kelloggs power point
TRANSCRIPT
KELLOGG’S
William Campbell
Amber Huggins
Jason Webb
Christine Werfelman
History
February 19th 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.
1914 – The production of the Kellogg’s Corn Flakes expanded world wide.
1922 – The Battle Creek Toasted Corn Flake Company changed there name to The Kellogg Company.
History Continued
1938 – The company continued to expand and build plants in England and Australia.
1951 – W.K. Kellogg died. The Kellogg Company continued to expand and build plants in Latin America and Asia.
1964 – Kellogg’s Pop Tarts are introduced. 1976 – Acquisition of Mrs. Smith’s Pie
Company.
History Continued
1999 – Acquisition of Worthington Foods. 2000 – Acquisition of Kashi 2001 – Kellogg acquires Keebler, its largest
acquisition. 2006 – With almost 11 Billion, Kellogg’s is
the world’s leading producer of cereal and other convenience foods.
Brand Names
Kellogg’s Keebler Nutri-grain Pop-Tarts Eggo Cheez-It Special K
Rice Krispies Morningstar Farms Kashi Murray Austin Famous Amos
Product Lines
Cereal Crackers Cookies
Snacks Frozen Foods Water
Environmental Assessment
Economics
Consumer Segment Products are manufactured in 17 countries and are
marketed in more than 180 countries. Top Revenue Regions (Dollars are in Millions):
North America $6,807.8 67%Europe $2,013.6 20%Latin America $822.2 8%Asia Pacific $533.6 5%Total $10,177.2 100%
Consumer Economic Indicators
Unemployment Rate Discretionary Spending Saving Rate Consumer Debt
– Installment – Revolving
Capabilities Analysis
Kellogg’s Financial Trends
Operating Margin Trend
0
5
10
15
20
Year
Op
erat
ing
Mar
gin
(as
a
per
cen
t)
Kellogg's General Mills
Kellogg’s Financial Trends
ROE trend
0
20
40
60
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100
Year
RO
E (
as p
erce
nt)
Kellogg's General Mills
Kellogg’s Financial Trends
ROI trend
0
10
20
30
40
50
Year
RO
I (a
s a
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t)
Kellogg's General Mills
Kellogg’s Financial Trends
Leverage Trends
020406080
100120
Year
Lev
erag
e R
atio
Kellogg's General Mills
Kellogg’s Financial Goals
Projected Sales
02,000,0004,000,0006,000,0008,000,000
10,000,00012,000,00014,000,00016,000,000
Year
Pro
jecte
d S
ale
s (
in b
illi
on
s)
Kellogg’s Financial Goals
Projected Operating Margin
0
5
10
15
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Year
Pro
ject
ed O
per
atin
g
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gin
(as
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erce
nt)
Kellogg’s Financial Goals
Projected ROI
0
10
20
30
40
50
Year
Pro
jecte
d R
OI
(as a
perc
en
t)
Kellogg’s Financial Goals
Projected ROE
0
20
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80
100
1997
1998
1999
2000
2001
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2006
2007
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2009
2010
2011
Year
Pro
jecte
d R
OE
(as a
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Kellogg’s Financial Goals
Projected Leverage
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1997
1998
1999
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2007
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Pro
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ever
age
(as
a p
erce
nt)
Critical Success Factors
Purchasing power Distribution Market Research:
– Demographic analysis– Consumer/ Multinational taste
Product Development:– Baking Innovators– Nutritionists
Critical Failure Factors
Strong Balance Sheet Media Competence
– Television / Radio broadcasts– Packaging
Foreign Markets Distribution
– Location
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
Suppliers Bargaining Power
Low– No commodity control (Wheat)
Government regulation
– Power over processed food– Farmers negotiate prices
Buyers Bargaining Power
High– Grocery Stores– Historically low– Private label options– Codependent buyer relationship
Pricing Power
The cost index and the gross margin are closely correlated
Cost Price – Insulated industry– Strength with purchasing power
GDP Growth Rate 2007
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Brazil
Canad
a
Mex
ico
Japa
nIn
dia USAUK
Countries
An
nu
al P
erc
en
t R
ate
Population 2006
0
200
400
600
800
1,000
1,200
Countries
Po
pu
lati
on
(m
illi
on
s)
Global Matrix Structure
N.A. Europe Latin A. Asia P.
RTE Cereal
Snack foods
Meat Alt.
Frozen foods
Porter’s 5 Forces Applied to Kellogg’s
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.
Kellogg’s and Supplier Power
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.
Buyer Power and Kellogg’s
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.
Substitutes and Kellogg’s
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.
Barriers to Entry and Kellogg’s
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.
Degree of Rivalry and Kellogg’s
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.
Summary of Porter’s 5 Forces
Supplier Power: Medium
Buyer Power: High
Substitutes: High
Barriers to Entry: Medium-High
Degree of Rivalry: Very High
Kellogg’s Critical Success Factors
Critcal Success Factors (CSF) include things within a company that ensure that your company will succeed.
Kellogg’s CSF: Tradition
Kellogg’s has been in the business since 1906. That kind of tradition will buy some equity when it comes to selling a product.
Kellogg’s CSF: Innovation
Kellogg’s has developed many new products over the years trying to get hold of the majority of the market share in the industry.
Kellogg’s CSF: Baking
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.
Kellogg’s CSF: New Markets
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.
Kellogg’s CSF: Imagination
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.
Kellogg’s CSF: R&D Department
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.
Kellogg’s CSF: Shelf Placement
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.
Kellogg’s Strengths
Baking: When it comes to skills this is one thing that Kellogg’s knows and does best.
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.
Kellogg’s Strengths (Cont.)
Distribution: Kellogg’s currently has manufacturing plants in 17 different countries.
Brand: Kellogg’s is a very recognizable American product. Tony the Tiger, Dig’ Em, Snap, Crackle, and Pop are all embedded in pop culture.
Kellogg’s Strength’s (Cont.)
Social Responsibility: Kellogg’s welcomes social responsibility and notes the environment, advocating healthy lifestyles, and promoting diversity as it’s main responsibilities.
Kellogg’s Weaknesses
Maturity: Many products that Kellogg’s offer are in the mature stage and are at a peak when it comes to profitbility.
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.
Kellogg’s Weaknesses
Debt: As of Dec. 30th, 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.
Need For Gas: Other than trucks needing to deliver their product, many of the ovens that bake the cereal also run off gas.