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Kraft Foods

Kraft Foods

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Published by Nazish Sohail
based on the secondary market research
based on the secondary market research

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Published by: Nazish Sohail on Aug 09, 2011
Copyright:Traditional Copyright: All rights reserved

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06/07/2013

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EXTERNAL ANALYSIS FOR KRAFT FOODSCHAPTER 1
1.0
 
INTRODUCTION
Kraft Foods or Kraft Foods Inc. (NYSE:KFT) specializes in the manufacturingand marketing of food products, including snacks, beverages, cheese, convenientmeals and various packaged grocery products. (US SEC, 2010). The companyoperates in more than 155 countries across the globe. It has three main segments:Kraft Foods North America, Kraft Foods Europe and Kraft Foods DevelopingMarkets.Kraft Foods is the second largest food and beverage company in the worldafter Nestle. Its portfolio consisted of 11 brands which earn Kraft foods more than $ 1 billion worldwide. The brands includes: Oreo, Nabisco and LU biscuits; Milka andCadbury chocolates; Trident gum; Jacob and Maxwell house coffees; Philadelphiacream cheese; Kraft cheeses ; Oscar Meyer meats (Trefis, 2011).At December 31, 2010, it had operations in more than 75 countries and made its products at 223 manufacturing and processing facilities worldwide. Kraft is anindependent public company listed in the stock exchange of NY City and was listedin the Dow Jones industrial average in 2008 (USA Today, 2008). It acquired Cadburyagainst $ 19.7 billion in 2010resulting in several boycotts of all Kraft related products.
 
CHAPTER 2
2.0
 
SWOT ANALYSIS2.1 SWOT MATRIX
The SWOT analysis of Kraft Foods Inc. is as follows:
Strengths
y
 
World¶s second largest foodcompany
 
y
 
Strong brand equity
 
y
 
Innovation
 
y
 
Distribution network 
 
y
 
Ad Hoc R&D
 Weaknesses
y
 
Market share
y
 
Competition
y
 
Debt requirements
y
 
G
eographic concentration
Opportunities
y
 
Expansion in developingmarkets
y
 
Explore Cadbury markets
y
 
Repositioning
y
 
Offer Organic Products
Threats
y
 
Cadbury purchase issues
 
y
 
Fierce competition
 
y
 
Poor implementations onCadbury division
 
y
 
Unhappy customers
 2.1.1 STRENGHTS
 
Kraft Foods Inc. enjoys the position of world¶s second largest food company after  Nestle (Trevis, 2011). The company masters the manufacturing and marketing of confectionary, food items and beverages. It has more than 11 brands in the markets of America, Europe and Asia. The company has strong brand image and offers innovative products to its customer base. More than 40 of its brands has 100 years heritage (KraftFoods, 2011). Kraft Foods provides an interesting portrait of a company that employstraditional distribution network as well as 2 tier direct store delivery distribution network (MWPL, 2011). With its continuous Research and development units the company iscontinuously in a process of offering safe, healthy and innovative products to itscustomers. The effective R&D is a key to sustain its market position and competition inthe industry.
2.1.2
 
WEAKNESSES
The company is weak on its market performance. Kraft foods acquired Cadburywhich no doubt increased its profit ratio to many folds but it also added lot of debt pressure on the company. Along with the debt requirements the company faces cut throatcompetition with Nestle and Harshey in the markets. Despite of its operations in variousmarkets and presence in US and other markets, the company is weak on geographicconcentration. Kraft foods has low market share but it enjoys high margins in grocery business.Kraft has about 9% market share in the $40 billion global grocery market.Although the grocery division's contribution to Kraft's revenues is lower compared toother divisions, it has EBITDA margins of 33% which are higher than the 14-15%margins in Kraft's other businesses. The high profit margins make grocery a lucrative business line for Kraft (Trevis, 2011).

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