Strategic Management - Kellogg Company 2005

Running Head : STRATEGIC MANAGEMENT - KELLOGG COMPANY 2005

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Introduction

From inception , Kellogg Company had the following comparative strength in the food industry . Kellogg developed and sold strong brands , for example , Bran-flakes , Allan Bran and Rice Krispies (Bonn Christodoulou , 1996 . W .K . Kellogg (Co-Founder ) had recognized the value of grain-based products and even knew how to present it in the markets (Bonn Christodoulou , 1996 . The company also used best ways to communicate value of their produces to the consumer , that is advertising in

leading magazines , free cereal product promotions electric signs that are strategically positioned and strong brand names and icons that resonated with consumers (Ibid , 1996

Kellogg also employed advanced production technology in to reduce production costs . Also , the company had had visionary and strategic management team that has made the company take great steps like strategic mergers and acquisitions (Bonn Christodoulou , 1996

Kellogg had these opportunities that they managed to use large unsaturated markets in Europe , Asia and Australia that made them to increase sales revenues . They also had opportunities in acquiring firm and business units like Keebler that increased their product line and sales revenue (Bonn Christodoulou , 1996

Weaknesses that Kellogg had over rival firms includes , generally their production was labor intensive until recently . This increase cost and thus reduces profit margins (Bonn Christodoulou , 1996 . Their acquisition of firm was only vertical acquisition , thus they cannot control their pricing to their favor without affecting their selling price

Threats that faced the company include inflation that caused increase in prices of raw materials and reduced investment value in their subsidiary firms (Bonn Christodoulou , 1996 . Increase in prices caused price wars in the market and this forced Kellogg in a tight place since they cannot increase their price marginally as they can lose their market share . Rival companies like General Mill acquired firms that resulted in increased output and thus competition (Bonn Christodoulou , 1996

Changes that have taken place in the company include , change of name to Kellogg Company in 1922 (Bonn Christodoulou , 1996 . The company also increased their product line to produce snacks and cookies . They also acquired firms outside America . Organization structure also changed as their operation expanded . The company changes its name to create strong brand name that could have impact on the market (Ibid , 1996 . To increase their sales revenue , increase output and gain on economies of scale , the company extended their product line (Bonn Christodoulou 1996 . To penetrate markets like in Latin America , the company acquired food firms in those markets (Bonn Christodoulou , 1996 . Structure follows strategy , as the company corporate strategy became global focused they had to change management structure in to implement their strategies (Bonn Christodoulou , 1996

Strategies the company used to extend their product line is acquisition and merger with firms that were profitable and with growth prospectus (Bonn Christodoulou , 1996 . Good corporate governance and financial discipline was important strategy in mobilizing enough capital to buy out firms (Ibid , 1996 . In hiring top management employees the...