Case Study

KRAFT,INC.

1. Current Situation:

A. Current Performance

-excellent current performance

-130 countries indicates wide market capturing
-more than 5000 sales people are included
-ranks second only to general foods in the food processing industry n its amongst the 4
largest food businesses in the world
-is into different business segments like food products, direct selling, consumer products,
commercial products
-very old company in the market.. from 1903
-lot of M&A

B. Strategic Posture

-kraft’s mission is to become the leading food company in the world,based on achieving
superiority versus competition
 Customers
-wants &
needs
-quality

Business Channels
style -participat^
-openness n
-innovation -advantage
..

MISSIO
N

Competi^n
People
-mass
-excellence
-resources
-commit^t

-strategies
to protect & build existing business
weight the business mix towards value added products
to augment the growth of existing products
to continue to pursue expense & asset minimization in all areas
to increase organisational vitality

2. Corporate Finance

Top management has taken various decisions from time to time regarding:
Group & division Principal division

Retail food group:

Refrigerated products division Process , natural, cream cheese

Grocery products division Salad dressings, mayonnaise

Venture division Bagels & herb teas

International group: Wide variety

Primary operations in Canada, west germany, italy,
Australia, phillippines, latin america, & mexico

Dairy group: Ice cream, ice milk, cottage cheese

Food service group: From retail to restaurants

Industrial foods group: Edible oils & edible oil based products

3. External Environment:

A. Societal
-wide consumer acceptance
-consumer satisfaction indicated by increasing sales

B. Task
-cost savings from lower commodity prices
-possible tax legislation

C. Summary
-thus those firms which can most successfully identify & satisfy the rapidly changing
customer needs with strong , high value added brands will be winners in this slow growth
market

4. Internal Environment:
A. Corporate Structure

keeps on changing due to continuous M&A, but companies performance indicates that
the corporate structure is well defined.. every employee must be satisfied with the kind of
work he is performing.. & there should be right person at the right place..

B. Corporate Culture
-the culture of kraft inc is supportive,as kraft’s human resources policies & practices are
built on standard of excellence & total commitment to equal opportunity & fair
treatment..
-culture is also supportive in the sense that it is open.. employees are given chance to be
innovative & creative

C. Corporate Resources
Marketing:
leader or strong contender
Its amongst the top 20 spenders on advertising $ 418.6 millions in 1984

Finance:
increasing operating profit of $ 833.8 millions from $ 812.9 millions

R&D:

Operating efficiencies & economies of size

Increasing capital expenditure from $ 181 million to $ 209 million
indicates purchase of heavy machineries or other technological
equipments

Operations & logistics:

More than 5000 sales people distributing in 130 countries

Human Resource Management:

Giving opportunities to staff without compromising with the excellence

Payroll & employee benefits have increased to $1360 million from $ 1208
million.

D. Summary Of Internal Factors

Thus internal factors consist of all the things internal to a company whether it be the
corporate structure, corporate culture or the corporate resources. All internal factors are
somehow influenced by the external factors. So a company like kraft has kept itself very
strong to meet the external factors whether they are favourable or unfavourabe.

5. Analysis Of Strategic Factors

A. Situational Analysis
Strengths
-Increasing profits & consumer acceptance
-Goodwill
-Faithful employees
-Achievement of set targets
-Geographically too dispersed so failure in one particular area due to any possible
reason will not be the risk

Weaknesses
-No recent track record of success in develoiping the new product
-Too conservative, need more challenges
-Increasing competition

B. Review Of Mission & Objectives

Mission is to become the leading food company in the world , based on achieving
superiority versus competition in a balance of overall quality, people, products, business
plans , return on management investment ROMI, rate of growth in unit sales & operating
income & innovation

6. Strategis Alternatives & Recommended Strategy

-employees should be given more chances to show their creativity this will lead to
product innovations & thus will satisfy the bottom line as people are more crazy for new
products

-surveys should be done to know why sales of a particular product are going down

-company can also target certain niche segments to widen its scope

-performance of company should also be compared quaterly not only yearly

Review of mission & objectives

-mission is to achieve wide customer acceptance.. but if sales are becoming constant or
slow then change in customer tastes & preferences should be found out..

-to meet the competition performance should be consistent but the plans should be
flexible.

7. Implementation
-As prices are on rise so sales should increase so that it covers all the expenses as well
company can cover the expenses of new projects..as new projects involve huge
investments so it wont be possible for the company to raise whole amount from outside..
as already long term debt are $ 231.5 million and total debt to total capital is 34.9% so
sales should be increased

-segments which are generating low profits should me either restructured if there is any
hope or should be shut down or sold off so that the fixed expenses are cut down.. as net
income per share has decreased from last year’s $ 2.82 million to $ 2.77 million.

-though customers are satisfied still to meet the growing competition TQM total quality
management should be introduced

-brain storming sessions should be done so that new ideas which are feasible are
implemented.. this will motivate the employees also..

These kind of changes should be initiated from top level management & there should be
active participation of all the employees.. before introducing these changes in depth
analysis should be done to know its after effects.. some times these also increase the
expectations of the employees.. thus to ensure there applicability following things should
be kept in mind:
-how much feasible changes are.. whether financially or technically..
-how much time consuming they are..
-does the company needs these changes at this stage..

8. Evaluation & Control

-whatever changes are being introduced whether the information system can support it.. if
it cannot thenm, upgradation of the systems..

-how much control measures are present to tackle these changes..

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