Thursday, February 23, 2012

Internal Environment

Kellogg’s value chain is very important to its business. Part of its operations is packaging. This is key for Kellogg’s because the packaging features the product, brand name, nutrient levels and other important information they want their consumers to know. The packaging is continuously being tested to make sure Kellogg’s is using the best. They want to keep their products fresh and safe during shipping and handling. Kellogg’s also uses several sizes of packaging to fit their target markets needs.

Having manufacturing facilities in 18 countries is Kellogg’s main outbound logistic. This allows for quick transportation to the 180 countries that sell their products.

Kellogg’s does a lot with marketing and sales. They are the industry leader in the level of advertising investment with over $1 billion. The marketing team is given 9% of Kellogg’s net sales to use for advertising their brands. Specifically for cereal, they use a lot of promotional techniques to advertise such as sweepstakes, mail in offers, toys inside the boxes and printable coupons online.

Human resource management consists of treating their employees well. Kellogg’s wants to see their employees succeed and support them in their professional and personal growth. Kellogg’s prides themselves on being an equal opportunity employer who is committed to workplace diversity. They strongly believe that their employees are their competitive advantage.

For service, Kellogg’s is constantly training their employees to make sure they are growing in their career and also to ensure great product quality.

I could not find much about the technology Kellogg’s uses for manufacturing, but I can guess that it is up to date since they strive for the innovation of new products for their brands.

The main aspect of Kellogg’s procurement is the great relationships they have with their suppliers. Kellogg’s has won numerous awards for having a diverse set of suppliers. They also have created a program called “Great Ideas.” This allows suppliers to fill out a form suggesting an idea of how to make their relationships more effective and useful.

Kellogg’s has stable financial statements and have been consistently growing. In Kellogg’s 2011 annual report, I found that they had net sales of over $13 billion. This number was a 4.5% growth from 2010. Their operating profits were almost $2 million, which grew 2.9% from 2010. Kellogg’s earning per share stated the same from 2010 at $3.38.

Kellogg’s has many tangible and intangible resources. Kellogg’s tangible resources include their employees, goods, and great manufacturing locations.  All of these are valuable to them because with out them they would not such a big success. Their employees could be considered rare because of the way they train them and encourage them to grow their career. However, there could be substitutes because Kellogg’s could find new employees to hire and train. 

Kellogg’s intangible resources are their reputation, brand names, and the culture of their company. These resources are also all very valuable. Their reputation would be difficult to imitate because they have been in business for so long. Their brand names are a sustainable competitive advantage because of their great quality. Their culture would also be difficult to replicate because the management and other employees set the culture for Kellogg’s.

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