Executive Summary
Kroger Company is a giant in the retail industry, having grown over the years to establish itself as a leader in the industry. The structures used by the company helps it to maintain and grow its customer base.
Findings
Kroger is a family based company which enjoys operating in an economy of scale, which has driven the retail business to venture in manufacturing, ensuring it enjoys good operations reaping decent revenue all year round.
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Recommendations
Kroger Company can maintain and improve their market presence through aggressive online marketing, and push more of their manufactured products to be sold in other retail outlets since it will significantly enhance their revenue stream.
Historical Background and Present Context
Kroger Company is an American retail business based in Cincinnati, Ohio, and was founded in the year 1883 by Bernard Kroger. Kroger had a humble beginning of investing all his funds to start a grocery store valued at $372, through his passion, dedication, and innovativeness he was able to solidify his place in the market gaining notice from the community. His innovativeness in putting butcher and a bakery in the store gave him an edge over all the other retail stores (Hamstra, 2013).
Kroger Company serves millions of customers in over 35 states in the United States held firmly by its key pillars of honesty, integrity, respect, diversity, safety and inclusion. The innovativeness of the business is seen in the different styles used in each of the chain retail stores. The retail industry is a fast paced market which has attracted some big players such as Costco, Target and Wal-Mart. Kroger is a unique company which can perform well during any season, shielding itself from the turmoil’s in the economy, earning the title of the second largest retailer in the fiscal year of 2016, and largest chain based on revenue in the same year. Strategic ploys employed by the company have helped it have a presence either directly through its stores, or indirectly through its subsidiaries, having a total of 2,778 supermarkets and multidepartment stores (Hamstra, 2013).
Company Mission Vision and Other Guiding Stars
The Kroger Manufacturing company mission and vision are linked to their staff, investing handsomely in its workforce since they believe that it is only through dedicated and capable employees that they can be able to deliver superior and quality services. The company mission statement is to be a leader in distributing and merchandising of food, health, pharmacy and personal care items, seasonal merchandise, and related goods and services (The Kroger Co., 2016).
A key motto that helped to steer his business to success is to “Be particular. Never sell something that you would not want yourself.” This motto has aided the company to withstand the test of time and stand firm in the community for over 130 years providing essential commodities required in everyday households. Mr. Kroger has been pursuing quality service which has been the secret formula to the fortunes he made, compared to the rest of his competitors during his early years in business. The business owner never got content with what was around as he pursued, new opportunities in the 1990’s of putting a bakery and later setting up a butchery curving his business to be unique compared to the rest (The Kroger Co., 2016).
An individual effort of setting up a bakery fueled Kroger’s spirit to venture into the manufacturing business. Presently Kroger Company has 38 food manufacturing departments which supply the market with thousands of variety of products. The spirit of manufacturing its products has aided the business to grow and achieve significantly profitable returns in the market. Kroger innovativeness and risk-taking attitude have ensured it continues to play a commanding role in society (The Kroger Co., 2016).
Partnerships, mergers and innovative technology application, have helped the business to move from a simple grocery shop to selling a wide variety of products and merchandise. The company has earned communities trust in how it safeguards the quality of goods delivered to consumers receiving a prestigious black pearl award in recognition in appreciation of the company commitment to protect the quality of products (The Kroger Co., 2016).
External Environment Assessment
Being in a profitable industry attracts fierce competition and Kroger Company seats in a lucrative business that competitors such as Wal-Mart. Sears and Target are fighting to acquire. A SWOT analysis of the company helps to establish the factors in the external environment that could assist in strengthening the market position of the business (Zahorsky, 2017).
Opportunities which are yet to be tapped by the firm to meet the growing demand for organic products in the market, and increasing the volume of online sales. Threats’ currently being faced is the growth in competition from the different players in the market, and the ever growing challenge of wages paid to staff since the government is consistently increasing the minimum wage. The strength of the company can be measured by the customer loyalty it enjoys, how it can utilize the size of the economy and the significant presence it has in US and global markets. Currently, the company is threatened by the entry of new enterprises; its manufactured products can be substituted by other cheaper products in the market. The level of competition in the market has done the business to employ aggressive tactics, to ensure it continues to enjoy the same degree of customer loyalty (Zahorsky, 2017).
Internal Environment Assessment
Business can achieve its goals and overall success through the internal structures, which help to steer the business in the right direction. Kroger has been able to establish a solid reputation, being a leader in the business community, and providing excellent customer service which helps it to attract new clientele, while at the same time solidifying its relationship with its established customer base (Hodson and Covert, 2001).
Management and staff are efficient in delivering their required duties which have seen them be able to achieve a greater customer base, through adapting to changes in the market and restructuring the company operations several times to make it more competitive. Strengths in the company can be seen through the role it has played over the decades, serving consumers with commodities which are in need. The biggest limiting factor of Kroger Company is its financials since its operating capital is made up of loans, and credit facilities, which if not properly managed can result in financial troubles for the establishment (Webber, 2016).
Undertaking some manufacturing ventures creates risk factors that can threaten the retail business. In venturing into the production, the company stands to make significant revenue, but at the same time holds the possibility of being faced with a multimillion dollar lawsuit or expense in the event a product is contaminated or ends up harming a consumer. A big company such as Kroger relies on its ability to deliver excellent services hence its required to maintain the best standards, maintaining a good reputation is difficult since their those clients who are not easily satisfied. Having a high customer care department aids in ensuring the company can maintain, and build its reputation with the communities they get to serve (Webber, 2016).
Strategies in Action at Kroger
Kroger strategic growth plan is to venture into more partnerships with other business entities, which will enable it to establish its presence in more areas across the nation. Another critical area for the company is the motivation of its staff; the company rewards its companies for their effort in helping grow the business to achieve its desired goals and targets. Offering staff better wages and benefits helps the company to access to maintain the skill labor force it enjoys while equally ensuring the safety of the quality of service which is offered (Zahorsky, 2017).
The company is looking to expand its operation to new areas, to ensure it taps the market of every region providing the kind of service which is required. Most of the decisions made by the company have been synergized with the individual stations, to make efficient and timely calls which will spell greater fortunes for the enterprise. Kroger ensures that it aligns all its business goals and vision, to match the needs of the consumers in the various markets it operates (Zahorsky, 2017).
Venturing into new areas such as online sales is helping the company to move with the current trends and demands in the market. There are no rules which guide a business to become successful, but the innovativeness of the staff members who work for the company is helping it keep with the times. Adoption of technology in the business is critical in helping reduce operational expenses while ensuring maximum productivity is achieved in areas of the firm. Continuous advancements in technology are expensive for the company since the hardware and software employed is costly to purchase and maintain. One of the areas which are helping the company is using machinery and vehicles on the lease so that it can use the funds it has sparingly pumping it to the most critical areas.
Kroger’s financial strategy helps it to stay afloat even in difficult economic times. Having a good revenue stream across the year means shareholders can reap decent returns at the end of the exercise. Maintaining a strong financial strategy is helping the business to attract more investors who are pumping more funds into the company enabling it to develop. The partnership between the management and junior staff contributes to creating a cohesive environment which enables staff to produce the best results. Conclusion
Kroger Company has been in existence for more than a century, and with the current effort, it's making it will continue to grow at the same momentum ensuring it a place in the market. Continuous efforts to develop better strategies which can move with the time are enabling the business to have a powerful voice in the market.
Management strategies which are helping to motivate staff and investors are significantly working, but there remains room for more incentives so that the company can attract the best talent, and lure more investors. One critical area that requires greater intervention is the debt ratio of the company since it makes the company be in a position of high risk; hence the need to have stronger financial controls is deemed necessary.
References
Zahorsky, D. (2017). Sample SWOT Analysis for Business: The Kroger Company. The Balance . Retrieved February 6, 2017 from https://www.thebalance.com/swot-analysis-of-the kroger company-2951755
Webber, L. (2016). Kroger's CEO: Supermarkets' future is 'all of the above'. SN: Supermarket News , 4 (11), 18. Retrieved from EBSCO Business Source Elite database. http://proxy01.academic.walshcollege.edu:2129/ehost/detail/detail?sid=9c15e366-21a8-48ad-8631-3ab6c0ddaacd@sessionmgr103&vid=19&hid=128&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ==#db=bsh&AN=119319172
The Kroger Co. Financial and Strategic Analysis Review. (2016). Retrieved from Gale Business Insights: Global database. http://proxy01.academic.walshcollege.edu:2156/global/showpdf?pdfdocid=305040_GDRT30797FSA
Hodson, S., & Covert, G. (2001). Kroger's Six Key elements: Recipe for Safety Success. Occupational Hazards , 63 (3), 44. Retrieved from EBSCO Business Source Elite database. http://proxy01.academic.walshcollege.edu:2096/ehost/detail/detail?sid=2c5d726d-576f-4d5d-b67a-2f2b5b818283%40sessionmgr4006&vid=17&hid=4214&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=4217750&db=bsh
Hamstra, M. (2013). 1 DAVID DILLON. SN: Supermarket News , 61 (27/28), 18. Retrieved from EBSCO Business Source Elite database. http://proxy01.academic.walshcollege.edu:2096/ehost/detail/detail?vid=30&sid=2c5d726d-576f-4d5d-b67a-2f2b5b818283%40sessionmgr4006&hid=4214&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=89373342&db=bsh
