Introduction The company Kellogg’s Corn Flakes® is the second large company in America began in 1906,which makes breakfast and snacks for millions. The founder, W. K. kellogg, set healthy and high quality as the aim of providing nutritious products with diversify flavor. Their provide products such as cereal, waffle, Bars, and cookies to their consumer all around the world. Today, “Kellogg’s Company manufactures in 18 countries, also sells its products in more than 180 countries” (Kellogg’s, 2011).
The following essay will evaluate this company through PEST analysis in the UK, factors include political-legal, economic, social and technological environment (Anon, 2005). It is to be claimed that out of those reasons, the social-culture environment in the UK seems to have more impact. The purpose of using PEST analysis is essential, because it could helps the company to operate by using this four measurements of the external macro-environment. PEST Analysis PEST analysis is used as a technique to measure, or to evaluate the factors which has impact to the operate of a company. Anon,2005) this could also assist the company to make better understanding and right decision in terms to gain a further goal. Political-legal Environment Political-legal factors involved government regulations and laws which a company must obey (Anon, 2005). Examples include political stability,laws that affects the company, and any relative changes in legislation. According to Food Standards Agency, 2011, it point out that the food company provider must have accurate food labeling on the packaging of the product. This will leads to a clear guidance to the consumer to have secure schemes.
For example, ingredients, allergy information and nutrition information. In response, Kellogg’s have been strictly following this regulation, and make sure that every package of this product has been labeling, and their consumer felt safe when buying their product(Kellogg’s, 2011). Furthermore, since cereals with high-sugar products dominate television advertising targeting at children between the ages of 6 to 11 in the UK (Jardine and Wentz, 2005). And overall about 78 per cent of foods in high calories advertised during TV programs are watched by kids (Wise, 2010).
And this is now what Kellogg accused of marketing to children by the pressure group (Wise, 2010). Kellogg’s response involved developing a new range of cereals and snacks which are lower in sugar than existing products (BBC news, 2010). However, the company has also taken down some UK websites (Wise, 2010). Kellogg’s action in some extend is pessimist, although taken down the websites perhaps could clearance the negative news which could have influence the company, but by hidden the truth is not going to assist the company for a better further.
Economic Environment The factors that Economic environment involved could have affect on the purchasing power of potential customers and the company’s cost of capital (Anon, 2005). Contains points such as the overall economic of the country, their income of target population, and exchange rate. To begin with, the UK economic current circumstance is that although the economy in the country is growing, however, there still a downturn. The weak situation of British capital is that it is Britain especially vulnerable to the crisis. BBS news, 2009). The External market for is very difficult to explain. The power of UK buyers are at a very certain level, but at the same time, the power of suppliers and threat of new entrants are both very low (Kilmister, 2008), and this is perhaps related to the competitive market and high rate of the intensity of rivalry in the country. Although, Kellogg’s as a whole is facing a very healthy finance, and a strong global based brand, with diversity, innovation of new products and explore new market(BBC news 2010).
On the other perspective, the weakness for them is that the limitation on the growth of product margins. However, their situation in the UK seems like threaten by the rising costs of production materials and increase intensity of the market competition. As result, UK’s Kellogg’s aimed their target at groups of individuals with a middle-High level of income. Socio-cultural Environment. Social factors include the life styles, and social attitude of the countries, which could have the impact of the potential market.
These factors affect customer needs and the size of potential market. Although the concept of“the most important meal of the day is breakfast” Is widely spread and understood (Diabetes UK, 2011), however because of their rush lifestyle, many British do not act on this knowledge(Diabetes UK, 2011). Wise, 2010 claimed that out of the following countries including UK, France, America and Netherland, the British’s proportion of skipping breakfast is over 30%, which seems like a serious issue.
Whit a busy lifestyle of the citizens in the UK, breakfast which is Healthy and convenience are the most demanded for consumer (Talking Retail, 2007). They want a real health product which is also has to be delicious. Therefore, there are more individuals start to put their aim in cereals. Alone with the extensive variety of flavors and options, cereals are also low in fat, and also is a good source of wholegrain. The Kellogg’s Company is devoted to promoting healthy lifestyle choices through the benefits of cereal and, is dedicated to enhancing the quality of life.
Kellogg’s responses with over 40 types of cereals for the British which is widely ranged for people with different back ground or tastes(Kellogg’s,2011), in order to satisfy their consumer’s needs and wants, categories such as for Vegetarian, Kosher certified, Halal certified, and even gluten free(Talking Retail, 2007). Furthermore, since the nation government encourages the British to eat “five a day”, they start putting more attention on the quality of cereals (Diabetes UK, 2011). Alone with their new ideology of lifestyle, the Kellogg’s has launching a new product which is a fruit pack named FruitaBu(Talking Retail, 2007).
Kellogg’s,2011 research point out that Some of the consumer survey represents people need a fast way of getting their “5 a day”, and that is because individuals in the UK with busy lifestyle are having problems with not eating enough fruit per day. As a solution with FruitaBu, it could offers consumers a new way to get their own ‘5 a day’ with 1 portion of fruit per pack been guaranteed (Talking Retail, 2007). Kellogg’s in the UK has been positively response to British people’s life style by spreading the range of the product, also with the new invention in terms to help their consumers to achieve a healthy daily life.
This has improved their reputation for being too much sugar and salt in their product to the children, also rebuilt the market with a strong confident. Technological environment This part of the analysis involved the impact of the Internet, mobile phone or other high technologies. The Kellogg’s company has promoted a diet app, which helps the consumer lose their weight in a healthy style. This app is a program which could be communicated through the normal channels of television; their consumers could go to the website of Kellogg’s to organize a personal plan (Dolan, 2010).
They could have print it out and stick the plan on the wall at their bed room. Furthermore, there is also another version which consumer could use it through a mobile(Dolan, 2010). As a result, it could help individuals to challenge their personal successful weight losing. There are several reasons for Kellogg to provide this service for the consumer, to start with, Kellogg could have a new touch point with the consumer, and that is because mobile phone as an access of media develop fast, and this app will help them get into the market.
The second point is that to create this tool, they could have a great opportunity to have a special relationship with their consumer who have been participate from this challenge, moreover, to win their trust for the brand. Conclusion On this basis, the essay evaluated the PEST analysis through four perspectives include political-legal, economic, socio-cultural, and technological environmental. Out of those factors, the socio-cultural seems the most affect for the company Kellogg’s to develop and operate.
Although there are always negative news reporting about cereal contains high level of sugar and fat, Kellogg’s should take positive action by labeling the nutrition that the product contain on the package, in addition, they could invite the local scientist to test their product, then publicize the result in terms to clarify. The second suggestion is that the company perhaps could invent more products in order to encourage individuals to eat and live in a healthier life style. This will be beneficial for the company itself in the long run.
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