The Analysis of Kraft Foods Inc - Case Study Example

? CASE ANALYSIS OF KRAFT FOODS INC. of Executive Summary Company strategic management is a long term objectivity process that would see it expand its scale of production. The paper discusses the existing missions in the company, objectives and strategies. This would see if the mission is viable enough or a different proposed mission would work better for the company. The SWOT/TOWS analysis was meant to relate the internal company strengths and weaknesses against the market threats and opportunities. The competitive matrix table was drawn and an analytical comparison made to the IFE and EFE tables as interpreted. The alternative strategies were given out based on the analysis that was noted in the company analysis. Existing Mission, Objectives, and Strategies Located in the UK, Kraft Food Company, the mission statement of the company is based on a rational strategic plan to start executing it. Established in 1903, the company is a manufacturing conglomerate located in Illinois, a suburb in Chicago, USA and specializes in grocery. A manufacturing firm, the company grocery collection has a big lineation to direct food items such as convenience foods, confectionery, snacks, beverage and cheese. The company operates in more than 170 countries all over the world. The company does not operate on the basis of production of the named food items a lone but specializes in marketing, innovation, health and wellness as well as health sustainability (Kraft, 2013). The company operations are therefore based on a mission statement that looks to promote a good health in all the company customers and thus goes ‘Make Today Delicious’. The universality is inculcated in the fact that the company is a multinational. The mission is all about what the company is and the company is about the customers, their health and the general life that they live. The company strategies in view of the mission statement are quite diverse. First, the company wishes to make its products to become the first choice of the consumers in all the countries of operation. It also intends to make all its retailers and other companies to view it as an indispensable competitor in the entire market. Just as before when it was operating with some other companies, the company wishes to strategically continue operating in coalition with other companies to expand its scale of production. Production is not only a way of market sustenance, the company therefore wishes to create a human resource management strength in which all the market will be willing to work for it. The last laid strategy is that the company wishes to make itself be recognized as a high performance as far as the market is concerned. In view of these strategies, the company came up with some objectives that would see it realize the strategies that it had planned to achieve. The first object that the company wishes to implement is the acceleration of growth of core brands. The second is that the company wishes to extend the awareness of the value of its products in the developing countries. Moreover, the company wishes to increase its value of those brands that are considered as low quality in the market. This will be done at the lowest possible cost in the market. The last objective again is based on human resource and is leveled towards development of the company values through employment of committed employees. A new mission statement can be created for the company based on a combination of its existing values as well as inclusion of the strategic objectives more than is covered. It would take close proximity to ‘Making Today and Tomorrow Delicious’. This would mean the company opens up more branches all over the world so that it is able to impact everyone positively. The company will therefore do this through provisions for a well experienced more knowledgeable employment team, cleaner restaurants and at affordable prices. SWOT (TOWS) Analysis of Kraft Food Inc. Multinational companies have very wide market coverage and therefore have the strengths, weaknesses, opportunities and Threats that all similar companies face. The SWOT analysis of Kraft foods therefore tries to create a relationship between the internal strengths and weaknesses against external opportunities and threats. The TWOS matrix will insist on the strategic plan as a way of progressing the development of the company (McDaniel, 2010). The company has several strengths in the market. One of the strengths is that it is the second largest food company in the world. Therefore, it is able to maximize use of operational economies of scale to advance its objective strategies. The company operates in over 170 countries and is therefore able to capitalize on the availability all resources and cultures to create a more market oriented technological products. The second strength is that the company has had a focus on opportunities in research and development. This is very important in that technology is so dynamic in the modern market. Consumers prefer goods that conform to the latest changes in tastes and preferences and the company is just able to do that. The third strength of the company lies in its brands. The company has been able to create brands in all the areas of production it engages in and according to Kraft (2013); it holds the first position in the global production of biscuits and global confectionary. In fact, snacks and confectionery account for over 50% of its revenues. The company also experiences weaknesses as an internal issue. One of the weaknesses of the company is that of poor stock performance. This has been lineated to the cases that have been leveled against t the company in the recent past about its product quality. The company has been forced to recall some of the products in the market because of production complications. In the Canada segmentation for instance, there is a high concentration of production of products for Middle Ages only especially the coffee produced. The second weakness is that the company has many difficulties launching its products in the market. This also is in line with the product quality. Most of the company expansions are based on acquisitions and the company is therefore deemed to lack independence of thought in its market management (McDaniel, 2010). The company has several market opportunities. One of them is leveled in its objective strategies already mentioned; expansion into the developing world. The second opportunity is the expansion to provision of dog food. The dog section is an increasing section in the market with so many people rearing the dogs. In this case, the company can create another specialization in production of dog products. The last opportunity is the increment in the production of health related products. Many populations are basing their consumption on the fact that they have to consume more health related foods than the junky foods in the market. The threats that the company is facing are based on the fact that there are other upcoming companies such as Nestle Inc. and Mars Inc. these companies are rapidly responding to the customer changes in the tastes and preferences and are therefore able to attract more customers. The other threat is that the company is not able to effectively expand to other new markets due to the inability to execute expansion strategies. Competitive Profile Matrix A competitive profile matrix is a tool of analysis meant to critic ally look at the competitive advantage that the company will have in the market. A landscape and position of the company in the market is well developed so that the company is able to be differentiated from the other companies in the market. Special reference is made to the company strengths as well as those of the other competitors. The competitive profile matrix will also include the external factor evaluation (EFE). EFE is a tool of control in management that is used to access current business conditions in the company. It visualizes the threats and opportunities faced by the company. The internal factor evaluation (IFE) is a tool of strategic management that is used to measure the major strengths in relation to the weaknesses of the company. The case of Kraft Foods Company brings into picture the entire factor that would affect the internal and external factors that regulate the company. The EFE approximated factors would take the form as implied in the table below: EFE Evaluation Matrix for Kraft Foods Key external factors Weight Rating Weighted Score Threats High levels of obesity in North America 0.04 2 0.06 Employee turnover due to a let-go permission 0.07 1 0.06 High manufacturing and operation prices 0.06 2 0.10 High intensity of the competitors especially in Europe 0.05 2 0.08 Customer switch to generic brands 0.14 3 0.39 Difficulty in differentiation of the company products and other products 0.09 3 0.27 Declines in the value of the dollar in the market 0.08 4 0.28 High rise in the prices of oil in the market that make production hard 0.07 2 0.08 Opportunities Growth in environmental consensus 0.08 3 0.24 Renegotiation of long term contracts 0.10 4 0.4 More women in top management 0.06 4 0.24 High trends of bottle water 0.03 1 0.03 Organic beverage and food sale increase by 25 billion between 1990-2009 0.13 4 0.52 1.0 2.75 The internal factors in the company as far as the IFE matrix are concerned. IFE Evaluation Matrix for Kraft Foods Inc. Key Internal Factors Weight Rating Weighted Score Strengths Sales that are positive as well as effective operation in all the five areas of operation 0.07 4 0.28 Prioritized approach to food safety 0.07 3 0.21 A high diversity in brands and products 0.09 4 0.36 Sales increase by close to 2.9% in the N.American market 0.05 3 0.15 A perceived strong reputation among the customers 0.13 4 0.52 increae of 2.3 in organic sales in 2009 0.08 4 0.32 Weaknesses Risks in the contamination of the produced products 0.12 1 0.12 The perceived weaknesses of the female employees 0.03 2 0.06 Sales drop in second period of 5.9% in 2009 0.10 2 0.20 A very big amount of goodwill 0.09 1 0.09 High difficulty in launching new brands 0.11 1 0.11 The actual margins depend on prices of the commodities 0.06 2 0.12 1.0 2.54 The IFE therefore for the company takes the form of the figure as illustrated above. The interpretation of the tables above can be based on a scale of 1-4 in which case concentration will be given to the rating. The key would be of the form: Rate meaning 1 major weakness 2 minor weakness 3 minor strength 4 major strengths The major weaknesses and strengths can therefore be read from the table based on the categorization of being an area that requires improvement or emphasis. Having analyzed the matrix above, it is therefore viable to identify the competitive profile matrix for the company based on the facts clarified in both IFE and EFE. Competitive Profile Matrix Table Critical Success Factor Weight Kraft Nestle ConAgra Rating Score Rating Score Rating Score 1 Global Expansion 0.25 3 0.75 4 1 2 0.5 2 Financial Position 0.1 3 0.3 4 0.4 2 0.2 3 Consumer Demands 0.25 3 0.75 4 1 2 0.5 4 Product Diversity 0.1 3 0.3 3 0.3 2 0.2 5 Market Share 0.15 4 0.6 4 0.6 3 0.45 6 Advertisement 0.15 4 0.6 3 0.45 3 0.45 The values in the later matrix will gain the same interpretation based on the values that are obtained. From the above information, it can be noted that the competitive advantages are gauged against those of the other two companies. The factors in this perspective include both internal and external factors so that a general and all round view of the abilities of the company can be decided. The success factors in this case can be decided on the basis of the broadness that is covered in the matrix. They include a look at all the market factors that affect the working of the company in the market other than just the internal and external factors. It should however be noted that the numbers as they appear above simply provide relative strengths of the companies and therefore the closeness of the figures do not give the exact company positions. In view of this, there is supposed to be a situation in which the company focuses on other factors of strength so that they can fully define their competitive advantage in the market (Norida, 2011). Alternative Strategies, Advantages and Alternatives From analytical point of view, the company would have a larger market share if it works on the existing weaknesses. For instance, it is not able to effectively introduce new brands or even carry out market expansion programs. There have been cases about the quality of the goods it is producing. Without creation of a viable market ability and strength, there will always be a struggle to expand its strategies. Therefore, the most volatile and immediate strategy that can be used at the moment is that one of improvement of the quality of the goods it has in the market. The advantage of this strategy would be that the company will rebuild its name in the market before creation of viable expansionary objectives. Alternatively, the company can altogether create a change in the range of products so that there is an inclination to health based products rather than the foods considered as junk. Recommended Specific Strategies and Long-Term Objectives The long term objectives would be to venture into new markets especially in the developing countries. Their capital base would allow them to offer prices that are relatively equivalent to the purchasing power of the customers in these countries. It is known that the purchasing power parity of the citizens of the third world economies is low. Therefore, there is a probability that the company will be forced to sell the commodities for a lower price than is anticipated. This will be the long-term objective of the company and can be inculcated into the long term strategic o objectives. References Kraft. (2013, 4 26). Corporate Governance. Retrieved 4 28, 2013, from Kraft: http://www.kraftfoodsgroup.com/Investor/corporate-governance/index.aspx McDaniel, C. D. (2010). Marketing 4. Belmont: Cengage Learning. Norida, Y. (2011, 6 30). Kraft Food Case Study. Retrieved 4 28, 2013, from Marketing and Advertising: http://www.studymode.com/essays/Kraft-Food-Case-Study-712781.html Read More