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Kellogg Company is the world's leading producer of cereal and a leading producer of convenience foods, including cookies, crackers,

toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles, and vegetarian foods. The company's brands include Corn Flakes, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, BearNaked, Morningstar Farms, Famous Amos, Special K, All-Bran, Frosted Mini-Wheats, Club and Kashi. Kellogg products are manufactured in 18 countries and marketed in more than 180 countries around the world. Its global headquarters are in Battle Creek, Michigan, USA. 1. About the company Kellogg's was founded as the Battle Creek Toasted Corn Flake Company on February 19, 1906, by Will Keith Kellogg as an outgrowth of his work with his brother John Harvey Kellogg at the Battle Creek Sanitarium following practices based on the Seventh-day Adventist Christian denomination. The company produced and marketed the hugely successful Kellogg's Toasted Corn Flakes and was renamed the Kellogg Company in 1922. In 1930, the Kellogg Company announced that most of its factories would shift towards 30 hour work weeks, from the usual 40. This practice remained until World War II, and continued briefly after the war, although some departments and factories remained locked into 30 hour work weeks until 1980. From 1969 to 1977, Kellogg's acquired various small businesses including Salad Foods, Fearn International, Mrs. Smith's Pies, Eggo, and Pure Packed Foods; however, it was later criticized for not diversifying further like General Mills and Quaker Oats were. After underspending its competition in marketing and product development, Kellogg's U.S. market share hit a low 36.7% in 1983. A prominent Wall Street analyst called it "a fine company that's past its prime" and the cereal market was being regarded as "mature." Such comments invigorated Kellogg chairman William E. LaMothe to improve, which primarily involved approaching the demographic of 80 million baby boomers rather than marketing children-oriented cereals. In emphasizing cereal's convenience and nutritional value, Kellogg helped persuade U.S. consumers age 25 to 49 to eat 26% more cereal than people that age ate five years prior. The U.S. ready-to-eat cereal market, worth $3.7 billion at retail in 1983, totaled $5.4 billion by 1988, and had expanded three times as fast as the average grocery category. Kellogg's also introduced new products including Crispix, Raisin Squares, and Nutri-Grain Biscuits and reached out internationally with Just Right aimed at Australians and Genmai Flakes for Japan. During this time, the company maintained success over its top competitors: General Mills, who largely marketed children's cereals, and Post, who had difficulty in the adult cereal market. In March 2001, Kellogg made its largest acquisition, the Keebler Company. Over the years it has also gone on to acquire Morningstar Farms and Kashi divisions or subsidiaries. Kellogg also owns the Bear Naked, Natural Touch, Cheez-It, Murray, Austin, Famous Amos, Gardenburger (acquired 2007) and Plantation brands.

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2. Mission and Vision Consumers around the world enjoy Kellogg Company products, one of which Kelloggs Corn Flakes has been part of a wholesome, delicious morning for more than a century. The company began with only 44 employees in Battle Creek, Michigan, in 1906. For more than 100 years, innovation and their commitment to being the best have guided Kellogg. From being the first company to offer premiums in the cereal boxes to being the first to fortify the cereals, Kellogg has historically been a leader in industry, innovation and marketing. The founder, W.K. Kellogg, had a strong commitment to nutrition, health and quality. His vision continues to drive improvement in products and processes, with the goal of providing great-tasting, nutritious products that meet the most rigorous quality standards. With 2010 sales of nearly $12 billion, Kellogg Company is the worlds leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles and veggie foods. 2.1 Vision and mission Kellogg Companys Vision and Mission statements define the focus upon sustainable growth, the broadened definition of social responsibility and the true strength of the company people and brands. The Vision encompasses the full spectrum of the stakeholders including shareowners, employees, customers, consumers and communities. The Mission articulates where the company is today and where it wishes to be in the future. Vision and Mission do not stand alone. They are integrated with the focused strategy and operating principles as well as the foundations of the business: the K Values, people and commitment to social responsibility. 3. Strategic capabilities and competitive advantage Kellogg Company was founded on a commitment to nutrition. This commitment remains at the core of its business today. With more than 100 ready-to-eat cereals around the world, consumers count on Kellogg for great-tasting, convenient and affordable choices that meet their nutrition needs. A competitive advantage. By focusing on diversity Kellogg has built a culture where all employees can bring their best, allowing to better serve diverse consumers through innovation and quality brands. People from all backgrounds and walks of life enjoy Kelloggs food. Thanks to technology, demographic shifts and worldwide connectivity, the company lives in a global marketplace that moves 24/7 and changes daily. Kellogg is part of that change, and know the commitment to diversity and inclusion is vital to continued success.
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Kellogg around the World One of Kellogg Companys greatest competitive advantages is the global infrastructure. W.K. Kellogg, started the company more than 100 years ago and quickly expanded into new geographies. The early adoption of this growth plan has provided Kellogg with a global business today 4. Resources and competences Legal Compliance Kellogg expects suppliers to comply with all applicable laws and regulations. This includes all applicable local, state, provincial and national laws, codes, rules and regulations, as well as all applicable treaties and international standards. Ethical Dealings Kellogg expects suppliers to compete fairly for its business, without paying or receiving bribes or kickbacks, or giving or receiving anything of value to secure an improper benefit or advantage, and avoiding all forms of corruption. This includes complying with the Foreign Corrupt Practices Act regardless of where in the world the supplier is located and with the laws of the country in which the Supplier operates. Conflicts of Interest Kellogg employees must act in the best interest of their company and have no interest with any supplier that might conflict, or appear to conflict, with that obligation. Supplier Diversity Program To remain a superior global food company in the 21st century, Kellogg Company recognizes that it must have the strongest possible resources to support its business growth. An essential part of that strength is acquiring raw materials and other products and services from the widest and best base of resources. To build this base, Kellogg Company is committed to developing a comprehensive and innovative supplier diversity program. By cultivating strategic procurement relationships with W/MBE-owned, controlled and operated businesses that supply products and services Kellogg purchases, it will foster the growth of these businesses while promoting the long-term growth of the Kellogg Company.

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Key factors for success (KFS)

Health

Location

Versatility

Availability

Convenience

Marketing

Brand Awareness

Research and development

Something for everyone

Affordable

Innovation

Low barriers to entry

Value for money

Quality 5. External analysis The environment 5.1.The Macro-environment Analysis For analyzing the macro-environment in which Kellogg performs its activity we are using the PESTEL Analysis technique to describe the main influential factors for Kellogg.
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5.1.1 Political and legal factors The Romanian cereal industry is characterized by regulations on global supply, prices of raw materials and packaging. Moreover, government trade policies are made (government intervention) to monitor and control the fluctuation of commodity supplies and prices. The quality standard is implemented to ensure Kellogg's does not sell products that are intentionally or unintentionally harmful to consumers. Quality and food safety, ingredients, advertising, relationships with distributors and retailers and the environment are carefully monitored and controlled. Moreover, Kellogg must respect as well the EU legislation regarding health, ingredients, labeling and storage. This legislation includes the Food Labeling Regulations and there is ACFM also and CEEREAL. Kellogg responsibly communicates their brand in truthful and transparent manner that allows consumers to make rational and informed buying decisions. E.g. Kelloggs Global Nutrition Criteria (KGNC) determines which products should be advertised to children under the age of 12. It reformulates health alternatives for target customers. If found to be out of compliance with regulations, Kellogg Company could be subject to fines, penalties or potential criminal sanctions. 5.1.2 Economic factors Kellogg Company is operating in the mass consumer market in different continents, such as North America, Latin America, Europe and Asia Pacific, manufactures products in 17 countries and sells them in 180 countries worldwide, being influenced by the global economy. Kellogg economic influences on business, production and demand for grain are GNP trends, foreign exchange, interest rate, money supply, inflation (eg: inflated cost of key ingredients: cocoa), unemployment, income levels, consumer debt and so on. In general, market demand for breakfast cereals is relatively high as more people seek nutritious 1 options as well as affordable comfort food in their daily lives. 5.1.3 Socio-cultural factors Socio-cultural dimensions like the population demographics, level of consumerism and other personal attributes such as social mobility, lifestyle, attitudes to work and level of education and leisure, are important factors in changing buying habits for Kellogg products. Taking into account this factors, Kellogg can determine the demand for its products, if their products or services are attractive to many customers and also detect potential customers, helping in creating competitive advantages for Kellogg on some market segments. On the other hand, Kellogg Company has a diverse workforce (cultural diversity), which consists of more than 32,000 employees in their offices worldwide. A key role is given to diversity and inclusion plans that focus on accountability through goal setting and tracking, recruitment, retention and development, thus building a stronger and inclusive culture.
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Cod of Federal Regulations claiming that a cereal is a good source, contains or provides a vitamin, must supply at least 10% of the daily value (DV) of that nutrient. To claim high in or rich in or excellent source of, the food must supply at least 20% of the DV. Some cereals even provide 100% of the DV of certain nutrients

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Moreover, as a multinational organization it is mandatory for Kellogg to understand and identify explicit or subtle cultural differences in order to achieve competitive advantages in its business worldwide. For example, advertising in the United States of America that ends with a person who puts his index finger and thumb together means that the product is "right", but in Brazil, the same symbol is considered vulgar and offensive. 5.1.4 Technological factors Kellogg own food technology has led to their business successes in recent years. They should establish closer working relations and cooperation with the authorities concerned to discern ways to manufacture products with excellent sources of nutrients, being given the high interest of American Government towards Research&Development. As a statement, nutritional immunology is a new science field, discovered and developed by American scientists in the U.S 5.2. Industry Analysis. 5 Force Framework-Porter Using the 5 Force Framework-Porter technique, the US Cereal Industry is described as follows: Michael Porters 5 competitive forces model: Threat of new entrants -Economies of scale -Capital requirements -Proprietary learning curve -Customer or suppliers loyalty -Access to supply or distribution -Government legislation -Expected retaliation -Proprietary products differentiation Rivalry among competitors Suppliers power -Industry concentration -Supplier concentration -Exit barriers -Importance of volume to supplier -Fixed costs/ Value added -High switching costs of supplier -Industry growth -Product differences -Threat of forward integration -Diversity of rivals -Corporate stakes Buyers power -Buyer concentration -Buyer information -Brand identity -Price sensitivity -Product differentiation -Switching cost to dif. supplier -Threat of backward integration

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Threat of substitutes -Switching costs -Buyer inclination to substitute -Price-performance trade-off of substitutes

The five forces of Porters model have the following levels for the cereal industry:

ForcesPorter Levels

The threat of The threat of The power of The power of Competitive entry substitutes buyers suppliers rivalry Medium-High High High Medium Very High

5.2.1 The threat of entry The level of barriers of entry into the breakfast cereal industry is medium to high at this time. While a new company may find it difficult to enter it, companies such as PepsiCo. and Kraft, which are in the cereals market presents a substantial threat to Kellogg and General Mills by eroding their market share through aggressive marketing strategies. A successful company in this industry enjoys absolute cost advantages and economies of scale, strong brand identity, extensive distribution network, its own learning curve and products. Among the existent barriers of entry are also: the process of obtaining a patent for the production of plant sterols, licenses, higher taxes agreement, and consumer awareness about the new food technology.

5.2.2 The threat of substitutes Kellogg is a breakfast company, therefore, anything that is popular to consume at breakfast time (or tables) can be a substitute for Kellogg's products. Among this we can mention fruit, bars, donuts and more. Private labeling brands are also a threat. Thus, consumer possibility to find suitable alternative is relatively high and the cost of buying alternatives (switching cost) is negligible. 5.2.3 The power of buyers

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This power Constraints the strategic freedom of an organization and influences the margins Together with the power of buyers, it represents the value network within which an organization is operating. Kellogg (as supplier) and its clients (as buyers): The power of buyers is greater when there is a concentration of buyers in the industry, like the case of the cereal industry. Consumers have also very good knowledge of products, due to technological advances and media and therefore they have greater bargaining power. Other reasons are as follows: Products are diversified: cereals, crackers, cookies, snacks, frozen food and water, so that consumers have a wide range of choice, not only that products are widely available in food stores, supermarkets, hypermarkets, retailers, automated kiosks and so on. For this reason, the cost of switching to a new supplier is low or low-risk. Many private labels have been promoted. Co-dependent relationships of the buyer also influences the strength of consumers, because they have a mutual influence purchase decisions. Kellogg (as supplier) and distributors (as buyers) - food stores, supermarkets, hypermarkets, automated kiosks, etc: Kellogg buyers also include food stores and supermarkets and others. There is a threat of the supplier being acquired by the buyer and / or the buyer setting up in competition with the supplier (backward integration). They have long-term power, as they may determine the price. They finally support the market power industry.

5.2.4 The power of suppliers Kellogg (as buyer) and producer of wheat (as suppliers): Large companies from cereal product industry (like Kellogg, General Mills) have moderate influences and bargaining power, because they have a medium level of control over the key ingredient (wheat) when buying wheat from their suppliers (producers), because the price of wheat will vary owing to extensive market forces and the cost will be passed on to the Kelloggs customers. Kellogg (as supplier) and its consumers of breakfast cereal products (as buyers): The cereal products suppliers are likely to have low power because of the high concentration of suppliers (companies of cereal products) in the cereal industry. Suppliers like Kellogg and General Mills have less power because of private labels in the market, from which consumers can buy similar and cheaper products.

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Kellogg (as supplier) and its distributors (buyers): groceries shops, supermarkets, kiosks, etc. There is a possibility that Kellogg has to compete directly with its distributors/ buyers, so the solution can be a long term cooperative working relation or collaboration with them through forward integration. 5.2.5 Rivalry among competitors General Mills has been a direct competitor to Kellogg in the last few years. The companies are both in mature stage regarding their products. The competition is very intense. Each company gains substantial market share and is able to influence the market price through new products and aggressive marketing campaigns. There are also the private label brands which contribute to a higher competitive rivalry, due to low customer loyalty. Other factors which influence the level of rivalry are: the industry growth rate- being an industry characterized by the need of continuous inovation - and companys brand identity, as well as high capital costs. Moreover, the cereal industry confronts with an ongoing price war between large companies as Kellogg and General Mills and private label brands, like Wal-Mart. Given this situation, companies try to move away from price competition through focus on brand extensions like Special K containing berries or new varieties of Cheerios2.

5.3. Market Analysis 5.3.1 Kellogg SWOT Analysis Strengths Tradition Brand recognition Weaknesses Maturity- many products are in the mature stage and are at a peak regarding profitability

Broad Market- target consumers are Diversity among its suppliers and from many different demographically areas, employees requesting many different focuses Distribution (having manufacturing plants in 17 different countries)
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Charles W.L Hill, Gareth R. Jones- Strategic Management An Integrated Approach, 2008, pag 52

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Social Responsibility promotes diversity, healthy lifestyles and notes the environment as its main responsibilities

High prices

Opportunities * Expanding distribution * New global communities for the companies * Global trend to healthier food

Threats ! Intensive competition- rival products and lower prices(private labels fibre cereals) ! Fluctuation of costs, high gasoline prices and impact of eco-friendly packaging delays

! There is a consumer trend towards * Increasing number of the products tastier cereals main consumers in UK(people over 55) * Health claims is becoming more prevalent- Kelloggs - American Heart Association In order to analyze Kellogg strengths and weaknesses we shall start with the opportunities and threats that the company can encounter. The main opportunities for Kellogg are the possibility of a continuous International expansion, and also of a slowly diversification of products, while still remaining in their core business area, which will increase their profitability. If they can develop a better pricing strategy and guarantee lower prices, they can reduce costs while increasing their market share. Being identified with healthier lifestyles, another opportunity for Kellogg is due to global trend of prevailing health claims.

The main threats are the price competition and product proliferation strategy used by its main competitors, General Mills, Post, and Quaker Oats in order to erode Kelloggs share of the market. Moreover, discount imitation cereals brands have been successful in reducing premium brands in the more commodity like cereals. These, however can be countered through brand loyalty. Furthermore, Kellogg can be threatened by supply issues including fluctuation of costs and high gasoline prices. Regarding these, Kelloggs strengths include tradition and brand recognition as a market leader in nutritional food. Tony the Tiger, Digem, Snap, Crackle and Pop are already embedded in pop culture. Another strength is the promotion of diversity within its suppliers and its employees as well, that could support and promote international expansion. Kelloggs
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involvement in social responsibility programs and the identification with healthy food products is another strength of the company. Weaknesses, on the other hand, center on high prices and stage of Kelloggs products. Many products are in the mature stage and are at a peak regarding profitability. They have not aggressively developed many new cereal lines in the past four years, and their US market share slowly eroded in the past few years, together with a declining awareness of the brand, due to little promotional activity in recent years. 5.3.2 Competitors Analysis Today, Kellogg faces the most difficult operating environment it has experienced in many years. Prime among the challenges confronting Kellogg are rapidly rising prices for several of the key inputs for its cereal and snack foods, including corn and wheat. Rising energy prices exacerbate high input prices by increasing the cost of transportation and delivery to Kellogg's distributors. Finally, Kellogg faces intense competition from General Mills and Kraft in its core U.S. market where a slowdown in consumer spending, as a result of America's ongoing economic hardships, threatens to hurt sales. Kelloggs is basically a breakfast company therefore anythig that is popular to consume at breakfast time is a substitute to Kelloggs. This includes fruit, bars, doughnuts, toasts, etc. Private labeling brands pose a threat as well. At the moment Kelloggs is at a dead heat with rival General Mills. The companies are both in the mature stage as is most their products. Trying to find that smoking sun that will catch the market share has become a game of cat and mouse between the two entities. Critical success factors include things within a company to ensure that the company will succeed. Tradition: Kelloggs has been in the business since 1906. That kind of tradition will buy some equity when it comes to selling a product. Innovation: Kelloggs has developed many new products over the years trying to get hold of the majority of the market share in the industry. Baking: They have innovated many products but one thing has stayed the sames in the 101 years of business. The core competence of Kelloggs is baking. New markets: seeing that there are more people in the world that need ready-to-eat cereal and other baked goods Kelloggs entered into foreign markets, again, trying to get the majority of the market share in the industry. Latin America, Europe and Asia Pacific are markets that Kelloggs have entered into.

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Imagination: Over the years, Kelloggs has introduced a wide range of characteristics that have served as mascots for their respected cereals. Tony the Tiger, Snap, Crackle, and Pop, Toucan Sam, Dig Em and Cornelius are the more popular characters in the mix. R&D Department: America went through a cultural change recently and shifted to wanting more healthy foods. The responsibility then was in the hands of the producers like Kelloggs. Making healthy foods meant R&D was needed and Kelloggs answered with their line of foods for the health conscience. Self-Placement: When stores put Kelloggs products on the shelf the employees arent just throwing them in a vacant space. Kelloggs placement on the shelf is methodical and strategic and comes at a price

Company Comparison Company Kellogg Net Revenue (in millions) International Rev as % of sales Gross Margin % $12,575 32.3% 18.2% 41.4% 42.9% 39.7% 36.2%

General Mills $14,796 Kraft $40,386

5.3.3 Customers Analysis Who Are the Buyers (of Cocoa Krispies for example)? Parents, Older Adults

How Often Do They Purchase? Kids cereal are purchased roughly 18 times a year 10th fastest-moving product in the supermarket

Where Do they Want to Buy? Grocery Stores responsible for 99% of cereal sales

Who Are the Influencers?

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Kids

Who consumes the goods? Kids under 18

Who are Kelloggs Target Market? 6. - Kids 8-11 years old Marketing strategy and internalization process

Kelloggs is taking commitment to remain a powerfull company with well known brands and appreciated by clients all over the world. In all this time it continues to respect and to invest in the environment, society and people. The company desires that in the future: - it reduces the quality of water used by 1,7% per year. -it will reduce the energy used by 1,2% per year. -to maintain the level of gas emissions at the value of 0.47cubic meters per tone. Next they will try to reduce this. -bring the level of nonrecyclable waste at a value of 0,05 by 1st January 2016. -to increase the value f contributions made by the end of the year by 8%. -to increase by 1st January 2014 the value of charity investment for children aged 1-8 years old from 2,5 to 2,8 mil $. -to maintain the position of leader of cereal market , increasing its quota to 38% from the total in 2 years. -to increase the safety of employers by investing in better equipment in order to decrease the frequence of accidents by 35% in the following years. -to extend their business on the Chips market , this resulting from the acquisition of Pringles company. -to extend on horizontal by acquiring other 3 well known brands in the snacks industry by Julie 2014. 6.1. Strategy in Romania In the following years I would propose to take into account a growth strategy ,more precise in what it concerns the products by applying a strategy to concentrate by developing the cereal market. In order to do this, it has to make significant investment in research and development and brand consolidation to maintain its leading position in most of the countries it exists and in the ones it wants to penetrate , like Romania.
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Moreover, the company will adopt a concentration strategy by horizontal integration due to the fact that it follows a strategy to extend on snacks and chips markets. As a way to realize this strategy , it will rely on acquisitions; the first step has been made by acquiring Pringles offering a competitive position of Kelloggs on snacks and chips market worldwide , which puts Kelloggs in second place. As strategic initiatives the following will be taken into consideration: - the formulating of a strategy of informing customers on the new markets to help them to assume a commitment in what means nutrition and health. - evaluating and improving the programs for health, educations and nutrition. - extending the network of suppliers and empowering the relations with the supplies in order to create a long term relationship capable to assure the growth of success rate. - creating some programs that they will extend globally to increase the concern to combat some diseases like: obesity , diabetes, heart diseases and producing some special nourishments for people who participate in this kind of programs, products that keep the specific of the company. ( taste, quality and price) - offering their employers the possibility of developing on a professional and personal plan , by involving them in the companys mission. - development of the recruiting process , considering that demographic diversity isone of key factors for success. - maintaining a policy of protecting the environment. - sustaining and developing the agriculture. - developing methods of penetrating new markets by recycling. - understanding the potential impact of climate changes over the raw materials supply used in production.

7. Conclusions When Will Kellogg accidentally invented a new breakfast food in Battle Creek, Michigan in 1894, he did not realise that he was on the threshold of forming a major food manufacturing company. His name would become one of the most instantly recognised throughout the world. Today, Kellogg's is an American owned organisation that has a true global market. It has four main divisions covering North America, South & Central America, Asia Pacific, and finally Europe, Africa and the Middle East. The European Headquarters is in the UK, which along with Ireland has the highest per capita consumption in the world. However, Kellogg's has manufacturing operations in several different European countries. The supply chain management,
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covering all aspects of production, logistics and finance is organised on a pan-European basis, which gives substantial economies of scale. However, marketing and sales tend to be more locally based to meet the different cultural needs as the markets across Europe can vary enormously. The completed new designs were further tested on consumers using sophisticated computerised eye tracking tests to see if the packs stood out on the supermarket shelves. More extensive market research was carried out to gauge the reactions of consumers. Finally, it was necessary to communicate with consumers about the new packaging and the new image was flagged on the old packs for two months before the launch. The top section of the back panels was used to display the new designs to enable the consumers to become familiar with them. The new designs were also featured in a direct mail campaign to Kellogg's consumers as the packs went into market. Changing the appearance of a well-known range of products can be a risky strategy, particularly in the highly competitive environment of the supermarket, where purchase decisions are made very quickly and competitors often try to imitate the packaging of a market leader. However, with extremely careful preparation and attention to detail and some state of the art design techniques, Kellogg's has been able to clearly differentiate its product range from the competition. Extensive market research helped to reduce the risk, and communication with consumers warning them of the new changes, eased the period of changeover. The new designs have been successful in promoting all the familiar attributes associated with the Kellogg's name and have also enhanced and up-dated the personalities of the individual brands.

8. Sources: http://www.thetimes100.co.uk/case-study--using-aims-and-objectives-to-create-a-businessstrategy--6-267-6.php#ixzz1NCxXt4SD
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