Kelloggs Presentation

1. KELLOGG’S William Campbell Amber Huggins Jason Webb Christine Werfelman

2. History <ul><li>February 19 th 1906 - John Harvey Kellogg and Will Keith Kellogg also known as W.K Kellogg founded the Battle Creek Toasted Corn Flake Company in Battle Creek, Michigan. </li></ul><ul><li>1914 – The production of the Kellogg’s Corn Flakes expanded world wide. </li></ul><ul><li>1922 – The Battle Creek Toasted Corn Flake Company changed there name to The Kellogg Company. </li></ul>

3. History Continued <ul><li>1938 – The company continued to expand and build plants in England and Australia. </li></ul><ul><li>1951 – W.K. Kellogg died. The Kellogg Company continued to expand and build plants in Latin America and Asia. </li></ul><ul><li>1964 – Kellogg’s Pop Tarts are introduced. </li></ul><ul><li>1976 – Acquisition of Mrs. Smith’s Pie Company. </li></ul>

4. History Continued <ul><li>1999 – Acquisition of Worthington Foods. </li></ul><ul><li>2000 – Acquisition of Kashi </li></ul><ul><li>2001 – Kellogg acquires Keebler, its largest acquisition. </li></ul><ul><li>2006 – With almost 11 Billion, Kellogg’s is the world’s leading producer of cereal and other convenience foods. </li></ul>

5. Brand Names <ul><li>Kellogg’s </li></ul><ul><li>Keebler </li></ul><ul><li>Nutri-grain </li></ul><ul><li>Pop-Tarts </li></ul><ul><li>Eggo </li></ul><ul><li>Cheez-It </li></ul><ul><li>Special K </li></ul><ul><li>Rice Krispies </li></ul><ul><li>Morningstar Farms </li></ul><ul><li>Kashi </li></ul><ul><li>Murray </li></ul><ul><li>Austin </li></ul><ul><li>Famous Amos </li></ul>

6. Product Lines <ul><li>Cereal </li></ul><ul><li>Crackers </li></ul><ul><li>Cookies </li></ul><ul><li>Snacks </li></ul><ul><li>Frozen Foods </li></ul><ul><li>Water </li></ul>

7. Environmental Assessment

8. Economics <ul><li>Consumer Segment </li></ul><ul><li>Products are manufactured in 17 countries and are marketed in more than 180 countries. </li></ul><ul><li>Top Revenue Regions (Dollars are in Millions): </li></ul><ul><ul><ul><li>North America $6,807.8 67% </li></ul></ul></ul><ul><ul><ul><li>Europe $2,013.6 20% </li></ul></ul></ul><ul><ul><ul><li>Latin America $822.2 8% </li></ul></ul></ul><ul><ul><ul><li>Asia Pacific $533.6 5% </li></ul></ul></ul><ul><ul><ul><li>Total $10,177.2 100% </li></ul></ul></ul>

9. Consumer Economic Indicators <ul><li>Unemployment Rate </li></ul><ul><li>Discretionary Spending </li></ul><ul><li>Saving Rate </li></ul><ul><li>Consumer Debt </li></ul><ul><ul><li>Installment </li></ul></ul><ul><ul><li>Revolving </li></ul></ul>

10. Capabilities Analysis

11. Kellogg’s Financial Trends

15. Kellogg’s Financial Goals

20. Critical Success Factors <ul><li>Purchasing power </li></ul><ul><li>Distribution </li></ul><ul><li>Market Research: </li></ul><ul><ul><li>Demographic analysis </li></ul></ul><ul><ul><li>Consumer/ Multinational taste </li></ul></ul><ul><li>Product Development: </li></ul><ul><ul><li>Baking Innovators </li></ul></ul><ul><ul><li>Nutritionists </li></ul></ul>

21. Critical Failure Factors <ul><li>Strong Balance Sheet </li></ul><ul><li>Media Competence </li></ul><ul><ul><li>Television / Radio broadcasts </li></ul></ul><ul><ul><li>Packaging </li></ul></ul><ul><li>Foreign Markets </li></ul><ul><li>Distribution </li></ul><ul><ul><li>Location </li></ul></ul>

22. CSF: Report Card Company Name Market Research Product Development Strong Balance Sheet Process Development Advertising/ Marketing Overall GPA Kellogg's A A A A A A 4.0 General Mills A A A A A A 4.0 Ralcorp D C B A D C 2.2

23. Suppliers Bargaining Power <ul><li>Low </li></ul><ul><ul><li>No commodity control (Wheat) </li></ul></ul><ul><ul><ul><li>Government regulation </li></ul></ul></ul><ul><ul><li>Power over processed food </li></ul></ul><ul><ul><li>Farmers negotiate prices </li></ul></ul>

24. Buyers Bargaining Power <ul><li>High </li></ul><ul><ul><li>Grocery Stores </li></ul></ul><ul><ul><li>Historically low </li></ul></ul><ul><ul><li>Private label options </li></ul></ul><ul><ul><li>Codependent buyer relationship </li></ul></ul>

25. Pricing Power <ul><li>The cost index and the gross margin are closely correlated </li></ul><ul><li>Cost Price </li></ul><ul><ul><li>Insulated industry </li></ul></ul><ul><ul><li>Strength with purchasing power </li></ul></ul>

28. Global Matrix Structure N.A. Europe Latin A. Asia P. RTE Cereal Snack foods Meat Alt. Frozen foods

29. Porter’s 5 Forces Applied to Kellogg’s <ul><li>Michael Porter’s theory of an industry being influenced by 5 forces, which include Supplier Power, Barriers to Entry, Buyer Power, Threat of Substitutes, and Degree of Rivalry. Let’s now take at the theory and how it applies to Kellogg’s. </li></ul>

30. Kellogg’s and Supplier Power <ul><li>Kellogg’s posesses only medium power when buying from suppliers. Wheat for example will vary in price because of extensive forces and that cost will be passed onto customers of Kellogg’s. </li></ul>

31. Buyer Power and Kellogg’s <ul><li>Buyer’s of Kellogg’s are mostly grocery stores and supermarkets. They hold the power because they set the price. They ultimately hold the power of the industry in its hands. </li></ul>

32. Substitutes and Kellogg’s <ul><li>Kellogg’s is basically a breakfast company therefore anything that is popular to consume at breakfast time is a substitute to Kellogg’s. This includes fruit, bars, doughnuts, toast, etc. Private labeling brands pose a threat as well. </li></ul>

33. Barriers to Entry and Kellogg’s <ul><li>The Barriers to Enter into the Breakfast Cereal is medium at the moment. While a startup company would find trouble getting in, there are two companies that at anytime could strike and take away a large amount of market share from both Kellogg’s and General Mills. PepsiCo and Kraft are also in the Cereal business and have the money to aggressively strike at anytime to wreck havoc on the breakfast cereal industry. </li></ul>

34. Degree of Rivalry and Kellogg’s <ul><li>At the moment Kellogg’s is at a dead heat with rival General Mills. The companies are both in the mature stage as is most their products. Trying to find that smoking gun that will catch the market share has become a game of cat and mouse between the two entities. </li></ul>

35. Summary of Porter’s 5 Forces <ul><li>Supplier Power: Medium </li></ul><ul><li>Buyer Power: High </li></ul><ul><li>Substitutes: High </li></ul><ul><li>Barriers to Entry: Medium-High </li></ul><ul><li>Degree of Rivalry: Very High </li></ul>

36. Kellogg’s Critical Success Factors <ul><li>Critcal Success Factors (CSF) include things within a company that ensure that your company will succeed. </li></ul>

37. Kellogg’s CSF: Tradition <ul><li>Kellogg’s has been in the business since 1906. That kind of tradition will buy some equity when it comes to selling a product. </li></ul>

38. Kellogg’s CSF: Innovation <ul><li>Kellogg’s has developed many new products over the years trying to get hold of the majority of the market share in the industry. </li></ul>

39. Kellogg’s CSF: Baking <ul><li>They have innovated many products but one thing has stayed the same in the 101 years of business. The core competence of Kellogg’s is baking. </li></ul>

40. Kellogg’s CSF: New Markets <ul><li>Seeing that there are more people in the world that need ready-to-eat cereal and other baked goods Kellogg’s entered into foreign market’s, again, trying to get the majority of the market share in the industry. Latin America, Europe, and Asia Pacific are markets that Kellogg’s have entered into. </li></ul>

41. Kellogg’s CSF: Imagination <ul><li>Over the years, Kellogg’s has introduced a wide range of characters that have served as mascots for their respected cereals. Tony the Tiger, Snap, Crackle, and Pop, Toucan Sam, Dig Em’, and Cornelius are the more popular characters in the mix. </li></ul>

42. Kellogg’s CSF: R&D Department <ul><li>America went through a cultural change recently and shifted to wanting more healthy foods. The responsibility then was in the hands of the producers, like Kellogg’s. Making healthy foods meant R&D was needed and Kellogg’s answered with their line of foods for the health conscience. </li></ul>

43. Kellogg’s CSF: Shelf Placement <ul><li>When stores put Kellogg’s products on the shelf the employees aren’t just throwing them in a vacant space. Kellogg’s placement on the shelf is methodical and strategic and comes at a price. </li></ul>

44. Kellogg’s Strengths <ul><li>Baking : When it comes to skills this is one thing that Kellogg’s knows and does best. </li></ul><ul><li>Innovation : With the rivalry with GM at a stalemate Kellogg’s must be looking for new ways to get more share with any new product and also appease the public with healthy products. </li></ul>

45. Kellogg’s Strengths (Cont.) <ul><li>Distribution : Kellogg’s currently has manufacturing plants in 17 different countries. </li></ul><ul><li>Brand : Kellogg’s is a very recognizable American product. Tony the Tiger, Dig’ Em, Snap, Crackle, and Pop are all embedded in pop culture. </li></ul>

46. Kellogg’s Strength’s (Cont.) <ul><li>Social Responsibility : Kellogg’s welcomes social responsibility and notes the environment, advocating healthy lifestyles, and promoting diversity as it’s main responsibilities. </li></ul>

47. Kellogg’s Weaknesses <ul><li>Maturity : Many products that Kellogg’s offer are in the mature stage and are at a peak when it comes to profitbility. </li></ul><ul><li>Broad Market : Kellogg’s has many demographically different customers which means many different focuses. This may cause a conflict when it comes to public opinion. </li></ul>

48. Kellogg’s Weaknesses <ul><li>Debt : As of Dec. 30 th , 2006 Kellogg’s had a debt of 5.04 billion dollars. In their Annual Report they admit that their high Leverage may put them in a competitive disadvantage. </li></ul><ul><li>Need For Gas : Other than trucks needing to deliver their product, many of the ovens that bake the cereal also run off gas. </li></ul>

Kelloggs Presentation

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Kelloggs Presentation