prevailing brands in its industry or market. In other way, cereal seems to be the most salable product offering in the market where Kellogg’s competes with other prevailing brands. In this example, it is shown that aside from core values, a product, especially in the case of Kellogg’s can be a significant core competency too. Part B Task 1: Environmental and organisational influences on Kellogg’s 1.0 PEST Analysis 1.1 Political Factors There is a prevailing “food politics” especially in the current industry where Kellogg’s is an integral component. In fact, in the food industry people are politically bombarded with ideas on what literally needs to be eaten and how much. This is a relevant challenge on the part of Kellogg’s especially on the point that people have become sophisticated in what they exactly need, so trade restrictions have become common. Trade restrictions can be one of the most common political factors facing Kellogg’s, which are commonly observed in the prevailing food politics and even in holding down prices (Paarlberg, 2013, p.35). 1.2 Economic Factors People’s incomes are the primary factors that could change buying behavior patterns (Pride, Hughes and Kapoor, 2009, p.357). This important principle applies in the case of Kellogg’s. Once economic constraints take place, people will be more willing to go for alternatives or even in savings. Thus, the opportunity to minimise sales and production of Kellogg’s products cannot be simply overlooked. 1.3 Social Factors Good thing that people are becoming health conscious and are becoming aware of what are necessary to be eaten. Kellogg’s with its core competence to provide the best option for healthy foods is at the advantageous side in the midst of increasing social awareness for health. 1.4 Technological Factors The advancement in technology that will also lead to advanced research and development activities is a continuing challenge for Kellogg’s as its competitors are willing to innovate new product offerings. 2.0 SWOT Analysis for Kellogg’s Strength Weaknesses Renowned brand Kellogg’s is renowned for its cereal product offerings Good mission and vision statements Intensive research programs Ability to satisfy customers Less innovative marketing strategies Less dynamic innovation Less innovative marketing entry strategies Opportunities Threats Health-conscious society Sophisticated customers New market segments Loyal customers New market entrants Food politics Economic constraints Established competitors 3.0 Stakeholder Analysis   Impact on Stakeholder group Finance (gain/loss) Organisation Legislation (planning) Business as usual Loyal customers √ √ Dieticians/health practitioners and experts √ √ √ Retailers √ √ Government √ √ Health and sports sectors √ √ √ √ Task 2: Different strategic growth initiatives over the next three years New product development. This strategy allows a certain firm to produce a new product to the market. This in particular is quite attractive strategy for the growth of Kellogg’s. Considering that cereal is one of the popular products that could be associated to Kellogg’s, various products that will involve cereal could make a difference in the actual market. The matter of market acceptance will be an issue, but it is important to consider that Kellogg’s should optimise the kind of trust that it receives from its target customers at present. In the next three years, employing this strategy will eventually result to a remarkable market opportunity for Kellogg’s or the opportunity to expand specific market segments more than what it actually has at present. In theory, new product development is linked to market expansion of a firm, brand or an organisation, especially if it is line with product-related segmentation (Boone and Kurtz, 2006, p.305). Market penetration. Other than the strategy to initiate new product development, market penetration allows the firm to establish more competitive effort in a market where other prevailing products exist. Market penetration is a strategic effort that will allow Kellogg’s to produce product offerings that will eventually create more competitive advantage, especially in the level of production and distribution. This strategic growth is quite suitable in the case of Kellogg’s because this can be an opportunity for its brand to take dominion or lead in its industry. Market penetration will allow Kellogg’s to saturate its entire industry, allowing it to become the brand of choice for the various-related needs of its industry or target market. Diversification. This strategy is perhaps highly beyond new product development, because the firm must consider establishing new products and establish new markets at the same time. This might be quite expensive in the case of Kellogg’s as the new market mover, but this will also allow its expansion within the span of three years or so. Kellogg’s should start to be more dynamic in its approach if it wants to become the market leader in its industry for quite a long period of time. Diversification simply allows Kellogg’s to explore new opportunities or establish a remarkable competitive advantage in its industry because it will eventually lead to formulating new market segments, new products and it means opportunity to cater the needs of the general market. All of the above mentioned strategic growth initiatives are dynamic in essence, allowing Kellogg’s to turn its weaknesses in marketing strategies to improve for good. Task 3: Issues of strategic plan formulation and possible planning techniques: The case of Kellogg’s Considering the point that Kellogg’s is not that dynamic enough in its marketing strategy or even in innovation, one remarkable challenge in strategic plan formulation will be the degree of difficulty of acceptance of a new concept in the process. It is important that the entire team that will have to implement the plan will have a unified view in mind to go for strategic development. In this case, no one will be left out in the plan, and everyone will function as part of the whole team for the success of Kellogg’s. A top-down planning technique may be quite good in a sense that the whole system of Kellogg’s will be broken down into various subsystems in order to better take a look at the compositional sub-systems. In this case, it will be easier to implement the actual strategy from various involved components of the entire system. However, a bottom-up planning technique allows Kellogg’s to implement new complex systems from its prevailing systems, allowing it original systems to be sub-systems of the new developed complex system. This is quite complex, but dynamic in a sense, allowing Kellogg’s to eventually formulate more dynamic strategies in the long run too. However, in order to prevent any hint of complexities in the case of Kellogg’s and for a straightforward implementation, the top-down planning technique might be quite appropriate for now for the firm’s prevailing level. The following flow chart depicts this actual point. The above diagram shows how eventually the entire plan will be established and implemented using a top-down planning technique. In this technique, it is necessary to acquire human resources that are dynamic and engaging in order to implement the entire plan as planned. Furthermore, it is necessary to have constant evaluation at the end of the month or even quarterly, so that it will be easy to embrace some options that will allow future success if ever it is necessary. In the entire diagram, Kellogg’s are expected to follow the common traditional way of implementing the plan, but what seems to be remarkable in this format is the need to implement human resources that are dynamic enough to implement the plan. This is to ensure optimum output especially in the bottom management where the entire implementation process of the plan will take place. References Angelica, E. (2001) The Wilder Nonprofit Field Guide to Crafting Effective Mission and Vision Statements. Saint Paul, MN: Fieldstone Alliance. Boone, L. E., and Kurtz, D. L. (2006) Contemporary marketing. 12th ed. Mason, OH: Cengage Learning. Gutbrod, R., and Wiele, C. (2012) The Software Dilemma: Balancing Creativity and Control on the Path to Sustainable Software. London: Springer. Paarlberg, R. (2013) Food Politics: What Everyone Needs to Know. New York, NY: Oxford University Press. Pride, W., Hughes, R., and Kapoor, J. (2009) Business. Mason, OH: Cengage Learning. Quick, E. K. (2012) Core Competencies in the Solution-Focused and Strategic Therapies: Becoming a Highly Competent Solution-Focused and Strategic Therapist. New York, NY: Taylor & Francis. Radliff, D. (2008) Developing Life Skills. Carson-Dellosa Publishing. SDSU (1996) The differences between goals and objectives [online] available from . [11 April 2014]. Strydon, J., Antonites, A., De Beer, A., Cant, M., and Jacobs, H. (2008) Entrepreneurship & How to Establish Your Own Business. Cape Town: Juta and Company Ltd. Dear writer, Below is what the tutor has given feedback. please read carefully and do the changes.. , in line with the assignment brief, I have reviewed PART A ONLY here, as this was enough for me to get a view on whether your understanding / knowledge was along the right lines or not ...... and I can confirm that it certainly is!! You have written well about the strategic terms here - I would like to see more real examples (e.g. an example of a SMART objective used in the kelloggs business) to show a more specific, detailed and operational level knowledge. In answer to your question re. formulating a new strategy - developing new products is a valid strategy - if you can justify this choice of strategy then all the better. I hope this feedback serves to give you the confidence that you are indeed working along the right lines on this module - I look forward to reading and marking your final report in due course. Thanks & Regards Read More