Week 8 – appendix (1)

Element of the Completed Playbook

Student’s Name

Institution’s Name

Date

Executive Summary

The playbook focuses on analyzing Kellogg Company to determine the best strategy that can be employed to enhance its strategic operation to maximize on profitability. Kellogg is a publicly traded company that manufacture and market ready-to-eat cereals and convenience food. This is an eight weeks playbook that focuses on analyzing different aspects of the company to enhance its operations. The book first week involves company selection and brief description of the company. The second week focuses on describing the company’s mission, vision and value. The third week involves the analysis of the company’s internal strategies. The fourth week involves the application of the main insight of the stakeholders’ strategy analysis and P.E.S.T. The fifth week analyzes the competitive strategy analysis tools ad concepts towards the relevant and development portions. The sixth weeks involves the main insight from the strategy analysis of the company’s key success factor. The seventh week involves the recommendation of the best strategy to enhance the right strategy to enhance the company’s profitability and market development. This paper compiles the work done for the last seven weeks to demonstrate the company’s operation and the best strategy to employ to enhance the company operations.

Playbook Summary Diagram

Playbook Summary

Week 1 Company selection; Kellogg from food and beverage industry

Week 2 Mission: a company of promise and possibilities

Vision: Nourishing families so they can flourish and thrive

Value:

Week 3 Internal strategies: Company’s structure, capabilities, and core competencies

Week 4 P.E.S.T and stock strategies

Week 5 Competitive strategies analysis

Week 6 KSF Analysis and Potential Strategic Pathways

Week 7 Best strategies recommendation

Appendix

Week 1: Company Selection

The company I have chosen for my Strategy Playbook is Kellogg’s Company. This is a publicly traded company within the food and beverage industry. The Kellogg Company is also a global company that is committed to building long-term growth in volume by providing nutritious food products of superior value. The Kellogg Company is the world’s leading producer of breakfast cereals. Its products are manufactured in 18 countries and sold in more than 180 countries. According to Dun & Bradstreet Hoover (Hoover) website, Kellogg Company is in a constant battle for the #1 spot in the US cereal market. For more than 100 years, Kellogg’s has been a leader in health and nutrition. It has done this by providing consumers with a wide variety of food products (Dun & Bradstreet Hoover, 2017). The reason for my choice is the passion for food and nutrition and the consistent ethical practices this company exemplifies. The Kellogg Company has been recognized as one of the World’s Most Ethical Companies by Ethisphere Institute, an independent research center promoting best practices in corporate ethics and governance (CHIN, 2016).

Week 2: Mission, Vision, and Values of Kellogg

 The Soulful Purpose of Kellogg’s mission is foundationally strong with meaning and purpose (Wolf, 2011). “Nourishing families so they can flourish and thrive” is the rooted belief by which Kellogg has maintained their business for over 100 years. The Kellogg’s mission operates as a company of promise and possibilities. They strive each day to represent a fresh opportunity to share Vision and Purpose. This company promotes an environment where they go beyond boundaries and borders to create foods and brands that help to fuel the best in everyone. Most children in America probably grew up watching cartoons on Saturday morning and eating breakfast cereal.

I remember sitting in my PJ’s in front of the TV, eating a bowl of my favorite cereal and cold milk.  Many times, during the commercials cereal brands would use that time to advertise colorfully, and sugar-laden cereal with prizes in the box.  Throughout the years, the targeted marketing of cereal companies was planted into youthful minds. Cereal is synonymous with being a kid, more like a sweet treat than a breakfast staple. Cereal is one of the first widely marketed “health foods.” It was developed as an answer to a growing dyspepsia epidemic in America. During the Civil War, many suffered from this chronic digestion problem that resulted from the unhealthy, high-protein diets of the time. (Dun & Bradstreet Hoover, 2017).  W.K. Kellogg founded the company through his belief in nutrition and dedication to well-being (Dun & Bradstreet Hoover, 2017). This deep purpose motivated by his passion for people, quality, and innovation, he created the first-ever breakfast cereal and then shaped an entire industry (Wolf, 2011). Kellogg soon became a household name; his signature, a trusted mark.

The strength of Kellogg’s mission to promote the well-being of people has proven his success. It is this belief that brings us together and sets us apart. The company has a worldwide presence through its brand. Kellogg’s has acquired various companies over the years which helped it in optimizing the use of its resources. The company has positioned itself as a brand meant for fighting hunger specifically as a breakfast cereal brand which has helped the company to share in the “Fighting Hunger” initiative. Although Kellogg’s mission has continued to be towards the well-being of others, the message has at times confused consumers. The marketing methods used by Kellogg contained high sugar content and use of ingredients such as high-fructose corn syrup.

The cereals market is crowded with local, National and International brands with plenty of competition; I recommend that Kellogg’s should strive to continue in the market by showing consumers how breakfast cereals can increase the nutritional intake and lead to a healthier experience. Consistent breakfast consumption has been shown to be associated with improved food selections throughout the day. (Cho, 2003) The core brands that the company offers address many health needs, from digestive health to weight management, from heart health to kids’ growth. They have made significant strides over the last few years in responsibly reducing the sugar, sodium, and fats in their products.

Week 3: Internal Strategies

Internal strategy analysis involves the process of evaluating and identifying specific characteristics of an organization. The four extensive areas that require to be regarded for internal analysis include the organization capabilities and resources, the manner in which an organization coordinate and configure its main value-adding activities, the organization structure and its cultural characteristics, as well as the organization performance as measured by the products strength. Kellogg competitive advantage is highly enhanced by the high company’s capabilities, competencies, organization’s structure and core skills.

Kellogg is founded on a centralized organization structure in which workers are answerable to the manager of their department. The decision of the employee and the manager need to match up with the organization vision, mission as well as the CEO defined strategies. The company organizational structure contains multidivisional form of cooperative structure, characterized by hierarchy. The company operations are highly guided by the mission and the vision which help in defining the organization purpose. Its main aim is to delight and enrich the world via brands and foods which matter. The company assesses performance with two metrics that include investment in brands and people and sustainable growth. The company centers more on its competitiveness, its value, and being more efficient (Kellogg Company’s website, 2017).

Kellogg has exceptional capabilities in its finance and marketing. It marketing objective is to uphold huge retail customers, and to offer its products at global level. It has general marketing strategy of building the demand with international customers that resulted to Kellogg products ordering in retail grocery. Its specific marketing strategy involves the employment of multi-segment strategy in which it markets and manufactures convenience foods and ready-to-eat cereals (Faiz, 2014). The company employs the concept of mix marketing by manufacturing quality products in its two main market lines; convenience food and ready-to-eat cereals, and by surveying the market to determine the cost of similar products, which help them to take advantage of the most effective pricing strategies. It has developed a great distribution system that enhances its products availability in global convenience stores and retail grocery. The company also tries to promote its products using TV promotional programs and ads, and also by use of social media among other modern marketing techniques.

The company has a strong financial foundation with constant period of making profit. Although the net income curve has demonstrated some irregularity in the past 5 years, the company is still trying to keep up and to enhance its sales. The company recorded net margin of 5.33%. The income growth has been of great advantage to the company since it adheres to its plan to minimize on the cost and increase in its net income. However, the company’s sales level is considerably low and may need to add more effort to improve the volume of sale, and enhance its constant growth. The company has recently been depending more on debts compared to equity, weakening its ability to overcome future economic challenges (Morningstar.com, 2017). Another major company’s capability is technology to increase the products value. The company has invested in research and development, making it possible to brighten the future of its customers. This has enabled it to identify better and healthier ingredients. The research and development investment has helped the company to be in a continuous journey to enhance the nutrition value of their food as well as improving their taste.

In addition to this, the company has invested a lot in its human resource. Kellogg ensures diversity while employing its workers. It values developing a great and healthy relationship with its workers, promotes a safe and healthy work environment and support wellness and health using benefits programs. The company also promotes positive career growth, motivating its workers to advance in skill and competence. It has severally tried to review its workers compensation plan to be able to work above the market value as a way of enhancing high workers retention rate and attracting the best talents in the market. The company’s core competencies lie on its brand name and image, as well as the customer loyalty. The two have highly enhanced the company’s ability to record profit year after year. Its distinctive competencies lie on its exceptional supply chain management system. The company has tried to use all possible means to increase the value of its product. Kellogg was the first cereal company to employ a nutritionist. This implies that the company products highly consider the nutrition value, and thus they have highly managed to develop more healthy products which would be highly preferred by all (Kellogg Company’s website, 2017).

Week 4: P.E.S.T. and Stakeholder Strategy Analysis

For over 100 years the Kellogg Company is the world’s leading producer of cereals. Kellogg’s leads consumers with a variety of health and nutrition food products. The ethical business practices and its value based culture have built a commitment to its reputation and customer trust. The company has a lead in the industry with its marketing position. Kellogg’s business values are the company beliefs that shape and guide the decision making within organization. Kellogg’s implemented K-values a guide in which the company interacts with its stakeholders. The business plans and strategies focus on engaging with stakeholders the highest ethical standards, sustainable business practices and the impact to the environment. The comprehensive perspective of Kellogg’s P.E.S.T. analysis will help analyze the Political, Economic, Socio-Cultural, and Technological changes in the business environment.

Political

Many of the new government requirements for food content and consumer preferences has reduced the number of commercials promoting sugary breakfast television advertising aimed at children (Johnson, 2002). This poses a real challenge for the company to maintain its commitment to a healthier lifestyle.  Public health advocates have argued that the industry’s self-regulation is not enough and has pushed the government to set guidelines (Freimuth, 1988). In 2009, Congress directed the Federal Trade Commission, Agriculture Department, Food and Drug Administration and the federal Centers for Disease Control and Prevention to develop the recommendations (Freimuth, 1988). In efforts to promote a healthier lifestyle the goal is to encourage a marketing environment that supports, rather than undermines, parents’ efforts to get their children to eat more healthfully” (Botta, 2013). These agencies recommend that companies only market foods that have a significant amount of fruits, vegetables, whole grains, and low-fat milk products. Foods that promoted trans-fat, more than 1 gram of saturated fat, 13 grams of added sugars or 210 milligrams of sodium in a serving would not be eligible for marketing to children under the guidelines.

Economic

It has always been Kellogg’s goal to make a profit to secure high returns for its shareholders. Kellogg’s has experienced, and expect to continue the intense competition for sales of all of their principal products in the major product categories, both domestically and internationally. The products compete with advertised and branded products of similar nature.  According to Lachance, (2014), they also compete with unadvertised and private label products which are typically distributed at lower prices, and generally with other food products. Principal methods and factors of competition include new product introductions, product quality, taste, convenience, nutritional value, price, advertising and promotion. The Kellogg Company is driven to enrich and delight the world through foods and brands that matter. In recent sales of approximately $14.6 billion, Kellogg is the world’s leading cereal company; second largest producer of cookies and crackers; a leading producer of savory snacks; and a leading North American frozen foods company. (Economy, 2016).Social

Kellogg’s engages with communities through its breakfast clubs. Engaging and improving the communities in which they operate is an integral part of Kellogg’s operations. The Kellogg Company prides itself in its legacy of behaving ethically and supporting CSR initiatives. According to Kellogg’s Foundation (2011) Kellogg’s commitment to its stakeholders and ethical practices is demonstrated through its Corporate Social Responsibility (CSR) initiatives. CSR focuses on improving the lives of communities in which the organization operates Kellogg’s founder. According to Kellogg’s Foundation (2011) Kellogg’s seeks to continue this legacy by making a difference in the communities in which it operates. The focus is on projects where the company can make a real impact on issues close to its heart, namely food poverty and sustainable agriculture. Kellogg’s is committed to working with farmers to achieve ‘sustainable agriculture’. This occurs when farmers are able to grow crops year after year without negatively affecting future generations. The yield from their land improves as does their income. Sustainable agriculture helps guarantee security to farmers and their families.

Technological

Kellogg’s has successfully used mobile technology to improve visibility and measurement of its field sales activities and retail execution across the United States. According to Adriatic (2017), Kellogg’s created custom enterprise mobile apps to replace paper forms used by sales managers for evaluating retail store conditions and the performance of field sales team members. The mobile solution provides real-time updates between the field and the office, accurate data points on in-store conditions, and custom reports for identifying trends that drive sales. (Adriatic, 2017)   Kellogg’s workflow features allow the apps to guide sales managers through the entire business process. This technology solution supports two-way data, so that managers can access corporate data or past records on mobile devices in the field when they need them.

 In conclusion, Kellogg’s has opportunity to continue to be successful on their strategy. According to John Bryant, CEO of Kellogg’s company has a strategic 2020 growth plan. Breakfast is a growing meal that generates more than $400 billion in sales globally each year. It also comprises about 45 percent of global sales. An opportunity for business, Kellogg’s knows that tastes and preferences for breakfast have been changing. Last year the company focused on four of the largest cereal markets in the U.S., Canada, U.K. and Australia. Kellogg’s business strategy is stakeholder-focused. The company’s decisions and actions are all made with the best interest of its stakeholders at the heart. Engaging with both internal and external stakeholders creates two-way communication that brings benefits to both Kellogg’s and to each stakeholder group. The use of the technology will continue to keep Kellogg’s at a competitive advantage.

Week 5: Competitive Strategy Analysis

The Kellogg Company is the world’s leading producer of cereals. Over 100 years, Kellogg’s is a leader in health and nutrition through providing consumers with a wide variety of food products. Kellogg’s market leading position and brand is founded on its commitment to ethical business practices and its values-based culture. Kellogg’s operates in the red ocean market and to keep innovation as a competitive advantage; it will need to operate in blue ocean markets. (Kim, 2004) Based on Porter’s Five Forces analysis, the essence of formulating a competitive strategy is relating a company to its environment. (Porter, 1983) They analyze forces driving industry competition.

Threat of Entry

Kellogg’s brand, innovation and established breakfast leader, and now the acquisition of Pringles and the continued introduction of new products from its other well-known snacks brands are giving the company a similar status in the snacks marketplace. The building off these brands with new products that reflect an understanding of people’s evolving taste preferences and nutrition needs has held a steady product line which helped Kellogg compete and pose a threat to the competition. Some of Kellogg’s biggest competitors are General Mill, bulkpost, Malt-O-Meal, and Quaker. The Big Three face their biggest threat in the private label brands and the increasingly intense internal competition among themselves.

Customer loyalty to the brand has been consistent over the 100 years, and competitors are aware of the diverse product line which makes it hard for them to compete. (Porter, 1983). Kellogg’s engages with customers and potential customers through its advertising campaigns. This includes TV, print advertising, commercials and the use of social media such as Facebook and Twitter. These are all platforms used to create two-way engagement with customers about its products. The brand loyalty has provided a significant barrier to entry for potential entrants.  Customers in the cereal market historically have been shown to have a demand for established cereal brands. (Cho, 2003) Children are a major consumer of ready to eat cereal and after watching advertisements they are not willing to settle for generic or off-brand cereals.

Bargaining Powers of Buyers

 Kellogg’s top competitors are known as the top 3 in competition, General Mills, and bulkpost. These companies compete with Kellogg’s in only one or two product segments, such as Quaker Oats in the cereal and snack business. The cereal industry has historically been divided among three main competitors. The bargaining power of buyers, both retailers, and consumers has become an increasing threat to the cereal market over the past year. In the early 70’s, the primary purchasers of cereal were small, independent retailers who stocked only what their customers demanded on a short-term basis to fill their stores. (Dun & Bradstreet Hoover, 2017) Due to the relatively small amount of cereal that each of these small stores demanded, these independent stores were unable to enact any sort of bargaining power on the major cereal manufacturers. Kellogg’s largest customers, like Wal-Mart, have the power to demand that their suppliers perform work once done by the retailers themselves. (Dun & Bradstreet Hoover, 2017)

Bargaining Powers of Suppliers

The market has become increasingly competitive over last ten years, with private label sales cutting into the Big Three’s market share.  The increasing pressure to engineer growth in a stagnant market has led to more competitive pricing and increasing costs. The bargaining power of Kellogg’s suppliers is significant.  The bulk of raw materials that Kellogg requires to produce cereal are commodity items such as grains and wheat are available through a large number of both large and small distributors. Packaging companies have little power over Kellogg since there are numerous companies that Kellogg may solicit to fill their packaging needs at a minimal transfer cost if Kellogg’s suppliers decide to increase prices.

Threat of Substitute Products

Substitutes pose substantial threats to the profitability and growth in the cereal market. The cereal industry has experienced a considerable weakening in demand as consumers’ preference in the breakfast market has shifted towards greater convenience and speed. (Cho, 2003) The mobile lifestyle that does not include the traditional sit-down breakfast has customers demanding alternatives for breakfast include toaster pastries health bars, health drinks, and morning pastries.

The substitutes, in both mobile and sit-down breakfast, are priced competitively and are available from many of the retailers that sell cereal, resulting in minimal search costs for price comparisons. Kellogg faces competition from these alternative breakfasts at two main decision points, purchasing and consumption. Customers decide to purchase cereal but do not consume it regularly because of the various other breakfast options.  The substitutes for the cereal industry provide pressure on the industries profit potential.

While Kellogg’s traditional cereal business has experienced slowing growth because of the industry-wide trends, some of its smaller segments present substantial growth opportunities.  This is true for the health food and snack food segments.  Kellogg encourages an image of healthy food products with many customers; this positive image gives the company a competitive advantage in the growing health and natural foods market. The refocusing of Kellogg’s brand name on a healthier lifestyle the company will be able to respond to the demographic shift to a health-conscious population. For now, I don’t see them out of the red ocean market.

Week 6: KSF Analysis and Potential Strategic Pathways

Kellogg’s continued success will depend on the essential skills, competencies, and capabilities that are critical for them to survive future. These recommendations will help them gain a competitive advantage in the Cereal and Snack Industry. I have illustrated key success factors that would add value and sustainability to the future growth of the company.

Product Differentiation

Kellogg must remain aware of the changes of the consumer market which will help the company gain a competitive edge in the cereal industry. Differentiation is the essence of strategy, the prime source of competitive advantage. (Zook & Allen, 2011). With the trend of health consciousness and tastes changes can be discovered by market research. It is important to gain feedback from consumers through surveys and focus groups which will allow the company to gain knowledge about their strengths and weaknesses. This will enable them to strategically position themselves with resources to minimize price, improve profitability and differentiate itself from the competition. This positioning will help them achieve sustainable competitive advantage by preserving what is distinctive. (Porter, 1996).Innovative capability

Kellogg’s Success and brand have a healthy image when compared to other daily breakfasts and snacks competitors. The implementation of convenient products so that they can be transported easily, the range of cereal bars which are handy for people in a morning rush. Based on the article “Using the theories of innovation to predict industry change” its actual strategy is manifest in the products the company introduces, the process it follows, the services it offers, and the acquisitions it makes (Christensen & Roth, 2004). Nutrition is a key factor for Kellogg’s they have researched the sodium content in the food is a major issue. They are trying to develop products with less salt content and more fruits in the bars and cereals for people with health concerns. Brand awareness was created around this initiative which allowed them to win with customer loyalty. This innovation has influenced their product market to a greater level with the changing markets. The innovation helped to increase productivity and reduce costs, create a reputation for being a caring customer-oriented company.

Customer Satisfaction/Experience

Kellogg’s aim is to educate customers about the importance of a lifestyle that is balanced, which can be achieved by consuming their products. The mission is “to drive sustainable growth through the power of the people and brands by better serving the needs of customers, consumers, and communities. A balanced lifestyle is one of the broad strategic objectives of the company. It implemented these strategies by tactical plans in supporting the physical activity and the sponsorship of activities with the use of company’s resources. This entails the implementation of communication with healthy balance diet to consumers using the introduction of food labeling, which allows consumers to understand the balanced diet content of their products. These new activities, it shows that the company is trying to create a good CSR image in the industry (Kellogg’s Foundation, 2011). Kellogg’s commitment to its stakeholders and ethical practices is demonstrated through its Corporate Social Responsibility (CSR) initiatives.

Week 7: Strategy That the Playbook Is Designed to Support

The main aim of any organization is maximize on the profit. However, this goal is limited by a number of challenges that include external business environmental factors, competition, and lack of capability among other things. Kellogg has employed various strategies to enhance its competitiveness and profitability. However, it has not effectively managed to perform to its very best. More still need to be done to enhance high level of sale. The company volume of sale has been declining, resulting to a decline in the net income. I addition, the company is investing more in debt, making it hard for the company to make anticipated income. The company’s focuses on providing balance diet food product and cereals. They have also tried to increase various minerals and other valuable elements to enhance their product. However, however, the outcome is not as much appealing as the company would want to see. This may be due to the employment of dissatisfying marketing strategies. Kellogg is an international company that focuses on selling its products worldwide. In this regard the company needs to adopt more international based marketing strategy other than relying on traditional marketing strategies. This strategy must still be based on the current marketing mix concept, but in this case 7ps concept of mix marketing should be employed.

International marketing strategy involves 7Ps mix marketing concept is the chosen strategy to enhance the sales growth and profitability in Kellogg. International marketing in this case refers to a standardized form of marketing that focus on the company’s global customers, but with some aspect of individualization where the cultural aspect is integrated to marketing strategies employed in each country, where culture is highly valued, especially in food products. The 8Ps mix marketing strategies will include the traditional 4ps which include product, price, place and promotion, as well as four more additional Ps that include packaging, people, process, and physical evidence (Rafiq & Ahmed, 1995).

International 7Ps Mix Marketing Strategies

Product and People

The company will develop its product putting all current measures into considerations. These include the nutritional value, and taste. However, in this case, the company will consider specific regional consideration of taste. The company will change its product tastes based on customers’ preference, but maintaining the health and nutritional value of these products. The company should also consider developing products for specific group of customers. For instance, the company should define cereals for infants, older children, adults, and elderly. These products should vary based on health needs and digestive ability of each group. The company should also diversify based on health nutritional needs of different groups. They should have cereals for diabetic people, and obese people among others. This will help in diversifying the company’s products and addressing the needs of all in the society. Addressing more special groups in the market will increase the company’s market share. This will also address the people aspect in 7Ps since it involves focusing on individuals needs while designing a product (Rafiq & Ahmed, 1995).

Price

The company should also employ different pricing strategies to enhance sales and to expand its market share. These strategies will vary based on the region and the level of customers’ awareness in the region. The company should employ low prices while entering in a new market as a way of encouraging consumers to buy and try its product. Close monitoring on the volume of sales should be done to ensure that once the sales stabilizes and that the consumers are familiarized with the products, the cost is constantly increased to normal. This will allow the company to maintain loyal customers who purchase its products due to its quality, taste, nutritional value and because it addresses their age or health needs. The company standard price in a stable market should be standardized based on the prices of other competitors in the market. This should be done as per the region to ensure that the company prices match those of competitors in each region.

Place

The company already has a superior supply chain with efficient distribution system. This kind of distribution system should be extended to other parts of the world where the company consider venturing into. It should ensure that the products are highly available at the customers reach at all the time. This should also be ensured in new market entry. The company should consider ensuring that its products are available in various customers’ retail outlets at all time. This makes it easy for customers to depend on the product