This is solution of east end college business strategy assignment, written after the research on the Kellog's business and marketing strategy.
Business strategy can be defined collection of various aspects which are used towards achieving a business objective. Thus as displayed by below figure, business strategy is a collusion of targets, initiatives, objectives and measures. When all these aspects are applied in a business then it results in formation of a business strategy. In current scenario business strategy is critical part of the entire growth strategy.
But understanding the core objective of the business is a crucial step towards preparation of an efficient and successful business strategy. That is why business organisations these days are focused extensively on identifying their short term as well as long term goals. Based on these goals accordingly strategies are prepared. A successful business strategy is that which can implement various actions in an effective manner to achieve the business objective. This assignment will analyse various aspects associated with a business strategy and how it continues to be core support for business organisations to achieve success.
Analysis of Business Environment’s Use in Strategy Formulation
1.1 Strategic contexts and terminology
Kellogg’s is an American multinational company which produces various type of cereal and convenience foods across globe. Today Kellogg’s can boast of numerous popular brands in its stable such as Froot Loops, Corn Flakes, and Pringles etc. Over a period of time Kellogg’s has established a complete monopoly in the breakfast cereal market. Kellogg’s scale of operations can be understood by the fact that it has presence in more than 180 countries with its manufacturing facilities spread across 18 countries (Andrews, 1997).Largest factory of Kellogg’s ironically is not in UK but Trafford Park, Manchester, United Kingdom where its European headquarter is located as well. Following is the explanation for various terminologies associated with Kellogg’s.
Mission Statement: Mission statement in context of business strategy defines the purpose or the core objective which a business organisation wants to achieve. Mission Statement helps the organisation to position itself in a different way as compared to its competitors. In case of Kellogg’s the sole mission of the organisation is to create a business environment where company can achieve long term growth and at the same time it can leverage and maintain its dominant position in the food market (especially breakfast cereals). Kellogg’s mission is also to ensure that continues producing high quality food at a reasonable price so that its products are available for all.
Vision Statement: Vision statement helps an organisation to establish a scenario in front of its employee regarding the success of the organisation. This helps the employees and other stakeholders to stay motivated and work together to fulfil that vision. Kellogg’s vision is simple as it aims to value add in food industry through its brands which can be used for enrichment and delight of the world.
Objective: Objective in strategic context can be defined as the outcome which a particular business organisation wants to fulfil in a long term perspective. Thus to achieve its objective it can allocate resources and fulfil its objective. For Kellogg’s the objective is to provide nourishment to the families from its products which in turn will help the families to thrive and progress further.
Goals: No business can exist without defining its goal. A goal might be short term or long term. Based on the situation of the business organisations define their goals. For example Kellogg’s goals is to maintain its dominant and leadership position in its respective segment. Whereas another goal for Kellogg’s is to diversify in various food segment so that it can cater to diverse population with varying food requirements.
Core Competencies: As the name suggest, main expertise or the key strength of the company can be defined as core competency. Every business organisation has some or the other core competencies. Kellogg’s core competency is its leadership position in breakfast cereal market to an extent that today despite of numerous competitors, Kellogg’s remains the undisputed leader of the market (Andrews, 1997).
1.2 Factors involved in strategic planning for Kellogg’s
Strategic planning has to be done considering several factors associated with the business organisation. Thus various factors which can be listed down and are involved in the strategic planning of Kellogg’s are as follows:
Assertive leadership: Organisations expand or collapse due to leaderships. Establishment of an assertive leadership means that the focus on the goal and objective remains intact. Similarly Kellogg’s has been using its assertive leadership to push its objectives towards achievement. Positive and assertive leadership not only helps an organisation like Kellogg’s to achieve its goal, but it also creates a positive work environment.
Empowering Employees: Employees of an organisation are one of the core asset which an organisation can have. However having faith in capabilities of these employees is equally important as it motivates these employees to work hard towards achieving the goal. That is why it is important for Kellogg’s that it empower its employee with various decision making authority varying from level to level.
Diversification: If observed, diversification is another factor which has been an important part of the strategy which Kellogg’s is following. Apart from being a leader in breakfast cereal market, Kellogg’s over a period of time is also diversifying in various other food segments. Ultimately it can be said that Kellogg’s strategic planning cycle has various elements which are displayed in the diagram below:
1.3 Planning techniques that Kellogg’s can use
For any business organisation, planning is one of the most crucial aspect of its entire business strategy. Marketing Planning helps a business to analyse its strength and weakness, and at the same time it helps the organisation to understand that what all resources are available for it to compete in the market. Today there are various planning techniques which are used in strategy planning of a business organisation.
BCG matrix is one of the most popular planning technique which business organisations have been using extensively. A sample BCG matrix is displayed below:
This matrix consists of four quadrants on two axis of market growth and market share respectively.
Question mark represents a low market share and high market growth where company is clueless of its strategy and how to capitalize on the opportunities available to it.
Stars: this is the most desirable condition for an organisation as being a star means that an organisation enjoys a high market growth as well as high market share. And the company has been responding well to the available opportunities. Kellogg’s can be termed as a Star, as it has both high market share as well as high market growth. Over a period of time Kellogg’s has established itself as a leader in the breakfast cereal and various other food categories which has helped the company in grabbing a huge market share (Ansoff, 1999).
Cash Cows: Organisations who belong this category have high market share, but due to low market growth rate they have to focus on only limited set of opportunities.
Dogs: This has to be the most undesirable state for an organisation. As organisations falling in this category have to suffer both low market share as well as low market growth. Position of such organisation is weak and they are normally incapable of making profit.
Hence based on above analysis, it can be clearly said that Kellogg’s is a Star and it should use this position to further strengthen its position in the market. It can in fact acquire various smaller companies in the same field to consolidate its position in the market.
Understanding the Process of Strategy Planning
2.1 Organisational audit for Kellogg’s
In current business environment, it has become essential for organisations to include organisational audit as an important part of their business strategy. Use of organisational audit reveals various important information associated with the organisation. To compete in a highly competitive environment, organisations today should be aware about various internal and external factors impacting it. Having a clear understanding about the strength, weakness, opportunities and threats is crucial for success. SWOT analysis is one such organisational audit tool which can be used effectively to analyse various factors associated with Kellogg’s
- Kellogg’s has share of close to 35% of entire US’s cereal market.
- One of the most trusted brand in the food industry
- Has monopoly in the breakfast cereal market
- High brand awareness among general public
- Most of its brands are already well established in the market
- Brand fatigue is setting among people.
- Growth rate of breakfast cereal especially in developed countries such as US and UK has seen stagnation over a period of time
- Yet to strengthen its position in third world countries.
Opportunities in front of Kellogg’s
- Growing awareness among people related to healthy food habits.
- Huge demand for breakfast cereals in developing countries
- Rapid emergence of digital platforms such as internet has helped Kellogg’s to trim down its publicity budget to a significant level.
Threat for Kellogg’s
Emerging organisations such as General Mills. For example GM has close to 31% share of the US cereal market, whereas Kellogg’s has 34% (Baye & Beil, 2006).This means, that there are various other players who are capturing a major chunk of the cereal market.
Resistance towards packaged food is another threat which Kellogg’s might face, with people shifting towards organic form of food, after some point of time Kellogg’s might witness substantial drop in its customer base.
2.2 Environmental audit for Kellogg’s
Environmental audit of an organisation helps to reveal various factors which might be both hindrance as well as supporter in the growth of the company. That is why it has become critical for the organisations to include environmental audit as a part of their business strategy. PESTEL analysis is one such audit tool which helps in analysing various factors impacting an organisations. For Kellogg’s following is its PESTEL analysis:
Political (P): governments in various countries have their standards associated with the quality of the food being produced by the companies. That is why this factor plays an important role in the development and growth of the food sector. Various rules and regulations related to food quality has ensured that Kellogg’s since its inception follows a strict quality control of its products.
Economic (E): Kellogg’s growth can be linked to growth of retail sector as well. Products placed strategically in various supermarket chains has helped Kellogg’s to increase its reach. Retail culture has increase only due to the reason that people are more than willing to shop in a convenient environment. Thus it has become a complete ecosystem where economic growth of people have helped Kellogg’s in an indirect manner.
Social (S): increasing inclination of people towards readymade breakfast cereal has resulted into growth of Kellogg’s. Initially Kellogg’s target customer were the school going kids, who use to rush away in the morning. Thus it became a quick and health way of breakfast for the kids. Also with shortage of time these days, people prefer having a quick and health breakfast. Kellogg’s seems to be fulfilling that requirement as well.
Technology (T): Technology has proven to be a huge asset for Kellogg’s. With evolution of technology Kellogg’s has been able to use the latest and most advance manufacturing technologies for its production system. This has ensured that minimum raw material is wasted and quality of end product remains high.
Environmental (E): Kellogg’s has never shied away from its responsibility towards society and environment. That is why it has dedicated corporate social responsibility group which is focused specifically on the betterment of society and environment.
Legal: Being in food industry Kellogg’s has always been serious about adherence to various rules and regulations of the food industry. That is why it came up with an idea of Guided Daily Amounts label on its products. This was in accordance to food labelling regulations introduced by various governments across world (Churchill & Iacobucci, 2009).
2.3 Significance of stakeholder analysis for Kellogg’s
Stakeholder analysis helps an organisation to map the objectives or expectations of its stakeholders with the responsibility of the company. This analysis helps an organisation to identify various responsibilities which it has towards its stake holders. In case of Kellogg’s it has following stakeholders:
Stakeholder analysis has helped Kellogg’s to identify its strategy for each of these stakeholders. For example government is one of an important stakeholder in Kellogg’s because government has to ensure that the food organisation follows its regulation, and Kellogg’s also has ensured through various practices such as Food Quality Check programmes that it is adhering to the standard set by the government.
Kellogg’s can use the below displayed matrix for its stakeholder analysis. Kellogg’s can categorize its stakeholders in four areas such as low priority, good relation, protect and monitor (Dranove & Marciano, 2005).
Based on the importance and influence Kellogg’s can accordingly take action to fulfil the objectives of these stakeholders.
2.4 New strategy for Kellogg’s
Kellogg’s as a brand has stagnated over a period of time. Especially in developed country such as US and UK, there is hardly any excitement left around the brand as such. This primarily due to the reason that Kellogg’s has not invested much in its branding and campaigning as it used to do earlier (Goodwin & Wright, 2001). It has kind of assumed that people are well aware of the brand-which might be a mistake for the company.
- That is why Kellogg’s should reinvent itself as an organisation and should capitalize its market leadership position. It can do the following:
- Fresh Marketing campaign based on the geographies
- Introduction of completely new products in its breakfast cereal range of products
- Diversification of its products in the fast growing economies such as China, Japan, Brazil etc.
- Expanding business in new countries
- Strengthening its supply chain
Hence if Kellogg’s can successfully implement above mentioned steps then it won’t be surprising if it will be able to boost further its overall market share and presence in various geographies.
Strategy Evaluation and Selection
3.1 Possible alternative strategies relating to substantive growth, limited growth or retrenchment for Kellogg’s
Apart from the strategies suggested in section 2.4, there are various other alternative strategies which Kellogg’s can follow:
Complete Re-branding: It has been seen that at times various companies go for complete re-branding once the original brand stagnates and shows no further growth. Similarly Kellogg’s can also opt for this strategy.
Operational Efficiency: Rising operational expenses is one major challenge which organisations such as Kellogg’s is facing today. Thus in order to consolidate its profit and earnings it is important that it should focus on controlling its operational expenses.
Mergers and Joint Ventures: In present market only those companies can survive who have enough strength (financially) to take on the competition. Thus for a company like Kellogg’s which already has a huge cash reserve, it can either form joint ventures with similar companies or it can purchase smaller companies in food segment (Hax & Majluf , 1996). This strategy will help the company to consolidate its position as well as diversify as well.
3.2 Appropriate future strategy for Kellogg’s
In order to create and evaluate future strategy it is important for company to focus on various strategic contexts such as its vision, mission, aims & objectives. These contexts needs to be in centre before evaluating a future course. It can follow a gradual approach such as:
Situational Analysis of the organisation: This will help Kellogg’s to identify various aspects such as key stakeholders in the company (Pringle & Thompson, 2001).Based on the outcome of this particular stage, organisation can accordingly prepare its future road map.
Strategy Development: This stage will detail the steps and actions which will be required to achieve the core business objective, mission and vision of the company.
Monitoring and Evaluation: This is an important stage, as it will help Kellogg’s to monitor and evaluate the impact of various steps it has taken towards making its business strategy.
Realisation of Strategy Implementation
4.1 Roles and responsibilities for strategy implementation for Kellogg’s
The entire sales planning process is an important part of the organisational growth. However it is equally important to understand that what all roles and responsibilities within the organisation is responsible for implementation of the strategy. Before understanding those roles and responsibilities it is important to have an overview of the strategic planning process.
If seen carefully then it can be observed that roles and responsibilities should be reviewed in the last part of the strategic planning process. In case of Kellogg’s following are the roles and responsibilities which are responsible for the implementation:
- Director of the Company
- Chief Executive Officer (CEO)
- Chief Technological Officer (CTO)
- Human Resource Director
- Marketing Director (MD)
Thus each of the above role has important role to play in the strategy implementation. For example if it comes to complete rebranding, then Marketing Director has a critical role to play. Similarly leveraging the technological advancement depends purely on the efficiency of a CTO (Sarkis & Talluri, 2002).That is how various roles and responsibilities are crucial for the implementation of the strategies at various functional level of the business.
4.2 Resource requirements to implement a new strategy for Kellogg’s
As discussed in one of the sections, Kellogg’s today has manufacturing facility in more than 18 countries, and its presence is there in more than 180 countries. Which reflects the massive reach of the company across the globe. This also means that to sustain this level of operations, it is important that resource requirement of Kellogg’s is well structured and sorted out. Resource can be human resource, financial resources or raw material resource. Thus it is clear that in order to support its widespread network and team it needs all the above mentioned resources. Kellogg’s should focus on improving its operational efficiency as it will help the company in utilizing the available resources at an optimum level. Also with operations spreading across continents, Kellogg’s should also focus on strengthening manpower especially its sales and marketing team. In markets such as China, Brazil and India, there is ample of scope to grow and in order to grow there is human resource requirement in marketing and sales team of the company. Kellogg’s should also focus on financial resource mobilization and optimisation based on the requirement across geographies (Teece, 2010). Hence a developing country might need more marketing budget as compared to a developed country. Thus accordingly Kellogg’s should priorities its resources.
4.3 Targets and timescales for achievement for Kellogg’s business scenario to monitor a given strategy
For implementation of a business strategy it is important to have time bound measurable goals. Thus based on the strategies discussed above, Kellogg’s can focus on implementing its strategy in a timely manner. It can identify a time period of one year divided in four quarters. Thus each quarter can implement an element of its business strategy. At the end of the fourth quarter Kellogg’s should be in position to evaluate and measure the success (or failure) of the strategy implemented. Thus following are the timelines:
Quarter 1: Situational Analysis
Quarter 2: Situational Analysis & Strategy development
Quarter 3: Strategy Development, monitoring & evaluation
Quarter 4: Strategy implementation, monitoring and evaluation.
Thus it can be said that in a phased manner Kellogg’s will be able to analyse, implement and measure the success or failure of its business strategy.
Ultimately it can be said business strategy has lot to do with the way organisation perceives its position in the market. There are various aspects which are responsible for success or failure of an organisation. That is why it is important for an organisation such as Kellogg’s to fine tune its strategy formulation, strategy planning, strategy evaluation and selection and the ways strategy is implemented. If all these aspects are structured and implemented in a proper way then organisations can achieve greater heights of success.