Opportunities: Kellogg is an old company firmly placed in the business of food products – ready to eat cereals, cookies and snacks known as convenience foods worldwide, and is rooted well in North America. The opportunities for Kellogg are in abundance, as it has been making…
business operations of Kellogg are historical, and the good thing about Kellogg products is that it is keen to provide healthy and nutritious foods to the customers.
Threats: Threats to Kellogg are equally strong. It faces competition from such companies that are international brands like General Mills’ Cheerios in read- to-eat cereals and PepsiCo’s Frito-Lay, and Kraft Foods Nabisco Foods in convenience foods. Both the competitor companies are equally strong to promote their brand products worldwide, introduce new products, and acquire the rival companies. Another competition to Kellogg is from well established stores’ own brand products which are being sold at lesser rates, as their spending on advertisement and promotion is nominal.
As per Porter’s Five Forces Model, the collective strength of the five forces decide the final profit making capacity in an industry. In that context, the competitive position of Kellogg should not be taken lightly. The market for ready-to-eat foods has reached a ripened state where a selective group of manufacturers like Kellogg have developed a stronghold; they have created brand identity, achieved economies of scale, and are financially sound with added proprietary product differences. So fear of new entrants is not an issue in the near future as well.
Regarding substitute products in the ready-to-eat breakfast and fast food, Kellogg faces price competition from well established stores’ brand products. Customers also show the tendency to purchase less costly and equal in quality store products.
Regarding Kellogg’s suppliers bargaining power, it is not as strong because of volume supplies, differentiation of inputs and their impact. Suppliers cannot afford to change their customers due to related costs. Kellogg’s initiatives like its partnership with Bung/Dupont Biotech Alliance to increase the production of Nutrium, low-linolenic soybean oil made from genetically improved soybeans will help it in controlling ...
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