Kraft Foods

Jessica Bargman Caitlin Casey Shane Fitzgerald

Wu-Tang Clan Strategic Analysis

Bryanna Geisbush Pat Jewell Jerry Wroten

Organizational Chart

Market in almost 160 countries Owns 70+ brands that earn $100 million annually Core Business: Beverage, cheese & dairy, snack foods, confectionary, convenience foods & cereal.

Marketed in more than 26 Countries Mexico Brazil France Ireland Russia Ukraine Argentina Brazil Colombia Dominican Republic Ecuador Paraguay Peru Uruguay Venezuela Belgium Canada Germany Italy Middle East Netherlands United Kingdom United States Denmark Finland Sweden .

8. 6. Brand Power vs. 4.Kraft TOWS Analysis 1. Low stock prices last few quarters Cadbury·s poor financial situation Cadbury States that Kraft has internal management weaknesses 1. 5. 3. Using brand power and diverse a. 3. 4. Brand power E-Marketing for a competitive c. Wide variety of product helps to acquire competitors for with new healthy trends company success 2. 4. Threats (T) Competitors DEAN-more dairy GM-food conglomerate Health Trends-non organic company Economy US $ vs. International Influence vs. Using marketing and brand power 1. 1. 2. Bad image with Cadbury 3. 3. Hard to Grow 2. 7. 4. Organic/Health Acquiring competitors Online marketing Vertical integration 1. Competitors (Dean& GM) 2. 3. other currencies 5. 2. 5. 6. Weaknesses (W) Hard to grow-slow Poor monopolistic image Reaction time is very slow Current and slope with revenue a. Social responsibility Strengths to Opportunities Strategies Strengths to Threats Strategies (S/O) (S/T) 1. Opportunities (O) Expand more internationally New food categories a. Strengths (S) Diverse Product Portfolio Acquisitions of other companies Brand Power International Influence Marketing Power Social Responsibility Financial Freedom Diverse Market Segments Strengths to Weaknesses Strategies (S/W) 1. Merger with companies market segments to develop new b. 5. 2. International influence w/ US currency . Social responsibility advantage 3. 6. 2.

room for financial spending. Strategy Purchase a farm in order to expand vertically and create a more sustainable company Buying out Folgers coffee company Increase and improve current E-Marketing . Success in past merged companies and room for financial spending.Strategic Actions Strength Diverse Product Portfolio. Marketing Power. awareness of social responsibility. room for financial spending and Brand Power. international relations and brand recognition.

Financial Information Kraft is in the process of acquiring Cadbury $19 billion deal Information based off of 2008/2009 yearly financial statements All the strategic actions are based off this information .

366.000 Cost of Goods Sold $28.000 Long Term Debt $18.000 Current Liabilities $11.DuPont Kraft Foods Inc.31% Return on Total Assets 2.817.000 Balance Sheet Current Assets $11.000 Taxes $728.712.200.000 4.000 Total Stockholder Equity $22.078.633.88% Total Asset Turn Over 0.84 Net Profit After Taxes Net Profit Margin $1.000 Total Liabilities $29.272.67 Return on Equity 8.201.18% .000 Interest Expense $1.198.044. Income Statement Sales $42.186.000 Net Fixed Assets $51.000 *$ numbers in 1000's* Financial Leverage Multiplier 2.000 Total Assets $63.589.000 Operating Expenses $10.

28 General Mills has high Return on Total Assets Dean Foods has high Financial Leverage Multiplier Kraft is a lot higher is sales than both companies .82 Return on Equity 2 .8 .78 Total Asset Turn Over 0. 8 Financial Leverage Multiplier Financial Leverage Multiplier 2.67 Return on Equity 8. Net Profit Margin 8. Return on Total Assets 2.77 Financial Leverage Multiplier 2.6 Return on Equity .6 Total Asset Turn Over .2 eneral Mills Inc. Net Profit Margin . Net Profit Margin . Return on Total Assets 6.88 Total Asset Turn Over 0. Dean Foods Co. 9 Return on Total Assets 2.DuPont Kraft Foods Inc.

000) 22.000 40.345.910.321 11.DATA Sales Net profit Pro Forma Analysis % of sales 11.599 12.817.000 27% 65% 31% 3% Kraft Pro Forma A alysis 2008 $ 42.000 26% 10.243 Balance sheet Assets: Current assets Net fixed assets Equipment Goodwill Intangible Assets Other Assets Total Assets Liabilities: Total Current Liabilities Total Long Term Liabilities Total liabilities Owner's Equity: Treasury Stock Capital Surplus Retained Earnings Other Stockholder Equity Total Owner's Equity Total L & OE Financing Needs = 10.000 1.944.430.000 29.044.949.000 4% (8.018 (3.744.994.000) 23.926.183 1.000 Next Year $ 40.000 13.775 29.476.563.243 64.000 26.000 27.834.000 1.380.078.078.601.834.000 40.089.366.563.881 9.878.408.416 1.000 12.435.000) 23.200.917.201.775 ( 63.000 15.511.994.000) 23.426 60.581.000 9.000 63.714.697) *numbers in 1000's .243 (5.000 (5.917.

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California . room for financial spending and Brand Power. awareness of social responsibility. Opportunity: Sustainable agriculture. but any available farms to be purchased Idaho. real-estate Spending plan: approximately $ Billion Purchase dairy farms in United States Preferably in Wisconsin.Strategy 1: Vertical Integration Strength: Diverse Product Portfolio.

Purchasing Dairies 2007 Kraft purchased $ . control of milk quality Milk market is very fluctuating Dairy farm prices change with milk price . Billion worth of raw milk Purchase of dairies would allow Kraft to control entire product supply from creation to distribution Organic/Natural.

900 Will be more miscellaneous expense depending on barns. equipment 2008 Wisconsin Cattle production cow/per year 19. parlors. 6lbs 1.USDA Averages Average Farm Size 18 acres Average Farm Price approx $20 0 Approx Farm cost: $8 6.2 Million Cows .

Threats Availability of dairy farms Staff Requires high amount of experience Fluctuating Market .

1000+ Cow Farm Provide alternative power sources Methane Dairies would be self-sustaining . Min.Return Money spent on one year of raw milk could purchase enough farms and cattle to supply their demand.

main competitor Folgers is currently owned by Smuckers . Maxwell House U.S.Strategy 2: Acquisition of Folgers Strength: brand power and marketing power Threat: outside competitors Kraft currently owns 8 coffee brands Ex.

Folgers Background Similar brand qualities as Maxwell House Purchased by Smuckers in 2008 for $2.6 billion Current success with Smuckers Our bid would have to more then the worth .

Location of Coffee Sales Home brewed coffee sales increasing Recession creates potential sales numbers Sales Home Work Eating Place 70% Traveling Other 1% 7% % 18% .

Competitive U.S. Companies Folgers leading the way Potential for market majority Trend of sales Ex. Pepsi and Coke Sales Folgers 6% 6% 7% 8% 9% 11% 0% % Maxwell House Eight O' Clock Coffee evalia 19% .

Nabisco: oreo . billion spending plan Would Smuckers sell? Overpayment possibility Possible failure Kraft past acquisition success Ex.Can we afford it? $ .

Strategy : Increase E-Marketing Strengths: Brand Power and diverse market segments Opportunities: Newer online marketing available. and new competitive advantages being developed Pull Marketing Initiative rests with the online shoppers who request information Ex: advertising and e-coupons Push Marketing Promotes product/service information to online shoppers or web browsers that do not ask for information .

joining a mailing alone achieves 1. M unique visitors per month Online searches for coupons and offers have increased by 8% over the past year Properly executed e-mail campaigns can be an effective way of disbursing coupons to the right people Creating an account.Online Coupons Create manufacturer coupons directly posted on Kraft website all the time Kraftfoods. etc .

Online Commercials Companies sell commercial space for ads to accompany the airing of a TV show or Movie With online commercials typically there are only 1-2 commercials so viewers don t feel the need to click away It is easy to target markets specifically by the genres of the online videos .

Social Media Sites ‡ Time spent online by people ages 18-2 ± ~ 0% entertainment ± ~ 0% Social Media ‡ Create ads/banners on social media sites ‡ Develop promotional contests directed towards our demographic (18-2 ) .

Recap Main strengths focus Our strategies Vertical Expansion Acquisition of Folgers Increase E-Marketing EFN Financial situation in correlation with strategies .

Qualitative Data Compare and contrast Feasibility of each Post potential negative analysis results Rating Increase E-Marketing Vertical Integration Acquisition of Folgers .

Strategic Actions Strength Diverse Product Portfolio. Marketing Power. awareness of social responsibility. international relations and brand recognition. room for financial spending. room for financial spending and Brand Power. Success in past merged companies and room for financial spending. Strategy Purchase a farm in order to expand vertically and create a more sustainable company Buying out Folgers coffee company Increase and improve current E-Marketing .

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