Portrait Of A Companies Success Portrait of a Companys Success by Introduction One can hardly find a party without them, the Kelly products: Popcorn, chips, peanuts have been keeping the American Party flair going for more than 40 years. Kellys is a brilliant Viennese company with a long traditional success story. The crunch-munch story began in Vienna during the post wartime, 1955. The US major Howard M. Kelly tried to find a way to stay in beautiful Vienna he met Herbert Rast. In 1955 nobody in Austria wanted to eat popcorn.
And so the two of them showed the Austrians that eating popcorn in cinemas is a great experience. The two founded the first American popcorn company with the motto: If it doesn’t work- it does not work. This was said without having much business experience. They had no clue about facts and figures the only thing they knew that the price of popcorn in American cinemas was 10 cents. 10 Cents at that time was 2 ? shillings and that is the price they charged. The company expanded quickly and they soon saw that it is important to include potato chips.
This was the start of a very funny way of American advertising that still continues today. There were 46 producers of popcorn, later there was 25 of them. And 10 years after that there was just Kellys providing the market with the product. Not only did they have quality, they had the know-how to produce and distribute. In those days they drove to every wholesaler in small cars delivering the fresh product and collecting the outdated.
They were always the best and remained till this day. The product line quickly grew, production needed more space and that is when Helmut Jordan entered the company. All the work paid off and the company needed a larger production infrastructure. The found the best suited place about 25 km south from Vienna in Fachstetten. There they rented a building 25 m long, and 70 m wide.
It was packed with all the necessary departments: office space, warehouse, production facilities, packaging and loading docks for transporting. Very early on Balsen took over Kellys but Kelly remained independent in Austrian business. Kelly took over other companies such as the biggest competitor Feldbacher with its well-known product such as sollettis and bretzels. In June 1997 Kelly moved into a new production and logistic facility, which was stationed in Vienna in the 22 districts. 400 million shillings were invested all the products were delivered much quicker and more efficiently from this new location.
One can measure its success by the yearly delivered amount. Here in Austria more than 22 thousand 8 hundred tons of snacks are bought each year this equals to 3 kg of snacks per person. When one thinks of this in terms of packages thats more than 180 million packages that are sold each year of soletti and other Kelly products. This means that more than 400 thousand products from the Kelly family are purchased every day. 4703 trucks are necessary to transport a yearly production of Kellys product. If one put the trucks end to end they would cover a distance from Vienna to Melk.
To be able to produce so much a lot of raw materials are used. The raw materials are kept in a small and cool place because freshness is absolutely important. Kelly faithfully following strict rules and regulations of certain criteria deliver the best original quality. Every thing in this large hall is produced under the care and commitment of Manfred Furhacker. Based on out interview with Ing. Furhacker we can say that Kelly has 4 lines of production. The first line is popcorn the next three lines are there to produce peanut curls, zigeuner rings and other products.
But let us now focus on popcorn. Kellys high quality corn is delivered especially from the USA is it transferred almost automatically and pumped directly into the popcorn machines. It is then heated without any additional ingredients where it then pops and then lands on a large conveyer belt where it is then salted. Now nothing stands in the way of packaging it, transporting and eating it! Through and through the employees in the laboratories analyze the consistence of salt, fat content, and moisture of the product. Raw materials and plastic packs are also tested.
Since 1997 in order to offer excellent quality Kelly implemented the quality management system ISO 9001. The products are packaged and sealed in plastic foil and then placed on pallets and moved to the warehouse by elevators. Trucks deliver products such as popcorn to the warehouse 8 times a day. The truck is automatically unloaded; the products are then sent on the conveyer belt to the storehouse and remain there together with the products from the production site of Vienna. Together they are stored in a high-shelved warehouse. The warehouse is 100 m long, 22 meters wide and 30 meters high.
The products do not remain in the warehouse since they are usually delivered to the customer within 4 days. The logistic center then fulfills the customers orders. Full pallets are pulled directly from the warehouse where smaller orders are assembled manually. The staff members then put the product on truck on a customer-to-customer basis. On average more than 600 pallets are delivered daily. During the peak season- for example during Christmas time the number could rise that high as to 16 hundred.
Business continues to grow. Since the beginning of this year Kellys have been running the production and sales of the Balsen Picantery line in Austria. Kellys generated more about 1100-milshillings of net value within Austria. As far as Kellys know they are the only food enterprise in Austria, which has been successful in not only not closing production facilities here but also keeping the business domestic. Today Kellys have 413 employees and in 1999 Kellys had a turnover of 1.058 mil ATS. Kellys export revenue is more than 100 mil shillings in Europe and Kellys export 27% of their products.
The main export markets are Scandinavia and all neighboring countries to Austria. One can find their products also in Singapore or across Australia. If everything goes as planned one would be able to find Kellys products in the USA very soon. Maybe this is the beginning of the Kellys story in the US just as it began in Vienna in 1955. The Austrian way of life will bring the tasty crunchy-munch to the Americans Businesses and organizations can survive only if they are able to manage change.
The organization that manages change well will progress and grow. As the rate of change in the organizations task environment increases, new and better ways must be found to understand, anticipate, deal with, and monitor changes in the environment. Planning is the key management function for dealing with change in a positive, purposeful way. (Kami 103) Strategic planning as defined by Samuel C. Certo is a long-range planning that focuses on the organization as a whole.
( Certo). In our report we would like to focus on the way strategic planing is conducted at Kellys. In the simplest sense, a plan is anything that involves selecting a course of action for the future. Kellys for example planned for the coming Christmas season by observing how and what the competition is doing and then mapping out strategies how they can be better. For instance they offered millenium packs that had 25% more volume for the same price. Planning looks to the future to determine the direction in which an organization or its sub units should be going.
It helps bridge the gap from where we are to where we want to be. (See figure 1) Decision-making occurs at each of three levels on the way from the present to the future: monitoring and forecasting developing plans and developing controls. For example Kellys in their early career when monitoring their environment found out that their customers are not ready for popcorn. Unlike in the USA popcorn in cinemas and as snack has never been a tradition in Austria. Plans were developed to increase the production and volume of sales, but controls showed that this was also causing reduced profits because the surplus of the product was going bad in the warehouse as people where not yet used to it. As a result new plans had to be made.
Each step of course involved decision-making. Finally before we go to the strategic planning of Kellys let us still look at the definition of a strategy. Accordingly, a strategy has been defined by MIT strategy scholar Arnoldo C. Hax as the pattern of decisions a firm makes. Dr. Wolfgang Hotschl from Kellys who is in the position of the CEO told us in the interview that in his opinion strategic planning: Involves the assessment of the organization and its environment, the formulation of a mission statement, the development of general goals in key areas of association activity and the outlining of projects, programs and activities in pursuit of these goals.
Strategy has been defined as that which has to do with determining the basic objectives of an organization and allocating resources to their accomplishment. A strategy determines the direction in which an organization needs to move to fulfil its mission. A strategic plan acts as a road map for carrying out the strategy and achieving long-term results. Strategic planning is different from long-range planning. Long-range planning builds on current goals and practices and proposes modifications for the future. Strategic planning, however, considers changes or anticipated changes in the environment that suggest more radical moves away from current practices.
A Phenomenon of our time is the increased emphasis placed on planning by all sorts of organizations. The primary reason for this phenomenon as we mentioned earlier is that the world is more turbulent than it used to be, changes are more rapid than ever before, and problems are more complex. Organizations know that without good plans they will be caught by surprise. To summarize – planning is important for at least five reasons: It enables the organization to cope with change It helps ensure that organizational objectives are reached or changed when necessary It helps the organization to succeed It helps in day to day decision making It enables the organization to maintain an effective control process (Figure 1. Strategic planning process) Many books and articles describe how best to do strategic planning, and many go too much greater lengths.
Every single source has a different proposal, different order or number of the planning steps. The truth is that strategic planning occurs everywhere including our daily life and it cant be reduced to a sequence of prescribed steps. Compiling information from different sources and using our own experience and common sense we came to the conclusion that there isnt a right strategic planning process. All organizations develop their own process. Below is a brief description of the five steps in the process.
We think that these steps can be a proposal but not the only recipe for creating a strategic plan. Other proposals may recommend entirely different steps or variations of these steps. Kellys also has a slightly different structure of this process. However, the steps outlined below describe the basic work that needs to be done and the typical products of the process. Thoughtful and creative planners will add spice to the mix or elegance to the presentation in order to develop a strategic plan that best suits their organization! To get ready for strategic planning, an organization must first assess if it is ready.
While a number of issues must be addressed in assessing readiness, the determination essentially comes down to whether organization leaders are truly committed to the effort, and whether they are able to devote the necessary attention to the big picture. For example, if a funding crisis looms, the founder is about to depart, or the environment is turbulent, then it does not make sense to take time out for strategic planning effort at that time. An organization that determines it is indeed ready to begin strategic planning must perform five tasks to pave the way for an organized process: Identify specific issues or choices that the planning process should address Clarify roles (who does what in the process) Create a Planning Committee Develop an organizational profile Identify the information that must be collected to help make sound decisions. The product developed at the end of the Step One is a Working plan. A mission statement is like an introductory paragraph: it lets the reader know where the writer is going, and it also shows that the writer knows where he or she is going.
Likewise, a mission statement must communicate the essence of an organization to the reader. An organization’s ability to articulate its mission indicates its focus and purposefulness. A mission statement typically describes an organization in terms of its: Purpose – why the organization exists, and what it seeks to accomplish Business – the main method or activity through which the organization tries it fulfill this purpose Values – the principles or beliefs that guide an organization’s members as they pursue the organization’s purpose Whereas the mission statement summarizes the what, how, and why of an organization work, a vision statement presents an image of what success will look like. With mission and vision statements in hand, an organization has taken an important step towards creating a shared, coherent idea of what it is strategically planning for. At the end of Step Two, a draft mission statement and a draft vision statement is developed.
Once an organization has committed to why it exists and what it does, it must take a clear-eyed look at its current situation. That part of strategic planning, thinking, and management is an awareness of resources and an eye to the future environment, so that an organization can successfully respond to changes in the environment. Situation assessment, therefore, means obtaining current information about the organizations strengths, weaknesses, and performance – information that will highlight the critical issues that the organization faces and that its strategic plan must address. These could include a variety of primary concerns, such as funding issues, new program opportunities, changing regulations or changing needs in the client population, and so on. The point is to choose the most important issues to address.
The Planning Committee should agree on no more than five to ten critical issues around which to organize the strategic plan. The products of Step Three include: a data base of quality information that can be used to make decisions; and a list of critical issues which demand a response from the organization – the most important issues the organization needs to deal with. Once an organization’s mission has been affirmed and its critical issues identified, it is time to figure out what to do about them: the broad approaches to be taken (strategies) and the general and specific results to be sought (the goals and objectives). Strategies, goals, and objectives may come from individual inspiration, group discussion, formal decision-making techniques, and so on – but the bottom line is that, in the end, the leadership agrees on how to address the critical issues. This can take considerable time and flexibility: discussions at this stage frequently will require additional information or a reevaluation of conclusions reached during the situation assessment.
It is even possible that new insights will emerge which changes the thrust of the mission statement. It is important that planners are not afraid to go back to an earlier step in the process and take advantage of available information to create the best possible plan. The product of Step Four is an outline of the organization’s strategic directions – the general strategies, long-range goals, and specific objectives of its response to critical issues. The mission has been articulated, the critical issues identified, and the goals and strategies agreed upon. This step essentially involves putting all that down on paper.
Usually one member of the Planning Committee, the executive director, or even a planning consultant will draft a final planning document and submit it for review to all key decision makers (usually the board and senior staff). This is also the time to consult with senior staff to determine whether the document can be translated into operating plans (the subsequent detailed action plans for accomplishing the goals proposed by the strategic plan) and to ensure that the plan answers key questions about priorities and directions in sufficient detail to serve as a guide. Revisions should not be dragged out for months, but action should be taken to answer any important questions that are raised at this step. It would certainly be a mistake to bury conflict at this step just to wrap up the process more quickly, because the conflict, if serious, will inevitably undermine the potency of the strategic directions chosen by the planning committee. The product of Step Five is a strategic plan! The Need The need of strategic planning at Kellys is a very important process.
During our interview with the CEO Dr Wolfgang Hotschl we found out the organization are now operating very smoothly, but Kelly’s wonder if it will be so in five years. Some issues that he mentioned were: Members are leaving the organization to join other organizations with similar purposes. The popcorn industry is an industry every one can be in. You just need a popping machine Organization is loosing market share because of aggressive competition. No name products enter the market with lower cost strategies.
More training is needed for employees in order for Kellys to keep up with the industry development e.g. computers A farmer, when planning a cropping enterprise in the long-term, may forecast the eventual replacement of a combine with a newer model that has increased efficiency and capacity. However, when developing a strategic plan, long-term market trends, alternative opportunities, new technology and other factors are analyzed. This analysis might determine the emphasis on cash crops versus other farm enterprises, decisions on the future expansion of land, labor or capital, and other strategic decisions. Similarly an organization such as Kelly’s makes long-range planning decisions (e.g., rental prices or fees, or staffing) based on current conditions.
However, strategic planning may result in facility expansion or major changes to programs as a result of social or demographic trends that are going to be discussed later in this report. Gaining Commitment to Strategic Planning When strategic planning, …