The Kellogg Company

Topics: Will Keith Kellogg, John Harvey Kellogg, Kellogg Company Pages: 9 (2725 words) Published: July 19, 2010
The Kellogg Company
Pestle Analysis

The Kellogg Company Pestle Analysis
Glossary Page

Pestle 3
Political Influences4
Economic Influences5
Socio-Cultural Influences7
Technology Influences8
Legal Influences9
Ethical Influences11

The Kellogg Company Pestle Analysis

Will Keith (W.K.) Kellogg was born April 7, 1860. In 1876 W.K. and his brother Dr John Harvey Kellogg, accidentally discovered the process of creating flaked cereal while experimenting with shredded wheat cereal. While experimenting with different ways to cook and crush wheat to make it more palatable without losing its goodness, they inadvertently ran a batch of cooked wheat through the rollers that had been standing around for a day or so. In 1906, W.K. Kellogg entered the cereal business, as American eating habits began shifting from heavy, fat-laden breakfasts to lighter, more grain-based meals. Kellogg Company (Kellogg’s) was founded in 1906 as the Battle Creek Toasted Corn Flakes Company. Kellogg Company of Great Britain Ltd, a subsidiary of the US Kellogg Company of Michigan, remains the dominant brand in the UK breakfast cereals market, with around 40% sales volume in 2000. The Group's principal activities are to manufacture and market ready-to-eat cereal and convenience food products.


There are many environmental issues which should be looked at to get the broader picture of Kellogg’s Company. These issues can be grouped into six categories: political, economical, socio-cultural, technological, legal and ethical. The acronym for this is a Pestle analysis.

The general economic, political conditions and taxation policies ride on a business’s succession. Customer and consumer demands are heavily affected by recessions, economic downturns and the financial and credit market. In the past the Kellogg Company have been victim to the vast economic and political changes which have affected the company worldwide, it is possible that Kellogg’s may remain victim to the changes in the future. What also keeps the down turn in action is the performance of or rise in tariffs, including value added tax, or other changes in the application of existing taxes, in markets in which Kellogg’s are currently active or may be active in the future, or on specific products that they sell or with which their products compete, may have an adverse effect on the company or on their results of operations. The Kellogg Company hold assets and gain liabilities as well as earn revenue and pay expenses in a variety of currencies other than the U.S. dollar. Because their consolidated financial statements are presented in U.S. dollars, Kellogg’s translate their assets, liabilities, revenue and expenses into U.S. dollars at then applicable exchange rates. Consequently, changes in the value of the U.S. dollar may negatively affect the value of these items in their consolidated financial statements, even if the value has not changed in their original currency. The Kellogg Company is exposed to instability in foreign currency cash flows related to third-party purchases, intercompany loans and product shipments. The company is also open to fluctuations in the value of foreign currency investments in subsidiaries and cash flows related to the return of these investments. Additionally, Kellogg’s is exposed to volatility in the translation of foreign currency earnings to U.S. dollars. Primary exposures include the U.S. dollar versus the British pound, euro, Australian dollar, Canadian dollar, and Mexican peso, and in the case of inter-subsidiary transactions, the British pound versus the euro.

The Kellogg Company face competition across their production lines, including ready-to-eat cereals and convenience foods, from other companies which have a variety of abilities to withstand changes in market...
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