Running Header: VALUE CHAIN ANALYSIS

Value Chain Analysis Carolyn Y. Taylor Walden University Dr. Peter Anthony 3 May 2012

Running Header: VALUE CHAIN ANALYSIS

Introduction The purpose of this integrated discussion essay is to analyze the Kelloggs Company value chain. According to Meznar, Chrisman, and Carroll (1991), Kelloggs operates within a broad enterprise strategy because it deems ethics and social responsibilities essential in strategic operations. The organization not only believes they are accountable to shareholders, but to society as a whole. The key sections in this discussion are an analysis of the value chain, strengths and weaknesses revealed through the Kellogg SWOT analysis, linkages within the value chain, and the strategic significance of Kelloggs value chain in terms of the larger system. Description of Theories/Core Concepts The 2011 Kelloggs Corporate Responsibility Report outlines the organizations primary activities in the value chain, in order of occurrence, as sourcing, manufacturing, transport, customer, and the consumer. Four pillars support the primary activities. The first is marketplace, which includes such key elements as health and nutrition, as well as product quality and safety. The focus on product quality and safety throughout manufacturing activities solidify Kelloggs commitment to the broad enterprise theory. The second pillar, the workplace, addresses compensation and benefits for employees. Government and ethics falls under this pillar and are adhered to through the process. The environmental key element, the third pillar, encompasses environment impact reduction and packaging. Both elements are executed throughout the value chain. The final pillar is community and consists of functions such as community development and employee volunteerism. Community development spans throughout the value chain process. Those activities that are initiating during sourcing and continue through the value chain to the consumer are the focus and provide the foundation for sustainability and competitive advantage.

Running Header: VALUE CHAIN ANALYSIS Analysis/Explanation Discussion As stated earlier, the Kellogg Company identified five key elements or activities that

structure sustainability within the support pillars managed throughout the value chain. The focus elements provide the organization with an opportunity to generate superior value to its customers and consumers, giving the organization a competitive advantage through differentiation. Kellogg demonstrates this strategy in their range of products, which target different market segments from toddlers to adults. While this differentiation can bring about sustainability, identifying linkages within the value chain will develop competitive advantage. Linkages occur throughout the value chain and are crucial for organizational success. An example of a linkage in the Kellogg Value Chain is supplier diversity. This linkage provides the opportunity for new concept and improvements in quality, safety, nutritional value or environmental concern. Moreover, diversity in suppliers enables the Kellogg Company to seek out businesses owned by minorities, women, and disabled Veterans. This reach capability strengthens community development. Diversity in suppliers also addresses the strategic significance of the Kellogg Company in the larger value system. Because there is diversity in suppliers, there is less likely a chance of monopolization. Suppliers are chosen ethically. Strength and Weakness through SWAT Analysis Strength in the organizations value chain is the importance placed understanding the desire of the consumer and meeting that desire. The Kellogg Company changes product manufacture to suit immediate consumer need. For instance, in the threat of child obesity and high blood pressure, the organization sought to provide low calorie options and decrease salt content in snack items. However, as the organization can capitalize on its strengths, they have yet to address the weakness of its inability to set pricing in the market.

Running Header: VALUE CHAIN ANALYSIS Conclusion Effective analysis of an organizations value chain identifies key pillars within production to create sustainability. Through revealed linkages, an organization can investigate lowering costs in production and enhancing differentiation to gain competitive advantage in the industry. Extending the Conversation The Kellogg Company was founded in 1906. Growing from one manufacturing in one location in Battle Creek, Michigan to 18 different countries, do you believe that the Kellogg Company has found a niche, gaining competitive advantage in cereal and snack production over such competitors as General Mills and Kraft? Nutrition and health has gained popularity with the threat of obesity, particularly in children. The Kellogg Company has a team of nutritionist that provide input during production? Do you feel this is a necessary step to continue competitive advantage?

Running Header: VALUE CHAIN ANALYSIS References Menznar, M.M, Chrisman, J.J., and Carroll, A.B. (1990). Social Responsibility and Strategic Management: Toward An Enterpise Strategy Classification. Business and Professional Ethics Journal, 10(1), pp. 332-336. Porter, M. E., & Millar, V. E. (1985). How Information Gives You Competitive Advantage. Harvard Business Review, 63(4), pp. 149-174. Senge, P., Smith, B., Kruschwitz, N., Laur, J., & Schley, S. (2008). The necessary revolution: How individuals and organizations are working together to create a sustainable world. New York, NY: Doubleday. Kelloggs Corporate Responsibility Report RNB Technologies Inc. (2011). Retrieved from http://www.kelloggcorporateresponsibility.com/overview NetMBA. Business knowledge center (2010). Retrieved April 26, 2012 from: http://www.netmba.com/strategy/value-chain/