.. Kellys emphasize team planning. By involving those affected by the plan, they build an organization-wide understanding and commitment to the strategic plan (participants acquire an ownership of it). Strategic planning requires a significant investment of time and energy. As Helmut Jordan who is in the position of the production director said: Kelly’s will have to overcome barriers raised by comments such as: a lack of time, things are changing too fast, we’re doing OK now, etc.
A visible commitment from top leadership is required for effective strategic planning. Strategic Planning Model The strategic planning process is shown by the model below. Note that the arrows indicate a continuous need for feedback, evaluation and comparing with previous steps. New information or further analysis of issues may suggest a modification of objectives or even of the basic mission of an organization. (Figure 2) Elements of Strategic Plans Organization Mission Statement — What Strategic Analysis — Why Strategy Formulation — Where Long-term ObjectivesImplementation and Operational Plans — When & How The mission statement establishes what the organization plans to do, for whom, and for what benefit it will exist. The mission statement identifies organizational purposes and the reason for its existence.
It addresses the what questions, i.e., what is our role? What business are we in?, etc. (Kretner) We asked Wolfgang Hotschl if he thought that a mission statement is necessary he answered that: The mission statement is Kellys its preferred future it ensures consistency and clarity of purpose throughout the organization. It provides a point of reference for all major-planning decisions. When it is communicated as a basis for key decisions, commitment is gained from within the organization and support from those outside is generated The mission statement at Kellys addresses such questions as what is our business? What is our principle service/product? Who are our principal clients/users? What is unique about our organization (geographic, type of member, mandate)? What are the benefits? Simply, What? For whom? And Why? Kellys is in the business of rather entertaining than just snacks. The principal of Kellys is to provide the consumer with the best possible product.
The clients are the entertainment industries like cinemas, party services, and food stores. Kellys is unique. It is the first American Popcorn Company. It uses only the freshest raw materials transported to Vienna from the USA. Kellys Mission Statement Kellys Mission statement includes both the philosophy of the company, their beliefs, traditions, values and also the purpose of the organization.
The philosophy is based upon recognition and realization of new emerging trends and the need to fit the rapid changes in the general environment including societal values, politics and technology. Therefore the purpose of the organization that has as one its main objectives the satisfaction of the customers needs is to deliver an absolute and unique quality and freshness to the customer. One of the main components that guides the company towards achieving the unique fresh quality of the product, is Kellys outstanding knowledge of logistics, including packaging and transportation and the delivery of freshness to the customer on a day-to-day basis. This philosophy and kind of company Kellys embodies makes them the market leader in the whole Austrian snack industry. The strategic analysis is an in-depth look at all factors likely to have the greatest impact on the future of the organization.
During this analysis, critical issues facing the organization are identified. (Wortzel & Wortzel) This analysis forms the basis for decisions affecting the organization’s future. Thus, it is essential that sufficient accurate information be available on which to base judgments. All assumptions should be identified and checked. (Hill) Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis Strengths and Weaknesses of the Organization (Internal) In this part of the analysis, factors that are internal to, or within the control of, the organization are identified. Their impact on the ability of the group to fulfil its mission discussed.
Kellys included: membership numbers, skills or resources, structure, shared values, finances, staff/directors, and style of leadership within the organization. Strengths At this point in time Kellys has 462 employees compared to 437 in 1997. The production process of popcorn is very easy and can be done with the minimum help of people so that employee craft can be used somewhere else in the organization. Employees are not substituted by new technology they are rather relocated. Teamwork is emphasized. Continuous development of total quality management (discussed in the appendix) Below is a brief description of the production process: Weaknesses Kellys management is using an autocratic style of leadership.
The leaders are task centered and tend to give criticism when production slows down. This is a weakness because the quantity of work produced in autocratic groups is greater quality is second best. Also when the autocratic leader leaves the production area the workers almost stop working completely which is a sign of job dissatisfaction Kellys is still in the process of developing its motivation and incentives programs. Opportunities and Threats Facing the Organization (External) All organizations are affected by outside influences over which they may have little control. These factors have varying degrees of impact, both positive and negative, on the organization. Factors to be addressed here will relate to the mission of Kellys.
They include activities of competing organizations, government policies, society/community influences or trends, markets, the economy, lifestyles, the environment, demographic trends, technological advances or alternatives. Threats Activities of competing organizations The major competitors of Kellys are: No name brands which produce low cost products Pringles using aggressive promotion Wolfsberg Funny Frish Opportunities Society/community influences or trends Today Kellys is in good business. The Austrias snack market in number equaled to sales of 22,809 in 1999 compared to the sales of 1998 that were 22,616 t. The trend of eating popcorn in cinemas, partys or at home has become a tradition and aggressive promotion of competitors such as Pringles did not destroy the position of Kellys as of the market leader. Considering the per- capita consumption of popcorn in 1999 that was 2,85 kg. Kelly s have a market share of proud 89,2%.
Political and economical overview Austria has a population of over 8 million people, of whom about 1.6 millions live in Vienna, which is the capital city of Austria. Other cities like Graz, Salzburg and Insburg follow with populations ranging from 50, 000 and 250,000. The geographic area is 85,853 square kilometers. The population growth rate of Austria is 0.09% (1999). Austria is a federal republic compromised of nine republics and has a parliamentary democracy. The parliament consists basically of two chambers: The federal council represents all of the provinces according to the population.
The National Council is elected directly by the people and has 183 members. In the year 1999 the GDP of Austria was 326,941 ATS per capita. The real growth rate of 1999 was 2.2% (this is the estimate for the year 2000). Exports of goods of Austria account for nearly 29% of the GDP. In 1999 the imports were approximately 822.86 millions ATS, whereas tourism and other services were in surplus, so that the current account balance showed a 2.2% deficit (this value is expected to increase by the end of the year 2000). The unemployment rate was one of the lowest among the Western Europe 4.4%.
The inflation rate was 0.9% in 1998, which then has decreased in only one year to 0.6% in 1999 (an increase up to 1.1% is expected by the end of the year 2000). Lifestyles Popcorn has never been part of the Viennese coffee house tradition. Since the emergence of Kellys- popcorn is becoming more and more popular. This is an advantage because Kellys can take up new markets. For instance they are now offering rooms for party purposes, supplying them with all needed equipment and of course popcorn.
Critical Issues To conclude the SWOT analysis, Kellys identify the issues most critical to the future of the organization. Their significance can be measured by the size of the gap between the current status and performance of the organization and what is needed to favorably respond to internal and external factors in the future. These issues affect growth or financial stability or form barriers to the accomplishment of the organization’s mission. Kellys complies a short report for each critical issue. It contains the issue, supporting information, underlying causes and conclusions with respect to impact on the organization: Below we describe the issues available to us.
Critical Issues at Kellys 1. Training/incentives/benefits programs are not sufficient (internal) Causes: Fast technology development programs are permanently in development Conclusion: Difficult for workers to keep up with the technological progress. Production slows down. 3. Total market share is rising, popcorn market share is falling Cause: No name popcorn producers storm the market with lower cost/quality products (e.g. supplying Cinemas and therefore spoiling Kellys image as people see the popcorn in Cinemas as the product of Kellys. Conclusion: There will be a demand of promotion In this phase, the focus should be on where the organization should be going rather than how it should get there. A three to five year planning horizon is recommended.
The critical issues facing Kellys in accomplishing its mission is the basis for this stage. We make sure that decisions fit with the directions defined by the mission statement. (CEO,W.Hotschl) There are three steps in this stage: 1. Identification of Key Strategic Areas This step produces a listing of key strategic areas or thrusts that are emphasized to address the critical issues. They are stated in no more than a few words.
Kellys – Key Strategic Areas Critical Issues Key Strategic Areas Improving image Public RelationsPromotion Increasing market share Merge with competitors e.g. Bahlsen Training of members/leaders/staff Still developing Each key strategic area requires extra effort from Kellys in the future. They are important in addressing one or several critical issues identified during the strategic analysis. 2. Establishing Priority of Key Strategic Areas Some strategic areas will be more crucial to the organization’s success or survival than others. The next step Kellys makes is to prioritize the strategic areas. Criteria for ranking are based on which area has the greatest effect on the organization’s ability to fulfil its mission.
It is a good practice, says the director of production Helmut Jordan that prior to ranking, to state clearly and agree on what each strategic area encompasses. The highest ranking key strategic area will be the driving force of the strategy and the one requiring the most time and resources allocated to it. Kellys priority and the driving force are to win back market share of 89,2 % from the 78,4%, or even to increase it. 3. Develop Strategy Statement for Top Ranked Areas The key strategic areas are the basis for future actions Kellys. They are carefully documented for communication to the membership.
Strategy statements for each area at Kellys answer the following questions: What shall be our future key strategic areas? How do they differ from our current areas of concentration? Do they represent changes? Are they compatible with our mission and the conclusions from our strategic analysis? For instance: Member recruitment at Kellys is necessary for our Council to regain the support of our community and to provide the human resources to help us raise funds for new projects. We have not gone into the community to recruit in the past. If we are to serve our community, we must be seen as representative of it. HR Manager, Markus Zlokliklovitz Within the most important strategic areas, Kellys identify what must happen to move the organization closer to accomplishing its mission and strategies. These objectives are broad and visionary.
The objectives are written using the following format: To have (or become) .. (the results) .. by .. (year). 1) To achieve a market share of the previous years by 2002 2) To expand export to Scandinavia, Australia, USA The objectives are tested to determine if: 1.
If they can be measured 2. If they are achievable or feasible within a given time frame 3. If collectively, they are flexible or adaptable to allow for the unknown and for exploring new opportunities. 4. They are consistent with the rest of the plan.
A comparison with the current strategy is undertaken at this stage. An examination of the structure and operations of the organization are carried out to ensure a fit with the newly stated strategy or objectives. Kellys areas to be scrutinized, and possibly changed, include: 1. Allocation of resources: will enough resources be available for the highest ranked strategic area? What do we cut back to free up resources? 2. Organization structure: are jobs adequately defined? Are committees in place to deal with thrusts? 3.
Information systems: what will be the organization’s communication needs? Feedback on results? 4. People responsible: are there people identified as in charge of each objective? 5. Reward systems: how will people be recognized or rewarded for achieving results? The time frame for implementation reflects the scope of the required change. In addition, ongoing criteria and techniques for evaluation are established. Finally, short-term objectives (e.g., one year) are set based on the long-term objective.
These include activities and programs. The written analysis employed for these objectives are similar to those used when developing long-term objectives. The result is a map of activities or programs, responsibilities of people, resource allocations, and a time frame for the next planning period. In subsequent years, if checks for fit indicate that no changes to the strategy or long-term objectives are required, this stage will be the only required planning activity. CEO Wolfgang Hotschl Example: Operational Plan Long-Term Objective: To be market leaderShort-Term Objective: To achieve the market share of the preceding years.Activity: Merge with competitors Who Resources Needed Time Frame Info N/A Info N/A Info N/A The Planning Process – Hints Additional to the information we got above the CEO told us the little tricks Kellys use in the planing process. Strike a planning committee to undertake the strategic planning task.
The benefit of involving the whole board or membership at certain stages (for reaction or ideas) is increased awareness and sense of ownership of the plan. Allow plenty of time! There should be gaps in time between certain stages (e.g., stages 3 and 4) for reaction, reflection and checking facts. In many cases, we use an outside facilitator for the process that can help minimize members’ biases, challenge assumptions, and allow all members to contribute equally. We allow for lots of brainstorming, especially in stages 1 and 2. This allows new ideas to be considered. To conclude PR-Manager Manfred Cambruzzi said that: Strategic planning is a thought process as well as a plan.
Part of developing sound strategies is learning to think strategically, learning how to ask questions and to think broadly and creatively. While our plan has focused on our organization, the same process can be applied to business or personal strategic planning. Conclusion: This project gave us an opportunity to analyze and to understand one of the most important issues strategic planning, in Austrias leading snack industry. Because of the wide range of product Kellys produce we decided to concentrate only on one of their products popcorn. This decision was based upon the fact that the Kellys company started its operations in 1955 by the production of Popcorn. Then with further development they expanded the production line by merging with other companies in this industry.
The project gave us a chance to have a closer look at the operations of such a successful company, giving us an understanding of how to use strategic planning in our future lifes. 4. Appendix: 4.1 Kellys Organizational chart 4.2 Development of total quality management a major issue at Kellys Defining TQM a management system that is an integral part of an organizational strategy and aimed at continually improving product and service quality as to achieve high levels of customer satisfaction and build strong customer loyalty. Total Quality Management (TQM) Total = Quality involves everyone and all activities in the company. Quality = Conformance to Requirements (Meeting Customer Requirements). Management = Quality can and must be managed.
TQM = A process for managing quality; it must be a continuous way of life; a philosophy of perpetual improvement in everything we do. Kellys TQM is the foundation for activities that include; Meeting Customer Requirements Kellys slogan is to deliver the freshest, poppiest product. Packaging is therefore plastic to maintain the freshness. The product is delivered to the customer within 4 days. Just In Time logistic Kellys products do not stay in the warehouse for a long time.
The factory produces the exact quantity that is needed to supply its customers. Improvement Teams Continuously monitor effectiveness and efficiency to try and improve the quality of the product. Conclusion Bibliography Sources cited: 1. Wotzel, Heid Veron Strategic Management of Multinational Corporations: The Essentials John Wiley & Sons, Canada, 1985 2. Certo, Samuel L.
Modern Management 7th edition Prentice Hall, New Jersey, 1997 3. Kreitner, Robert Management 5th edition Houghten Miffin Company, Boston, 1992 4. Hellrigel, Don & Slocum Jr., John W. Management: Contingency Approaches, 2nd edition Addison Wesley Publishing Company, Canada 1987 5. Mathis, Robert L. & Jackson, John H.
Human Resource Management 8th edition West Publishing Company, USA 1997 6. Aacker, David A., Kumar, V., Day, George S. Marketing Research 5th edition John Wiley & Sons, Inc., Canada 7. Huse, Edgar F. The Modern Manager West Publishing Company, USA 1979 Mill, Roberts W. L. and Jones, Gareth R. Strategic Planning An Integrated Approach Houghton Miffilin Company, Boston, New York Business Reports.