Business Strategy of Kellogg Company

This report provides a study on the business strategies of Kellogg Company, including PEST analysis, stakeholder analysis, SWOT analysis, VRIO analysis, and Porter's five force model. It discusses the external and internal factors that the company needs to analyze to become more effective. The report also includes information on Kellogg's background, revenue, and market presence.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................4
P 1................................................................................................................................................4
PEST Analysis of Kellogg's........................................................................................................4
Stakeholder Analysis of Kellogg................................................................................................5
LO 2.................................................................................................................................................6
P 2................................................................................................................................................6
SWOT Analysis Of Kellogg ......................................................................................................6
VRIO Analysis............................................................................................................................8
LO 3.................................................................................................................................................9
P 3 ...............................................................................................................................................9
Porter's five force model of Kellogg Company...........................................................................9
LO 4...............................................................................................................................................10
P 4 Strategic Plan Of Kellogg..................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is the process of Understanding the business operations and taking
decisions which help the entrepreneurs to achieve the set objectives of their business. Business
strategy comprises managerial principles which help the business to analyze the market and
make it effective with the better planning and controlling. An organization need to adopt a
business strategy as it helps to compete in the market and also increase the competitive
advantage to increase the profits of the business. It also helps the business to use all the resources
optimally by analyzing all the opportunities and threats and behavior of the customers. In this
report there is a brief study about business strategies of Kellogg Company and what are the
external and internal factors which the company have to analyze in order to make the company
more effective. Kellogg is the international food production company which produces the
morning food and lightweight food which help the customers to increase the health and make
them fitter. The company was established in 1906 which is situated in Michigan, US and have
annual revenue of around 13,500 billion dollars.
LO 1
P 1
PEST Analysis of Kellogg's
Pest analysis help the Kellogg to analyses the external environment so that they can
formulate the effective strategy ans increase the sale so the company. It will also help the
company to analyses all the factors which will make the company more competitive and provide
with better opportunities.
Political factor
As the Kellogg is doing their business in the international markets it is very essential for
the company to analyses the political stability of the country so that they can be assured about
their investments and the return of investments. The company also have to understand all the
taxation policies of the countries, product branding and laws related to food and health safety
will also be required to make the effective strategy so that the company can increase the market
share and increase the customer base in market to increase the profits of the company. The
company also have to analyses that the engorgement of the country is not corrupted as it would
also lea to unstable government and the Kellogg will not be willing to invest in the economy.

Economic factor
The business environment in the global market is very risky and the company have to
analyze the economic factors to ensure that the investment is safe and the company will grow
rapidly. Marketers of Kellogg company will analyze that the country in which they want to
invest in is having a stable economy or not. Growth rates, inflation rates, GDP, income level of
the populations, foreign exchange rates of the country will be analyzed mainly by the marketers
to make an effective strategy and also increase the sales of the company. The company also have
to analyze that there are efficient financial institutions which can help the company to support
their capital and help the company to set up their base in the country. The company will also get
the benefit if the country have the high unemployment rates as the labor in the country will be
cheap and will lower the cost of the company.
Social Factors
The company also have to achieve goals which will also help the company to analyses
the culture, beliefs, and attitude of the populations so that they can understand the behavior and
make an effective strategy to attract them to the company.(Vereecke and Kalchschmidt, 2016)
For example Kellogg analyses that the country have a population in which majority of them are
young and child so the company will make a marketing strategy which will target on them and
attract them to buy the products of the company. The company also have to analyze the social
classes segments so that they can differentiate the prices according to the social class of the
market.
Technological Factors
Kellogg company also have to adopt the technological advancements in order to increase
the competitiveness in the market and have a better customer base to attract them and increase
the sales of the company. The company have to determine all the cost which will the technology
will lower and make a better strategy to adopt it to increase the profit margins. The company
have also analyzed that due to emerging technology changes the behavior of the consumer which
will make the effective marketing campaigns.
Stakeholder Analysis of Kellogg
Stakeholder analysis help the company to understand the people which help and
contribute in the growth of the company and make it more effective by performing efficient

activities and doing their roles and responsibilities. It will help the company to gather all the
people before starting any project as they are more effective in doing their work and the
company needs those people to achieve the goals.
 It helps the company to determine the key resource of the company and appreciate them
for their contributions. And by doing this analysis the company can have a list of people
prior to any project so that they can also decide which person is best for the job.
 The stakeholders' analysis will also help the company to resolve and conflicts as they are
having more knowledge and skills to manage all the operations and make the employees
understand the problems and issues of the company. Kellogg also have analyses all the
stakeholder so that they can ensure that the company can increase the efficiency by
solving all the problems and increasing the productivity of the company.
 The stakeholders of Kellogg company are Executives, sales, finance, purchase, operations
, product of the company. Kellogg have to divide all the stakeholder according to their
importance which are players, subjects, context setters, crowd. (Uhl and Gollenia Eds.,
2016)
LO 2
P 2
SWOT Analysis Of Kellogg
Swot analysis is an evaluation of micro environment factors which will help the company
to understand the strengths, weaknesses, opportunities and threats. It provides Kellogg a
planning in which thy can make the effective changes to improve the business. It helps the
company to determine the current situation of the market according to the strengths and
weakness which factors cab support the company to increase the growth and profit margins.
Strengths
Kellogg has many strengths which help the company to be differentiated by another and
make a different product. The company also have some unique customer approaches which help
the company to penetrate the market.
 The company have the efficiency to improve and innovate their products to increase the
market coverage.

 The company also have the very strong goodwill which will help to increase the sales and
attract more customers to the company. (Teece, 2018) Kellogg also focus on their employees by developing and providing them with high skills
and knowledge which increases the ability of the company to perform excellent in the
new markets as the company can make an effective strategy to penetrate the market and
increase the profits.(Shields and Shelleman , 2015)
Weaknesses
It is very important for Kellogg company to determine their weaknesses so that they
improve them increase the productivity of the company. The strategy of the company will help to
decrease the issues and problems and help the company to increase the efficiency of their work
force and sales to produce more profits.
 The company is ineffective in developing the strategies for the new products in the
current market and which decreases the sales of the company.(Rahimi, Møller and Hvam,
2016)
 The company have a different work culture which makes it difficult for the company to
communicate with different cultures and also adopt any other culture in the company.
 The cost of production of Kellogg company becomes very high when the planning of the
product is done wrong and that also discourages the employees of the company to be
effective in performing their activities. The company also lack the technological adoption as it will help the company to decrease
the cost of human resource and training them to do the operations of the company.
Opportunities
 Kellogg have to analyze the growth rate of the economy as the increase in the economy
means that the income level of the population is increased and the capacity to pay for the
products will also increase. The company will have to invest in that market which will
increase their return on investments. (Priem and Alfano, 2016)
 The company also have to find an effective was which can lower the cost of
transportation of their goods to the suppliers and increase the efficiency by building the
factories near the market where there is more demand of their products.
 The company also have an opportunity to increase the customers by opening an online
store which will attract the customers.

 Kellogg also have to ensure all the employment regulations of the government which can
help the company to increase the profits.
Threats
 the increase in the online business by the competitors will decrase the consumers of the
company.(Morabito, 2016.)
 The company also have to develop new innovated products to keep the customers loyal. The increase in cost of production of the company can also make the profit margins low
and make the efficiency of the company less.
VRIO Analysis
Kellogg also have to analyze the market demand and supply in accordance the production
of the company, the company do not want to exceed the demand of the customers as it can incur
losses. The company have to adopt the VRIO analysis so that they can determine the effective
resources and for cost-efficient production of goods and increased profit margins which will
make the company have core competency in the market. The company have to analyze the
factors while doing this analysis.
Valuable
The company have to analyses the resources in the market which add value to the product
and make the product more effective for the customer. The company have to analyze the
alternative which are cheaper and effective then the current resources. This will make the
company to have a competitive advantage and also increase the customer base and increase the
profits of the company. (Menon and Yao, 2017) Kellogg also have to determine the value of the
resources due to continuous change in the micro and macro environment factors can make the
product inefficient.
Rare
The resources which the company can find and that not every company can have is the
rare resources and this will increase the competitive advantage of the company. The rare
resources can only be acquired by some big players in the market which will make the same
strategy as Kellogg to sell their product. This will result into the competitive parity.
Costly to duplicate

The company have to analyze the resources which are very costly to duplicate by the
other competitors and this also maintain the competitive advantage of the company. Kellogg
have the resources like machinery and other assets which the new market players cannot
duplicate and it gives the company core competency for some time. (Kitsios and Kamariotou,
2016)
Effective Use
The resources will only be of competitive nature when the company has the efficiency to
exploit he resources and make the proper strategies to delver the products to the market.
LO 3
P 3
Porter's five force model of Kellogg Company
Kellogg analyzed that there are many thereat in the market as the company is doing there
business globally and being the leader in the world the company have to analyze some factors
which can decease the efficiency and decrease the profit margin as well.
Threat of New Entrants
Kellogg always have the threat of new entry in the market to compete in the company. As
the new entrant will also have new technologies and innovative ideas to increase the market
share and that can also fore the company to change the strategy to lower the price and attracts the
current customers of the company. Kellogg have to analyze all the current market trends and
innovate according to it to increase the value of the product. The company can also increase the
production will lower the cost of per product and the company will make more profits. The
company can also invest in the research and development of the product which the new entrant
could not due to low capital resources and lack of market experiences. (Houqe, Kerr and Monem,
2015)
Bargaining power of Suppliers
Kellogg also have the threat of suppliers as the current changes in the market demand and
the suppliers will also change the prices of their products and which will affect the cost of
production of Kellogg. The supplier has the power to charge any price they want and this will
make the company have less profit. The company have established their own manufacturing

units to avoid the bargaining power as the company manufacturing will now only be working for
Kellogg and it will have no other options which will decease the power.
Bargaining Power of Buyers
Buyers are the king of the market and the company have to make the strategies according
to the satisfaction level of the buyers so that they can make them the loyal customers of the com
nay. As the buyer have the tendency to have the maximum satisfaction in the least possible
spending and this has affected the sales and profits of the company. (Holmes Jr And et.al., 2018)
Kellogg company have planned to increase the number of customer and increase the total
revenue generation which will also increase the profit of the company and introducing the new
product will also reduce the bargaining power of the buyer as they will be willing to pay for the
innovative products.
Threats of substitute Goods
Kellogg have also faced the competition as the market player also launched the similar
cereal like the Kellogg company which decreased the market shares as the substitute good have
better taste and also at lower price. Kellogg also made the strategy to increase the satisfaction for
the customers by increasing the other services and providing exactly what the customer needs
this will reduce the threat of substitute good for the company.
Rivalry
There are huge competition in the industry which lead to price wars and innovation of
their product which Kellogg company is facing. The company have analyzed to increase the
products to provide the variety to the customers and the company will also collaborate In small
venture to increase the market share and compete with the rivals.
LO 4
P 4 Strategic Plan Of Kellogg
Vision
Kellogg's focus on increasing the satisfaction of the world by providing the better food
and effective brands which help in distributing the food in the world and make everyone healthy.
Mission

To increase the health awareness in the world and also provide the proper relations
between the family. The company also focus on the heritage values and keep an eye on future to
increase the efficiency of the company and provide better products to the world.
Objectives
 To increase the market coverage and become the leading company to provide
nourishment to the customers with many values. (Hashim, 2016)
 To innovate and expand the company to new markets with the new products.
Strategies
Kellogg have adopted the Porter's generic model to increase the competitive advantage in
the market and also improve the efficiency of the company. (Chen, Preston and Tarafdar, 2015)
1. Cost leadership- the company have focused to reduce the cost by improving the
management and leadership skills of the employees. High level of productivity will ne
allowed by this strategy.
2. Cost Focus- the Kellogg in this approach focus on reducing the cost of a specific market
to increase the sales and attract more customers and compete in the market.
3. Differentiation focus- Kellogg also made a strategy in which they focus ion the product
differentiation so that they can increase the target in the customers as there are different
needs and desires of different customers and this will only be possible with different
products which provide different flavors. (Bentley-Goode, Newton and Thompson, 2016)
4. Differentiation Leadership- This strategy helped the company to increase the quality of
the products and goodwill of the product's brand. The company also focused on the
distribution channel of the product in the different market to lower the cost.
Tactics
1. Product- The company focused on increasing the brand value by improving the services
and also proving the better packaging of the products.
2. Price- Kellogg have provided discounts and various special offers to the customer to
make them loyal to increase the sales.
3. Place- the company also have make a marketing strategy according to the place in order
to cover the proper population and gain the maximum customers.
4. Promotion- Kellogg have invested in promoting the products to increase the sales of the
company by advertising, , mouth publicity. (Akdogan, Dogan and Cingöz, 2015)

CONCLUSION
The report had brief information about the internal and external business environment of
Kellogg company as there are many factors which helped the company to grow and increase the
market coverage of the company. Kellogg also adopted PEST, SWOT analysis in order to
understand all the external factors and internal factors with the help of Porter's five force Model.
Kellogg also had to terminate all the challenges by innovating the products and by price and
product differentiation in the market. The company provided many discounts and offers which
helped to retain the customers and make them loyal to the company.

REFERENCES
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