Kellogg's Business and Corporate Strategy Analysis

Introduction

The corporate strategy of a business is based on the vision and mission of the entity. It also lays a foundation for business and functional strategies. The industry sector specific to a business is also an influential factor in developing strategies for a given corporation. Diversification in related and unrelated product lines, as well as expansion through geographic presence, enables an organization to capitalize on profits. This paper highlights Kellogg's corporate and business strategy, investigates the company's industry competitors and their strategies, and discusses fast- and slow-cycle markets in relation to strategy.

Kellogg's is one of the most recognized brands in the food processing industry. The company has not only created new product lines but has also specialized in the range of products it produces. The company was founded in 1906, based on experimentation by the Kellogg brothers dating back to 1898. The business initially hired 44 employees to commence operations; however, within a short span of time it gained widespread popularity and began to expand beyond national borders. The company's products and quality are well recognized throughout the world, and the business has consistently emphasized the quality and nutritional values of its products. The corporation is considered one of the notably innovative businesses to have introduced several flavors and varieties within the corn flakes and breakfast food processing sector, both domestically and globally (Kellogg's).

The corporation took a notable initiative in 2009–2010. Research revealed that the population within the United States was not consuming adequate fiber. The business launched an initiative through which it increased the fiber content in its products. This initiative is regarded as a customer-centric approach taken by the business to better serve its target market. The competitive business environment is also examined in relation to one of Kellogg's primary competitors, and the selection and implementation of strategy is considered with respect to the slow-cycle and fast-cycle market dynamics of the business.

Business-Level Strategy

Large corporations require both corporate-level and business-level strategies in order to function within a dynamic business environment. The business-level strategy of Kellogg's is to focus on a single line of products — specifically, a variety of cereals. The company has added various products and categories within its business line but has not deviated from its basic production principles. This strategy of focusing on a single product line and specializing within that category has allowed the business to diversify across the flavors and varieties of cereals. The company has produced cereal bars and other related breakfast products while refraining from entering unrelated business lines.

The business-level strategy adopted by the corporation has not only proven successful but has also created a natural inclination for customers to rely on the brand. Kellogg's is not only a reputable brand within its competitive space, but customers actively prefer its products. The strategy of focusing solely on its preferred product line has enabled the business to establish its authenticity within processed corn flakes. The available flavors are appreciated alongside the original recipe product. As noted by Lussier (2011), strategic and business controls revolve around the vision and mission of the corporation, and companies establish clear strategies to incorporate their core values and achieve their objectives.

Business-level strategy and functional planning are part of the core operational process for any organization. The overall business strategy is broken down into functional strategies that facilitate individual business processes, while the major theme of the business is carried through at each level. The strategic planning process is characterized as a coordinated approach across each functional area, including marketing, advertising, accounting, finance, and human resources. This is evident in the case of Kellogg's, as the business has maintained its focus on a single product line in the processed food industry. The elements of customer care and providing essential nutrients to consumers are central to its corporate, business, and functional strategies alike, and are reflected in how the company advertises and markets its products. Product innovation, the addition of flavors, and packaging decisions all revolve around this overarching strategy.

The single-business focus and a clear strategy for growth have enabled Kellogg's to develop a strong brand identity within the market. It has also created a product-development approach centered on enhancing customer value. While a single-product focus can be beneficial, it can also lead to minimal differentiation. Competitors actively develop and replace products using market research and technology as leverage — an approach that is less characteristic of Kellogg's traditional business strategy.

Corporate-Level Strategy

The long-term success of a business is largely based on its strategy to envision growth and develop a coherent corporate strategy. Businesses typically ground their corporate strategy in mission and vision statements, and Kellogg's is no exception. Its long history reflects a successful track record of enriching its corporate presence through initiatives centered on customer care and environmental responsibility. The company has achieved significant growth by expanding into global markets, and this economic growth has reinforced its brand identity as a reputable, internationally present business entity. Rather than entering into joint ventures, Kellogg's adopted a corporate strategy of increasing its customer reach through distributors and large retail stores.

The corporate strategy of the business was to ensure market leadership in breakfast cereals, a position it maintained for many years. The company faced a serious crisis in 2001 when its leading market position was significantly threatened by rivals. The business had to shift its strategy and introduce innovative products to diversify its range. Its mission was also reframed: the corporation now operates its corporate strategy around the principle of being the food choice for its consumers, with a focus on health and nutrition. The business regained its strategic position in the market by diversifying its product range from breakfast cereals to breakfast bars, cookies, crackers, toaster pastries, fruit-flavored snacks, frozen waffles, and veggie foods. The corporate strategy of focusing on product diversification and expanding geographic reach has also driven an innovative approach to growth (Hitt, Ireland, & Hoskisson, 2012).

The customer-centric health focus provided the foundation for a new diversification strategy. The company identified a gap in nutritional value among United States consumers and addressed it by reinvesting in its products — most notably by adding additional fiber across its product range. These enhancements were largely consistent with its original approach of minimal or maximally related diversification. The related diversification created synergy that gave the corporation a competitive advantage over its rivals, reduced the risks of losing its market position, and simultaneously increased sales (Hitt et al., 2012).

One major contributor to profitability and market share growth was the opening of operations in several countries that had previously been inaccessible. All of these developments combined to produce a corporate strategy more closely aligned with the changing requirements of international business. The potential present in global expansion was realized through the successful integration of corporate and business-level strategy, and increased profitability reinforced Kellogg's long-standing market reputation (Hitt et al., 2012).

Conclusion

Kellogg's business strategy of focusing on a single product line and diversifying within related products has enabled the company to specialize and develop a strong brand identity. The corporate strategy shift observed around 2010 was driven by the perceived threat from rivals. The business identified a consumer-centric approach to redefining its products, launching offerings with additional nutritional components that addressed deficiencies found among United States consumers. The introduction of fruit bars and flavored breakfast cereals complemented the corporate strategy for business growth, and the brand's recognition as a customer-centric company was further strengthened. Geographic diversification also provided the business with increased profitability potential.