Kellogg's Essay

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Contents Introduction
Kellogg’s is highly a profile company which is hugely known not only in the UK but in the world at large. It is one of the largest breakfast companies in the word, not only that but it is also financially it is a stably and well organised company. Kellogg’s profits have been stable if not increasing for the better from what it was 5 years ago.
Terms of reference
As the financial analyst of the company, this report is written in respect to how the financial position of the company can be improved. This report is aimed for the senior management team.
Prioritisation Section
Strengths Weaknesses
 Strong brand making easier to introduce a new product.
 Large advertising capacity
Customer Loyalty  High priced product
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1 Strong market power and a large market base (new product)
Introducing a new product to the market is a very risky operation. Not only is it risky but it takes time, effort and money. In order for a product to be successful, it had to fully undergo the product life cycle. Kellogg’s has an advantage when it comes to the breakfast market as it holds the biggest market share. After providing the British public with breakfast for years, it most certainly has a larger customer loyalty base. The strong brand makes it easy for product launching as the public are already familiar with the brand. However, introducing a new product comes with its challenges and risks. Looking at the ratios, Kellogg’s has a current ratio to date of 1:1.1 . This in financial terms rings alarm bells as it shows that the company will struggle to pay its short term obligations. Kellogg’s however can operate on a low current test ratio as it has a good long term revenues coming into the business. This means that it is possible to borrow on this basis to meet its current obligation. After calculating the net present value, which gave a positive NPV of £38450million, I move that we go ahead with the introduction of a new product. In traducing a new product is a sign of innovation and growth on the part of the competitors. In order for a new product to be introduced to the market, Kellogg’s will have to spend money on the actual product, the marketing side of
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