17571315 Managing Organizations And People Kelloggs Case Study


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17571315 Managing Organizations And People Kelloggs Case Study

  1. 1. Student name: Anum Ali KR#: 002478 Intake: DF0761DBT Individual Assignment – Level 1 Subject: Managing Organizations and People 2 Lecturer: Adnan Rasheed Length of paper: 2500 words Submission date: January 5, 2009 Asia Pacific Institute of Information Technology Managing Organizations and People
  2. 2. Asia Pacific Institute of Information Technology Managing Organizations and People
  3. 3. iii Table of Contents Application of Deming’s 14 Points to Kellogg’s...........................................................1 Analysis of Kellogg’s planning strategy......................................................................9 Advantages of Kellogg’s strategic planning..............................................................12 References....................................................................................................... .........16 Asia Pacific Institute of Information Technology Managing Organizations and People
  4. 4. 1 Answer 1 Application of Deming’s 14 Points to Kellogg’s 1- Create constancy of purpose towards improvement of product and service, with the aim to become competitive, stay in business, and to provide jobs. Kellogg’s focused on long-term strategic planning and devised a clear mission, vision and values to set a focused direction for the company and employees. (Table 1.0) Table 1.0 Vision “To be the food company of choice.” Mission “To drive sustainable growth through the power of our people and brands by better serving the needs of our consumers, customers and communities.” Satisfying Deming’s belief, Kellogg’s works not just for profit but as a social entity in service to its employees and customers. The Vision and Mission statements focus upon corporate social responsibility, and sustainable growth. Kellogg’s has a pyramid for strategic management (Figure 1.0) which elaborates how the futuristic Vision and Mission form the commanding core for the Operating Principles and the “K Values”. (Kellogg Company, 2009) The W.K. Kellogg Foundation works to provide health, nutrition and educational opportunities to children and communities. (W.K. Kellogg Foundation, n.d.) Asia Pacific Institute of Information Technology Managing Organizations and People
  5. 5. 2 Figure 1.0 – Kellogg’s Strategic Management Pyramid 2- Adopt the new philosophy. The management at Kellogg’s anticipated that the dynamism of times and trends would require them to adopt change and so, it directed itself to be more than just a “fair weather” believer i.e. planned for contingency and flexibility. (Ends of the Earth: Deming’s 14 Points and 7 Deadly Diseases, 1998) Keeping in pace with the health consciousness trend of today’s times, the new philosophy of targeting and satisfying the health vigilant consumer was adopted. Asia Pacific Institute of Information Technology Managing Organizations and People
  6. 6. 3 3- Understand the purpose for inspection. Being a food company, Kellogg’s needs to understand that minor recklessness in monitoring the contents of cereals can result in major life threats of consumers. Therefore, inspection should be carried out from the onset of procurement of raw materials to the printing of precautionary labels on the packaging. Kellogg’s has faced dilemmas of consumers complaining of reactions to milk proteins and nuts. Stringent care should be taken to mention nuts and protein allergies on the boxes. (Archive – ALLERGY ALERT – UNDECLARED MILK IN KELLOGG’S HOLIDAY FROOT LOOPS, 2007) 4- End the practice of awarding business on price tag. Instead of the wide base of diverse suppliers, currently being used at Kellogg’s, few suppliers with long term relationships should be pursued. The company is renewing the supplier base by contracting with “W/MBE-owned, controlled and operated businesses”. Kellogg’s agreed to enter into a mutually beneficial relationship with these businesses. (Kellogg Company – Supplier Diversity, 2009) 5- Constantly and forever improve the system of production and service. Quality Assurance at Kellogg’s is committed to continuous quality improvement and minimizing wastes. To maintain consistent quality in the taste and texture and the nutrients of cereals, inspection is done continuously at different stages from procurement and processing to packaging and labeling. (Kellogg Company – Quality Assurance, 2009) 6- Institute modern methods of training on the job. Kellogg’s Company makes on-facility employee training available. Brochures, leaflets, training websites, visuals and other promotional items are accessible by employees. The company’s intranet also provides instructions. (On Staffing: Advice and Perspectives, n.d.) 7- Institute modern methods of supervising Asia Pacific Institute of Information Technology Managing Organizations and People
  7. 7. 4 The leadership team at Kellogg’s involves the Chairman of Board, the CEO and the Vice Presidents. (Kellogg Company – Leadership Team, 2009) In recommendation of modern methods of supervising, cross functional teams should be made and the supervisors should be in-charge of their area of responsibility. Transparency in communication with the top management and prestigious work opportunities. 8- Drive out Fear, Create Trust & Create a Climate for Innovation: Kellogg’s promises its employees job security, recognition and growth opportunities. From internships to hourly jobs and to full employment positions of the marketing, operations, human resources, supply chain management and the information technology departments. The employees enjoy compensation and benefits plans, direct deposit, annual bonuses, paid vacation and sick leaves and other fringe benefits. (Kellogg’s: Employment, Jobs, Career & Work, n.d.) Karen Meehan, Kellogg's VP of human resources narrates that the average annual bonus is £600 paid in December which helps employees afford the festivities of the Christmas season and use the money as travel fare to visit loved ones. A reward package also provides pension and share purchase plans. (Kellogg_s employees receive bonus, 2008) 9- Break down barriers between departments Being an organization of global stature, Kellogg’s uses multiple methods to communicate with its customers. Cartoon characters like Jack & Aimee are used to communicate the plus points of physical exercise to parents and children. The Kellogg’s Tony Tiger (Figure 1.1) advertises energy needs for children. The Kellogg’s website also displays leaflets for customers on healthy eating and calcium for strong bones. (Business Case Studies | Kellogg’s | Communicating the strategy, 2009) Figure 1.1 Asia Pacific Institute of Information Technology Managing Organizations and People
  8. 8. 5 Internally, the Kellogg’s message “Get the Balance Right” is communicated to the employees through an in-house magazine. It covers issues on eating right and exercising right and also the Kellogg’s sports activities and CSR activities. Employees are also encouraged towards being activists in their own lives so as to better understand the Kellogg’s objectives. (Business Case Studies | Kellogg’s | Communicating the strategy, 2009) 10 - Eliminate slogans/targets asking fore increased productivity without providing methods In the 1990’s, Kellogg’s committed the mistake of setting profitability goals, following the footsteps of other companies of the time during economic recession. Employees were pressured to achieve numerical goals which proved to be a wrong idea because the mature market patterns were unstable. Hence, the new product launches ended up in failure and Kellogg’s lost market share and reputation because of not being able to meet its own projections. (The Magazine << MIT Sloan Management Review >> A Return to Basics at Kellogg, 2009) 11- (a) Eliminate Numerical Quotas for the Work Force (b)Eliminate Management by Objectives: Initially Kellogg’s productivity requirements were specified for employees as numerical quotas i.e. in number of cereal boxes and later in monetary values worth millions and billions. These quotas pressurized the workforce. (Kellogg Company: Information from Answers.com, 2008) Such quotas should be eliminated to pursue the wider and more realistic productivity goals. Management by Objectives, too creates a tunnel vision for the entire organization where the goals of top managers and subordinates are aligned on the same narrow objectives, usually with numerical specifications and deadlines. (Management by Objectives, 1997-2008) 12- Remove barriers that stand between workers & their pride of workmanship; the same for all salaried people: Asia Pacific Institute of Information Technology Managing Organizations and People
  9. 9. 6 Kellogg’s claims to be an “Equal Opportunity Employer”. To serve its aim of maintaining diversity t shows respect for unique employees from a variety of backgrounds. Their innovations and ideas are appreciated. The management facilitates the understanding of the mission and the vision through an efficient system of communication with its employees. As mentioned in Point 9, employees are encouraged to keep a watch on their own physical activities to be able to walk on the same path taken by Kellogg’s in projecting the image of personal fitness. (Kellogg Company- Career, 2009) However, the exclusive lists of benefits (Table 1.1) being offered only to a portion of the salaried workforce may become an offset for the employees who work just as hard as the others who enjoy the incentives. When Kellogg’s mentions that these benefits are for selected professionals, it becomes contrary to its claim of “Equal Opportunity Employer”. Table 1.1 Annual Incentive Bonus Plan* 401(k) Vacation Asia Pacific Institute of Information Technology Managing Organizations and People
  10. 10. 7 Vacation Purchase and Donation* Holidays Floating Holidays Ill Days Tuition Reimbursement Flexible Spending Accounts Company-paid and Optional Short-term and Long-term Disability Feeling Gr-r-reat Program: (Health Screenings, Flu Shots, Health Coaching, Exercise and Weight Management) Medical, Dental and Vision Insurance Mental Health Benefits Prescription Drug Coverage Company-paid and Optional Life and Accident insurance Direct Deposit Dress for Your Day Fitness Center (not available at all locations) Employee Assistance Program Volunteer Incentives College Savings Program Adoption Assistance Summer Hours (not available in all locations) Dry Cleaning Services (not available in all locations) Discount Employee Stock Purchase Plan Employee Referral Program Childcare Referral Assistance (not available in all locations) Dependent Care While Traveling on Company Business Employee Discount Programs Bereavement Leave 13-Encourage Education & Self-Improvement for Everyone: Asia Pacific Institute of Information Technology Managing Organizations and People
  11. 11. 8 The management struggles to extract the diverse talent of the workforce. The Executive Diversity Council, regularly meets to suggest strategies for employee development and fostering of their maximum potential. Employee development programs are made available to enhance the talent of the workforce. The Office of Diversity and Inclusion, is supported by the Global Leadership Team which funds for the resources required for employee training programs. (Kellogg Company – Commitments, 2009) 14-Take Action to Accomplish the Transformation: Kellogg’s management is committed to continuous improvement and customer satisfaction. It communicates the vision and mission throughout the organization and plan strategically to achieve the goals. It understands its responsibility as a strategy maker and takes proactive steps to continually improve the processes and products to exceed customer expectations. (Ends of the Earth: Deming’s 14 Points and 7 Deadly Diseases, 1998) Answer 2 Asia Pacific Institute of Information Technology Managing Organizations and People
  12. 12. 9 Analysis of Kellogg’s planning strategy In reference to the 5 basic steps of strategic planning, Kellogg’s planning strategy has been analyzed. 1- Developing A Strategic Vision & Business Mission Kellogg’s Vision and Mission statements are those that have been re-designed after the drawbacks of the 1990’s. Table 1.2 Vision “To be the food company of choice.” Mission “To drive sustainable growth through the power of our people and brands by better serving the needs of our consumers, customers and communities.” (Kellogg Company, 2009) 2- Crafting a Strategy to achieve the objectives. The power of branding and positioning was tactfully used to achieve the aims and objectives. Various consumer groups were identified as potential targets and then each brand was designed to attract a unique mind frame of the consumer. 3- Setting broad Strategic Objectives. The broad strategic aim is “to reinforce the idea of a balanced, healthy lifestyle” 4- Implementing & Executing the strategy through specific tactical objectives Asia Pacific Institute of Information Technology Managing Organizations and People
  13. 13. 10 The specific tactical objectives were SMART, i.e. Specific, Measureable, Achievable, Realistic and Time-bound. They were set in 3 main areas: • Encouraging and promoting physical activity for health Kellogg’s worked with the Amateur Swimming Association (ASA) and sponsored swimming events in the UK to promote physical activity for health. Swimming was promoted as a ‘skill for life’. Cycling programs were also promoted in collaboration with the Sustrans, UK’s leading sustainable transport association. Working with All Bran, walking events and activities were sponsored. • Using packaging to promote the measure of balanced lifestyle Kellogg’s products, use packaging to communicate a balanced lifestyle for each segment of its consumer market. For children, cartoon characters are used to advise them and their parents about benefits of exercise. In addition, active living, shape management and proactive health care is also encouraged through the photographs and images on cereal boxes. (Kellogg Nutrition – Live Healthy, 2008) Figure 1.2 Figure 1.2 Asia Pacific Institute of Information Technology Managing Organizations and People
  14. 14. 11 • Using food labeling to help consumers make choices Kellogg’s Guideline Daily Amounts are symbolical graphics printed on the products displaying the percentage amount of calories present in each nutrient contained in the product’s per person serving. This helps the health conscious consumer become familiar with the essential nutrients and their names and weight watchers can always select the cereal or snack which suits their calorie intake. The tactic allows the consumer to “build his own breakfast”. (Kellogg Nutrition – Live Healthy, 2008) Figure 1.3 Four key nutrients (calories, total fat, sodium and sugars) are displayed on every cereal box. Figure 1.4 Any two additional nutrients out of the following are mentioned alongside: fiber, calcium, magnesium, potassium, and vitamins A, C, and E. (Kellogg Nutrition – Live Healthy, 2008) Asia Pacific Institute of Information Technology Managing Organizations and People
  15. 15. 12 5- Evaluating performance & Monitoring new developments. Extensive research is conducted to evaluate Kellogg’s performance and also to tap the changes in consumer preferences. Kellogg’s conducted the foremost research on balanced diet and exercise and concluded that essential nutrients and physical activity contribute to good health. The Nominating and Governance Committee reviews and evaluates the performance on a regular basis. (Kellogg Company, 2009) Answer 3 Advantages of Kellogg’s strategic planning Tool used for strategic planning Asia Pacific Institute of Information Technology Managing Organizations and People
  16. 16. 13 A SWOT analysis (Table 1.3) shows how Kellogg’s used its managerial strength of high quality strategic planning to counter the weaknesses and take advantage of the opportunities in the market while keeping a vigilant eye for threats. Table 1.3 Strengths Weaknesses • Strong leadership • Focus on non-realistic profitability goals • Skilled management • Product-focused approach • Dedicated and diverse workforce • Extensive research ability Opportunities Threats • Health consciousness trends in • Criticism on sugary cereals for contributing consumers to obesity • £1.1 billion worth of cereals market in UK Advantages Recognition of the dynamism in the consumer market In order to gain a competitive edge in the market, for any organization it is important to be aware of the changing dynamics of the consumer market. Through the extensive research, funded by the management and conducted by a diverse body of professional analysts, the increasing trend for health consciousness among the consumers was recognized. Commitment to a unified mission and vision Asia Pacific Institute of Information Technology Managing Organizations and People
  17. 17. 14 Strategic planning gave way to the establishment of the ‘constancy of purpose’ stressed upon by Edward Deming. The managers and employees committed to the slogan of “Get the Balance Right” and worked towards a common goal. Improvement of internal communication As the message “Get the Balance Right” was communicated throughout the organization, the employees better understood their basic role of being a health activist in their job. The in- house magazine and physical activity drives further brought them to a common forum towards a common motive. Development of marketing and advertising functions The marketing and advertising functions developed to communicate the message to the consumers and extract the best of profits from the £1.1 billion worth of cereals market in UK. Branding became very strong and unique positioning was done to secure each target consumer. Packaging and labeling became a critical job in compliance to the government’s food guidelines. Achievement of product diversity, market leadership and competitive edge Kellogg’s emerged as a diverse range of breakfast snacks and cereals with 39 brands, surely the first cereals line to have secured a large consumer base comprising 42% of the UK market share. Embassador for balanced lifestyles Having participated in sponsoring physical activities like walking, cycling and swimming with renowned organizations like the ASA, Sustrans and All Bran, Kellogg’s has earned its name as an ambassador for balanced lifestyles. Answer 4 Kellogg’s basic approaches for planning Asia Pacific Institute of Information Technology Managing Organizations and People
  18. 18. 15 Goal-Based Approach The most basic approach, as observed in the case study, is the Goal-Based Approach. It begins with the setting up of the company’s vision and mission. Goals are established, to accomplish the mission. Strategies are designed to help achieve goals. Action planning is done to decide the roles of people and their deadlines in goal accomplishment. (Strategic Planning, 1997-2008) The Proactive Approach Kellogg’s “created the future” by developing a vision and a mission and then developed innovative tactics to make it happen. The changing trends were diagnosed by research and proper segmenting, targeting and positioning was done. (4 Approaches to planning, 2008) According to Stephen R. Covey, proactive stance begins from within the organization. As Kellogg’s developed the determinism and became independent, it sought its own opportunities and recognized unique gaps left in the cereal market to explore. Then, it used its own branding expertise to hit each segment. (7 Habits of Highly Effective People, 1999-2007) User-Based Approach – The Family Focus From the TQM perspective, Kellogg’s centered their strategic planning towards its customer base – “The Family Focus”. It took into consideration what the consumer’s perception of quality would be of a cereal manufacturer. Considering the health safety of consumers, care was taken to ensure total quality of the nutrients and checks for allergic components from the onset of procurement to packaging and distribution. To satisfy the need of the weight conscious consumer to know about the calorie values of the cereal, the labeling of the boxes was made perfect to detail. (Kellogg Company, 2009) Market Consideration Strategy Resources were allocated towards wisely selected consumer segments of the market that had potential for profit. Children, weight watchers, athletes, and families were focused on and brands were developed to suit the mind frame of each. Previously, limited products were mass- marketed such as the typical box of Cornflakes. Asia Pacific Institute of Information Technology Managing Organizations and People
  19. 19. 16 Word Limit: 2500 words References Kellogg Company, [online]. Available: http://www.kelloggcompany.com/company.aspx?id=888 [4th January 2009] Asia Pacific Institute of Information Technology Managing Organizations and People
  20. 20. 17 W.K. Kellogg Foundation, [online]. Available: http://www.wkkf.org/Default.aspx?tabid=1149&CID=432&ItemID=127 [4th January 2009] Ends of the Earth: Deming’s 14 Points and 7 Deadly Diseases,[online]. Available: http://www.endsoftheearth.com/Deming14Pts.htm [4th January 2009] Archive – ALLERGY ALERT – UNDECLARED MILK IN KELLOGG’S HOLIDAY FROOT LOOPS,[online]. Available: http://www.inspection.gc.ca/english/corpaffr/recarapp/2007/20071206e.shtml [4th January 2009] Kellogg Company – Supplier Diversity, [online]. Available: http://www.kelloggcompany.com/company.aspx?id=1415 [4th January 2009] Kellogg Company – Quality Assurance, [online]. Available: http://www.kelloggcompany.com/company.aspx?id=37 [4th January 2009] On Staffing: Advice and Perspectives, [online]. Available: http://books.google.com.pk/books?id=aFbq7oUFXUwC&pg=PA128&lpg=PA128&dq=Kellogg' s+Company+training&source=web&ots=l4i6OClZRH&sig=6- mm4iLvGAJkvWpdkmklkcvfyqk&hl=en&sa=X&oi=book_result&resnum=1&ct=result [4th January 2009] Kellogg Company – Leadership Team, [online]. Available: http://investor.kelloggs.com/management.cfm?navSection=BInfo [4th January 2009] Kellogg’s: Employment, Jobs, Career & Work, [online]. Available: http://www.jobbankusa.com/employment_jobs_career/kelloggs.html [4th January 2009] Kellogg_s employees receive bonus, [online]. Available: http://www.eatoutmagazine.co.uk/online_article/Kellogg_s-employees-receive-%C2%A3600- bonus/5541 [4th January 2009] Business Case Studies | Kellogg’s | Communicating the strategy,[online]. Available: http://www.thetimes100.co.uk/case-study--using-aims-objectives-to-create-business-strategy--6- 267-5.php [4th January 2009] Asia Pacific Institute of Information Technology Managing Organizations and People
  21. 21. 18 Kellogg Company: Information from Answers.com,[online]. Available: http://www.answers.com/topic/kellogg-company [4th January 2009] Management by Objectives, [online]. Available: http://managementhelp.org/plan_dec/mbo/mbo.htm [4th January 2009] Kellogg Company- Career, [online]. Available: http://www.kelloggcompany.com/career.aspx?id=1232 [4th January 2009] Kellogg Company – Commitments, [online]. Available: http://www.kelloggcompany.com/commitments.aspx?id=1468 [4th January 2009] Kellogg Nutrition – Live Healthy,[online]. Available:http://www.kelloggnutrition.com/live- healthy/index.html [4th January 2009] Strategic Planning,[online]. Available: http://managementhelp.org/plan_dec/str_plan/str_plan.htm [4th January 2009] 4 Approaches to planning, [online]. Available: http://www.entarga.com/stratplan/approaches.htm [4th January 2009] Kellogg Company, [online]. Available: http://www2.kelloggs.com/FamilyFocus/ [4th January 2009] 7 Habits of Highly Effective People, [online]. Available: http://www.quickmba.com/mgmt/7hab/ [4th January 2009] Asia Pacific Institute of Information Technology Managing Organizations and People