According to Frank (2010), in 1903, there was a man named James Lewis Kraft who had begun cheese delivery service at Chicago area after he had been eased out from a cheese company at Buffalo. Every morning, he will buy cheese wholesale and resold it to the local vendors in order to avoid the cheese melt or spoil. The business was successful and several of his brothers who are known as Charles H. , John H. , Fred Walker and Norman had joined the company named J. L Kraft & Bros. Co. in 1909 as permanent employees (MAC 2011).
James L. Kraft is a president of the company who had invented a revolutionary process in 1915. This process helps to pasteurize the cheese, thus it would not spoiled easily and can be transported long distances (NNDB 2009). Fundamentally, according to Phillip (2010), in 1920, Kraft purchased a Canadian cheese company and changed it to Kraft Cheese Company in 1924. Kraft Cheese Company had obtained a lot of sales which enable J. L Kraft to expand the company into Germany, Australia and Britain. During World War II, Kraft had supplied 4 million pounds of cheese to Britain.
It had showed that Kraft was a main food supplier at that time. In 1945, the Kraft Cheese Company became Kraft Food Company (NNDB 2009).
Kraft Food Company’s headquarter had been located at Cheltenham, United Kingdom since Kraft has a close connection with the rest of Europe. The manufacturing site had been established at the Ban bury as a global manufacturing base that will supply a variety type of products worldwide in 155 countries including Malaysia, China and United State (Kraft Food Inc. 2010). Kraft Food Company was having more than 100,000 diverse employees all over the world.
Currently, Kraft Food Company is a second largest food and beverage company in the world after Nestle.
TYPE OF PRODUCTS
Furthermore, according to Joel (2010), Kraft Food Company is popular with cheese and dairy, snack foods and confectionary, beverage and convenient foods. However, Kraft Food Company is basically focusing more on cheese and dairy products such as cottage cheese and sour cream. Kraft produces a wide variety of natural cheese and American cheese slices. Besides that, Kraft also been known as snack food brands especially cookies and crackers.
Some of popular snacks food offers by Kraft are Kraft cheese Nips, Wheat Thins crackers, Corn Nuts and Garden Harvest toasted chips (Kraft Food 2011). Instead of that, sweet and confectionary food brands produced by Kraft are Oreo cookies, Kraft Mayo with olive oil, Jet-Puffed Marshmallows and Kraft salad dressings whereas for beverage and convenient foods are Kraft Macaroni and Cheese, California Pizza Kitchen and DiGiorno frozen pizzas, Yuban Coffee and Maxwell House (David 2009).
VISION AND MISSION STATEMENTS 1.
Kraft Foods Mission Statement: "Make Today Delicious" In order to fulfill this mission Kraft Foods Inc. focuses on consumers in everything that they do. The company also understands that actions speak louder than words, so at Kraft Foods, they: - inspire trust. - act like owners. - keep it simple. - are open and inclusive. - tell it like it is. - lead from the head and the heart. - discuss - decide -deliver.
Kraft Foods Vision Statement: "Helping People Around the World to Eat & Live Better" Their vision captures the essence of who they are.
Everything they do flows from their vision. They just don't happen to be a business that sells food – it's what they're all about. Their vision is about meeting consumers' needs and making food an easier, healthier, more memorable, and enjoyable part of the life. Revised Mission Statement Here at Kraft Foods we strive to produce superior products and services (2) to our customers (1) ranging from wholesalers to households. The 21st century is sure to bring more innovation, new products, and new food technology (4), thus enabling us to create and deliver better and healthier products.
Kraft Foods continues to lead the food industry as the largest food supplier in North America (7) with plans to continue expansion into new and existing global markets (3). We support the goals of the company by applying the highest ethical conduct within our corporate philosophy in all our business transactions (6), treatment of employees (9), and social and environmental policies (8). We at Kraft Foods focus highly on our consumers’ lifestyles and aim to grow profitable in the worlds’ food market and provide a higher than expected return to shareholders (5).
Our company takes pride in making today and the future-delicious.
Products and services
Concern for survival, growth, and profitability
Concern for public image
Concern for employees
Revised Vision Statement Global leadership in offering the best food products enabling people to eat and live better. Explanation-This revised vision statement incorporates a vision for the Kraft Foods Inc. to become a global leader among its competitors-that is to be the number one.
This statement shall encourage the whole organization of the corporation to think not only for the good but for the best. The corporation shall offer not only quality products but the best quality products helping their global market to live better through the consumption of their products. B. EXTERNAL ASSESSMENT 1. Competitive Profile Matrix (CPM) Table 1. Competitive Profile Matrix(CPM) for Kraft Foods Inc. Critical Success Factor | | | | | Rating | Rating | Rating | 1. Advertising| 3| 4| 2| 2. Financial Position| 3| 4| 2| 3. Global Expansion| 3| 4| 2| 4. Market Share| 3| 3| 2| . Product Diversity | 4| 4| 3| 6. Consumer Demands | 4| 3| 3| Average Rating | 20/6= 3. 33| 22/6= 3. 67| 14/6= 2. 33| Note: 1=major weakness, 2=minor weakness, 3=minor strength, 4=major strength The Competitive Profile Matrix shows the relative strength of Kraft Foods Inc. compared to its competitors by using the critical success factors in its industry. By identifying its strengths, we can also identify its relative weaknesses and address them to formulate effective strategies. Kraft Foods Inc. is relatively competitive in its industry, showing 3. 33 as its total score.
The company has to improve on global strength, market share and attractiveness as an employer to improve on brand loyalty and customer retention. Its profit margin has a rating of 3 just like the other industry because it is considered as a minor strength for they all want to focus on their brand and customer satisfaction.
The PESTLE analysis contains the analysis of Political, Economic, Social, Technological, Legal and Environmental environments of a country with reference to a particular object. The PESTLE analysis of Kraft Foods Inc. is as follows: POLITICAL
They support candidates who understand and appreciate the public policies that impact their business, brands and employees. The company has started a political action committee called Kraftpac or Kraft Political Action Committee which makes funding to state political parties, committees and candidates. ECONOMIC Kraft is making good earnings from its market involvements via its products and brands. The company is delivering high quality earnings to its shareholders despite the difficult economic environment. They are continuously investing in their brands and businesses to further provide excellent product offerings to their customers.
As a result of their investment strategies, the Kraft Foods is very well positioned to deliver sustainable top-tier performance, with or without Cadbury (Kraft foods financial news, 2011). In 2008, Kraft Foods was once again named to the Dow Jones Sustainability World Index and the Dow Jones Sustainability North America Index in recognition of the company’s economic, environmental and social performance. SOCIAL The company took initiative to improve the living standards of more than 1 million farmers with effective partnerships with them.
They increased their cocoa and coffee purchase to further benefit their partner farmers. Kraft Foods reduced greenhouse gas emissions by 18% and water consumption by 30% since2005, as measured against total production. Furthermore, the company improved the nutritional profile of more than 5,500 products during the last five years. They removed nearly 6. 5 million pounds (3 million kg) of salt from products in 2010 and helped to provide more than 1 billion servings of food since 1999 in the United States alone. TECHNOLOGICAL The company keeps consumer needs in their minds before designing their strategies.
They adapt and anticipate their needs in order to meet them efficiently. The company has employed SAP Net weaver technology platform to ensure effective information and business transformation strategy within all the business units (FBR, 2008). Kraft foods have established a hub and spoke model where a centrally led team focuses on the overall strategies, systems, enabling tools, networks and metrics. And, they have complemented that central team with R&D people the open innovation "technical scouts"? embedded in each of Kraft's business units. LEGAL
The company abides by the laws, rules, and regulations of the national as well as international countries in order to sustain its profitability and its business operations. Almost all of the activities of the company’s food operations outside of the United States are subject to local and national regulations similar to those applicable to Kraft Philippines businesses and, in some cases, international regulatory provisions, such as those of the European Union relating to labeling, packaging, food content, pricing, marketing and advertising and related areas.
ENVIRONMENTAL Kraft Foods has set an example in the global industry by determining a push to reduce the impact of its operations on the environment in the U. S. and around the world. The company released its CSR report in 2010 which stated its environmental goals agenda to reduce the effects of energy and the carbon dioxide emissions in food plants to the conservation of water and minimizing excess packaging. They are creating packaging that uses less material, weighs less and reduces impact on landfills without compromising food safety or freshness.
As part of their plan to reduce our "carbon footprint," Kraft foods are improving their energy efficiencies, using less energy and finding new and cleaner sources of energy. Kraft Foods look for opportunities to reduce the use of water to minimize the impact of water discharge and even reuse water in ways that help the environment and save money. Lastly they are not only focusing on creating less waste in the manufacturing process, they are also finding new and better ways to reuse, treat and even put waste to work. 3. Porter’s Five Forces Analysis
BARGAINING POWER OF SUPPLIERS The food and beverage industry is quite high and competitive in nature. The prices offered are usually competitive to remain in the market. THE BARGAINING POWER OF BUYERS The buyers preferences changes with the passage of time and they are likely to switch to the seller who offers good quality at less price. Wal-Mart has played a major role in this case. It offers less priced goods to attract the buyers¶ attention. There is a significant opportunity for the buyers to extract industry and firm profits. THE THREAT OF THE ENTRY OF NEW COMPETITORS
There are already so many competitors present in the market that there are very less chances for the new comers to set foot in and enjoy their share in the market. The existing companies have already spent so much on their brands, quality and positioning that it will be difficult for the new comers to entice switching among consumers. RIVALRY AMONG ESTABLISHED COMPETITIONS Intense competition lies in the food and beverage industry. The main vehicle by which firms in the industry preserve market share is through brand loyalty and diversification.
In general, the products of these firms are highly elastic with consumers weighing the tradeoff between price and quality between companies and products. Consumers in the industry have minimal switching costs and there is never the guarantee of brand loyalty. Therefore, the way these firms maintain market share is by providing brand quality at an affordable price. Thus, there is some cooperation among firms against the erosion of market share to private label products. With all firms promoting brand quality, there are signals passed onto the consumer that brand name products are superior to private label products in quality and elegance.
There have been restructurings and realignments at Kraft and at other companies in the industry in order to increase volume and profitability despite increasing input costs, sluggish top line growth, margin contraction, and rising pension costs.
THE THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
The consumers evaluate the quality of products and their prices with that of others to decide which product to buy. The treat of substitutes is medium in this case. The private label products, also referred to as ? generic? products, pose a serious threat to industry and firm profits. 4. Input Tools Table 2.
External Factor Evaluation (EFE) Matrix for Kraft Foods Inc. Key External Factors| Opportunities| 1. Operates in many fast growing categories| 2. Growing demand for health and wellness products| 3. Decreased input costs [raw materials]| 4. Changing lifestyles. | 5. Increased trends of flavor enhancer for bottled water. | 6. Growth in the market overall. | 7. Cadbury acquisition provides new products. | Threats| 1. Increasing trend of dining out| 2. Health concerns| 3. Inflation [transportation]| 4. Unfavorable impact of foreign currency| 5. Customers switching to generic brands. | 6. Intense competition from Mars Inc. Nestle SA| C. INTERNAL ASSESSMENT 1. Internal Factor Evaluation (IFE) Matrix Table 3. Internal Factor Evaluation (IFE) Matrix for Kraft Foods Inc. Key Internal Threats | Strengths| 1. Strong R;D| 2 Increased organic revenues| 3. Availability| 4. Innovative advertising methods| 5. Diverse range of leading brands| 6. Focus on consumers| 7. Strong distribution network| 8. Strong brand image| 9. World’s second-largest food company| 10. 25% of global revenue from emerging markets| Weaknesses| 1. Difficulty in launching new brands| 2. Most of growth is dependent on acquisitions or expanding into new market. 3. Strong competition from Nestle, Hershey, etc. | 4. Poor performance of North-American segment| 2. Matching Tools a. Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix The opportunities and threats that Kraft Foods Inc. possesses are now matched against its strengths and weaknesses by using the SWOT matrix in order to generate appropriate strategies. Table 4. SWOT MATRIX for Kraft Foods Inc. 1| Strengths| SWOT MATRIX SWOT MATRIX | 1. Strong R;D| | 2. Increased organic revenues| | 3. Availability| | 4. Innovative advertising methods| | 5. Diverse range of leading brands| | 6.
Focus on consumers| | 7. Strong Distribution network| | 8. Strong brand image| | 9. World’s second largest food company| | 10. 25% of global revenue from emerging markets| Opportunities| SO Strategies| 1. Operates in many fast growing categories| Focus on retailers and restaurants (O1,S1)Position itself as a healthy food producer (O4, S3, S8)Focus on ready to eat products (O4 S6)Promote ready to drink beverages (O4, S5, S8)| 2. Growing demand for health and wellness products| | 3. Decreased input costs [raw materials]| | 4. Changing lifestyles. | | 5. Increased trends of flavor enhancer for bottled water. | 6. Growth in the market overall. | | 7. Cadbury acquisition provides new products. | | Threats| ST Strategies| 1. Increasing trend of dining out| Introduce low fat products (T3, S6)Outsource operations to cheaper logistics partners (T4, S7)| 2. Health concerns| | 3. Inflation [transportation]| | 4. Unfavorable impact of foreign currency| | 5. Customers switching to generic brands. | | 6. Intense competition from Mars Inc. , Nestle SA| | SWOT MATRIX SWOT MATRIX | Weaknesses| | 1. Difficulty in launching new brands| | 2. Most of growth is dependent on acquisitions or expanding into new market. | | 3.
Strong competition from Nestle, Hershey, etc. | | 4. Poor performance of North-American segment| Opportunities | WO Strategies| 1. Operates in many fast growing categories| Look for divestiture in poor performing segmentsSell packaged coffees to cafes (W4, O1) | 2. Growing demand for health and wellness products| | 3. Decreased input costs [raw materials]| | 4. Changing lifestyles. | | 5. Increased trends of flavor enhancer for bottled water. | | 6. Growth in the market overall. | | 7. Cadbury acquisition provides new products. | | Threats| WT Strategies| 1. Increasing trend of dining out| Launch a sub-brand (brand extension) for ealthier range of products(W3, T2)Market dependent; look into closing lower value markets and look to switch to higher value economies | 2. Health concerns| | 3. Inflation [transportation]| | 4. Unfavorable impact of foreign currency| | 5. Customers switching to generic brands. | | 6. Intense competition from Mars Inc. , Nestle SA| | | | | | IP IP c. Boston Consulting Group (BCG) Matrix Division| Revenue (millions)| Percent Revneues| Profit (millions)| Percent Profit| Relative Market Share| Industry Growth Rate (%)| Company| $ 42,201| 100%| $2,901| 100%| 0. 38| 6. 41%| In the BCG matrix, Kraft Foods Inc. ervices are presented and compared with industry’s growth rate. The percentage market share of Kraft Foods Inc. was computed as follows: (2010 Kraft Foods net sales/ 2010 industry total net sales) X 100%= $42,201/$111,507= 38% The percentage industry growth rate was obtained from the annual increase in revenues. Table 5. Boston Consulting Group (BCG) Matrix for Kraft Foods Inc. (Global Market Share) Relative market share in the industry (percentage) Relative market share in the industry (percentage) 1. 0 . 50 0. 0 2. . 50 0. 0 +20 0 20 +20 0 20 Industry Sales Growth Rate (Percentage) Industry Sales Growth Rate (Percentage) Question Marks I Question Marks I Stars II Stars II Dogs IV Dogs IV Cash Cows III Cash Cows III Kraft Foods belongs to Question Marks Group seen in Quadrant I, it remains to be competitive enough although its market share is not that high but its growth rate in industry is high enough to cover the market. In order to be on Stars the company must pursue an intensive strategy to strengthen the company and meet its goals in the industry. Table 6.
Boston Consulting Group (BCG) Matrix for Kraft Foods Inc. (Domestic Market Share) Relative Market Share Position in the Industry Relative Market Share Position in the Industry 1. 0 . 500. 0 2. 0 . 500. 0 Industry Sales Growth Rate (Percentage) Industry Sales Growth Rate (Percentage) +20 0 -20 +20 0 -20 Question Marks I Question Marks I Stars II Stars II Dogs IV Dogs IV Cash Cows III Cash Cows III Kraft Foods belongs to Stars Group seen in Quadrant II, its market share is high and highly competitive in the industry, but because of fast growing market, Kraft is required to have a huge investments to maintain their lead.
Division| Revenue (millions)| Percent Revneues| Profit (millions)| Percent Profit| Relative Market Share| Industry Growth Rate (%)| Company| $ 42,201| 100%| $ 2,901| 100%| 0. 70| 6. 41%| The percentage market share of Kraft Foods Inc. was computed as follows: (2010 Kraft Foods net sales/ 2010 industry total net sales) X 100%= $42,201/$60,287= 70% The percentage industry growth rate was obtained from the annual increase in revenues. d. Internal-External (I/E) Matrix IFE Total Weighted Scores IFE Total Weighted Scores Table 7. Internal-External (I/E) Matrix for Kraft Foods Inc.
Strong Average Weak Strong Average Weak 4. 0 High 3. 0 to 4. 0 3. 0 Medium 2. 0 to 2. 99 2. 0 Low 1. 0 to 1. 99 1. 0 4. 0 High 3. 0 to 4. 0 3. 0 Medium 2. 0 to 2. 99 2. 0 Low 2. 0 to 1. 99 1. 0 3. 0 to 4. 0 3. 0 2. 0 to 2. 99 2. 0 1. 0 to 1. 99 1. 0 3. 0 to 4. 0 3. 0 2. 0 to 2. 99 2. 0 1. 0 to 1. 99 1. 0 Grow and build
Grow and build I| 2. 57, 3. 14 2. 57, 3. 14 II | III| IV | Hold and Maintain Hold and Maintain V| VI| VII| VIII| Harvest or Divest Harvest or Divest IX| EFE Total Weighted Scores EFE Total Weighted Scores Division| Revenues (millions)| Percent Revenues| Profit (millions)| Percent Profit| IFE Scores| EFE Scores| Company| $ 42,201 | 100%| $ 2,901 | 100%| 2. 57| 3. 14| Kraft Foods Co. is in the Grow and Build position which means that its internal strengths are on the average and response to the external factors are on the above average.
This means that Kraft can proceed in doing intensive and integrative strategies as suggested by the IE Matrix. e. Grand Strategy (GS) Matrix Rapid Market Growth Rapid Market Growth Table 8. GS Matrix for Kraft Foods Inc. Quadrant II| Quadrant I 1. Market Development 2. Market Penetration 3. Product Development 4. Forward Integration 5. Backward Integration 6. Horizontal Integration 7. Related Diversification| Quadrant III| Quadrant IV| Strong Competitive Position Strong Competitive Position Weak Competitive Position Weak Competitive Position Slow Market Growth
Slow Market Growth Kraft Foods Inc. falls under Quadrant I which is characterized by rapid market growth and strong competitive position. For Kraft Foods Inc. it would be best for them to continue their concentration on their current markets and strategies that would be best to use are market penetration and market development as suggested earlier in the other matrixes. If Kraft Foods is too heavily committed to a single product, then related diversification may reduce the risks associated with a narrow product line. g. Functional areas of the firm Marketing
Kraft's management performed an international consumer survey to determine if consumers were aware of the product quality and whether they were receptive to Kraft's product quality. After receiving a favorable survey response, KFI decided to produce an adaptive, revitalization, and business acquisition marketing campaign; tailored for specific foreign markets. An organization can make a creditable business case for product adaptation when the product modification develops into higher revenues and profits. Kraft's product brand managers developed ways and methods to revitalize existing food products to sell in foreign markets.
The brand managers revisited products that were more than 35 years old and revitalized them by positioning the products as mild, hot, or spicy and microwavable. Consequently, product revitalization influenced consumer behaviors. Shortly after product revitalization, the initial response occurred when new customers became enticed by the repositioned products and younger consumers became interested in Kraft products. Finance At Kraft, cash is king When Kraft Foods needed to cut costs and free up cash, its supply chain organization rose to the challenge.
Better inventory turnover played a leading role in boosting cash flow by 20 percent. If the company could make just the right amount of goods for a market and get them quickly into the hands of the consumer, it would speed up the cycle for converting products to cash. The relationship between inventory and cash flow put Kraft's supply chain organization front and center in the multiyear project. Research, Development ; Quality When it comes to bold thinking, Research, Development ; Quality is the place to be exciting new tastes. Packaging that extends the shelf life of our products – and is biodegradable.
State-of-the-art machinery. That’s the kind of thing we’re aiming for. And what we come up with. Kraft Foods R;D Center At Kraft Foods, we have been focusing on inventing delicious foods and improving life quality. Thus we sincerely invite the best R;D staff and establish 6 R;D centers in world. All of our professional knowledge in nutrition and food safety allow us to accelerate product research and development, bringing the best technologies and products to benefit people all over the world. Kraft Foods Global R;D center located in Glenview, Illinois, has established professional labs for hemical and flavor analysis. We attract excellent R;D staffs and provide strong technique supports of product development for North America and other areas in global. We believe innovation is a journey. In 2010, Kraft Foods China launched a strong pipeline of innovative products including OREO Ice Cream Flavor and Mini-snack biscuits. Pacific Whole Grain is the first real whole grain biscuit on the market that has enjoyed great success among Chinese consumers. Production/operation Kraft Foods Inc. is a holding company, our principal source of funds is from our subsidiaries.
Our wholly owned subsidiaries currently are not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their common stock. Reportable Segments We manage and report operating results through three geographic units: Kraft Foods North America, Kraft Foods Europe and Kraft Foods Developing Markets. We manage the operations of Kraft Foods North America and Kraft Foods Europe by product category, and we manage the operations of Kraft Foods Developing Markets by location. Our reportable segments are U. S. Beverages, U. S. Cheese, U. S. Convenient Meals, U.
S. Grocery, U. S. Snacks, Canada ; North America Foodservice, Kraft Foods Europe (formerly known as European Union) and Kraft Foods Developing Markets. • We transitioned our European Biscuit, Chocolate, Coffee and Cheese categories to fully integrated business units, further strengthening our focus on these core categories. To ensure decisions are made faster and closer to our customers and consumers, each category is fully accountable for its financial results, including marketing, manufacturing and R;D. Category leadership, based in Zurich, Switzerland, reports to the Kraft Foods Europe President.
These business units now comprise the Kraft Foods Europe segment. Information Systems Innovation can only happen if we’ve got the infrastructure to support it. And everything we do, every minute of the day, relies on having the right technology and information immediately available. Information Systems are the key. But they do much more than just answer helpdesk calls and fix our computers. Information Systems also invent neat solutions to our technological problems, and work out what systems and equipment we need to support our ideas.
EXECUTIVE DECISION RESPONSIBILITIES
Key decisions at Kraft are made by the following three organizations:
Global Marketing and Category Development
Global Marketing and Category Development is responsible for decisions on global category strategies, new product growth platforms and marketing excellence. Commercial Units are responsible for determining the marketing and sales programs that best meet the needs of local consumers and customers, with profit and loss responsibility for the results. Functional Areas are strongly aligned and linked to the Global Marketing ; Category Development group and the two commercial units.
The functions are centers for excellence, with responsibility for identifying and sharing best practices and using Kraft’s global scale to best advantage. The leaders within these organizations all report directly to the CEO. The leaders are:
Global Marketing and Category Development: – EVP, Global Marketing Resources ; Initiatives – EVP, Global Category Development
Commercial Units: – President, North America Commercial – President, International Commercial
Functional Areas: – EVP, Global Corporate Affairs – EVP ; Chief Financial Officer – EVP, Global Human Resources – EVP, General Counsel ; Corporate Secretary EVP, Global Strategy ; Business Development – EVP ; Chief Information Officer – EVP, Global Technology ; Quality – EVP, Global Supply Chai
EXECUTIVE DEVELOPMENT ; SUCCESSION
Executive development at Kraft takes place on the job. Unlike other companies where executive development takes place in an academic setting, Kraft creates management opportunities on the job for its employees. Beginning even with their earliest assignments, young managers are expected to demonstrate an ability to carry responsibility and sophisticated thinking that’s usually reserved for top tier executives at other companies. As managers ascend the ranks, Kraft encourages them to develop leadership skills such as creativity, the power to persuade and influence, and the willingness to take risks. Kraft gives its young managers broad authority that helps to challenge themselves and spur their leadership skills. Each function within Kraft has an Advancement Planning Policy in place. This policy provides the guidelines for identifying replacements for executives. Generally, there are two to three potential replacements already identified for any executive in case he or she leaves the company.
INSIDER’S VIEW ON KRAFT CULTURE
Insiders have commented that Kraft is very diverse and that they have many qualified minorities in management positions. • Even though working at Kraft is stressful, insiders have commented that many people enjoy working there. • However, insiders have also commented that morale is low due to layoffs and the resultant heavy workloads on the remaining employees. There have also been comments made that employees from acquired companies suffer from low morale because of difficulty in adjusting to Kraft culture.
Table 8. Balance Scorecard for Kraft Foods Inc. GOALS| STRATEGIES| MEASURES| TIME COMPLETION| Customer Perspective| | | | Provide quality products for all customers| Product Development| Developing quality products such as low fat and less cholesterol| Immediately after 2013| Internal Business Process| | | | More efficient internal control| Semi-centralization of the organization| A main branch per areas which controls other branches| 4th quarter 2007-2008| Financial perspective| | | |
Attainment of 2011, 2012, and 2013 revenue target| Having a large share in the global economy| Using effective marketing and extensive product developmentCutting cost if possible| 3rd quarter 2013| Learning and growth| | | | Increase industry awareness regarding service in other country. Development of intensive training program for human resources| Intensify marketing promotionsOffering seminars that will enhance skills in communicating and decision-making| Use the partner company’s expertise regarding the marketability of the countryIncrease of effectiveness and efficiency of skill performance| 2nd -3rd quarter 2014Immediately after 2013|
As an evaluation tool, the balanced scorecard shows the various selected key strategies on aspects of consumer perspective, interval business processes, financial perspective and learning growth. A set of quantitative measures has been enumerated for each strategy to enable the company to monitor progress or strategy attainment on a regular basis and review whether these need to be changed or revised SUMMARY Kraft Foods remains to be competitive enough although its global market share is not that high but its growth rate in industry is high enough to cover the market.
The company must pursue an intensive strategy to strengthen the company and meet its goals in the industry. Its domestic market share is high and highly competitive in the industry, but because of fast growing market, Kraft is required to have a huge investment to maintain their lead. Kraft Foods Co. internal strengths are on the average and response to the external factors are on the above average. This means that Kraft can proceed in doing intensive and integrative strategies as suggested by the I/E Matrix. For Kraft Foods Inc. t would be best for them to continue their concentration on their current markets and strategies that would be best to use are market penetration and market development as suggested earlier in the other matrixes. If Kraft Foods is too heavily committed to a single product, then related diversification may reduce the risks associated with a narrow product line.
Food industry is one of the fast growing industries ever since it started to appear in the global market. United States is the home where leading food companies are principally located.
Indeed the advance technological adaptation in this country led the food industry to become innovative and more eager to develop new products as time goes by. The challenge in this industry is the tough competition of the various companies belonging in the same industry. On how they could penetrate the market and what would be their advantage over their competitor. Kraft Foods is one of the companies belonging in this category. It can achieve its leadership and growth by doing intensive promotion and management of its existing clients and venturing other countries to promote business.
RECOMMENDED REVISE ORGANIZATIONAL STRUCTURE.
The organizational structure of the company is fully a centralized one. It is only compose of the top executives of the company. We suggest the that company develop a line and staff structure wherein the middle and lower level of the organization is seen and have a direct communication in terms of decision making and finding solutions to the problems both on top to lower level management.
Upon the using the matrixes presented, the following are the recommended strategies that Kraft Foods Inc. should use. Market Penetration Increase advertising expenditures and specifically target the household population. •Offer extensive sales promotion during peak season and creating bonus packages.Decrease the cost of the product if it would be possible so that buyers will be attracted to patronize it. Product Development Develop products containing low fat and calories for those healthconscious individuals. Develop confectionary products that are sugar free to attract retiringindividuals. Package products that are inter-related Improve technological systems, especially the online shopping center for mothers at home.
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