Business Case Analysis Kellogg’s and Nokia

Introduction

This essay is about business case analysis of two companies from different countries. The selected companies for this essay are Kellogg’s and NOKIA. The purpose of the essay is to provide an overview of the two selected companies including business and governance structures. The main aim of the paper is to analyze the influential business environmental factors which positively impact organizational performance. The key points of the essay are to discuss about the internal and external environmental factors that influence the organizations' performance, to explain three major risks of Kellogg's and NOKIA and the influences of the risks on decision-making of these two companies, and to provide three recommendations regarding how these two selected companies can improve its business practices.

Case company synopsis

Kellogg’s is an American Multinational food processing and distribution company founded in 1906 by Will Keith. Kellogg’s is the world's leading producer of cereal and a leading producer of convenience foods like cereal, crackers, toast pastries, frozen breakfast, Nutri-Grain bars under brands like Corn Flakes, Pringles, Eggo, Frosted Flakes, and Cheez-It (Kellogg's). The products of Kellogg’s are manufactured and marketed in over 180countries. The company employs 33,000 employees all over the world. The company works toward sustainability.

NOKIA is a Finland-based multinational telecommunication, information technology, and electronics company. The company was founded by Fredrik Idestam, Leo Mechelin, and Eduard Polon in 1865. NOKIA employed more than 100,000 employees (NOKIA). NOKIA embeds sustainability by adopting technology to provide improvised access to education, information, better healthcare, and economic opportunity

a) The business and governance structures of Kellogg’s and NOKIA and the difference between two companies

• The business structures of Kellogg’s

The business structure of Kellogg’s is decentralized with a vertical structure. Kellogg's produces its products in 18 countries and delivers it to 180 countries. This company helped the Kellogg's Foundation by granting more than $5.5 billion of projects to fulfill the mission of helping children. Kellogg’s business is divided into two divisions: Kellogg’s North America and Kellogg’s International. The first division includes retail cereal, retail snacks, and frozen and specialty channels businesses in both the United States and Canada. The former division is divided into businesses in Europe, Latin America, and Asia and Australia (Asia Pacific).

• The governance structures of Kellogg’s

The corporate governance structure of Kellogg’s places Board members on the top position. There are three committees- Audit Committee, a Compensation Committee, and a Nominating Committee. All members of these committees are independent directors under the criteria established by the New York Stock Exchange and all members of the Audit Committee will be independent under the Exchange Act. The number of board members in Kellogg’s is 12. The chairman appoints lead directors

• The business structures of NOKIA

NOKIA’s business structure is a horizontal organizational structure. It has departments like the device unit, solution department, service department, corporate development department, and NAVTEQ, the navigation department. NOKIA is an innovative leader in 5G networks and mobile phones worldwide.

• The governance structures of NOKIA

NOKIA has Board members on the top position in its corporate governance structure. All strategic and important decisions are made by the directors. The article of association and the Finnish Companies Act determine the roles and responsibilities of the directors and executive members.

• Reason for the difference and similarities between these two companies in terms of business and governance structure

Two companies are different in terms of business structure as Kellogg's is vertical structure and NOKIA is a horizontal structure. Vertical organizational structure has a pyramidal top-down structure where the CEO is at the top, managers and supervisors t the middle section and employees are at the bottom section. NOKIA has a flat structure with having few managers and more authority is provided to the employees. The decision-making process includes the opinions of employees.

The governance structures of these two companies are similar as both of these companies place Board members on the top position in the corporate governance structure.

b) The influences of environmental factors of the two companies on their performance

Organizational culture is influenced by the business environment of the organizations. The business environment is based on two types of environmental factors- internal environmental and external environmental factors. These factors influence the performance of an organization. The organization's strengths and weaknesses are influenced by internal environmental factors whereas opportunities and threats are assessed by external environmental factors.

1. The environmental factors of Kellogg’s which influence their performance
2. Internal environmental factors and their influences on the Kellogg’s performance

The influential internal environmental factors of Kellogg's are the following.

• Human resource management

Kellogg offers training to its employees and the employees are efficient to perform their job on time. The goals of the organization are easily achieved by the contribution of the employees. Thus the performance of the company rises for this internal environmental factor.

• Great manufacturing facilities

Kellogg’s has manufacturing facilities in 18 countries and it offers quick transport to the 180 serving countries to sell their products on time. This increases the profit margin level of the company and the performance is also increased for this factor.

1. External environmental factors and their influences on the Kellogg’s performance
2. The influential external environmental factors of Kellogg's are the following.

• Loyal customers

Kellogg's performance is influenced by this factor as the company is keeping its loyal customers happy by offering varieties of products with attractive price and packaging. They offer a family reward program to enable the customers to get the privilege. Therefore, Kellogg's has loyal customers who buy the products regularly and increases the number of sales. As a result, organizational performance is increased by this factor.

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1. A great relationship with the suppliers

Kellogg's maintains a good relationship with its suppliers and won various awards for having a diverse set of suppliers around the world. It also increases the performance level of Kellogg’s.

1. The environmental factors of NOKIA which influence their performance
2. Internal environmental factors and their influences on the NOKIA performance

The influential internal factors of NOKIA are the following.

• The large-scale of operation

Nokia has a large operation scale and this helps them to acquire big market share and worldwide acknowledgment. Nokia is in the third position for its market share and it is the largest distribution network in the telecommunication industry. This influences the performance of NOKIA.

• Value system

The value system of NOKIA helps the company to perform better. They offer equality to every employee of the organization. This helps to maintain a good employer-employee relationship.

1. External environmental factors and their influences on the NOKIA performance

• Technology

NOKIA started e-business to make the easy process of buying and selling. This e-business is called Nokia Payment Solution that helps to maintain a good relationship with the target audience. It influences the performance of NOKIA.

• Advertising

NOKIA uses various types of media campaigns to attract more customers since they adopt the Android version. They engage celebrities for an ad campaign. This factor influences the performance of the organization.

c) The top three risks two companies face and their influences on their decision making

The top three risks Kellogg’s faces and their influences on their decision making 100

The top three risks faced by Kellogg's are the following.

• Operational risk

In 2008, Kellogg's faced a shortage of Eggo Waffles after massive flooding in the Atlanta area. That flooding forced Kellogg's to close the Atlanta waffle factory as there were equipment problems in the Rossville waffle factory. This risk influenced the decision making as the closure of that unit stopped production of customers' favorite waffle (Paul, Sarker, & Essam, 2016). They lost many loyal customers.

• Compliance risk

The US Food and Drug Administration claimed that many stores sold Honey Smacks cereal even after Kellogg’s recalled that product range after there was an outbreak of salmonella poisoning. This risk influenced the decision making of Kellogg’s (Chiarini, 2017). The management team took the correct measure to aware people of that news and asked them to discard the product.

• Financial risk

The sale of Kellogg's breakfast cereal was declining as now Americans change their food habits. The sale rate was declining by 4.4% compared with last year. This risk influence decision making as the new finance chief planned to make new strategies to boost up sales rate.

The top three risks NOKIA faces and their influences on their decision making

The top three risks faced by NOKIA are the following.

• Competitive risk

NOKIA failed in their business for high competition in the market. The market was highly grabbed by Samsung, Apple, and Xiomi. NOKIA was unable to meet customers' demand and want so that it faced a huge risk from its competitors. This risk influenced decision-makers and for that reason, they merged with Microsoft in 2013.

• Strategy risk

In 2011, NOKIA adopted Windows as its operating system and this was its biggest mistake. NOKIA's failure in the market was caused by that risk. This risk influences their decision making as the management team decided to change OS for a new launch recently (Rebelo, Santos, & Silva, 2014).

• Innovation risk

NOKIA did not adapt changes though it launched Symbian smartphones in 2002, it could not meet the changing technology in the market. The decision making of the NOKIA team was influenced by the risk (Swami, Executive functions and decision making: A managerial review., 2013). They kept losing market share for this risk.

d) Three suggestions regarding how the companies might improve their business practices

1. Suggestions for improving the business practices of Kellogg’s
   1. Kellogg's should open several Waffle production plants to deal with the situation. It should also employ operations managers who would look after the entire plants and provide information to the technical department about the condition of the manufacturing equipment (Kumar, Singh, & Shankar, 2015).
   2. The compliance risk can be dealt if the company ensure food quality test before distributing the products to the distributors (Psomas, Vouzas, & Kafetzopoulos, 2014).
   3. Kellogg's should do a market survey to know about the customers' preferences so that they would produce products according to the market demand (Kristianto, Ajmal, & Sandhu, 2012).
2. Suggestions for improving the business practices of NOKIA
   1. NOKIA should do a market survey and competitor analysis to deal with competitive risk.
   2. The strategy of product planning should be done according to the current market trend.
   3. NOKIA should adapt to change when it requires as the current era is high-technology based.

Conclusion

Therefore it can be concluded that every organization's performance is highly influenced by business environmental factors. The business structures of Kellogg's and NOKIA are different as the two companies use two different organizational structures like vertical and horizontal structures. The governance structures of the companies are the same. The business risks faced by the two companies influenced the decision making of the company. Provided suggestions can be helpful to improve the business practices of both of these companies.

Reference List

1. Chiarini, A. (2017). Risk-based thinking according to ISO 9001: 2015 standard and the risk sources European manufacturing SMEs intend to manage. The TQM Journal, 29 (2), 310-323. DOI: 10.1108/TQM-04-2016-0038
2. Kellogg's. (n.d.). Retrieved from Kellogg's: https://www.kelloggs.com/en_US/home.html
3. Kristianto, Y., Ajmal, M. M., & Sandhu, M. (2012). Adopting TQM approach to achieve customer satisfaction: A flour milling company case study. The TQM Journal , 24 (1), 29-46. DOI: 10.1108/17542731211191203
4. Kumar, R., Singh, R. K., & Shankar, R. (2015). Critical success factors for implementation of supply chain management in Indian small and medium enterprises and their impact on performance. IIMB Management review , 27 (2), 92-104. DOI: 10.1016/j.iimb.2015.03.001
5. NOKIA. (n.d.). Retrieved from NOKIA: https://www.nokia.com/
6. Paul, S. K., Sarker, R., & Essam, D. (2016). Managing risk and disruption in production-inventory and supply chain systems: A review. Journal of Industrial & Management Optimization , 12 (3), 1009-1029. DOI: 10.394/jimo.2016.12.1009
7. Psomas, E., Vouzas, F., & Kafetzopoulos, D. (2014). Quality management benefits through the “soft” and “hard” aspect of TQM in food companies. The TQM Journal , 26 (5), 431-444. DOI: 10.1108/TQM-02-2013-0017
8. Rebelo, M. F., Santos, G., & Silva, R. (2014). A generic model for integration of quality, environment, and safety management systems. The TQM Journal , 26 (2), 143-159. DOI: 10.1108/TQM-08-2012-0055
9. Swami, S. (2013). Executive functions and decision making: A managerial review. IIMB Management Review, 25 (4), 203-212. DOI j.iimb.2013.09.002