Business Strategy – Kellogs Case Study

Plagiarism is presenting somebody else’s work as your own. It includes: copying information directly from the Web or books without referencing the material; submitting joint coursework as an individual effort; copying another student’s coursework; stealing or buying coursework from someone else and submitting it as your own work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the procedures set down by the School.

Any student for whom it has been proved that they have plagiarised the work of others will be subject to the School's disciplinary procedures which could result in them being dismissed from their course of study Your work will be submitted for electronic plagiarism checking. Any attempt to bypass our plagiarism detection systems will be treated as a severe Assessment Offence. Looking at key elements of Kellogg’s business strategy that I have listed for Question two, above, I would like to examine how well I think the Kellogg’s company is facing up to those potential problems.

The first possible setback with strategic planning is when a company lacks clarity of purpose; I really do not think this is the case with Kellogg’s, as their mission and objectives are clearly set out on their website for all their stakeholders to see and clearly communicated through advertising. As regards to having SMART objectives, this is also very clearly the case with Kellogg’s.

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Their objectives were measured to be achievable, communicated very clearly to all their employees, and were set over a time frame with all staff agreeing to certain actions required of them to implement the strategy over a three year period. Whether it was a goal of achieving best in class safety performance within their workplaces, implementing food labelling or any other objective, they have very clear goal setting within a specific time frame and they do constantly measure, monitor and publish their results, as well as renewing their commitments to even better results.

The strategies that they choose fit with their corporate culture. They bring everybody on board by encouraging diversity within the workplace, running leadership programs for their workforce; encourage participation for all in healthy lifestyle initiatives, not just for their employees but the community as a whole.

On their website, their beliefs, goals, commitments and overall initiatives are communicated clearly and strongly include their workforce who their openly state is their greatest asset, borne witness by this quote by W Kellogg himself, “Whatever success I have had in business has been as a result of my good fortune in selecting employees who could do their jobs better than I could have done them myself”. The organisation of my choice is Apple and I am going to look at some of the strategic planning problems they faced in 1997 and how they dealt with them, or rather how Steve Jobs turned the company around to an astonishing degree.

After Microsoft’s Windows 95 release, Apple was in a slump, struggling to stay afloat in a world dominated by Windows lintel driven PCs. CEO Gil Amelio cut staff and reorganized Apples products into 4 groups: Macintosh, information appliances, printers and peripherals, and alternative platforms, but nothing worked. On Feb 5th 1996 Business week had written them off with a cover article with the Apple logo and titled, ‘The Fall of an American Icon’; other articles abounded with titles like ‘101 ways to save apple’, and many Wall Street analysts were hoping they would do a deal with Sony or Hewlett Packard.

In September 1997, Apple was 2 months away from bankruptcy! Steve jobs, who had co-founded the company in 1976 with Steve Wozniek and had been pushed out of his own company, had agreed to return to serve on a board of directors and to act as an interim CEO. Fans of the Apple Macintosh were overjoyed at his return but people in the business world were not expecting much. However against all expectations, within a year of his return, things were to change dramatically! So how did Jobs turn apple around and set it on the path to becoming one of the most successful companies ever?

Jobs decided on a retrenchment strategy; he cut Apple back to its core, he shrunk the company back and decided to focus on being a niche producer of quality products within the highly competitive PC market. For example he drastically cut product selection, focusing on just one desktop rather than fifteen; he cut out all the printers and peripherals, software development and engineers. As well as this he cut virtually all his manufacturing, moving it to Taiwan. Costs were less, short cycle times, and overall much less working capital was needed. A much simplified product line cut inventory by 80%, and reduced costs everywhere.

A new Apple web store sold direct to customers, cutting out distributors and dealers. Jobs brought the NXT software with him that he had developed successfully in his time away from Apple. He even persuaded Microsoft, his main rival to invest  150 million in Apple, convincing Bill Gates that a failed Apple would lead to problems with the Department of Justice, and importantly he needed up to date version of Microsoft software to work on Apples computers. He didn’t announce any major plans or targets, just concentrated on cutting back and simplifying, cutting Apple back to its ‘core’ ironically.

He didn’t try to restore Apple computers to its former market share; at that stage they had just 4% of the computer market share. Interestingly when asked by ‘Good Strategy, Bad Strategy’ author Richard Rumelt exactly what his strategy was he replied ‘I am going to wait for the next big thing’, ( Rumelt, 2011, p. 14) , which of course we now know was the I pod and I tunes, followed by the I-phone, but he couldn’t have known that then. He was just putting himself in a position where he was ready to pounce and capitalise on the next window of opportunity he recognised.

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