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Business Strategy

Different Type of Business Strategy in a Organization

Introduction to Business Strategy

Business strategy is a set of activities which are carrying out for achieving some specific objectives of business. It is concerned with how a company competes successfully in a specific market. Here, different kinds of strategies are formulated with various intentions such as selection of a product; meet the needs of end users, taking competitive advantage, creating new opportunities for business, increase market share or profit, taking growth in particular market place etc. Business strategy is a long term planning that is designed by companies to accomplish particular aim or objectives of business operations. Development of business strategy is a major function of all types of organizations. By defining it in a clear manner, firm can increase the chances of growth in the competitive market place in upcoming future. Business strategy can be defined as either in a set of strategic statements or in paragraphs format. With the help of this, enterprises can easily achieve the goals of business, meet the expectations of customers and develop sustainable business in the competitive environment. The present research is related to business strategy and focuses to understand its importance within the organization, such as Kellogg's Company which is taking into consideration for better understanding of such study. Objectives that will cover under the following study are related with understanding the strategic management process, strategic position of company, strategic choices and appropriate methods to convert strategies into actions.

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1.1 Understand strategic position of Kellogg's

Kellogg's is an American multinational food production company. Major food products of company are cereal, convenience foods, toaster pastries, cookies, vegetarian foods etc. The purpose of organization behind conducting business is to deliver nutrition food products to the community. Besides this, Kellogg's is taking different environmental initiatives that help in achieving sustainable business. Along with this, numerous efforts of company have reduced the consumption of energy and minimized greenhouse gas emission from business operations. Current market share of organization is about 34% in the UK.

Mission

To build long term growth in future by delivering nutritional food products to the community.

Objectives

  • To become a leader of manufacturing cereal food in the world.
  • To attain sustainable growth in cereal food manufacturing business.
  • To develop an effective work environment by creating a team of talented and dedicated workforce.
  • To effectively fulfil corporate responsibilities towards community.
  • To reinforce the idea of healthy living for target segment.

For understand the impact of external and internal environment on Kellogg's, different tools and techniques can be used that can define the strategic position of company.

PESTEL analysis

Political

The impact of strict regulations of UK and other nation governments related to rules of manufacturing of cereal food product and stable political environment is Kellogg's is maintaining quality of food products. By doing this, consumers are getting right amount of nutrition values from different types of cereal food products.

Economic

Manufacturing industry is a major source of revenue for UK government and it is improving the economic condition of nation. But, due to recession, UK has faced big downturn in economic state of country. It has directly affected Kellogg's business in terms of decreased sales of cereal food products.

Social

With the time, perception of people towards breakfast is changing. Now, they are starting to consume cereals foods in breakfast to intake right amount of nutrition values and achieve well-being. This change has increased the sales of company and due to this; organization is introducing new flavours in cereal foods for different customer segments.

Technological

Fast and automated technologies have increased the speed of manufacturing cereal and other food products in minimum time. It leads to increase the volume of production every day in order to meet the demand of market.

Environmental

UK and other nation’s regulations have developed and imposed different kinds of environmental rules. The impact of this on Kellogg's is emphasizing on reducing the wastage, saving energy and minimizing green house emission on environment.

Core competencies of Kellogg’s are that it is adopting multi-channel retailing strategy to ensure the convenience of service users in order to buy food products easily. Along with this, it has also strong brand name, large portfolio of different food products, good quality of products, increased involvement of community etc.

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1.2 Strategic choices

For Kellogg's, there are two strategic choices and these are business level strategy and corporate level strategy. As per the brief introduction of company overview, market position, aim and objectives, appropriate strategic choice is related with developing corporate level strategy. It is related with the strategic decisions of firm which affects the whole business. For developing corporate level strategy, Kellogg's can use Ansoff matrix. On the other hand, before developing corporate level strategy, company needs to develop business level strategy. The appropriate method for developing action plan is Bowman's Strategy Clock.

It is a company responsibility to determine competitive edge as well as meet the end users demand as compare to the rivals. It is hard to give high degree of competitiveness to the competitors in the marketplace. Basically, organizations of the same industry are selling the similar products or services on different prices and it gives them different degree of success. To win the competition and meet the success, Kellogg's can use Bowman strategy clock. It has eight strategies on price and value objectives.

The appropriate strategy from eight option of Bowman Clock method for Kellogg's is differentiation because with the help of it company delivered value of the cereals to the customers by without setting up premium prices. It helps the organization to increase market share.

Ansoff matrix is a strategic planning tool that delivers future growth strategies for company. By using it, firm can identify its product and market growth tactics. According to this framework, business can grow in various conditions. Outcome of the following matrix is suggesting some growth strategies that set specific directions for the development and implementation of business strategy (Das, 2011). It has four quadrants, that is, market penetration, product development, market development and diversification.

Market penetration

Here, organizations are focusing on selling of existing products into existing markets. There are different reasons behind adopting this strategy such as increased market share, raised number of customers, taking advantages of competitive market, etc. With the help of this, Kellogg's can easily get information about its competitors and consumer needs. By this, it can be easy to focus on both market and cereal food products at the same time. But the negative impact of this on company is that it will take huge investment for new market research.

Market development

Here, company is selling its existing products in the new market. There are best possible reasons for Kellogg's to adopt this strategy such as increased market share, enhanced profitability, attracting customers from different segments, etc. For achieving this, firm can follow various ways like exporting the cereal food to a new nation, creating new distribution channels and adopting different pricing policies. If Kellogg's consider it as a strategy then a new segment or market can develop which would increase the consumption of cereal foods. But it is more risky as compared to market penetration.

Product development

Under this, a business is introducing a new product in the existing market. If Kellogg's has adopted this strategy then it may require developing new core competencies so that a new cereal food can be developed that would effectively appeal in the existing target market. The benefits of this are that company will differentiate its food products from its competitors. But the negative impact will be in a way that it will dilute the core competencies of firm.

Diversification

Here, organization is developing a new product for a new market with the intention of growth or expansion of business. If Kellogg's will follow this strategy then it would increase the chances of taking competitive advantages of other business sector. But negative aspect of adopting the following tactic on company is that it can be risky and would lead to failure of business different marketplaces.

1.3 Strategy into actions

Management of Kellogg’s can use Ansoff matrix to design strategic choices in the United Kingdom. This model is used to analyze the level of rivalry in the market. It is represented as below in the paragraph:

Threat of Entry

It is very high for organization due to existence of many organizations in the United Kingdom. According to Parnell (2010), Kellogg’s can use proper management process which can contribute effective role for firm to make better strategies in the FMCG market. This thing helps firm to reduce the threat of many new organizations in the market. This way, management of Kellogg’s can complete its objectives and goals in an appropriate manner. As per Rowley (2002), management of organization can provide better quality of food products to its consumers which can help the firm to increase sales of company. So this strategic objective can aid firm to gain effective market share in the United Kingdom.

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Rivalry

It is high for Kellogg’s due to frequency of lot of competitors in the market of United Kingdom. As Rumelt (2010), organization can make effective strategies which can contribute effective role for firm to face rivalry in the FMCG market. Firm can make proper strategic objectives which can help to design proper rival strategies to beat sales of competitors in United Kingdom. Thompson (2005), organization can give special values in its food products which can attract the consumers to purchase products of Kellogg’s in the FMCG market. This way, corporation can face rivalry in effective manner.

Threat of substitutes

There of substitutes is also high because competitors launches many other food product to replace commodities of Kellogg’s in United Kingdom. According to Wood (2009), management of firm can use new technology to design effective products in the nation. In addition to this, technological and innovative can provide security to reduce threat of substitution in the FMCG sector of United Kingdom (Wood, 2009). Management of Kellogg’s can use effective resource to manage to improve existing products which can contribute effectively to decrease threat of substitute of products in the market. This way, organization can make its strong position in the FMCG market of Britain (Allio, 2006).

Bargaining power of suppliers

It is medium for Kellogg’s due to higher proximity of vendors who can provide raw material in affordable prices in the nation. According to Butler (2009), purchase department of organization can manage effective relationship with suppliers by providing timely payments and arranging meeting in a month. This process also helps in reducing conflicts between Kellogg’s and its suppliers in the United Kingdom. Firm can reduce its expenditure by following these strategies. Culp (2002), organization can share its expansion plans in order to take suggestions from vendors in the market. This thing can also help the Kellogg’s to manage effective relationship with suppliers in United Kingdom.

Bargaining power of Consumers

It is very high for Kellogg’s because there many rivals in the FMCG sector of UK. Further, if customers do not get appropriate and better quality products from company then they can be diverted in the market. As per Epstein (2008), management of organization can improve its organizational structure which can contribute effectively to provide optimistic services in the market. Eshun (2009), Kellogg’s can provide good offers to consumers like seasonal discounts and extra values in same price in the market. So, this process lures consumers to purchase company products again in United Kingdom.

Conclusion

From the above research, it has been found that business strategy has played an important role in success of a company. It has helped the organizations to develop a long term planning and set the direction of achieving the business objectives. Kellogg's has also used business strategy for different purpose. SWOT and PESTEL analysis has shown the company position in the market. For develop appropriate corporate-level tactic, firm has used Ansoff matrix. It can be concluded that Ansoff matrix helps the Kellogg’s to implement its strategies in appropriate manner. It also aids the firm to earn effective market share, competitive advantages as well as profit in the FMCG market.

References

  • Allio, M., 2006. Practical strategy development: a wise investment for middle market businesses. Journal of Business Strategy.
  • Bloodgood, J., 2008. Competitive analysis of industry history to enhance planning. Strategic Direction.
  • Butler, C., 2009. Strategy. Leadership & Organization Development Journal.
  • Chernev, A., 2012. Strategic Marketing Management. Cerebellum Press.
  • Culp, C. L., 2002. The risk management process: Business strategy and tactics. John Wiley & Sons.
 

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