Research by: Roger Tsai
Kellogg Company
Corporate Overview
· Kellogg Company (“Kellogg”) is a publicly traded company (NYSE: K) that manufactures and markets ready-to-eat cereal and convenience foods. The company is the world’s leading producer of cereal and convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles, and meat alternatives.
· Kellogg manufactures in 20 countries and markets in more than 160.
· Total revenue increased from $8.81B at FYE 2003 to $9.61B at FYE 2004 (fourth consecutive year of growth). Total revenue increased from $2.39B in Q1 2004 to $2.57B in Q1 2005. Revenues reflect volume growth and pricing/mix improvement and favorable exchange rates. Kellogg derives about half of its sales from cereals.
· Kellogg’s business is broadly divided into two divisions: Kellogg North America and Kellogg International. Kellogg International is divided into businesses in Europe, Latin America, and Asia and Australia (Asia-Pacific). Total revenues by division in 2004 were as follows: North America $6.37B, Europe $2.00B, Latin America $0.72B, and Asia-Pacific $0.52B. The Europe and Asia-Pacific divisions have been increasing as a percentage of total revenue over the past 3 years, while the North America and Latin America divisions have been decreasing.
· Kellogg North America includes Retail Cereal, Retail Snacks, and Frozen and Specialty Channels businesses in both the United States and Canada. The North American Retail Cereal business includes brands such as Special K, Kellogg’s Frosted Flakes, and Kashi. The North American Retail Snacks business includes brands such as Keebler, Fruit Twistables, Nutri-Grain, and Pop-Tarts. The Frozen and Specialty Channels business includes brands such as Eggo, Morningstar Farms, Worthington, and the food service, convenience store, vending, and drug store businesses.
· The Kellogg International business focuses almost exclusively on the cereal and wholesome snack categories within the respective regions.
· Leading cereal brands include Kellogg’s Frosted Flakes, Rice Krispies, and Special K. The firm is also the second largest U.S. cookie and cracker manufacturer under its Keebler brand. Pop-Tarts toaster pastries is Kellogg’s single largest brand in the United States. Pop-Tarts holds an 84% share of the toaster pastry market. Eggo holds a 65% share of the frozen waffles market.
Corporate Strategy
· Kellogg has been in the news lately with topics concerning its International Division, Cereal Pricing, Nutrition/Lifestyle, Senior Management, and Competition. All of these topics highlight the Kellogg strategy to continue to grow the top-line through Volume-to-Value and through a continuation of substantial brand building. The firm is also committed to its Manage-for-Cash strategy. This strategy focuses on lowering the amount of cash that is being used in working capital purposes by being able to collect on their accounts receivable faster as well as successful distribution of their product to the end customer in a more efficient manager- ultimately lowering their inventory costs.
· Senior management changes include the departure of chairman and CEO, Carlos Gutierrez. Mr. Gutierrez left Kellogg to become the Secretary of Commerce for the United States. The new chairman and CEO is James M. Jenness with over 30 years of experience with Kellogg. John Bryant was promoted to president, Kellogg International. Jeff Montie was promoted to president, Kellogg North America. The management team in place remains very strong. Mr. Jenness was part of the team that constructed the Volume-to-Value strategy instituted by Mr. Gutierrez and consequently feels as if it is his own. Replacing low-margin cereals with new higher margin value-added cereals is key to Kellogg’s Volume-to-Value strategy.
· Kellogg’s growth in fruit snacks is very likely to continue to build with the recent purchase of Kraft’s fruit snack plant (Kraft sold only the manufacturing plant and is going to discontinue its products in this area). The addition of the manufacturing capacity, in conjunction with the recently announced licensing agreement with Nickelodeon, should allow Kellogg to build a solid #2 position in a good category (General Mills is #1 with a 40% share, Kellogg is #2 with an 18% share).
Career
· Kellogg offers full time positions, internships, and co-ops with a limited number of rotational programs at the company. There is no typical career path as employees can move fluidly through the company.
· There are MSU MBA Alumni in many different departments at Kellogg due to the close proximity of East Lansing to Battle Creek.
· The culture of Kellogg can be described as friendly, business-casual and collegial. Most business units stress the importance of cross-functional teams.
· Progression through the company is based largely on performance and personal preference of where one would like to head through the company. Kellogg has an internal job site called “Pathways” that posts open positions.
· It is possible to get a foreign assignment as Kellogg is a global company, however, these positions are typically offered to more seasoned employees.
· Travel time depends largely on the position. Some positions require 50% travel time and others require 0%. The average travel time is approximately 10% throughout the company.
Hiring Process
· Kellogg recruits new candidates via their website, career fairs, and campus visits.
· Kellogg recruits at MSU and across the nation for specific concentrations. Typical schools include U of M, MSU, Purdue, Duke, and Western. Kellogg does not currently recruit at MSU for marketing.
· Kellogg posts on their website the upcoming career fairs/conferences it will be attending along with a listing of schools.
· The company has hired MSU MBA graduates as recently as 2003.
· The hiring process does not vary across academic concentrations or business units as there is one standard HR format. All interviews entail a short presentation (< 30 minutes) of one’s background by a candidate.
· The company states on their website that they are looking for the best and the brightest. The company is interested in candidates that are innovative, hardworking, and talented. This highlights the fact that one must be well prepared during the interview with examples of accomplishments that highlight specific skill sets.
· After the first interview one can expect to hear back from the recruiter within 1-2 weeks. Kellogg will then establish a second round interview at the corporate headquarters in Battle Creek, MI with more senior management. There is not typically a third interview. The company makes their offers after the second round.
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