Supply Chain Section of Kellogg’s Cornflake Company

7 Pages   |   1,154 Words
Table of Contents
Introduction. 2
Micro and Macro Environment Analysis. 2
SWOT Analysis. 3
Porter’s Five Forces Model 3
PESTEL Analysis. 4
Conclusion. 5
Recommendation. 5
Bibliography. 6
 

Introduction

Kellogg’s Cornflake Company was founded in 1906 by Kellogg brothers. Company came into existence as a result of various experiments conducted to cook cereals without making them lose its natural essence. The philosophy of Kellogg’s cornflakes company was “improved diet leads to improved health”. Kellogg’s is an international manufacturing company which is based in UK, Latin America, Asia, Australia and Canada. Kellogg’s is the world leader in manufacturing breakfast cereals. Its portfolio consists of 19 different products available in more than 160 countries. The famous brands of Kellogg’s include Corn Flakes, Special K, Rice Krispies, Nutri Grain and Fruit n’ Fibre (Kelloggs, n.d.).
 

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The business strategy adopted by Kellogg’s is extremely straightforward and focused. By following this business strategy, Kellogg’s want to expand and grow the cereal business, diversify the business into convenience food and finding new business opportunities.
Kellogg’s strongly believes in taking responsible actions in all aspects and functions of supply chain. This business model focuses on the long term survival aspects for the company and its stakeholders. Furthermore, Kellogg’s has set a goal to curtail energy and emissions in manufacturing and improving packages to make its business more environmentally friendly.
The case study analysis is to show how Kellogg’s will accomplish its mission through establishing strong connections and improvements in various parts of its supply chain from manufacturing to final consumers through various internal and external factors which can influence the Kellogg’s decision making.

Micro and Macro Environment Analysis

The micro and macro level environment of any business include elements such as customers, government, regulations, competitors, technology and other internal as well external factors which directly or indirectly impact the decision making of the business. To identify the implications of such factors, it is necessary to conduct SWOT, PESTLE and Porter’s Five Forces Model

SWOT Analysis

SWOT analysis includes both, internal and external, factors that can affect the decision making of any business. Internal factors include strength and weaknesses; whereas, external factors include opportunity and threats faced by that company.
Kellogg’s is a multinational company which has been able to come up with many successful marketing campaigns through various initiatives. Kellogg’s has enormous labour force which adds up to 30,000 employees worldwide. Kellogg’s is considered as a top quality breakfast brand throughout the world. Lastly, Kellogg’s popularity among every age group consumers further strengthens its position in the market.
However, Kellogg’s cereals are considered to be complimentary meal at the breakfast. Many consumers think of Kellogg’s as non-filling meal. Therefore, it is treated as a snack rather than a proper breakfast meal.
Kellogg’s has found many opportunities to improve its market position in the form of conducting various CSR activities such as “healthy start day”, sponsoring international games and developing strong in-house distribution channels in different countries. Food regulations imposed by government and increasing levels of competition are the only threats faced by Kellogg’s (Voulgaridou, 2007).

Porter’s Five Forces Model

Porter five forces model take into account the complete external factors that influence any business. These factors include bargaining power of buyers, bargaining power of suppliers, threat of new entrants, threat of substitutes and competitive rivalry in the industry. The five forces model applied on Kellogg’s has following implications (Porter, 2008).

Kellogg’s enjoy low level of bargaining power of suppliers mainly due to government regulations and surplus farmer availability which makes the price negotiation extraordinarily difficult. On the other hand, the company enjoys a high degree of bargaining power over its buyers due to the vast availability of grocery stores, product availability and co-dependent buyer relationship with the company. Kellogg’s is involved in the business cereal manufacturing; therefore any product which is highly likely to be consumed at breakfast, is directly substitutable to Kellogg’s. Such products include toast, doughnuts, bars, fruits and other edibles. Kellogg’s does not face high level of threat from new entrants coming to the market. The start-up cost is unusually high to enter into this industry. Kellogg’s is facing direct competition with well-established and mature companies operating in the market. These companies include General Mills, Kraft Foods and Pepsi Co. This implies that there is high and intense competition in the market.

PESTEL Analysis

There are many external factors which should be looked in to at great details to design the broader picture for Kellogg’s. These issues include political, economical, social, technological, legal and ethical (Miller, 2007).
Political environment has significant implications in terms of financial services that are carried out in the industry. Moreover, political and legal factors can play a pivotal role when it comes to the law and order situation prevailing in the country. The two main forces that can influence the political environment in the country are national government and local government of that country. Government can affect Kellogg’s business in terms of wheat pricing and farmer control. The economic conditions of the country in which the Kellogg’s is conducting business can affect the activities in term of gross domestic product, inflation and per capita income. Kellogg’s must set its price in accordance with these economic factors. Furthermore, the social-demographics must be taken into account, and appropriate target market must be selected if Kellogg’s needs to be successful in retaining its business position in the market as a leader. Lastly, investing in technology can strengthen the market position of Kellogg’s if they manage to purchase state of the art technology for its production facilities.

The factors identified in the models above must be considered into account by Kellogg’s in improving its supply chain and producing cereals according to the tastes and preferences of the consumers.

Conclusion

In accordance with the supply chain sections of Kellogg’s, the industrial supply chain requires the interaction between different departments to ensure that goods and services are timely and provided to the customers. Kellogg’s needs to find efficient and effective ways of supply chain management to ensure timely delivery of its products at the right price.

Recommendation

It is recommended that Kellogg’s should focus on specialization as it is more cost effective and it will be more effective given the internal and external factors analyzed above. In order to achieve cost effectiveness, Kellogg’s needs to venture partnerships with other players in the industry, such as suppliers, distributors and others. Through more effective management of its supply chain, Kellogg’s will be able to benefit itself in the long run as well as it will have a positive influence on the environment and other businesses involved in the supply chain.
 

Bibliography

Kelloggs Kelloggs Home Page, [Online], Available: http://www.kelloggcompany.com/en_US/about-kellogg-company.html [20 March 2013].
Miller, S. (2007) 'Why Companies Need PESTEL Analysis', February.
Porter, M. (2008) 'The Five Competitive Forces That Shape Strategy', Harvard Business Review.
Voulgaridou, D. (2007) 'SWOT Analysis in Supply Chain Clustering'.
 
 
 

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