For conducting external audit of the company, its opportunities and threats are discussed below.
Consumers are becoming more health conscious and consequently the demand for healthy and organic food products is also increasing significantly. Kellogg’s’ is capitalising on this trend to develop its brand image (Seaberg et al, n.d.). The company has expanded its business in global market and is equipped with necessary human and other resources to gain upper hand position in the international market (Wayne State University School of Business Administration, n.d.).
The rate of competition is increasing drastically which poses a vital threat to the company. The company is facing intense competition from General Mills and PepsiCo. The products offered by its competitors act as substitute for its ready-to-eat cereal products. The main buyers of its products are Wal-Mart and Target Group. Their bargaining power is very high and it affects the pricing strategy of the company.
Porter’s Five Forces analysis indentifies the five factors that affect the competition level of an industry. These five forces are bargaining power of suppliers and customers, threat of substitute products and new entrants, and rivalry from existing competitors (Henry, 2008, p.69).
The company relies on its suppliers for manufacturing high quality food products. It needs suppliers for a wide range of products from raw materials and ingredients, packaging equipment and skilled labours. However, a large number of such suppliers are easily available in the global market and it can negotiate with them. Therefore, the bargaining power of the suppliers is quite low in this industry. In convenient food market, a large variety of ready-to-eat products are available. Fast-foods are the greatest threats to Kellogg’s products. The barrier to enter this industry is comparatively low due to low