Executive Summary
The main purpose of the paper is to carry out an internal analysis of the operations of Kraft Foods Group. The study utilizes SWOT analysis that encompasses the firm’s internal strengths and weaknesses as well as the external opportunities and threats.
Through the application of SWOT analysis, Kraft Foods is capable of pragmatically distinguishing the threats and weaknesses that exist in the operations of the business and offset such aspects with robust and resourceful set of prospects and strengths.
Essentially, SWOT analysis is invaluable in supporting the mission and vision as well as the defined aims of Kraft Foods Group. In other words, the tool enables the firm to build on strengths, reduce the weaknesses and seize the available prospects as well as neutralizing the threats.
Introduction
Generally, the main rationale and objective of SWOT analysis is to analyze Kraft Foods Group’s current situation as well as the strategies critical in the attainment of competitive advantage. The tool is also significant in designing the tactics for reaching out and capturing a large pool of clients.
The SWOT approach begins with the analysis of the internal environment that contains important information regarding the up to date strengths and weaknesses of the firm (Zahorsky, 2009). Additionally, the tool reviews the external environment of the firm thereby yielding data concerning the opportunities available to the operations of the firm as well as external threats facing Kraft Foods Group.
Actually, the SWOT analysis tool discovers the potentials that offer responses to the firm’s problems. Additionally, the model presents the firm’s executive with the best decision-making matrix for the organization’s initiatives through identification of strengths, weaknesses, opportunities and threats.
As such, the firm is capable of enhancing and improving its plans. In other words, the internal environment analytical tool reveals the priorities and possibilities of the firm.
Internal Analysis of the Kraft Foods Group
The examination of the internal environment of the Kraft Foods Group encompasses strengths and weaknesses of the firm.
Strengths
The market leadership and excellent performance emanating from the human resources, financial resources as well as activities and processes are attributed to the strengths of Kraft Foods Group. In addition, the organization’s human resource management, customer service, experience of the owner and marketing functions are significant strengths of the firm.
First, the resources available to the Kraft Foods Group offer the firm with a competitive edge over similar firms in the market. For instance, the inputs used in the operations of Kraft Foods Groups are divided into physically visible and measurable tangible resources as well as the intangible resources (Zahorsky, 2009). The firm’s tangible resources include the physical, financial, information communication technology as well as the human resources.
The Kraft Foods Group’s strategic physical property comprising of manufacturing plants and equipments as well as buildings are significant for the firm’s growth. For instance, the assets are used in the production and delivery processes of the firm’s products and services.
Further, the assets are important in enabling the administrative functions of the firm. In addition, the co-manufacturing plants offer the firm with the prospect of contact to third party physical assets.
Additionally, the strength of Kraft Foods Group emanates from its strong financial performance. In fact, in the last five years, the business has recorded excellent financial results thereby offering the business with increased future financial prospects.
In fact, the firm’s revenues have been on upward trend over the last five financial years. Further, operations in China, Brazil, Mexico and India are the major contributors of the business returns.
Moreover, the augmented numbers of Kraft Foods Group’s common stockholders are major contributors to the firm’s equity. The asset portfolio and equity amounted to $93.837 billion and $35.328 billion respectively in 2011 (Kraft Foods Group, 2012).
Human resource management also forms a critical strength to the operations of the firm. The personnel are one of the major sources of strategic gains. In this regard, Kraft Foods Group carries out efficient staffing, selection and training as well as retention processes of employees.
Additionally, the firm has motivation arrangements for workers and aligns employees’ interests with the organizational performance through various initiatives. The initiatives enable the business to achieve competitive advantage over rivals by creating prospective managers via venturing in aptitude acquirement and development.
Further, the firm has launched third-party product vendors as well as estimated forty-two privately owned and leased delivery centers in Canada and US. The delivery centers make the accommodation and supply of Kraft Foods Group’s products to the markets efficient and convenient. In other words, the business’s marketing resources are vital in excellent performance.
The invisible assets are also critical sources of competitive advantage to the Kraft Foods Group. Such resources comprise of intellectual property, trademarks, repute, technical assets, goodwill and the organizational culture. First, efficient information technology resources are significant in quality delivery to end user and trailing the business operations including stock and sales management.
Second, the firm’s brands including Cracker, Crystal Light, Jell-O, Cool Whip, Cheez Whiz, Bakers, Kool-Aid, MiO and Lunchables are cosseted through registration. As such, Kraft Foods Group utilizes the patents gained through registration to cover production machinery and other processes. Third, the firm’s statement of financial position attests an increase in the value of goodwill.
The increased value makes goodwill a valuable resource in the firm’s operations. Fourth, the partnerships and strategic alliances between the firm and suppliers as well as retailers have enabled Kraft Foods Group to access raw material and market products both locally and abroad (Kraft Foods Group, 2012).
Kraft Foods capabilities include architecture, innovation and reputation. The firm makes use of the extensive communication architecture including digital platforms, databases and other electronic communication platforms to manage business operations (Longenecker, 2012).
In addition, the firm enjoys good reputation due to the production of high quality goods, governance and corporate citizenship as well as good customer care service. Moreover, the organization‘s “big bet” innovations have enhanced its competitiveness in the international market through production of superior merchandise.
Weaknesses
The Kraft Foods Group encounters a number of weaknesses in operations. For instance, the group has been involved in product recalls, which raise eyebrows concerning the quality standards of the firm. Such recalls also negatively influence Kraft Foods Group’s trademark. Additionally, the firm often record poor inventory performance as well as stumpy growth levels in the US market (Schroeder, 2012).
Further, the geographical coverage of Kraft Foods Group is low since its operations are majorly based in the US and Canadian markets. Moreover, the firm has been unable to control the delivery of manufacturing processes due to abrupt augmented levels of demand. The increased demand leads to scarcity of products, which cause a substantial increase in product prices.
Opportunities
The firm has number of prospects in its operations. In particular, the acquisition of Cadbury offers Kraft Foods with opportunity of reaching out to wider market. Additionally, the launch of pet food has widened the product line of the firm thereby increasing the market share.
Further, the market coverage in terms of geographical concentration as well as category has received a major boost from the integration of Cadbury portfolio that occurred in 2010. In reality, the acquisition has enabled the firm to widen its existence in the rising markets such as North America (Schroeder, 2012).
Threats
The major threat to the operations of Kraft Foods Group originates from stiff competition from other firms in the industry. The firm has to contend with increased competition from dominant multinational corporations including Mars, Hersheys, Nestle, PepsoCo and General Mills (Longenecker, 2012).
Additionally, the health related concerns among the populace also pose a threat to the operations of the confectionary market. Moreover, the economic data from the US indicate a likelihood increase in food expenses in the future.
Recommendations
From the analysis, the firm needs to widen its geographical concentration in upcoming markets such as China, Japan and India. In addition, the firm should reposition the trademark image by neutralizing the negative perception that arose after the acquisition of Cadbury.
Moreover, Kraft Foods Group should augment the level of its safety inventory in order to avert the risk of high demands in stock out period and reduce expenses as well as diminish the rate of client turnover. Such steps would increase the proceeds of the firm.
Conclusion
The success of Kraft Foods Group is attributed to its strengths including human resources, strong financial performance, strategic marketing capabilities, good customer care as well as outstanding management.
However, the firm needs to work on its weaknesses arising from minimal product recalls, poor inventory performance, geographical concentration and poor control of production. Nonetheless, the firm should utilize the prospects emanating from the acquisition of Cadbury and the launch of pet food to neutralize the threats posed by competitors.
References
Kraft Foods Group. (2012). Kraft Foods research, development and Quality innovation investment fact sheet. Web.
Longenecker, J., G. (2012). Small business management: Launching and growing entrepreneurial ventures. Mason, OH: Cengage Learning.
Schroeder, E. (2012). Kraft looks to deliver top- and bottom-line growth. Web.
Zahorsky, D. (2009). A business owner’s secret weapon: SWOT analysis. Web.