A Bid to Sustain Leadership Position
Msc/MA International Business Management
Module: International Business Management and Strategy
Thames Valley University, London
Student number: 21113960
Date: 21st January 2011
2. Question 1:
Critically discuss and evaluate the growth strategy adopted by Kellog’s In India4
3. Question 2:
What are the major challenges Kellogg’s now face? Recommend and justify what actions Kellogg’s should take in India to sustain their market leadership.7
3.1. Macro-environmental Analysis of Kellogg’s India7
3.2. Porter’s 5 forces of Kellogg’s India and the food industry8
3.3. Strenghts and Weaknesses of Kellogg’s India9
This report will analyse the growth strategy, major challenges and the market leadership of Kellogg’s in India. This analysis will be carried out by using appropriate tools such as marketing models, PESTEL analysis, Porter’s 5 forces and an SWOT analysis. The information about Kellogg’s is taken from the case study and internet sources. The analysis is based on gained knowledge through lectures, research from literature and the internet.
Kellog’s was founded by W. K. Kellogg in Battle Creek, Michigan, USA in 1906. The company started with 44 employees and counts 30,900 employees today. In 2009, the company was the world’s leading producer of cereal as well as cookies, crackers, cereal bars, etc. and reached nearly $13 billion as sales in the same year. Kellogg’s products were manufactured in 18 countries and marketed in more than 180 countries worldwide. Historically, Kellogg’s has been a leader in industry, innovation and marketing. In 1994 Kellogg’s entered the Indian breakfast cereal market (Case Study).
2. Critically discuss and evaluate the growth strategy adopted by Kellog’s in India.
In order to adopt business objectives there is a need to develop a strategy. The two major dimensions of strategy are the resource allocation decision and the development of a sustainable competitive advantage. The resource allocation decision helps to identify which products and markets offer the best options for investment. Regarding growth strategy, a business can pursue four directions (Doyle and Stern 2006:17). A good way of looking into the four directions is the Ansoff Matrix. It combines present and new products, and also present and new markets and reveals four product strategies for growth (Jobber 2004:325).
Model taken from Kotler 2002
The first square is “Market Penetration strategy” (see figure) and focuses on market leadership by intensifying market development, relaunching products, imitation, cutting cost and prices and unbundling on existing markets (Kotler 2010:36). When Kellogg’s entered the Indian market in 1994, the cereal market was ruled by the local player Mohan Meakins. Their effective target was to increase awareness about cornflakes. The company penetrated the market with three variants with the main focus on the crispiness of its flakes. The average cost of Kellogg’s was more expensive to Mohan Meakins but they were ready to eat, best with cold milk and there was no need to add something, e.g. sweetener. However, the Indian population was used to hot breakfast and added hot milk to their cereal which turned it slushy. After a while, this led to fewer customers for the premium priced brand (Case study). The three different objectives the company was aiming were children, women and families. Due to a new way of having breakfast for the Indian population and the premium price of Kellogg’s it was difficult to establish themselves on the market The second square is the “Market Development Strategy” and is about finding and developing new markets for existing products, finding new customers for the...