Kraft Foods in the USA - Term Paper Example

Strategy implementation at Kraft’s Food of Executive summary In the United s, Kraft Foods is of the renowned companies that are involved in selling of packaged food and beverages. It is a publicly listed multinational company that trades in NASDAQ. The company has undergone a number of merger and acquisition activities which generally has a strong impact on organizational culture and organizational structure. In this context, the paper focuses on the culture, strategies and design pertaining to the company. Acquisition and merger also affect the human resources of a company, hence, human resources of company has also been discussed elaborately in the paper. In this paper, efforts have been made to understand whether various organizational components complement the primary strategy of the company and consequently suitable recommendations has been provided. Introduction Kraft Foods is an American company that primarily operates in North America and Canada and is one of the largest consumer packaged goods companies in the United States (US). The company was started in 1903 but it was re-launched in 2012 with a culture of collaboration and innovation. The company has a total of thirty brands selling different food items such as cheese, toppings, beverages, dressings, snacks and spreads. According to the company, at least ten brands of the company generate about $500 million in sales. The company is growing steadily and presently has approximately 22500 employees operating in the US and Canada (Kraft Foods Group, 2014a; 2014b). In this paper, the strategic position of the company along with its organizational design, organizational culture, human resource management and strategic system will be discussed in an elaborate manner. The rationale behind this attempt is to understand the efficiency of the strategy of the company and mitigate issues that are acting as barrier to strategy implementation in the company. It was ascertained from various published reports of Kraft Foods that the company has undergone major changes in recent years such as collaboration with McDonalds and multiyear licensing agreement with Keurig Green Mountain. It is assumed that such major decisions also have a strong impact on a company’s strategy and performance (Kraft Foods Group, 2014c; 2014d). The paper will evaluate various reports and articles about the company, for the purpose of analyzing various strategic developments in the company in recent years. By means of in-depth study, it is expected that the pertaining strategic issue of the company will be recognized so that appropriate recommendations can be provided therein. Impact of various organizational components on strategy implementation An organizational strategy is highly influenced by various organizational components, namely, organizational design, resources such as workforce, organizational culture and strategic control system (Luthans, 2010). These components have been discussed briefly in context of Kraft foods in the following section. Organizational design According to the Securities and Exchange Commission (SEC) (2012), initially Kraft Foods operated on the basis of a centralized organization design. A centralized organization design highlights that within an organization the decision making process depends heavily on a single individuals. It is more of a top down approach where decisions are taken by top level authorities and are delegated to operational level executives. This approach is most suitable in small organization with limited resource but in organizations such as Kraft Foods, centralized decision making process may hamper organizational growth and development as it is not possible of a small group of management bodies to look after every activity in the organization (Securities and Exchange Commission, 2012). Workforce Until 2012, Kraft Foods made limited investment in human resources and their training and development. According to SEC filing of the company, the initial resource allocation strategy was similar to the peanut-butter spread model. In other words, resources were allocated haphazardly without following any basic strategy. Such an approach affected the growth of the company because resources were not available at the right location at the right time. Moreover, lack of training and development resulted in further degradation of quality of workforce. Prior to 2012, the company made little investment in developing the quality of workforce which had a negative impact on the productivity of the company (Securities and Exchange Commission, 2012; Randolph Thomas & Horman, 2006; Kraft Foods Group, 2014e). Organizational culture Organization culture defines the behavior of workforce within an organization. Organization culture is one of the strong components that affect a company’s performance and productivity. In Kraft Foods, the initial cultural structure was based on power culture where the authorities regarding various activities were controlled by a small group of individuals. This kind of cultural practice barred employees from sharing their feelings and undertake open communication. The culture of Kraft Foods started changing since 2012 when the company underwent a major remodeling (Securities and Exchange Commission, 2012; Sinclair, 1993). Strategic control system Strategic control system for a company can be of two kinds, namely, traditional and contemporary. Under the traditional strategic approach, strategies are generally formulated at the top level and are delegated and implemented at operational level. Traditional strategic approach was initially practices at Kraft foods, which however shifted towards contemporary strategic control post remodeling in 2012. The contemporary strategic control denotes that an organization should undertake the right job as well as ensure that the strategies related to the job are implemented accurately. The strategic control system is highly affected by organizational culture as it relies upon shared values and belief (Langfield-Smith, 1997; Securities and Exchange Commission, 2012; Tavakoli & Perks, 2001). Impact of these factors on strategic formulation The organization underwent remodeling in 2012 because sufficient problem were observed due to the above mentioned factors in strategy implementation. In context of organizational design, centralized organizational structure in present competitive market can be a reason behind incorrect implementation of strategy. The reason is that in a competitive environment, it is not possible for one individual or a small group of individuals to handle everything in an organization. Organizational culture plays an important role in shaping strategies and their implementation. An organizational culture includes shared belief, values and norms through which it determines the cornerstone of any strategy. If Kraft Foods adopt a flexible culture, the work environment will be more open to new ideas and activities, thereby will contribute in greater productivity. In this context, a flexible culture is very important because it allows individuals to discuss openly various organizational matters and undertake efforts to resolve them. Presently, Kraft Foods is investing in appropriate training and development for its employees as well allocating resources strategically so as to improve its overall productivity and performance (Olson, Slater & Hult, 2005). Critical evaluation of fitness between organizational components and strategy implementation Since remodeling, it was observed that major changes such as strategic resource allocation, cultural change and workforce training and development have been incorporated in the firm. Even though these approaches have long term impact, they take time to exhibit productive outcome. Presently, Kraft Foods can be assumed to be going through a volatile phase due to remodeling and other changes such as licensing and collaboration with McDonalds (Kraft Foods Group, 2014b; 2014c). Critical assessment suggests that the company needs to focus extensively on its resources and their allocation for successful strategy implementation. Some problems can be recognized in context of organizational culture. In Kraft Foods, transition from bureaucratic culture to flexible culture can pose threat to the status quo and feeling of insecurity among employees. Additionally, organization resistance can be observed among employees due change in resource allocation, management style and organizational culture (Securities and Exchange Commission, 2012). Recommendations The problem that was ascertained in this paper indicates that the company underwent major remodeling in 2012 and changes were brought in organizational culture and resource management and allocation. These changes were implemented to improve efficiency of the company but due to prolong practice of traditional approaches, resistance was observed among employees. The CEO of the company should take measures such as disclosure about changes and reasons behind it to employees of the organization. Since the CEO is one of the prominent representatives of the top management, it is expected that employees will be cooperative in context of organizational behavior. Another important idea that can be recommended is that the management should compassionately explain to employees the importance of flexible work culture and decentralized organizational structure. The management in this regard must emphasize on employee empowerment for winning confidence of employees. Conclusion Kraft Foods group is one of the largest retail companies operating in the food and beverage sector in Canada and North America. The company present serves product demand of approximately 160 countries. The company underwent remodeling in 2012 which consequently impacted it organizational structure and culture. However, this change was necessary for appropriate strategy implementation. The paper focuses on discussing role of various organizational components on strategy implementation. Alongside, problems related in this context have been identified and recommendations have been made. References Kraft Foods Group. (2014a). About us. Retrieved from http://www.kraftfoodsgroup.com/About/index.aspx. Kraft Foods Group. (2014b). Brands. Retrieved from http://www.kraftfoodsgroup.com/Brands/index.aspx. Kraft Foods Group. (2014c). Keurig Green Mountain, Inc. and Kraft Foods Group, Inc. Announce Licensing Agreement. Retrieved from http://files.shareholder.com/downloads/ABEA-3QV6OO/3438645015x0x778092/485b3a7a-8e38-47f3-aa29-6badee4b4e70/GMCR-KRFT_News_Release_2014-08-22_FINAL.pdf. Kraft Foods Group. (2014d). McDonald’s USA and Kraft Foods Group, Inc. bring McCafé Coffee to Retail Outlets Nationwide in 2015. 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