Business Strategy and Policy - Assignment Example

Kellogg uses healthier ways of producing its products. Kellogg has tried using genetically modified raw materials for producing the goods. The company has tried to eliminate raw materials that have high fat content. Health problems are increasing in alarming rate. People are suffering from problems related to obesity. In such a scenario, Kellogg’s use of healthier raw materials like low fat oil would only lead to increase in demand for their products (Aaker, 2009). Kellogg did not take any effort in developing new products.

They have continuously carried their business with the same line of products. There was no modification in products and it also did not focus on matching its products with the changing customer needs and requirements. The taste and preferences of consumers were not considered while making any decisions regarding product development. There was also no diversification plans in the business. This increased threats from competitors. They could develop new products and capture Kellogg’s market.

(Fleisher, 2001). Kellogg may face a threat due to fall in its sales figures. This can be due to Kellogg’s inability to influence prices of its products. In the initial years, when Kellogg used small grocery stores for distributing the products, the company enjoyed significant power in setting its own price. But with the growth of the company, it has started transacting with large retailers. Such retailers do not allow Kellogg to negotiate prices and as a result Kellogg sets its prices according to the needs of the distributor (Fleisher, 2001).

Threats related to new entry: Kellogg has a well recognized brand name. They have acquired this position by continuously maintaining product quality. The threat related to new entries is thus not very high. The company has the advantage of using economies of scale. The standards set by the company globally cannot be matched by a new entrant instantly. Competitive