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.

http://www.kelloggcompany.com/company.aspx?id=37


Thursday, February 16, 2012

Kellogg's History and External Environment


Introduction to Kellogg’s

W.K. Kellogg founded Kellogg Company in 1906 in Battle Creek, Michigan. Back then, there were only 44 employees, but today they sell their products in more than 180 countries and manufacture in 18 countries across the globe. Mr. Kellogg had a firm commitment to nutrition, health and quality. These elements are the drivers for their mission statement, which is “to drive sustainable growth through the power of our people and brands by better serving the needs of our consumers, customers and communities.” Kellogg’s vision is “to be the food company of choice.” Kellogg Company has been a long-time leader in industry, innovation and marketing.

Kellogg’s has been committed to being the best in each category they compete and it has paid off. Kellogg Company is the world’s leader in producing cereal, cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles and veggie foods. Their brands include Kellogg’s®, Keebler®, Pop-Tarts®, Eggo®, Cheez-It®, All-Bran®, Mini-Wheats®, Nutri-Grain®, Rice Krispies®, Special K®, Chips Deluxe®, Famous Amos®, Sandies®, Austin®, Club®, Murray®, Kashi®, Bear Naked®, Morningstar Farms®, Gardenburger® and Stretch Island®.

Kellogg Company’s competitive advantage is their employees. They provide an environment in which each of their employees can succeed. Mr. Kellogg knew when he started his company that employees were key and that success would not come if they did not have successful employees.


Kellogg’s External Environment

First, I would just like to say I will only be discussing cereal, since this was Kellogg’s first product. Kellogg’s constantly needs to be watching its external environment. They need to be doing some external scanning, which is looking at what their competitors are doing. Their competitors include General Mills, Kashi, Cascadian Farm’s and store brand cereals. Their biggest of their competitors is General Mills. Kellogg’s does not really have a threat of new entrants because cereal is an established product and Kellogg’s is a well-established brand. Their customers, who are wholesalers, hold a lot of power because they decide if they will sell Kellogg’s cereals. However, Kellogg’s holds the power with their farmers, whom they have contracts with. There is a threat of substitute products because consumers are eating healthier foods. Consumers may switch to an organic cereal company such as Cascadian Farms, who makes similar cereals, but they are made of organic products. By looking at their website, it seems Kellogg Company has done a good job of watching their external environment.