A History of Innovation
Kellogg Company A History of Innovation Graham Thompson Jonathan Seppi Inho Suh Charles Stein Background A.K.A. Kellogg, Kelloggs, or Kelloggs of Battle Creek
Founded in 1906 Global Headquarters in BattleCreek, MI, USA Executive Statement: W.K. Kellogg put hissignature on every package ofcereal to express his personalpledge to quality andnutrition. In doing so, hebegan building trust in theKellogg brand. A centurylater, our vision is to be thefood company of choice. Organizational Architecture
U-Shaped CEO, COO, and VP all serve on the board of directors Each in charge of a region or department Decision Rights Final decision rights to board of directors
Division of company focused into regional branches Kellogg North America, Kellogg Europe, etc. Provides excellent architecture for decision making Separated by department Investing separated from accounting. Properly divided decision rights so specific knowledge canstay relevant Business Environment: Competition
Main Competitors: General Mills Nestle Ralcorp Holdings Kellogg Company holds 34%market share Largest of all competitors Business Environment: Diversity
Manufacturers in 18 countries Marketed in over 180 Use Transnational Strategy Business Environment: Relationships
Requires suppliers to followcode of conduct Failure to comply requiressuppliers to take immediateaction to correct deficiency atthe risk of termination ofcontracts. Focus on ensuring responsibleand reliable suppliers Failing to do so could reflectpoorly and have perverseeffects on products Employee Evaluation: K-Values
Evaluations are defined by K-Values: Integrity Accountability Passion Humility Simplicity Results Evaluated on how well theirconduct follows these corevalues and code of conduct W.K. Kellogg Award given tothose who best embody thevalues Employee Evaluation: Performance Evaluations
The Nominating and GovernanceCommittee is in charge ofconducting the performanceevaluations of employees Review performance reviews,comments, and report to the board Also in charge of selecting thenominees qualified to become boardmembers Evaluate directors who are subject torenomination Reviews directors compensations byperformance assessments Incentive Structure: Kellogg Share Incentive Plan
In UK employees maycontribute up to 1,500 poundsannually to invest in FirmStock Match contributions on a 1:1basis and buy common stockat market value Plan expires when employeesleave organization Eligible employees alsoincome and tax benefits if theshares are held for a specificnumber of years Incentive Structure: Feeling Gr-r-reat
Incentives to get healthy andstay healthy Provides numerous healthrelated benefits to theemployees Health screenings Flu shots Health coaching Exercising Weight management Incentive Structure: Stock Options
Executive Directors stock options Directors may convert all availablecompensation into units which arecredited to accounts Units have value equal to Kelloggscommon stock Dividend equivalents are earned on thewhole units into accounts Units may be paid in cash or shares ofstock either in lump sum or over 10installments throughout the year Payments begin when directorsservice as director terminates Limit 150,000 shares Current Issues Cereal recall
June 2010 voluntary recall ofover 28 million boxes ofcereal Odd smell and flavor madesome customers ill Approx. 20 complaints No serious health risks wereposed by the problem Employee Satisfaction Disconnect betweenemployees and managersbecause of the size Capacity to Solve Issues
Health concerns dealt with bymassive Recall Efficiency, scope, and speedof recall shows the capacity todeal with problems Employee issues Handled by Human Resources Vast internal scope makesproblem difficult Office politics do existfrequently Currently attempting to dividethe company by region anddepartment to makeemployees feel morecomfortable with managers Future of Kellogg Company
Creating closer relationshipsbetween company and itssuppliers Keep organizationalarchitecture clear andstructured Continue to be the worldsleading producer of cereal End Graham Thompson Jonathan Seppi Inho Suh Charles Stein