kraft

Presentation by: Osama Masood

Fahad Jawed

Overview - Kraft

• 150 countries across the globe• 100,000 employees• Profits increased by 10%, north American

sales rose by 2.3%• Brands include Oreo, LU biscuits and Kraft

Cheese, Toblerone

History

• Founded in 1903 by James Kraft and granted a patent for process cheese in 1914

• Exports started in 1920 with plants established in England and Germany

• Key to success at Kraft– Innovation – New advertising methods

OREO elevator ad

• Philip Morris acquired Nabisco in Dec 2000 and formed two companies– Kraft Foods North America– Kraft Foods International

• Second largest IPO in US history offering $8.68 billion dollars

• ‘Divisional by Geographic’ Organizational Structure

Company mission and Ethics Statement

• Make Today Delicious– In order to fulfill this mission Kraft Foods Inc.

focuses on consumers in everything. The company also understands that action speaks louder than words so at Kraft Foods:• We inspire trust• We act like owners • We keep it simple• We are open and inclusive • We tell like it is

Competitors

IFE MATRIX

Key Internal Factors Weight Rating Weighted Score

Strengths1. Strong R&D 0.1 4 0.42. Increased organic revenues 0.06 3 0.183. Availability 0.09 4 0.364. Innovative advertising methods 0.08 4 0.325. Purchasing power 0.04 4

0.166. Focus on consumers 0.08 3 0.247. Strong distribution network 0.08 3 0.248. Strong brand image 0.1 4 0.49. User friendly website 0.05 3

0.15

Weaknesses1. High long term debt ($18.5 billion) 0.1 1 0.12. Constant increase in current liabilities 0.08 2 0.163. Decrease in sales 0.07 2

0.144. Poor performance of North-American segment 0.07 2 0.14

Total 1.00 2.99

EFE MATRIX

Key External Factors Weight Rating Weighted ScoreOpportunities1. Increasing trend in dining out (chance to increase profit margins dealing with businesses)

0.1 30.3

2. Growing demand for health and wellness products 0.1 30.3

3. Decreased input costs (raw materials) 0.08 4 0.324. Changing lifestyles 0.08 3 0.245. Growth in the coffee market overall 0.06 2 0.126. Growth in global confectionary and snacks market 0.08 3 0.24Threats 1. Increasing trend in dining out 0.09 2

0.182. Health concerns 0.08 2 0.163. Increasing obesity rate 0.1 1

0.14. Inflation (transportation) 0.1 3 0.35. Unfavorable impact of foreign currency 0.06 1

0.066. Intense competition 0.07 4

0.28Total 1.00 2.60

CPM

Kraft Foods Inc.

Nestle ConAgra Foods

Critical Success Factors Weight Rating Score Rating Score Rating Score

1. Advertising 0.15 40.6

4 0.60 30.45

2. Global expansion 0.15 30.45

4 0.60 30.45

3. Market share 0.15 30.45

4 0.60 20.3

4. Customer loyalty 0.15 40.6

4 0.60 30.45

5. Profit margins 0.10 30.3

3 0.30 30.3

6. Attractiveness as employer 0.15 30.45

4 0.60 20.3

7. New product development 0.15 40.6

3 0.45 30.45

Total 1.00 3.45 3.75 2.70

SWOT ANALYSIS

Strengths Weaknesses1. Strong R&D2. Increased organic revenues3. Availability4. Innovative advertising methods5. Purchasing power6. Focus on consumers7. Strong distribution network8. Strong brand image9. User friendly website

1. High long term debt (18.5 billion)2. Constant increase in current liabilities3. Decrease in sales4. Poor performance in North-American

segment

Opportunities1. Increasing trend in dining out [chance to

increase profit margins to businesses]2. Growing demand for health and wellness

products3. Decreased input costs [raw materials]4. Changing lifestyles5. Growth in the coffee market overall6. Growth in global confectionary and snacks market

Focus on retailers and restaurants O1,S1 Look for divestiture in poor performing segments

Position itself as a healthy food producer O4,S3,S8

Sell packaged coffees to cafes W4,O1

Focus on ready to eat products O4,S6Promote ready to drink beverages O4,S5,S8

Threats1. Increasing trend in dining out2. Health concerns3. Increasing obesity rate4. Inflation [transportation]5. Unfavorable impact of foreign currency6. Intense competition

Introduce low fat products T3,S6 Launch a sub-brand (brand extension) for a healthier range of products T2, W3

Outsource operations to cheaper logistics partners T4,S7

SPACE MATRIX

External Factors Rating Average Rating

1. Financial Strength (FS) High Long term debt (18.5 Billion) Revenues increased to 42.2 Billion from 36.13 billion Liquidity increased from 567 million to 1.24 billion Saved $1.1 billion in 2009 through streamlined manufacturing Assets decreased from 67 billion to 63 billion Inventory decreased from 4 billion to 3.7 billion Receivables decreased from 5.1 billion to 4.7 billion

1555244

+3.71428

2. Competitive Advantage (CA) Strong Brand Name Largest Food Company in USA Available in over 150 countries New products Decrease in Sales Innovative advertising 9.8% increase in pricing

-1-1-2-2-5-1-3

-2.14286

3. Environmental Stability (ES) Rising costs of petroleum Unfavorable impacts of foreign currency Brand conscious consumers Global recession

-5-5-2-5

-4.25

4. Industry Strength (IS) More people are dining out Development of health products (Obesity Concerns) Steady Growth in US market for packaged and processed food

315

+3.00

• FS & ES Total Score= -0.53571 • CA & IS Total Score = 0.857143

The graph shows that Starbucks should follow competitive strategies like market penetration, product development and market development and integration.

QSPM

• Strategy 1: – A new line of low-fat products for the health

conscious segment• Strategy 2: – Develop the Maxwell House market by

introducing it to cafes.

Strategy 1 Strategy 2Key Factors Weight AS TAS AS TAS

Opportunities1. Increasing trend in dining out (chance to increase profit margins to businesses)

0.05 2 0.1 4 0.2

2. Growing demand for health and wellness products 0.103. Decreased input costs [raw materials] 0.15 2 0.3 2 0.34. Changing lifestyles 0.055. Growth in the market overall 0.10 4 0.4 2 0.26. Growth in global confectionary and snacks market 0.08 3 0.24 1 0.08Threats1. Increasing trend of dining out 0.05 4 0.2 4 0.22. Health concerns 0.10 3 0.3 3 0.33. Increasing obesity rates 0.08 2 0.16 1 0.084. Inflation [transportation] 0.15. Unfavorable impact of foreign currency 0.066. Intense competition 0.08 4 0.32 4 0.32

Strategy 1 Strategy 2Key Factors Weight AS TAS AS TAS

Strengths1. Strong R&D 0.06 1 0.06 4 0.242. Increased organic revenues 0.073. Availability 0.05 2 0.1 3 0.154. Innovative advertising methods 0.04 3 0.12 4 0.165. Purchasing power 0.08 3 0.24 4 0.326. Focus on consumers 0.06 4 0.24 3 0.187. Strong distribution network 0.07 4 0.28 4 0.288. Strong brand image 0.10 4 0.4 4 0.49. User friendly website 0.03 2 0.06 4 0.12

Weaknesses 0.12 4 0.48 4 0.481. High long term debt (18.5 billion) 0.10 2 0.2 1 0.12. Constant increase in current liabilities 0.08 4 0.32 1 0.083. Decrease in sales 0.06 4 0.244. Poor performance of North-American segment 0.08 4 0.32 1 0.08

• Strategy 1 Total TAS: 5.00• Strategy 2 Total TAS: 3.95

The recommended strategy for Kraft Foods Inc. would be to introduce a new line of low-fat products for the health conscious segment.

• Position its products as a healthy and organic.

Thank you!