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 Strengths

1. Strong R&D 2. Increased organic revenues 3. Availability 4. Innovative advertising methods 5. Purchasing power 6. Focus on consumers 7. Strong distribution network 8. Strong brand image 9. User friendly website

Weight
0.1 0.06 0.09 0.08 0.04 0.08 0.08 0.1 0.05

Rating
4 3 4 4 4 3 3 4 3

Weighted Score
0.4 0.18 0.36 0.32 0.16 0.24 0.24 0.4 0.15

Weaknesses
1. High long term debt ($18.5 billion) 2. Constant increase in current liabilities 3. Decrease in sales 4. Poor performance of North-American segment

0.1 0.08 0.07

0.07

1 2 2 2

0.1 0.16 0.14 0.14

Total

1.00

2.99

EFE MATRIX

Key External Factors Opportunities

1. Increasing trend in dining out (chance to increase profit margins dealing with businesses) 2. Growing demand for health and wellness products 3. Decreased input costs (raw materials) 4. Changing lifestyles 5. Growth in the coffee market overall 6. Growth in global confectionary and snacks market

Weight
0.1 0.1 0.08 0.08 0.06 0.08 0.09 0.08 0.1 0.1 0.06 0.07 1.00

Rating
3

Weighted Score
0.3

3 4 3 2 3

0.3
0.32 0.24 0.12 0.24

Threats
1. Increasing trend in dining out
2. Health concerns 3. Increasing obesity rate

2
2 1

0.18
0.16 0.1 0.3

4. Inflation (transportation) 5. Unfavorable impact of foreign currency

6. Intense competition

3 1
4

0.06
0.28 2.60

Total

CPM

Critical Success Factors

1. Advertising 2. Global expansion 3. Market share 4. Customer loyalty 5. Profit margins 6. Attractiveness as employer 7. New product development

Kraft Foods Nestle Inc. Weight Rating Score Rating Score

0.15 0.15 0.15 0.15 0.10 0.15 0.15 4 3 3 4 3 3 4 0.6 0.45 0.45 0.6 0.3 0.45 4 4 4 4 3 4 3 0.60 0.60 0.60 0.60 0.30 0.60 0.45

ConAgra Foods Rating

3
3 2 3 3 2 3

Score
0.45 0.45 0.3 0.45 0.3 0.3

0.6
3.45

0.45
2.70

Total

1.00

3.75

SWOT ANALYSIS

Strengths
1. 2. 3. 4. 5. 6. 7. 8. 9. Strong R&D Increased organic revenues Availability Innovative advertising methods Purchasing power Focus on consumers Strong distribution network Strong brand image User friendly website 1. 2. 3. 4.

Weaknesses
High long term debt (18.5 billion) Constant increase in current liabilities Decrease in sales Poor performance in North-American segment

Opportunities
1. Increasing trend in dining out [chance to increase profit margins to businesses] 2. Growing demand for health and wellness products 3. Decreased input costs [raw materials] 4. Changing lifestyles 5. Growth in the coffee market overall 6. Growth in global confectionary and snacks market Focus on retailers and restaurants O1,S1 Position itself as a healthy food producer O4,S3,S8 Focus on ready to eat products O4,S6 Promote ready to drink beverages O4,S5,S8 Look for divestiture in poor performing segments Sell packaged coffees to cafes W4,O1

Threats
1. 2. 3. 4. 5. 6. Increasing trend in dining out Health concerns Increasing obesity rate Inflation [transportation] Unfavorable impact of foreign currency Intense competition Introduce low fat products T3,S6 Outsource operations to cheaper logistics partners T4,S7 Launch a sub-brand (brand extension) for a healthier range of products T2, W3

SPACE MATRIX

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

Rating
1 5 5 5 2 4 4 -1 -1 -2 -2 -5 -1 -3

Average Rating
+3.71428

-2.14286

-5 -5 -2 -5 3 1 5

-4.25

+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.

Key Factors Opportunities

1. Increasing trend in dining out (chance to increase profit margins to businesses) 2. Growing demand for health and wellness products 3. Decreased input costs [raw materials] 4. Changing lifestyles 5. Growth in the market overall 6. Growth in global confectionary and snacks market

Strategy 1 Weight AS TAS

0.05 2

Strategy 2 AS TAS
0.2

0.1 4

0.10 0.15 0.05 0.10 0.08

0.05 0.10 0.08 0.1 0.06 0.08

2 4 3 4 3 2

0.3 2
0.4 2 0.24 1

0.3
0.2 0.08

Threats
1. Increasing trend of dining out 2. Health concerns 3. Increasing obesity rates 4. Inflation [transportation] 5. Unfavorable impact of foreign currency 6. Intense competition

0.2 4 0.3 3 0.16 1

0.2 0.3 0.08

0.32 4

0.32

Key Factors

Strategy 1 Strategy 2 Weight AS TAS AS TAS

0.06 0.07 0.05 0.04 0.08 0.06 0.07 0.10 0.03 0.12 0.10 0.08 0.06 0.08 1 0.06 4 0.1 0.12 0.24 0.24 0.28 0.4 0.06 0.48 0.2 0.32 0.24 0.32 0.24 0.15 0.16 0.32 0.18 0.28 0.4 0.12 0.48 0.1 0.08 0.08

Strengths

1. Strong R&D 2. Increased organic revenues 3. Availability 4. Innovative advertising methods 5. Purchasing power 6. Focus on consumers 7. Strong distribution network 8. Strong brand image 9. User friendly website

2 3 3 4 4 4 2
4 2 4 4 4

3 4 4 3 4 4 4
4 1 1 1

Weaknesses

1. High long term debt (18.5 billion) 2. Constant increase in current liabilities 3. Decrease in sales 4. Poor performance of North-American segment

 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 lowfat products for the health conscious segment. Position its products as a healthy and organic.

Thank you!