edf40wrjww2CF_PaperMaster:Desc
The purpose of this study is to determine the effectiveness of the Kellogg Company’s business strategy. The company’s financial results from 2003 through 2005 were analyzed thoroughly and compared to an industry benchmark that was comprised of Kellogg’s closest competitors. The benchmark consisted of General Mills Inc., Kraft Foods Inc., and PepsiCo. These companies compete head-to-head with Kellogg in supermarkets both domestically and internationally. Kellogg has been extremely successful in sticking to the basics of the company’s strategy. Since the inception of the company in 1898, Kellogg has focused on manufacturing and selling cereal. Kellogg’s strategy has always been to differentiate their products through effective marketing. Kellogg’s countless trademarks and characters, such as Tony the Tiger and “Snap! Crackle! Pop!,” have helped build brand equity through establishing high levels of customer loyalty. Three factors were used to judge the effectiveness of the company’s strategy: market capitalization, net profit margins, and revenue growth. Kellogg succeeded in passing the necessary criteria for success. Kellogg’s net profit margins and compound annual growth rates were very favorable compared to the industry benchmark. If Kellogg can maintain the company’s high level of efficiency while continuing to focus on growing cereal sales, it will continue to be a very healthy company for investors. The projected five-year CAGR from 2003-2008 for domestic cereal sales is expected to 1%. Since cereal accounts for 53% of Kellogg’s revenue, the company must seek out other avenues for growth. For the future, in order to grow and compete, the company must focus on expanding further into international markets....