UNLOCKING THE BUSINESS ENVIRONMENT
 CHAPTER 3: STRATEGY,
STRATEGY,
MISSION AND STAKEHOL
STAKEHOLDERS
DERS
 Case study: Kellogg’s
On 19 February 1906, William Keith Kellogg filed the papers to incorporate the
Battle Creek Toasted Corn Flakes Company in the USA, now known as
Kellogg’s. Kellogg believed that improved diets led to improved health. This
philosophy has driven everything the company has done since its inception
(Kellogg’s, 2010).
In the 1910s the invention of pasteurised milk led to the expansion of the
ready-to-eat cereal market. To keep up with this expanding market, Kellogg’s
developed new products, packaging and marketing innovations. In 1914, it
created Waxtite wrappers, for example – a new concept in packaging
technology. Kellogg believed that if people tried a good product, they would
keep buying it; he distributed free samples of his Corn Flakes and followed up
with advertising in magazines and on billboards. He held a children’s art
contest, selecting the best entries for use in his adverts.
Following on from its success in its home market, Kellogg’s opened its first
foreign cereal facility in Canada in 1914. In 1915 and 1916 Bran Flakes and
All Bran were introduced to the product portfolio.
In the 1920s Kellogg’s expanded further by entering new markets (exporting to
England) and then building plants in Sydney, Australia. In the USA, the
company introduced ready-to-eat cereals in individual servings for hospitals,
hotels and rail dining cars. New marketing innovations were also used, for
example the mailing in of box tops to receive free gifts.
© Routledge
UNLOCKING THE BUSINESS ENVIRONMENT
In the 1930s (the Great Depression), rather than cutting back the company
doubled its spending on advertising and its sales increased. The company
continued to expand with a new plant in the UK (Manchester). Kellogg’s Pep
was introduced as the first fortified cereal.
In the 1940s Kellogg’s provided packaged K-rations for US armed forces
during the Second World War. Rice Krispies emerged as a new product, as
did a new wholegrain product line (Raisin Bran), and a second plant was
opened in the USA (Nebraska).
In the 1950s some of the most well-known cereals appeared, including Corn
Pops, Frosted Flakes, Honey Smacks, Cocoa Krispies and Special K. Tony
the Tiger appeared on the scene. The company spread into California and
Tennessee, and internationally into Mexico and New Zealand.
The 1960s saw a wide range of new products: Fruit Loops, Apple Jacks,
Frosted Mini-Wheats, Bran Buds, Product 19, Pop-Tarts, and Croutettes.
Extensive global expansion took place during this period, with facilities
opening in South America, Canada, Europe and Asia.
In the 1970s the company responded to America’s growing awareness of
nutrition, making more of a play on the nutritional aspects of its product range.
Kellogg’s was the first company to voluntarily include nutritional information on
its packaging. New products were also introduced: Frosted Krispies and
Cracklin’ Oat Bran. The company also entered the frozen-food business when
Fearn International was acquired by the company. Kellogg’s also acquired Mrs
Smith’s Pie Company and Pure Packed Foods. Geographically, expansion
continued in Central America, Britain and Spain.
© Routledge
UNLOCKING THE BUSINESS ENVIRONMENT
In the 1980s, Squares, Crispix and Just Right were new product introductions.
New technology was introduced into plants. A new plant was opened in South
Korea, and a new HQ was opened in Battle Creek, USA.
In the 1990s consumers were all about ‘food on the go’. Convenience and
speed were important. Rice Krispie Treat Squares and Nutri-Grain bars were
introduced and became popular. Pop-Tarts became the company’s top-selling
product. Increased overseas competition hit the company; however, Kellogg’s
remained the global leader in cereals. The company opened its first plants in
India, China, Thailand and Latvia. A second plant was opened in Mexico. A
$75 million research institute was opened and, in 1999, Kellogg’s acquired
Worthington Foods, a top producer of soy-based meat alternatives.
In the 2000s the company expanded its convenience range. In 2001 the
company completed the largest acquisition in its history, paying $4.56 billion
for Keebler Foods Company, a leading producer of cookies and crackers. At
this point cereals represented 53 per cent of Kellogg’s sales, with 32 per cent
from snacks, and the remaining 15 per cent from other grain-based foods.
Kellogg’s also acquired Kashi Company (a health-foods company). They also
expanded the range of Special K cereal options.
Today, the Kellogg’s product range is extensive (see www.kelloggs.co.uk/
products).
Walk around your supermarket and you cannot help but be impressed with the
wide range of products with the name Kellogg’s on the box.
© Routledge
UNLOCKING THE BUSINESS ENVIRONMENT
Sources
Kellogg’s (2007) ‘A Historical Overview’, www.kellogghistory.com/history.html
(accessed 26 May 2010).
Kellogg’s (2010) ‘History’, www.kelloggs.co.uk/company/history (accessed 26
May 2010).
Questions
1. What would you say Kellogg’s competitive strategy is?
2. Draw up a stakeholder map for the Kellogg’s company.
3. Place the stakeholders in the relevant quadrants of Eden and Ackerman’s
stakeholder power and interest matrix.
4. What kind of corporate strategy has Kellogg’s adopted?
5. What kind of business strategy has Kellogg’s adopted to gain and maintain
its competitive advantage in the market? Explain how it has done this.
6. What were the benefits to the company of using acquisitions?
7. What are the strategic challenges you can see for Kellogg’s in the
foreseeable future? How could Kellogg’s address these challenges?
© Routledge