Strategic Analysis and Market Justification

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International Opportunity In the next one to five years global health consciousness will drive the demand for the company's products (Vyth, Steenhuis, Roodenburg, Brug, & Seidell, 2010). To capitalize on this growth the Kellogg Company will expand its healthy product line. The company will spend more money on Research and Development (R&D) to include healthier food choices. Current Economic Landscape The current economic landscape has seen decreased profits in the global breakfast cereals market but has demonstrated steady growth over the past ten years. According to Datamonitor (2011) estimates, the global breakfast cereals market generated total revenues of $28 billion in 2010, representing a compound annual growth rate (CAGR) of 3.7% for the period spanning 2006 to 2010. Ready-to-eat cereal sales proved the most important for the global breakfast cereal market in 2010, generating total revenues of $24.4 billion, equivalent to 87.2% of the market's overall value. The performance of the market is forecasted to accelerate with an anticipated CAGR of 4.1% for the five-year period 2010 to 2015, which is expected to drive the market to a value of $34.2 billion by the end of 2015 (Datamonitor, 2011). Kellogg’s is the world's leading producer of cereal and controls over 32% of the market share (Datamonitor, 2011). The company is thus well positioned to exploit the growing breakfast cereals market and enhance its top line and profitability. Trends in Market and Customer Preference Current trends show that global markets have gone through a cultural change in the past few years. Consumers are demanding healthier food (Vyth et al., 2010). To meet the demand Kellogg’s will spend more money on Research and Development (R&D) to include healthier food choices. They will develop products that are differentiated in the marketplace and respond to the changing tastes and

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