Study Case : Kellogg's Stakeholder Engagement

Introduction

The Kellogg Company is the world’s leading producer of cereals. For more than 100 years, Kellogg’s has been a leader in health and nutrition through providing consumers with a wide variety of food products. Kellogg’s market leading position and reputation is built on its commitment to ethical business practices and its values-based culture. Business values identify the beliefs that the company holds to be the most important. These values then guide decision making and shape the way the organisation behaves. For Kellogg’s, these are referred to as K-Values.

Kellogg’s K-Values guide the way the company interacts with all of its stakeholders. Stakeholders are individuals, groups and organisations that have an interest in the decisions a company makes and the products that it produces. They also, depending on their power, affect how businesses perform. Kellogg’s products are manufactured in 18 countries and are sold in more than 180 countries. This means Kellogg’s has to manage its relationships with a variety of stakeholders around the world. The diagram identifies Kellogg’s key stakeholder groups.

Kellogg’s long-term business plans, known as strategies, focus on engaging with its stakeholders to ensure their needs are being met. For Kellogg’s, this means ensuring the highest ethical standards and sustainable business practices. Kellogg’s has a Global Code of Ethics governing how it deals with stakeholders across the world. A sustainable business is one which focuses on minimising any negative impact to the environment to ensure future generations can prosper.

Kellogg’s vision and core purpose outline what the company wants to achieve. They guide the organisation’s decision making processes to help meet the expectations of its stakeholders. Kellogg’s vision, which was refreshed in 2012, sets out the company’s main aim: ‘To enrich and delight the world through foods and brands that matter.’ This is supported by Kellogg’s purpose of ‘Nourishing families so that they can flourish and thrive.’ Every Kellogg’s employee, no matter where in the world, is working towards achieving these every single day.

Interacting with stakeholders

Stakeholder engagement, building two-way relationships with its stakeholders, is a key aim for Kellogg’s. Two-way relationships help build trust between Kellogg’s and its stakeholders. Each stakeholder group has different needs. Engaging with each group individually helps Kellogg’s ensure these needs are met. As with any business, its owners are a major stakeholder group. However, Kellogg’s does not focus on pleasing shareholders at the expense of other stakeholders.

Kellogg’s uses a variety of strategies to maintain positive relationships with its stakeholders. For example, Kellogg’s commitment to its stakeholders and ethical practices is demonstrated through its Corporate Social Responsibility (CSR) initiatives. CSR focuses on improving the lives of communities in which the organisation operates. Kellogg’s has identified four pillars to its Corporate Responsibility strategy:

• Marketplace ambition - meeting the needs of customers. Selling them safe, high quality products whilst engaging in ethical and responsible marketing.

• Environment ambition - using scarce resources carefully whilst also reducing environmental impacts and supporting sustainable agriculture.

• Community ambition - contributing to the communities in which the company operates, concentrating on nutrition and physical fitness.

• Workplace ambition - supporting a talented and diverse workforce which values diversity and inclusion, abiding by best practice labour standards.

Kellogg’s focuses its CSR activity on initiatives that benefit stakeholders across these pillars. For example, Kellogg’s Breakfasts for Better Days campaign communicates important information about the benefits of starting the day with a healthy breakfast. It engages stakeholders across three of these pillars – customers, suppliers that provide the ingredients so Kellogg’s can guarantee the nutritional content of its products and also the communities in which it operates where the campaign’s messages are communicated. A key part of the campaign is Kellogg’s support for school breakfast clubs to ensure that every child in the UK gets a good start to the day.

An important part of managing the needs of stakeholders is understanding that different stakeholder groups can sometimes have conflicting interests. It is therefore essential for Kellogg’s to consider how it can best balance different stakeholder aspirations. Examples of conflicting stakeholder needs include:

• Government requirements for food content and consumer preferences. Kellogg’s recently changed the formula of Honey Loops to reduce the sugar content but this had an impact on consumer’s perceptions of the brand.

• Different interests of charity groups requesting Kellogg’s support. Kellogg’s current CR strategy focuses on breakfast clubs for children so conflict will occur when charities supporting other causes cannot be a focus for Kellogg’s at this time.

Internal stakeholders

Internal stakeholders are those within an organisation who have a key interest in the organisation’s decisions. Kellogg’s key internal stakeholders include employees at all levels, all over the world, and shareholders. Both groups are integral to the success of the organisation. Employees carry out the day-to-day activities which enable the company to operate globally. Shareholders

...