Internal and external analysis of Kelloggs

Internal and external analysis of Kelloggs In this assignment Im going to make an external analysis and an internal analysis of the Kelloggs company. Im going to choose four tools to make the all analysis. For the external analysis I will do PESTEL and Porters five force models and for the internal analysis I will do the Value chain and a benchmarking on Cereal SBU Presentation of the organization Kellogg Company is the United States largest cereal-Maker. In 1898, Will Keith and John Harvey give birth to the famous breakfast cereal Kelloggs Corn Flakes. Thanks to the success of the products Will Keith create in 1906 the Battle Creek Toasted Corn Flake Company. Kellogg is the leading producer of breakfast cereals in the world. It takes places in 18 countries and sells it products in more than 180 countries. Between 1938 and the present day Kellogg opened manufacturing plants in the UK, Canada, Australia, Latin America and Asia. Kellogg produce a wide range of cereal product including the well-know brand of Kelloggs corn flakes, rice krispies, special K , fruit n fibre, as well as the nuti-grain cereal bars. The philosophy was improved diet leads to improved health Kellogg company mission statement: Kellogg is a Global Company Committed to Building Long-Term Growth in Volume and Profit and to Enhancing its Worldwide Leadership Position by Providing Nutritious Food Products of Superior Value Analysis of Kelloggs external environment Analysis of Macro-environment influences through the PESTEL model The headquarter of Kellogg company is currently base in Battle Creek in the Michigan. I will base my PESTEL analysis in the country of the USA Political : Reforms for the problem of obesity in USA (wide problem) US focus on cereal products in the level of 17% of the food market(2000) Economical : The deterioration of general economic activity and the contraction of the food market have not been without consequences for the food industry .Faced with financial difficulties and difficulties of access People doesnt have money to buy expressive food because of the decrease of salary. High unemployment rate : 9,00%( january 2011) GDP in 2009:14  266  milliards of $ Curent Deft: 6% of GDP Increase of the inflation rate:1,5% Decrease of the money , low rate of the dollar Hard competition between the breakfast and snack brands Decrease of all the sales in cereal market (began in 2005 with less 0, 4%) Social : Population of USA: 312.061.000 people increase of obesity rate so the cereal market develop the sector of light food Lack of time to take a breakfast: American people would like some easy to transport at work or at school to eat. The increase in the Third Age population group (due to better living conditions and better health care) will decrease the sales of Kellogg children product and down growth for adult products. Importance of the health, safety People want to be inform on what people it Technological : Innovation on the cereal market: different package, small bar (snack), resealable package (or close package) Recycling package Innovation in communication and advertising level Scientific progress on the health- diet food Increase the cost of RD Kelloggs did a matrix Sustainability ingredients Environmental : Development of the biologic and natural food Development of ecologic packaging, and recyclable packaging to avoid the waste Legal : environnemental charter Health claims is becoming more prevalent with the increase of the power of American heath associations. Globalization creates homogeneity of consumer behaviour. Globalization is a key driver for standardization. This sector of tourism has to take into account the requirements of global customers. (Standardize the food, the drink, the activitiesà ¢Ã¢â€š ¬Ã‚ ¦). Because of this standardization competition increases between firms within the tourism sector. This price war will lead to decrease price. The five porters force Analysis Industry competitor: In the market industry four large companies are dominant (Kellogg, Nestlà ©, MDD and Jordans). Its an oligopolistic situation (a small number of sellers and a large number of applicants). The competition between the organizations is high and intense because of the price principally. Threat of a Substitution: there are many substitutes because of private label Threat of entry: The cereal industry is oligopolistic, so is very difficult for other firm to enter in this sector. If firm want to penetrate this market he has to have competitive prices, and has to make marketing communication and promotion to attract consumers Bargaining power of buyers: the power of buyer is low in the cereal industry; consumers dont have a deep impact. Bargaining power of suppliers: the power of suppliers is low because the importance of the market shares of private labels. They do exactly the products in cheaper prices. Suppliers can buy product independently. Source: Adapted from Porter M (1998, cited by Johnson G al, 2008) Analysis of Kelloggs internal environment (internal strategy) The Kelloggs value chain Support Activities Firm infrastructure: In order to maintain a good satisfaction level from its clients, Kellogg uses several services and the entire organisation is flexible. Quality Control Finance Accounting Information system(internal communication) : high level Kelloggs has an intranet to expose the information of the firm Legal service : the law concerning the production of the product Logistical support (restoration) Planning : Provide a planning to clients and Anticipate customers needs Human Resources Management: The company allows a dynamic of human resources management policy. For doing that well, Kellogg establish a model wish name is Kellogg business leaders model (KBLM).It is the base of everyone in Kellogg industry, it improves the competencies of each works and allow to progress in the company. This model is one of the most important competitive advantage, it allow adding value to the firm. Recruitment policy: Kellogg is looking for talent workers to develop new products and give freedom to do innovation. It does recruitment on international dimension. Training: Kellogg establishes the standing coaching to help workers to improve future operations and profitability. Kellogg is developing  plan  for  individual career to respond to the workers needs (new skills) The innovation is one of the most important sectors that Kellogg develops; it gives time to worker just to think about innovation. Performance measure Kellogg measuring performance and make feedback to add value Add value Kellogg motivates employees in giving merit reward when they perform. Technology Development: RD for products The innovation is a part of Kelloggs culture, it is the most important cereal heathcare company The development of products aimed at meeting consumers health and nutrition needs. The development of products packaging to ameliorate the communication for consumer and his comfort (when he use the product) Innovation on the image of health cereal: cereal for men target. Innovation the type of product(museli, cereal) Innovation to keep the iron in the cereal culture Innovation to give notoriety and visibility of the product The company has announced that it is testing the possibility of using lasers to etch the companys  name into corn flakes to let customers know they are eating a genuine Kellogs product(geek.com) Innovation in communication all around the world Procurement: To achieve economies of scale, purchasing division negotiate with suppliers to obtain group rates to reduce reduce cost and save time on delivery. Inbound Logistics: Kellogg calls the best suppliers and partners in term of cost efficiency, maintain the quality of the products. The suppliers are responsible (deal with) all the tasks upstream.( packaging, manufacturing, transportation management services, logistics management services and supplier management/procureme nt) the inbound logistic is automatic , evry part of the production is automated. Operations: Kellogg has un structure for all operation system very flexible. Kellogg set up On office in each country of the world. So Kellogg can manage the transformation between the raw material and the final product Outbound logistics: The distribution of the products to consumers (end user) is doing via a multi-layers channel system. The different channel of distribution allows comforting the consumers during the purchase. (distribution on retail, hypermarket and supermarket in general) Marketing and sales: All the consumers are familiar with the Kelloggs brand and Kellogg cereal. Kellogg company make sponsorships locally to height brand awareness. Thank to that Kellogg cereal are famous in all around the world. Kelloggs cereal use sometime promotion to reduce the price and increase the purchase. Kellogg  has managed  to  establish itself  in  almost  all   supermarkets  and  hypermarkets  in the world Services: Kellogg  offers  several   services  that  can   enhance  these  product to  the  consumer. Kellogg offering outstanding customer services( promotion to attract people and to loyaty the consumer with a relational   communication program  across all  brands  for adults and children,  built around a  mini-consumer Primary Activities Benchmarking To do this benchmark we are going to take the Kelloggs human resources sector and we will compare with Nestlà © human resource (Nestlà © is the principal competitor). Kelloggs Nestlà © HR culture Goal: add value thanks to innovation HR program: Kellogg business leaders model Kellogg join the high ethical standards -Freedom in the post HR program:Principles  of  Conduct Nestlà ©s business relationships between employees Communication is the principal factor of the HR policy. Equity between employees has to be respected. Give responsibility to employees Non freedom in the post Selection recruitment Kellogg is looking for talent workers Human Diversity attract and loyalty future employees(long term contract) Recruitment on the personality and professional skills develop a long term relationship. Training and Development Trainee program Personal development and team development Tainting program -Personal development Pay Benefit employee rewarding benefit: adaptation of working hours Employees social security. wage level( inferior to superior) Equity Financial compensation allows motivating employees. Participation/employee relation/communication -Power of employees unions -participation in important decisions. Every employee has got a personal responsibility in the company. -Importance of employee association.