Collage of Business and Economics

INTERNATIONAL MARKETING AND EXPORT

MANAGEMENT
Department of MSC Management

MGMT-MRK 5221
Course code:
1st Year/1st Semester
Year/Semester:
Case study I.3 Cereal Partners
Assignment Title: Worldwide (CPW): the no. 2 world
player is challenging the no. 1,
Kellogg

SUBMITTED BY: GROUP 2

Abay Abera Zerdew GSE/4038/15

Beamlak Alemayehu Wole GSE/7398/15

Dereje Tefera Baye GSE/6894/15

Gelila Tezera Bati GSE/9577/15

Kalkidan Masresha Garedew GSE/4890/15

SUBMITTED TO: DR. ETHIOPIA

Jan, 2023
Case study I.3
Cereal Partners Worldwide (CPW): the no. 2 world player is challenging the no. 1, Kellogg

Cereal Partners Worldwide (CPW)

This was achieved by combing all the organization strength into one. General Mills brought
massive manufacturing capabilities, excellence in products and production process, and
diversified portfolio of products. Nestle brought feeding the world, selling in all countries and
deep understanding of international marketing and distribution. With the upstream value chain,
CPW will need to centralize procurement on raw materials for all its manufacturing operations.
By using this strategy will receive

CPW more of the bargaining power when dealing with suppliers. This will result in lower costs
and better opportunities for future suppliers. With the downstream of the value chain regarding
marketing/sales & distribution and having these parts of the organization decentralized, this will
give CPW competitive advantage over competitors. This will give CPW the ability to market
variety of different product to certain individual consumers.

When one compares both advantages over CPW and Kellogg with the value chain, it can see
which has the better-perceived customer value. Kellogg had the better value added chain; this
was shown by comparing advantages over CPW. By looking at the advantages compared with
both companies, this can explain why Kellogg is more of a market lead in international business
strategy. The two best blue ocean strategy would be having a stand-alone store and partnering up
with a fitness centre to form a private label. With having a stand-alone or a private label, this will
give CPW to connect with their health-conscious consumer. Another benefit of doing a private
label is a decrease in cost relative brand marketing. This gives CPW to focus on the quality of
the product to increase brand loyalty and confidence.

To increase sales volumes, CPW needs to improve on penetrating into their market using a
glocalization strategy. There are five areas that CPW can work on marketing and brand strategy,
strengthening core brands, Innovation and new product launch, new global brands, and merger
and acquisition. This will give CPW more of a presence in their market and be able to act like an
international and local provider to their consumer base.
How can General Mills and Nestlé create international competitiveness by joining forces
with CPW? General Mills and Nestle need to leverage the value chain in their joint venture to
gain market share. This can be done by centralizing upstream activities and decentralizing
downstream activities. Adjusting how these activities are undertaken in the portfolio of
international markets will enable the joint partnership to better leverage their core competencies.
The CPW Value Chain The CPW value chain consists of upstream and downstream activities.
The CPW partnership divided the upstream and downstream activities to better leverage General
mills and Nestle core competencies. With General Mills strengths concentrated in the upstream
with their Massive manufacturing capabilities, Excellence in products and production process,
and diversified portfolio of products. This combination of core competencies makes them ideal
to handle the upstream processes. Nestle is the world’s largest food manufacturer and specialize
in making sure the world gets fed. CITATION Har08 l 1033 (Hollensen, 2008) Their core
competencies are focused on the downstream and consist of Feeding the world

Selling in all countries

Deep understanding of international marketing and distribution An understanding of the CPW

joint venture value chain can help create international competiveness. Centralization of the
Upstream Activities.

Upstream actives for the current joint venture are a combination of primary and support
activities. Competitive advantage in upstream and support activates often grow more out of the
entire system of countries in which a firm competes than from its position in any single country
CITATION Har08 l 1033 (Hollensen, 2008). The CPW partnership can start by centralizing
procurement of raw materials for all of its manufacturing operations. Doing this will enable them
to achieve greater bargain power over suppliers and thus lower their costs. Maybe insert
something about production planning and combine it with the creation and tweaking of current
products for individual markets. De-centralizing downstream ActivitiesNestle specializes in
feeding the world. They are unbelievable at delivering quality products to multiple international
markets. The CPW partnership needs to decentralize this part of the operation.
Downstream activities create competitive advantages that are largely out of local activities and
create entry/mobility barriers in that country alone. CITATION Har08 l 1033 (Hollensen, 2008)
Decentralizing the marketing/sales and distribution of the products will enable the team to target
individual tasks in the downstream value chain to gain competitive advantage over the
competition. For instance, a product might not be right for a certain market and a de-centralized
marketing department would be better equipped to pick up on that and make changes better
suited to the local consumer. The CPW partnership was created to leverage the core
competencies of the two companies. Carol can use this to her advantage by centralizing the
upstream activities and decentralizing the downstream activities. CITATION Har08 l 1033
(Hollensen, 2008) Doing this will enable multiple competitive advantages to be created in the
overall value chain.

Evaluate the international competitiveness of CPW compared to the Kellogg Company.Kellogg

Background InformationKellogg organization has been able to be the number one manufacturer
spot. They have achieved this by adopting an international strategy at beginning of their start up.
This led to Kellogg organization, the pathway to developing a strong brand globally and
concentrate on their core competence of their business. Also, Kellogg was able to market their
products effectively with all region they desired to sell to. Having this effectively marketing
plan, Kellogg was able to have a strong presence in all regions. CITATION Har08 l 1033
(Hollensen, 2008)Value ChainTo compare international competitiveness the value chain is the
best way to evaluate the advantages, and each organization has over the other.

Kellogg AdvantagesDeveloped their international strategy at an early stage of the business. This
has helped Kellogg develop connects in the international business field which helps with relative
costs. Perceived Value could be higher than CPW with more presence in the international
market. Comparing sales volumes and market share are higher this has led to advantage with
Economic of scale. Having production flexibility, better coordination of the whole value chain.
Fasterimplementation of new ideas on products to the market place CPW AdvantagesMore of a
market leader in countries other than North America. Well known partner Nestle on
collaborating with products to various regions and countries. Has a strong and leading brand with
General Mills.

By looking at the advantages compared with both companies, this can explain why Kellogg is
more of a market lead in international business strategy. Suggest how CPW can create a blue-
ocean strategy.In a fast evolving modern society, consumers begin to step away from traditional
breakfast meals. The reasons are the lack of time available in the morning, or the increased
popularity of fad diets, and trends. In order to keep up with a saturated market of breakfast
options, CPW needs to consider the following blue-ocean strategies. First Strategy: Stand-alone
storeThe first strategy is to open stand alone breakfast cereal stores. The stores would offer a
variety of breakfast cereals produced by Nestle and General Mills Inc. for the healthy conscious
consumers on the go. A number of options would be offered with the purchase of cereal, such as
a variety of dairy and non-dairy products, sugar and sugar substitutes, including cane sugar,
brown sugar and liquid sugar. Other addons to cereal will include fresh fruit, dried fruit, nuts,
and seeds to appeal to the growing healthconscious consumer demographic. CPW will offer a
variety of breakfast bars for consumers who still want the quality of breakfast cereal.

This will attract consumers do not possess the time to sit down and to have the traditional
morning breakfast, another option exists. In order to entice brand new and returning consumers,
a loyalty program will be introduced, such as stamp cards, in order to receive discounts and free
products. Second Strategy: Partnership with fitness centresThe second strategy is to join a
partnership with fitness centres such as Steve Nash and Club 16, and offer its members the
variety of CPW cereals or breakfast bars. Many of the fitness centres are open 24/7 or open
early, so a number of consumers who use their services choose to forfeit their breakfast for
attending a fitness centre. This is an ideal target market for CPW, because the company is trying
to appeal to a health-conscious consumer with the healthier cereals, and breakfast bars, which are
becoming increasingly popular.

Where and how can CPW create further international sales growth? General Mills and
Nestle have been able to use their international strengths of their organizations to become
number two in most of their industry. This has been able to be successful by using the CPW’s
50% stakeholder positon that General Mills owns. CITATION Har08 l 1033 (Hollensen, 2008)
For CPW to continue to grow in the international cereal market, there are a few countries that are
not being completely penetrated into the cereal market. This can be seen by the chart below
comparing the per capita consumption per year (kg) with the following listed regions CITATION
Har08 l 1033 (Hollensen, 2008).

CITATION Har08 l 1033 (Hollensen, 2008)For CPW to have further international sales growth,
the bottom four regions have a better penetration strategy. This can be done through marketing
and brand strategy, strengthening core brands, Innovation and new product launch, new global
brands, and merger and acquisition. Marketing and Brand StrategyIn the past, the level of sugar
levels in cereals have had a negative impact with the consumers that purchase cereal worldwide.
CITATION Har08 l 1033 (Hollensen, 2008) To reverse this impact and to attract more
consumers CPW should be using a health marketing and brand strategy. CPW needs to be able to
show and tell that CPW has changed their cereals to fit the everyday health-conscious consumer.
Strengthening Core BrandingWith exists, brands in regions CPW needs to establish a better
brands awareness to their consumers. This can be achieved by continuing using marketing
campaigns.

The way that these campaigns will affect the sales growth will be better connecting to CPW
consumers. CPW needs to a better understanding of what their consumers want out of breakfast
cereal. This can be done through celebrity endorsements with some of their cereal brands. New
Global BrandsCPW will be able to increase their sales by using a golocalization strategy for all
regions. The way CPW succeed in this is my looking at each of these regions and seeing the
local customer needs, culture, and local markets. Doing this CPW will have a better
understanding of why South-West Europe, South- East Asia, Russia, and China are considerably
lower Per Capita Consumption Per Year (kg) compared to the other regions.

Innovation and New Product Launch

CPW needs to continue using the value-added chain, so CPW continually develops new
innovated products that reach a variety of consumers. This will keep CPW ahead of their
competition and to keep existing and add new potential consumer. By keeping their existing and
new potential consumers, CPW will be able to increase their sales. For example; city dwellers
are more on the go and need some that they can just pick up and go. A perfect product for this
would be a cereal bar for the on the go worker. Merger and Acquisition The growth of cost for
branded products has led to private label products which have seen up to a 30% increase.
CITATION Har08 l 1033 (Hollensen, 2008) This is a huge opportunity that CPW can do for
their international marketing by concentrating on the brand identity. This will increase brand
loyalty and confidence that CPW lacks with a few of their regions. CPW has seen success in
using this strategy with their Australia. CPW achieved this by partnering up with Uncle Toby’s if
CPW does this with South-West Europe, South- East Asia, Russia, and China it will have a huge
increase in sales. ConclusionCereal Partners Worldwide (CPW) combined forces with General
Mills and Nestle in order to create more international competitiveness.

With the upstream value chain, CPW will need to centralize procurement on raw materials for all
its manufacturing operations. This way CPW will have improve their upstream value chain. The
downstream of the value chain needs to be decentralized regarding marketing/sales &
distribution. This will give CPW more of a competitor advantages when selling products to
variety of consumers. When one compares both advantages over CPW and Kellogg with the
value chain, it can see which has the better-perceived customer value. Kellogg had the better
value added chain; this was shown by comparing advantages over CPW. By looking at the
advantages compared with both companies, this can explain why Kellogg is more of a market
lead in international business strategy. The two best blue ocean strategy would be having a stand-
alone store and partnering up with a fitness centre to form a private label. With having a stand-
alone or a private label, this will give CPW to connect with their health-conscious consumer.

Another benefit of doing a private label is a decrease in cost relative brand marketing. This gives
CPW to focus on the quality of the product to increase brand loyalty and confidence. To increase
sales volumes, CPW needs to improve on penetrating into their market using a glocalization
strategy. There are five areas that CPW can work on marketing and brand strategy, strengthening
core brands, Innovation and new product launch, new global brands, and merger and acquisition.
This will give CPW more of a presence in their market and be able to act like an international
and local provider to their consumer base.
1. CPW is cereal partners worldwide which has been created through a joint partnership between
Nestle and General Mills. If 2 large and strong FMCG companies like Nestle and General Mills
come together in synergy and create a mutually beneficial partnership which strengthens their
joint partnership it creates a worldwide leader. Similarly, CPW has been created to become a
world leader in consumer food products especially breakfast cereals. They will have a joint
market which will be larger than the individual market of any other company. They will have a
better variety of product to offer to the customers and each will leverage on the supply chain
capacity to create value for the customer. This will also help them to combine their marketing
strategies and provide better services to their customers and access quality suppliers.

2. CPW has to work on its competitiveness as it is a fairly new company even with the combined
strengths of Nestle and General Mills. It has to work on its marketing capabilities and product
development as the company is fairly new in the cereal business as compared to Kelloggs which
is an established breakfast cereal brand. The company will have to establish its brand and value
in terms of visibility and acceptability in order to compete with the world leader Kellog. It needs
to work on its R&D and product development capabilities to compete with Kellogg which
already has been innovating its product to capture the global breakfast cereal market. 

3. CPW will have to gain intelligence about the customer experience and marketing strategy of
Kellogg in order to compete with them and own a sizable market. General Mills and Nestle both
have excellent product development capabilities and supply chains and therefore, in order to add
value in their supply chain they need to understand how Kelloggs has captured the global market
and why it is a preferred brand. 
4. CPW needs to first target those markets in which Kelloggs is not a well established brand so
that they can have a strong presence and lower global competition to deal with. They can look at
Asian markets to build their international sales growth as this is a market which is very different
from the western markets and has different cultures, norms and tastes. This has also led to the
failure of companies like Kelloggs as they have not been able to establish themselves well. This
can be leveraged by CPW for growing their international market in these countries especially by
adopting marketing strategies as per their culture and local tastes. 
Step-by-step explanation
Creating International Competitiveness by Joining Forces in CPW
General Mills and Nestle can create international competitiveness by joint
ventures to utilize their specific competitive advantages in CPW. Each of
the two companies has unique strengths that can be merged to create an
international advantage in CPW.
Nestle is a renowned leading brand in the global food and beverage
industry in terms of sales. The company has a dominant share in the
European market and has a diverse product portfolio (Global Banking
Finance Review, n.d). Besides, Nestle has a wide sales and marketing
strategy that covers the global market and is supported by hundreds of
subsidiaries spread in different regions across the globe.
On the other hand, General Mills (GM) has a competitive advantage of
being a dominant industry player in cereal in North America. The strength is
supported by technological and marketing expertise that spans decades in
the breakfast cereal industry (Euromonitor Research, 2007). GM is also a
leading brand in the global market and is supported by numerous
subsidiaries.
The joint venture between GM and Nestle can strengthen the international
competitiveness of CPW by leveraging the strength of the respective brand
to create a strong market base in Europe and North America. Nestle will
contribute to the competitive advantage by offering its unique sales and
marketing strategy and a diverse product portfolio in CPW. GM, on the
other hand, will reinforce CPW's international competitiveness by offering
technological expertise in the merger. A combination of these strengths of
General Mills and Nestles will result in reinforcing international
competitiveness in CPW.
International Competitiveness of CPW and Kellogg Company
Kellogg Company (KC) is accredited as the pioneers of ready-to-eat
breakfast cereals and commands a global market share of 30%. On the
other hand, CPW is a relatively new company compared to KC but has
achieved to dominate 20% of the global market share (Global Banking
Finance Review, n.d).
The two companies are significant rivals due to their different growth
strategies. KC concentrates on the markets that it established first such as
North America and Europe. CPW has a different competitive advantage of
concentrating on emerging markets such as Russia and China
(Euromonitor Research, 2007). This growth strategy contributes to the
spontaneous growth of CPW. Although the target markets for CPW are
relatively small compared to those of KC, they are growing rapidly, which
creates a further potential expansion for the company.
KC has an internationalization advantage, which gives the company a
strong brand image in the market. As a result, the company is highly
regarded compared to CPW. It also has an advantage of economies of
scale that gives it a relative cost compared to that of CPW. For example,
KC's sales volume in North America is higher since the company has a
higher market share in the global market. However, the market for Kellogg
Company is highly inelastic compared to that of CPW. This implies that KC
is almost at the brand maturation stage while CPW is in the brand growth
phase. Therefore, CPW has chances for dominating the global market by
specializing in emerging markets.
Recommended Competitive Intelligence for CPW about Kellogg
CPW should collect tactical intelligence from Kellogg to challenge its
leading position. Tactical intelligence is short-term and aims to offer input
into aspects like revenue maximization and capturing market shares
(Tahmasebifard & Wright, 2018). Kellogg has a competitive advantage of
controlling a wide market share, which can be an asset to CPW's goal of
toppling the company from its leadership position in the market.
Another type of competitive intelligence that CPW should collect from
Kellogg is operational intelligence. It involves real-time dynamic, business
analytics that offers insight and visibility into streamlining operations.
Kellogg has a competitive advantage in cost and sales in volume (Global
Banking Finance Review, n.d). CPW should consider this operational tactic
to optimize its international competitiveness in challenging Kellogg as the
market leader.
Where and How CPW can Create International Sales Growth
CPW can further international sales growth in emerging markets. The
company should continue to expand in these markets since their
competition is not highly concentrated like in developed markets (Global
Banking Finance Review, n.d). Besides, emerging markets have high
growth potentials that give CPW chances for expanding its global market
shares. CPW can focus on strengthening its core brand, marketing, and
brand strategy. The company can venture into innovation and new product
launches as competitive advantages for reinforcing its brand image in the
global market.

References
Global Banking Finance Review. (n.d). Global breakfast cereal market
2018 industry future trends, growth, strategies, size, share, segmentation,
in-depth analysis research report by foresight to 2023. Retrieved from
https://www.globalbankingandfinance.com/category/news/global-breakfast-
cereal-market-2018-industry-future-trends-growth-strategies-size-share-
segmentation-in-depth-analysis-research-report-by-foresight-to-2023/
Tahmasebifard, H & Wright, T. L. (2018). The role of competitive
intelligence and its sub-types on achieving market performance. Cogent
Business & Management, 5(1). Retrieved from
https://www.tandfonline.com/doi/full/10.1080/23311975.2018.1540073
Euromonitor Research. (2007). Cereal Partners Worldwide exploits
developing markets. Retrieved from https://blog.euromonitor.com/cereal-
partners-worldwide-exploits-developing-markets/