Nelson College London: Business Strategy Report for Kellogg's

This report provides a comprehensive analysis of Kellogg's business strategy, addressing key aspects of its operational environment. The report begins with an examination of the macro environment, using the PESTLE framework to assess the political, economic, social, technological, legal, and environmental factors influencing the company's operations and strategic decisions. It then delves into an internal analysis using SWOT analysis and VRIO model, evaluating Kellogg's strengths, weaknesses, opportunities, and threats, alongside its core competencies and resources. The report further applies Porter's Five Forces model to evaluate the competitive dynamics within Kellogg's market sector, assessing the bargaining power of suppliers and buyers, the threat of new entrants and substitute products, and the intensity of rivalry among existing competitors. Finally, the report integrates these analyses to interpret and devise strategic planning recommendations for Kellogg's, offering insights into how the company can navigate its competitive landscape and achieve its business objectives. The report is based on the assignment brief for Nelson College London's HNC Business course.

Business Strategy

Table of Contents
LO 1.................................................................................................................................................3
P1 Applying appropriate framework's analysis the impact and influence of the macro
environment on a given organization and its strategies..............................................................3
LO 2.................................................................................................................................................5
P2 Analyse the internal environment and capabilities of a given organisation using
appropriate frameworks..............................................................................................................5
LO 3.................................................................................................................................................7
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation............................................................................................................7
LO 4.................................................................................................................................................9
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation...............................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
Books and Journal.....................................................................................................................12

To achieve a specific objective in business there is a course of set decisions and actions
which have to be planned is known as business strategy. It is like a blue print of a long run,
destination and direction of the organization. The purpose of business is to achieve efficiency,
deal with threats and challenges, solve situation problems, etc. To achieve the goals of the
organization, compete successfully, attract customers and strengthening performance of the
organization, these are the actions and moves as the result of business strategy.
Kellogg's is a multinational American brand which produces convenience food and cereal
which includes toaster pastries and crackers. Pringles, Cheez-It, Eggo, Frosted Flakes and Corn
Flakes are several well-known brands of Kellogg's. Kellogg's focuses on serving nourished food
to the customers so that they thrive and flourish. Kellogg's is marketing its manufacturing in 180
countries in present. There were many methods which were used in the history of this company
to promote and expand the brand which is now making Kellogg's the most popular in its field.
LO 1
P1 Applying appropriate framework's analysis the impact and influence of the macro
environment on a given organization and its strategies.
There are many factors which influence the working of an organization which includes
political, environmental, social, technological, economic and legal which is known as pestle.
These are the external factors which influence an organization and is known as the macro
environment. This external factor analysis will increase the efficiency and profitability of the
organization.
Political Factors-
The nature of this factor is very drastic and may vary from place to place and this factor
will impact on efficiency and growth of the organization. This factor can play a significant role
in the long run profitability in a particular market or country (Buckley, Burton and Mirza, 2016).
Kellogg's company does not support abusive and racist posts which were being circulated by the
team of pro-Trump, this incident can impact the loyalty of the customers based on affiliations of
politics. Kellogg's is trying to minimize on wages so that they can make profitability in the
market and the chances of survival are higher. There has been a lot of political changes in the
country and it is becoming difficult for Kellogg's to survive.

Economic Factors-
If there are changes in the foreign exchange rate, gross domestic product, inflation rate,
interest rate and current stage of the economic cycle this will really affect the company's
economy. There is a high unemployment in the country that means anyone will be willingly to
work with a lower wage which means the cost of Kellogg's company will fall and the economy
of the company will fail. By keeping in mind about the supply and demand, Kellogg's should rise
the capital to a fair price. The GDP growth in rate will affect Kellogg's fast growth in the future
is what is expected (Burlton, 2015).
Social Factors-
The environment of an organization will get impacted due to the culture and the way of
doing work. The market as well as the operational aspects will be majorly affected by this factor.
After a study on the customer’s level of education, segment of society, lifestyle and beliefs helps
in the production of the product and the marketing message which will help Kellogg's to make a
profitability. The importance to reactions of harassment, health standards and environment
protection are few pointers which Kellogg's need to be fully aware of to make the company grow
(Dahlberg, Hokkanen and Newman, 2016). Kellogg's has products which are distributed between
classes and have come out with premium products which the lower class cannot afford so they
come with different packaging and a similar product for that class.
Technological Factors-
It is very important for the company for innovating and getting the knowledge of
technology not just because of increasing the product's production and making a profit but to
prevent any future harm to the company (Dranove and et.al., 2016). Technology is so powerful
that in no time it can reduce the selling and the price of the products so low and create higher
negative impacts on the company. Technology can make the selling of the product even faster
and more production will have to be done and the company must be technologically well
established to produce more to get an increase in their customers satisfaction and so get more
innovative ideas to make them unique so that a substitute cannot beat them.
Environmental Factors-
There are different environment conditions in different companies. The weather
conditions impact the income and outgoing of the organization. The raw material will have

difficulties in getting to the factory then how will the transportation take place for the delivery.
(Fontana, Sastre-Merino and Baca, 2017).
Legal Factors-
The government protects the employees by providing them equal opportunities, not
according to age, gender, sexual orientation, ethnicity, disabilities or religion. The impact of this
factor is that Kellogg's company follows the safety and health laws which were created after the
industrial revolution due to making the employees work forcefully and in difficult situations.
Kellogg's treats it employees equally and follows all the rules and regulations applied by the
government (Ghemawat, 2016). The government also makes sure that the prices of the product is
not too high or low that the company is having a stable income so provide wages and make profit
and are fair in all the steps of the organization.
LO 2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.
Swot analysis are the evaluation model which includes the internal and external factors
and impacts the micro and macro of the company. SWOT stands for strengths, weaknesses,
opportunities and threats. The analysis of these factors are very important since these helps the
company to grow and expand in their own field. If the company knows about the points they
have as a weakness then they can improve and they can even work on making their strengths
more powerful so that no competitor can beat them (Higgins, Omer and Phillips, 2015).
Strengths-
Kellogg's have established themselves as breakfast cereal which helps the sales of the
brand. The company focuses on the change in customer needs and are p serve their products in18
countries and serving 180 countries. Kellogg's spends reducing healthy products. They over 1
billion dollars on its advertisements and marketing and has become the world's largest cereal
maker (Johnson, 2016). Cereal is an alternative to fight hunger and is health and easier to
consume for the customers. Kellogg's is one of the first organization to put product information
of its product on the box and is also nutrition labeled. Kellogg's has invested a lot in building up
the portfolio of the company and SWOT analysis helps the company to expand itself to get in
new categories of products. To expand new projects in Kellogg's the company has free cash flow
in the hands of the organization.

Weaknesses-
There has been a negative word of mouth because there was a mismatch between the
product and market message and the press has a lot of questions which have raised in the market.
Questions have raised on the high consistency of sugar and fructose corn syrup. There is slow
market capture of Kellogg's because of the slow innovation in the product and company (Razak
and et.al., 2016). A gap is visible in the product range which is sold by the company and can give
birth to new competitors a foothold. There is no changes in the structure of the organization
which is now limiting the expansion in grow of Kellogg's.
Opportunities-
By targeting, penetrating and marketing in the developed market in the current market
will help the company to grow and increase its sales. Change in lifestyle, hectic and population
growth in urban cities is matching with their needs but in rural areas needed to be targeted to
match their needs and make the awareness of this product will help the company grow. Tying up
with hotel chains and restaurants will help the company to grow faster and effectively. Due to
low transportation on shipping Kellogg's can reduce its cost and gives an opportunity for the
company. To increase its profitability, the new taxation policies can play a great role in
expansion of the company. There are new advantages of technology and market share to produce
new categories (Scholes, 2015). Kellogg's need to invest more on the technology department to
produce more and sell across the world.
Threats-
The greatest threat to Kellogg's is that there are products like ready made goods,
restaurants in nearby nears and local food joints are not letting Kellogg's grow fully
(Soltanizadeh and et.al., 2016). According to the government policies the ingredients and content
in Kellogg's are not acceptable and is an another major factor which is not letting it company to
grow. The population which is having a fast track life are slowly shifting to take away food
products which is not letting the company to grow. Over two years the company has witness an
increase in the competitors which has had a lower profitability of sales overall. Even if the
company is getting in new products they are not regular with those products sales and there has
been a swing in the income and profitability of Kellogg's.
In order to analyses the capabilities VRIO model is also being used.

Valuable- The financial resources which is being used by company is highly valuable. This also
save them from external competitors.
Rare- Employees of Kellogg’s can be termed as rare because they are highly qualified and
efficient. This makes them more sufficient.
Imitable- The financial resources of Kellogg Company are costly to imitate as identified by the
Kellogg Company VRIO Analysis. These resources have been acquired by the company through
prolonged profits over the years.
Organization- The structure of organization is not well organized. This can act as a weakness for
them.
LO 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation.
To analysis the framework of a company's competitive environment porter's five forces
analysis is being used. The five forces are bargaining power of supplies, threat for substitute
products, threat of new entrants, bargaining power of buyers and rivalry among the existing
players. These five forces analysis can help the company to build on its packaging goods and
processing to have an advantage in competitive market (Thompson, Strickland and Gamble,
2015). To not just build upon its packaging goods or processing these five forces can also help in
the sector of whole consumer goods and profitability.
Bargaining Power of Supplies-
There are numerous suppliers of raw material of an organization. Due to suppliers the
company will have to put their price accordingly. If the suppliers demand higher price for raw
material, then the sells will reduce due to the increase in price. The company to have an efficient
supply of good then Kellogg's should have multiple suppliers. They should experiment with
different raw materials so that if the price of one raw material goes high then the company can
shift to the other supplier. Suppliers who are fully dependent on Kellogg's company should be
given more preference to because they lose there bargaining power and this will give more profit
to Kellogg's. This understanding of weaker supplier has been learnt from Nike and Walmart's
mistakes.
Threat for Substitute Products-

There is a similar product in the market which satisfies the needs of the customers make
the company suffer in profitability and as a market. The risk in a substitute product is high in the
event that it offers an incentive that is remarkably unique in relation to show contributions of the
business. The threats can reduce by using product oriented rather than service oriented. Kellogg's
focus is on the needs of the customers rather than what they are buying is what makes it unique
and has lesser competitors. They can all have a strategy by making the customers pay more by
switching products which means they keep their prices on average for easier accessible for them.
Threat of substitute product is also high.
Threat of New Entrants-
The new threats for Kellogg's are getting in new ideas of doing things and the strategy
they are using are reducing cost, new value propositions and pricing strategy. To prevent threats
Kellogg's has to manage with all these threats and build an effective boundary around itself.
Kellogg's should bring out new products and innovation in the product is required to not just get
in new customers but also keep the old customers to keep buying Kellogg's. Kellogg's should
invest in its research and development department because a new entrance will not target them
directly but will help the company to be established before any other company can product the
same. Threat of new entrants is moderate.
Bargaining Power of Buyers-
The customers want to buy products of good quality or best offerings by paying as
minimum price as possible. This demand puts a pressure on the company's profitability and does
not work for a long run. The selling or the customers of the product are smaller or limited then
the more offers and discounts they enjoy but that is not good for the company (Soltanizadeh and
et.al., 2016). If the company invests in innovation of new product, then the company can make
strong base for itself and have a control on the bargaining of the customers. Kellogg's should
build upon its customer base so that they have an opportunity in sales and production but also a
control on the customers bargaining power. Bargaining power of buyers are high.
Rivalry among the Existing Players-
Rather than competing with each other the companies can collaborate and target bigger
markets then smaller markets. To compete better Kellogg's can build a scale of the company. The
intensity in the market is high between the rivalry companies then Kellogg's has to reduce its
price and will not have profitability for a longer run.

LO 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation.
Mission
Kellogg's mission is to nourish families so that they can thrive and flourish. The heritage
of this company keeps that organization excited about tomorrow and the future of the
organization drives.
Vision
Kellogg's vision is through brands and foods which matter are enriched and delighted to
the world.
Core Values
The core values are Humility, Accountability, Results, Integrity, Simplicity and Passion
Objectives
 To increase sales of new product Kellogg's by 10% till the end of year 2020.
 To increase the market, share by 30% till the end of year 2022.
 To enhance consumer experience by 10% in upcoming 6 months.
Ansoff matrix

For a future growth there few tools which are strategically planned for helping the senior
managers, executives and marketers. It is further divided into four sub-divisions which are
Market Development, Diversification, Market Penetration and Product Development.
Market Development
The capturing of the market with your existing product and services. If the company
collaborates with restaurants and hotel chains then that could add up to the development of
Kellogg's market. Since this product is faster and less consumption in making it so it could be
effective in urban areas or population (Yuliansyah, Rammal and Rose, 2016). Company needs to
develop the market for the new products and services which they are going to deliver in market.
Diversification
The company is not putting in more ideas and no innovations are being made. Cheese- It
was introduced by Kellogg's but it backfired and they had to withdraw the product from the
market very fast.
Market Penetration
Kellogg's is one of the first to provide breakfast cereal and focuses on the health of the
people. The penetration of this brand is easy for the existing products because it does not have
many competitors. Kellogg's company just has to target few areas of urban lifestyle so that they
can penetrate deep into the market.
Product Development
Kellogg's need to invest in its technological department because there are no innovative
ideas or products coming out of Kellogg's and is stick to the old products. Though they try to
invent new products but they are not regular in supplying it. The customers are not expanding
since the lack of innovations and expanding business. The interaction between the four P's is
significant be it internal or external factors of overall environment of the business.
Company can make use of product development in order to grow. In this they can develop and
innovate more new products so that they can establish their market in new places.
Porters generic strategy
This strategy deals with the advantage over competitive in the chosen market field which
the company has chosen. Kellogg's is a well established company and does not need to focus on
this strategy much but they do so that they can make the company even bigger. The three
features are cost leadership, differentiation and focus.

Cost Leadership-
The company tries to reduce the cost of the raw material so that the company does not
have to spend a lot on that and the finished product can reach the customers in a lower cost so
that the product can become famous. The raw material they get are low of cost and they can
product way more than they should be but still they do not product extra which is there draw
back.
Differentiation-
There is a lot of uniqueness in the products of Kellogg's because no other company can
product what they are producing and that makes them powerful in the market. Kellogg's is doing
the best for themselves and no other company can come in competition with them becayse they
have the most powerful portfolio.
Focus-
The focus of Kellogg's is on making there portfolio very strong so that they do nt have
any competition in the market of there field. There is no other company which has ever come
even close to Kellogg's company because they have a strong brand name and customers prefer to
take that brand rather than any other brand.
Marketing Tactics
When a product or service is going to become public that time the four P's play a major
role. The four P's are Place, Promotion, Price and Product.
Place
There are 80 countries which are producing the company’s products and 180 countries
are selling those products. The factories are based in urban areas because the transportation
becomes cheaper and the servicing products to the customers is faster. The products are easily
available in the market but the only drawback is that local restaurants, readymade food and pick
food from the way is easier than going to the market and picking up the products of Kellogg's
and then coming home to make them (Higgins, Omer and Phillips, 2015). Customers want a
faster way to fill their stomach so that they can work more. More outlets of this company should
open soon.
Promotions
Kellogg's has campaigned their products as much as possible and trying to aware the
population about breakfast cereal concept. There are lot of advertisement and billboards which

are put out and the company is gaining its market but the only problem faced by this company is
that they are lacking in getting in new ideas and innovations.
Price
The price of the product is low and affordable by the customers. Now the customers are
looking for cheaper and good quality of products. Kellogg's aim is to provide customers with
good and healthy food but also give them at their price. The prices of the product can fall if the
competitive companies grow in the market.
Product
The products of Kellogg's are limited because whenever they come up with new products
they are not about to have a stable supply of that product and that backfire and they have to
withdraw that product from the market. The products they sell are Pringles, Corn Flakes, Eggo,
Frosted Flakes, Cheez-It, Toaster Pastries, Crackers, etc.
Conclusion
Kellogg's is well established in its field. They are unique in nature and focus on breakfast
cereal. The company's focus is to provide the customers with healthy diet with a low price which
is easier to make. Kellogg's has to invest a lot of money into its markets development, research
and product development before any other competitor comes in their competition. Kellogg's is
stuck to its old products and whenever they come out with new products they cannot remain
stable with them and this observation has been made with almost all the products they have come
out with. They need to get control over their customers and suppliers demands. Kellogg's can
expand itself more if they work upon there drawbacks.