Kudler Fine Foods

Introduction

It can be said that the success of an organization is dependent upon the strategy that the organization has employed. Many have studied the effects of having a defined strategy in an organization and how it relates to the success of the company. For a company to keep employee morale high and to remain in competition in the business world, managers and leaders are required to examine the organizational strategy that exists within the company. This paper will examine the strategy of Kudler Fine Foods by examining specifically the change in technology that has allowed Kudler Fine Foods to be successful, the strategy that Kudler has decided to employ and the tactics that Kudler can implement to maintain their strategy.

Kudler’s target market is an affluent, technological savvy population that will appreciate the use of the latest technology. Thus the ability to discover what Kudler offers online, together with the ability to order services through a complex interactive online environment will be of great use. Kudler shows that it is aware how technologically competent its customer is, and thus essentially shows respect for it.

Technology is an integral part of the Kudler system, but it is not overbearing. Thus its customer base is likely to be suspicious of the “dehumanizing” effects of some modern technology. These will be especially found within the important market for organic goods. These people are likely to be Internet-literature but unwilling to totally support all developments. A fine balance between the technological and face-to-face contact will need to be navigated.

Technology and the Internet are used by Kudler in a number of ways. Most of these uses are linked to the close management of accounting functions. Thus every cash register entry automatically transmits data to the GL. In turn debits cash and credit sales, cost of goods sold and merchandise inventory are all automatically calculated on an ongoing basis. Managers also have the ability to see the net profit per sale daily. Managers also have the ability to see the net profit per sale daily. All these functions enable managers to have a much closer and more accurate view of sales trends within the stores than would have occurred in a pre-computerized world.

Normal credit card functions also occur electronically. Thus clearing house automation automatically transfers credit card transactions to applicable financial institutions. The purchasing function also enables invoices for products and merchandise to be produced according to the company rules that have been set by management. Thus management has an acute sense of how sales are going on a shift-by-shift basis.

If purchase orders pass all the company rules then it is sent to the vendor, who delivers the goods to the manager. All of this has been done technologically, leaving the manager free to manage people and to collate/organize goods and merchandise once it arrives in the store. Essentially the Technology and Internet functions of the company allows for increased free time and energy for the managers to do what only human beings can do: manage people.

The generic strategy that Kudler seems to be employing is one of forecasting and assessing their external environments. Forecasting is the process in which the firm attempts to predict what is likely to happen in the future, the intensity of the anticipated event, its importance to the firm, and the pace or time frame in which it may occur (Gomez-Mejia, p. 26). According the Kudler intranet site, Kudler forecasts which items to carry and how much to carry in the future. For Kudler this has always been a challenge due to the fact that the company uses historical data on which items and what quantities were sold in the last 2-3 years, especially on holidays.

This strategy provides an indication of which items and what quantities to carry in the future. In general, forecasts are basically an extrapolation of past history to the future. In an increasing sales market, the trend extrapolating forecast works fairly well. The difficulty has always been in determining the forecast’s turning points, from increasing sales to decreasing for example, since significant errors can occur at these points. This is a reoccurring topic in monthly operations review meetings in which monthly sales are reviewed for the last year and monthly forecasts prepared for the next three months, a quarterly forecast for the quarter after that, and for six months for the next six-month period after that. The accuracy of this forecasting method has not been as good as desired and has resulted in the obsolescing of some merchandise and in offering others at drastic discounts.

If Kudler wishes to continue using this strategy, management should analyze the external environments that could possibly affect the sale of certain products. For example, are the competitors offering the same product at a cheaper price? If so, for how long? Did it have an affect on the sale of Kudler’s product? Because of the growing market and its potential threats, Kudler must learn to manage several operations for efficient functioning. Starting off with the purchasing for which they have Standard Purchasing Procedures but do not have any purchasing department. Each department managers determines the requirement and then an order is placed. While the accounting is done at Point-of-Sale in cash registers in which the prices, quantities, taxes and other essential finances are noted down.

As far as the inventory management