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Kraft Foods Company Report (Assessment)

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Updated: Jul 8th, 2019

Introduction

Kraft Foods Company is a North American business entity with vast interests in manufacturing and distribution of consumer food items such as snacks, consumer drinks, convenient food items, and an array of grocery items (Rankin 1).

The business entity sustains a stable operation base in over 155 countries around the world. The company enjoys a stable and reliable market share in all locations. However, it faces stiff competition from Nestle, which is its main business competitor.

The company portfolio comprises over 11 market brands that garner more than $ 1 billion across the world (Rankin 4). Prominent brands in the company include Jacob and Maxwell house coffee, LU biscuits, Oreo, Nabisco biscuits, Oscar Meyer meats, and Philadelphia cream cheese.

Kraft Foods Company operates over 223 outfits that facilitate its manufacturing, processing, and packaging ventures around the world. Kraft Foods Company operates as a public company and is a member the New York City stock exchange.

In 2008, the company acquired listing at the Dow Jones industrial average. In 2010, the company effected an acquisition of Cadbury brand, consequently spurring a massive boycott on all its related products (Rankin 11).

Swot Analysis

Kraft Foods Company is a business entity that operates in a competitive and dynamic business environment. The company endeavours to maximise on all factors that promote its operations. There are multiple factors that determine success or failure of the company in all areas of operation.

In order to guarantee corporate excellence, Kraft Foods Company should strive to maximise on its strengths and improve on its weaknesses (Rankin 12). The company should seize all opportunities that guarantee its bright future in the corporate landscape.

Above all, the company should identify and tackle all threats that linger in its horizon. If not dealt with, such threats could herald unprecedented challenges for the company (Rankin 17).

The strengths, weaknesses, opportunities, and threats (SWOT) analysis of the company presents a clear picture of all facets of the company with regard to its operations.

Strengths

Kraft Foods Company has several strengths that compliment its operations across the world. The company enjoys a strategic advantage in its position as the second largest entity in food manufacturing and processing (Rankin 21). The company ranks second after Nestle Company.

This is an obvious strength for the company because it commands a huge and influential share in the market. The company also enjoys a massive presence in the market across North America and the world (Rankin 21).

Such presence is advantageous because it offers the company a strong market visibility. This guarantees performance and profitability in the future.

Kraft Foods Company has a reputation for its prowess in manufacturing and processing of foods and assorted beverages. The company has several brands in various market segments across America, Asia, and Europe. This situation gives the company a competitive market advantage over its competitors in the market.

The brand image of Kraft Foods Company is strong, sustainable, and progressive (Rankin 24). The company should strive to maintain and propagate its brand image because it guarantees success and progress in the market. Most brands within the company profile have a long history and heritage in the market.

Customers identify with most brands within the company profile because those brands command a sustained presence in the market.

In fact, the company has several brands whose heritage dates over 100 years. Such brands present a strategic advantage for the company because customers understand and trust them (Rankin 25).

Immeasurable strength lies in Kraft’s elaborate distribution of networks in the market. The company effectively merges the traditional and contemporary distribution channels. This guarantees availability of products in the market, thereby spurring growth and expansion in the market (Welch 17).

The company effectively utilises a distribution that anchors on guided store delivery and distribution networks. Through such networks, the company monitors the movement of their products in the market.

This system offers a direct approach to monitoring, evaluation, and assessment of products in the market (Welch 17).

The company conducts periodical research and evaluation to determine the safety and sustainability of their products. This accords an opportunity for the company to assess market reception with regard to their products.

The research findings offer a roadmap for the company in their quest for healthy and safe products (Welch 19). The company runs various programmes to ensure that their products are innovative, healthy, and meet all safety requirements.

Such efforts are critical for the company because they facilitate and guarantee compliance to safety standards and requirements. Above all, such efforts ensure and guarantee a healthy and sustainable consumer base in the market.

Research and development programmes entrench the sustainability and competitive advantage of the company (Welch 23).

The company enjoys strength in the fact that customers in the market know the Kraft brand. As earlier mentioned, Kraft Foods Company has been in the market for many decades. Therefore, its products are popular in various segments of the market.

The products of Kraft Company appeal to consumers in all age brackets. This is an advantage because it widens the customer base of the company (Welch 23).

The company maximises on this by ensuring that their products address all consumer needs and preferences within their client base. This ensures that customers remain loyal and dedicated to the Kraft brand.

Over the years, the company has built a global network of outlets and food processing plants through rigorous expansion efforts. This accords the company an opportunity to explore and venture into new and under-exploited markets (Welch 27).

Through such efforts, the company projects an image of a global and ubiquitous commercial entity. This in turn builds and sustains confidence in the company’s ability to offer quality and healthy products to their consumers.

The company should amass the positive energy in this domain to ensure future success in the market. Through its global networks, the company taps the potential in various market segments across the world.

The company maintains a global presence through constant engagement with clients and business partners within the global community (Welch 27).

Overall, Kraft Foods Company ranks second to Nestle. However, the company is a market leader in production and sale of snacks. The company enjoys a competitive edge in the snack segment as compared to other business competitors in the market.

This is a strength that Kraft Company can seize in its effort to consolidate and sustain its command in the global market. The company should direct attention to such strong areas to guarantee its hegemony in the global and regional markets (Gaspar 43).

Weaknesses

Kraft Foods Company is weak in terms of its overall performance in the market. The acquisition of Cadbury upped Kraft’s profit ratio in a commendable way. However, it presented numerous challenges because it heightened the company’s debt pressure.

Such pressure shrinks the company’s ability to perform in a highly competitive corporate environment (Gaspar 43). For instance, the company faces stiff competition from market rivals such as Nestle and Harshey.

High debts and stiff competition in the market is a lethal combination of factors for any commercial entity, and Kraft Foods Company is not an exception. This means that the company should brace for tough and challenging times in the market.

The company has a commendable presence and command in the global market. However, it scores poorly in terms of concentration and distribution of outlets in areas beyond America and Europe. The company is yet to open outlets in high potential areas in the global market.

This emanates from its slow and ineffective strategy. The company lacks a robust expansion programme to guarantee dominance and command in the global market (Gaspar 47). Lack of an elaborate expansion programme denies the company vital opportunities for growth in the market.

The company has a weakness in terms of expansion and entry into new market zones. The company is over dependent on corporate acquisitions and buy-outs (Marcic 12). This approach to expansion presents various challenges for business entities.

For instance, in 2010, Kraft Foods Company effected a complete acquisition of Cadbury brand. This move presented challenges for the company after consumers staged a boycott against their products (Marcic 15).

It is evident that such acquisitions could back fire, thereby jeopardising the operations of the company. This scenario compounds the company’s inability to venture into new markets. This is a major weakness for Kraft’s Food Company (Marcic 16).

The company puts more emphasis on its existing niche in the market as opposed to new and uncharted territories. Competitors could exploit the weakness to initiate a market onslaught against the company.

In business, it is common for competitors to take advantage of structural and organizational weaknesses of their rivals.

This is a likely scenario for Kraft Company because of their current weakness with regard to market expansion and occupancy (Lamb 22). This weakness threatens Kraft’s presence and dominance in the global market.

Opportunities

Kraft Food Company continues to enjoy unprecedented growth and hegemony despite various challenges and occasional hiccups in the market (Lamb 27). The company has to address a number of issues in order to guarantee its success and stature in the market.

Amid challenges and weaknesses, the company has numerous opportunities that could spur its growth and success in the market. The company can pursue available channels to overcome its debt hurdle and other relates challenges that are responsible for its poor performance in the market (lamb 28).

Firstly, the company can embark on extensive expansion efforts to increase its presence in the market. The expansion efforts should target areas that have high market potential. Such areas include China, India, Korea, and Africa.

These areas have high potential for commercial activities because of various factors such as population and favourable government policy (Crosson 47).

Through expansion into new market territories, the company could increase and consolidate its market share, thereby increasing its profitability. The company can utilise the existing networks and influence of Cadbury to introduce fresh and innovative products in new markets (Crosson 48).

Secondly, the company can re-invent itself in its current markets by introducing radically distinctive and healthy products. Consumers are increasingly demanding fresh and healthy products in the market.

The company can seize this opportunity by increasing production of organic products in their markets. For instance, the company can venture into supply of fresh products from the farm. Such a strategy will endear the company to its clientele (Crosson 52).

Threats

Kraft Foods Company faces numerous challenges in its operations within the market. The company faces threats arising from the Cadbury acquisition. The transaction caused uproar within the British market. This caused a massive boycott against Kraft’s products in the affected market (Daft 31).

This issue threatens to curtail the performance and command of market share in the future. The company must accelerate efforts to regain confidence and trust among its customers. The acquisition presented numerous challenges for the company thereby affecting its performance in the market (Daft 32).

The company must avoid such pitfalls in future to ensure good performance in the market and maintain its profitability.

The company has to contend with heightened competition from Nestle and Harshey. The two market giants pose a monumental threat to the dominance of Kraft Food Company. The company must engage in activities that diffuse threats within its market (Daft 34).

The company must adopt strategies and mechanisms geared towards reduction and mitigation of threats. The food and beverage market is highly competitive. Kraft Food Company must initiate several preservative measures to guarantee and protect its commercial territory.

The company must ensure loyalty among its customers and embark on product diversification in the market (Daft 41). Such restructuring will ensure sustainability and dominance in the market.

The Split of Kraft Foods Company

In October 2012, Kraft split into two companies. The two companies are Kraft Food Group and Mondelez International (Askew par 1). Mondelez continued with Kraft’s interests in vending of snacks while Kraft Food Group commenced on efforts to consolidate the grocery market in North America.

The split was a calculated move to diversify and venture into new market locations (Askew par 3). The split was an effort towards consolidation of the company’s global presence and dominance. Above all, the split had the primary aim of ensuring expansion of Kraft’s operations in North America (Askew par 3).

The split presented an opportunity for the company to revise its internal organisational structure in a bid to increase efficiency and organisational performance.

The split would turn Kraft’s portfolio into a strong point of departure towards prosperity and heightened activity in the market (Askew par 4). Through the split, Kraft intended to ensure that resources channelled towards improvement and intensification of positive input within its market portfolio (Askew par 4).

Recommendations

In light of the above SWOT analysis, it is evident that Kraft Foods Company has a bright and progressive future in the food and beverages market. With the right approach, the company has a competitive advantage over its competitors in the market.

However, Kraft Food Company must take several decisive steps to ensure good performance in the market. The company should intensify its expansion efforts to ensure wide and appropriate coverage in unexploited markets. This will definitely increase its profitability and dominance in the market.

The company should strengthen existing brands to ensure maximum returns. This will help in cutting costs and avoiding excessive wastage of resources.

The company should seize the opportunity presented by its split to amass the positive energy in the moment. The split should enable the company to reach far-flung markets that are hitherto unexploited.

The company should reenergise its organisational machinery to enable eventual creation of innovative brands that capture the mood of consumers in the market. The company should exploit its numerous strengths and opportunities to guarantee future profitability and success in the market.

However, it is important for Kraft Foods Company to put effort into addressing its weaknesses and threats. This will ensure its growth and propagation in a highly competitive business environment.

Works Cited

Askew, Katy. . 1 October 2012. Web.

Crosson, Susan. Managerial Accounting. London: Cengage Learning, 2011. Print.

Daft, Richard. Management. London: Cengage Learning, 2012. Print.

Gaspar, Julian. Introduction to Business. London: Cengage Learning, 2012. Print.

Lamb, Charles. Essentials of Marketing. London: Cengage Learning, 2011. Print.

Marcic, Dorothy. Understanding Management. London: Cengage Learning, 2012. Print.

Rankin, Lee. Kraft Foods Company: The Bare Essentials. Newyork: Taylor & Francis, 2012. Print.

Welch, Patrick. Economics: Theory and Practice. Newyork: John Wiley & Sons, 2011. Print.

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