Kroger Company Case Analysis Essay

A. Case AbstractThis is a comprehensive strategic management case that includes the companys financial statements, organization chart, competitor information, and industry trends. suitable internal and external data ar provided to enable students to evaluate current strategies and recommend a three-year strategic cast for the company. The Kroger Company, Inc., with headquarters in Cincinnati, Ohio (513-762-4000), hunt downs all over 2,500 supermarkets, 795 whatchamacallum terminuss, and 436 jewelry stores. The Kroger Company employs approximately 290,000 employees. The company achieved annual r blushues of $56.4 million in fiscal year ending February 2005, compargond to $53.7 million in 2004. Kroger is ranked 19 on the Fortune 500 list and is ranked as the third largest retailer in the world, behind Wal-Mart (1) and the Home Depot (2). The company has been in existence for over one hundred years and is the 1 pure grocery chain in the United States with over 3,770 (including subsidiary businesses) stores in 32 states. Kroger and its subsidiary operations market food, pharmacy, and jewelry products.B. Vision assertion (proposed)Our vision is to be Americas supermarket, and to continue to provide innovation and unparalleled value to our nodes, employees, and sh arholders.C. Mission Statement (actual)Our mission is to be a leader in the distribution and merchandising of food, pharmacy, health and personal care items, seasonal merchandise, and related products and assists.(proposed)1. Provide the freshest food, highest quality products, and particular(a) service to our customers all at reasonable prices 2. Be a leader in the distribution and merchandising of food, pharmacy, health and personal careitems, seasonal merchandise, and related products and services 3. Strive to have a prominent, profitable presence and positive name recognition in all 50 states and the District of Columbia 4. practice the latest and most innovative technology to improve dist ribution, enhance customer service, anticipate customer needs, cut costs, and compete using an arsenal of consumer data 5. interminably review the performance of each and e precise Kroger store, manufacturing facility, employee, and private label product to insure that every element of the company is contributing to its growth and financial efficacy 6. Hold fast to our corporate values of honesty, integrity, respect for others, diversity, safety, and inclusion 7. Uphold the motto of our founder, Be particular. Never sell anything you would not want yourself. 8. Contribute munificently to causes that relieve hunger and provide medicine to the poor and 9. Compensate our employees in a manner that is consistent with the exceptionally high quality of customer service that is expected of them, striving to maintain positive relationships with the labor unions that represent our many associates across the rural area.This mission statement incorporates all aspects of the companys intere sts. The first channelize relates to the fact that Kroger essential differentiate itself on the basis of fresh food, high quality products, and exceptional service. In this respect, Kroger has a strategic advantage, since rivals like Wal-Mart are clear on customer service, and since Kroger manufactures many of its own items, it therefore has more control over quality and prices. The third point is important since Kroger now has a very weak presence on the East Coast. Kroger is missing opportunities by not having grocery stores in places like New Jersey, Maryland, and Florida.The fourth point is supported by Krogers new relationship with dunnhumby, a database management company from the United Kingdom, which is partnering with Kroger to better utilize consumer information to improve sales. This is an overwhelming strength against Wal-Mart, which does not even issue loyalty cards to its customers, and therefore, does not have access to nearly as vast a customer database as Kroger does. Point five is key, since Kroger must have the management dexterity and courage to close underperforming stores, execute make-versus-buy decisions, and implement enterprise-wide changes quickly when necessary.D. Class Discussion Questions and Issues1. Considering Krogers current position in the industry, would you nominate an international expansion strategy? If so, in what international market(s)? How would you suggest entrance with respect to location selections and number of units?Currently, Kroger has no existence in international markets, it would be advisable for Kroger to enter, perhaps Mexico and/or Canada, with a limited number of locations so it can test and strengthen the market at one or twain international arenas. While Wal-Mart seems to exist everywhere, Canada is a promising economy to test 3 to 5 store locations.2. If international expansion is one recommended strategy, discuss the pros and cons of considering hiring exile leadership/management teams.Leading/ operating in international markets reads a thorough cultural understanding of the respective country. Its difficult for expatriates to serve in such a capacity without having a conceptualization of the culture. It is advisable to recruit local leaders from the countries and perhaps examine local operational functions to ensure they are adaptable to business/cultural standards abroad. The use of expatriates can be considered a strength as they are aware of the corporate functions/culture and can operate with minimal direction abroad.3. Discuss cultural diversity/sensitivity management, as it applies to Kroger Company, Inc. How might it differ and what should Kroger consider/incorporate if international expansion efforts are proposed? pagan diversity is critical regarding workforce. Kroger should consider recruiting proposed international market leaders and training them at their headquarters. This would constitute leadership that represents the sociological culture of a respective c ountry coupled with the values/operational functions of headquarters as a endpoint of training, etc.There is more of a buy-in when local cultural leaders are in power, where transfer of objectives would take place much easier.4. Discuss how Kroger can take advantage of the concept of synergy.Kroger operates over 40 manufacturing facilities and should continue to focus on this business to operate the system more lean, where it can achieve optimal operating costs, converting to manufacturing savings and better pricing for consumers relating to corporate brand (55%) goods (www.kroger.com). Moreover, Kroger can arrive at from manufacturing dairy/bakery, etc., goods at a reduced price that it sells in its grocery stores, which can be considered a strategic advantage.5. How can Kroger, if at all, keep competitors at a distance? In your response discuss expansion in the United States, abroad, product line(s), and portfolio management.Kroger should continue to focus on its core business, grocery, by identifying acclivitous markets (population 20,000) and expanding. Additionally, continue to focus on product lines (grocery), with respect to buying power and sales. Incorporate more self-checkout units in stores to cut employee costs. Also, expand the jewelry business into more states and perhaps consider international expansion into Mexico and/or Canada too.6. How effective is the Strategic Growth Plan? Would you change and/or recommend any additions?The growth plan in its current state is worthy however, should include specific language/objectives with respect to international expansion to better compete with rival competitors. The focus should be to operate more lean and expand businesses that are achieving lucrative sales.7. What influence, if any, may consumer purchasing behavior affect an organizations (grocery retail) considerations to transition abroad? enliven discussSpecialty outlets, such as butcher/meat shops, produce and flower outdoor markets, etc. Soc iological factors, such as diet and grocery purchasing frequencies, etc.Kroger should always focus on behavior patterns of consumers one way to monitor this may be by use of a unify card where consumer transactions are able to be recorded and reviewed. This is especially valuable abroad as behavior patterns are obviously different, simply reasonable by physically noticing what is purchased and the quantity also. In Europe, butcher, flower markets, and outdoor produce markets are all highly common, where prices are lower as a result of operating expenses are being trimmed. Moreover, a greater part of the world (Asia and Europe) consumption patterns are minimal compared to the United States. It is common for consumers to visit the grocery store to purchase enough items to store in a shopping basket, as opposed to an average shopping visit in the United States which may require the use of a shopping cart. Obesity factors should be considered too.E. External AuditOpportunities1. Super market sales of drugs grew 6.9% to $27 billion in 2004. 2. Wal-Mart has a large, recruitable low-paid, nonunion workforce. 3. Organic food sales are up 19.5% annually over the last 5 years. 4. Latino shoppers spend $117/week vs. $87/week average on groceries. 5. Hispanic population growth rate = 13% = 4X average.6. Margins for private-label products are 35-45% vs. 27% for national brands. 7. 87% of consumers have tried private-label products.Threats1. Traditional drugstores are focusing on customer service and merchandising. 2. Mail-order pharmacies are the fastest-growing format in the industry (up17.9%). 3. Health plans allow larger supplies of drugs for Mail-order pharmacies. 4. Drug price inflation has led to illegal drug importation. 5. Supercenters are dominating the market share of grocery sales. 6. Wal-Mart is tops in logistics technology.7. Labor costs account for 50% of operating expenses.8. Price pressure was the cause of the Southern atomic number 20 strikes.