77538204-Kraft-Matrixes.doc

8/16/2019 77538204-Kraft-Matrixes.doc

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V. Strategy Formulation

A. Input Tools

Key external factors that affect the Kraft Foods Inc. were obtained from the PEST

analysis and Porter’s Five Forces of competition discussed earlier. The relevant

external factors affectin the Kraft Foods Inc. are!

1. External Factor Evaluation (EFE) Matrix

Table 19: EFE Matrix for Kraft Foos In!.

Key External Fa!tors "eig#t $ating "eig#teS!ore

%pportunities1. %perates in many fast gro&ing !ategories ".# $ ".$

'. (ro&ing eman for #ealt# an &ellnessprou!ts

".# $ ".$

). *e!rease input !osts +ra& materials, "."% & ".$'-. #anging lifestyles "."% $ ".'&/. (ro&t# in t#e !offee mar0et oerall "."( ' ".#'2. (ro&t# in global !onfe!tionary an sna!0s

mar0et3. abury a!4uisition proies ne& prou!ts

"."%

".")

$

$

".'&

".'#

T#reats

1. In!reasing tren in ining out "."* ' ".#%

'. 5ealt# !on!erns "."% ' ".#(). In!reasing obesity rate ".# # ".#

-. Inflation +transportation, ".# $ ".$/. 6nfaorable impa!t of foreign !urren!y "."( # "."(2. Intense !ompetition from Mars In!7 8estle SA ".#& & ".+(Total 1. ).9

The averae total weihted score is $.#. It means that the company is doin well

in handlin its existin opportunities and threats in its industry. It indicates that

the firms strateies are effectively utili,e to maximi,e its opportunities and

minimi,e the external threats.

)#


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The main opportunities for Kraft Foods are the ac-uisition of adbury/ the fast

rowin mar0et share in some of its products/ and also the value they create in

their products.

The threats show the external factors that directly affects the industry of Kraft

Foods. There are more threats in the industry than there are opportunities. 1ne

of the ma2or threats is its competition to 3estle/ S4

2. Competitive Profile Matrix (CPM)

Table ': M Matrix for Kraft Foos In!.

ompetitie rofile Matrix+M,

Kraft FoosIn!.

8estle ongra Foos

$ITIA; S6ESSFAT%$S "eig#t $ating S!ore $ating S!ore $ating S!ore#. 4dvertisin ".#+ & ".(" & ".(" $ ".&+'. 5lobal Expansion ".#+ $ ".&+ & ".(" $ ".&+$. 6ar0et Share ".#+ $ ".&+ & ".(" ' ".$"&. ustomer 7oyalty ".#+ & ".(" & ".(" $ ".&++. Profit 6arin ".#" $ ".$" $ ".$" $ ".$"(. 4ttractiveness asemployer

".#+ $ ".&+ & ".(" ' ".$"

). 3ew Product8evelopment

".#+ & ".(" $ ".&+ $ ".&+

T%TA; 1. ).-/ ).3/ '.3

3ote! #9ma2or wea0ness/ '9minor wea0ness/ $9minor strenth/ &9ma2orstrenth

The ompetitive Profile 6atrix shows the relative strenth of Kraft Foods

Inc. compared to its competitors by usin the critical success factors in its

industry. :y identifyin its strenths/ we can also identify its relative wea0nesses

and address them to formulate effective strateies.

)'


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Kraft Foods Inc. is relatively competitive in its industry/ showin $.&+ as its

total score. The company has to improve on lobal strenth/ mar0et share and

attractiveness as an employer to improve on brand loyalty and customer retention. Its profit marin has a ratin of $ 2ust li0e the other industry because it

is considered as a minor strenth for they all want to focus on their brand and

customer satisfaction.

)$


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3. Internal Factor Evaluation (IFE) Matrix

Table '1: IFE Matrix for Kraft Foos In!.

Key Internal Fa!tors "eig#t $ating "eig#te S!ore

Strengt#s

1. Strong $


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. Mat!#ing Tools

1. Strength!"ea#nee!opportunitie!$hreat (S"%$) Matrix The opportunities and threats that Kraft Foods Inc. possesses are now

matched aainst its strenths and wea0nesses by usin the S;1T matrix in

order to enerate appropriate strateies.

Table '': S"%T Matrix for Kraft Foos In!.

Strengt#s "ea0nesses

#. Stron of lobal revenue fromemerin mar0et.

#. 8ifficulty in launchin newbrands

'. 6ost of rowth is dependenton ac-uisition or expandininto new mar0et 8ecrease insales

$. Stron competition from3estle/ ?ershey Etc

&. Poor performance in 3orth@ 4merican sement

%pportunities

1. %perates in many fast gro&ing

!ategories'. (ro&ing eman for #ealt# an&ellness prou!ts

). *e!rease input !osts Bra&materialsC

-. #anging lifestyles/. (ro&t# in t#e !offee mar0et oerall2. (ro&t# in global !onfe!tionary an

sna!0s mar0et

7. abury a!4uisition proies ne&prou!ts

Focus on retailers and restaurants

1#/S#

7oo0 for divestiture in poor

performin sements

Position itself as a healthy food

producer 1&/S$/S%

Sell pac0aed coffees to cafes

;&/1#

Focus on ready to eat products

1&/S(

Promote ready to drin0 beveraes

1&/S+/S%

T#reats

In!reasing tren in ining out1. 5ealt# !on!erns'. In!reasing obesity rate

Introduce low fat products T$/S( 7aunch a sub@brand AbrandextensionB for a healthier raneof products T'/ ;$

)+


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). Inflation BtransportationC-. 6nfaorable impa!t of foreign

!urren!y2. Intense !ompetition

1utsource operations to cheaperloistics partners T&/S)

'. Strategic Poition an& 'ction Evaluation (SP'CE) Matrix

The SP4E matrix provides an indication of whether Kraft Foods Inc. should

pursue aressive/ conservative/ defensive or competitive strateies.

Table '): SAE Matrix for Kraft Foos In!.

Internal Strategi! osition $ating Aerage$ating

#. Financial Strenth AFSB ?ih 7on term debt A#%.+ :illionB


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$. Environmental Stability AESB


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mar0et penetration/ mar0et development and product development. This can

also include bac0ward/ forward and hori,ontal interation.

6ar0et penetration is defined as a stratey that see0s to increase mar0etshare for present mar0ets throuh reater mar0etin efforts.

6ar0et development involves introducin present products or services into

new eoraphic areas.

Product development is a stratey that see0s increased sales by improvin or

modifyin present products.

$. oton Conulting roup (C) Matrix

In the :5 matrix/ ATable '&B/ Kraft Foods Inc. services are presented and

compared with industry’s rowth rate.

Table '-: ( Matrix for Kraft Foos In!.

Total$eenue +in

Mio. D,

rofits +in

Mio. D,

@

Mar0etS#are

@Inustry

(ro&t#$ate

Food products &*/'") &/##& #%.() %.&&

The percentae mar0et share of ;ell Faro was computed as follows!

'"#" Kraft Foods net sales G #""> '"#" industry total net sales

9 &*/'") G #""> #*)/ +

9 '&.*#>

The percentae industry rowth rate was obtained from the annual increase in

revenues.

)%


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Figure '): ( Matrix for Kraft Foos In!. In&utr*

+ gro,th rate -elative + Mar#et Share in the In&utr*

?ih D'" #."

"

@'"

6edium".+

7ow"."

II STA$S

I 6ESTI%8MA$KS

+7'/7=.--,

III AS5 %"S IV ? *%(S

Kraft Foods belons to Huestion 6ar0s 5roup seen in Huadrant I/ it

remains to be competitive enouh althouh its mar0et share is not that hih but

its rowth rate in industry is hih enouh to cover the mar0et. In order to be on

Stars the company must pursue an intensive stratey to strenthen the company

and meet its oals in the industry.

)*

Kraf

t

Foo

ds

Kraf

t

Foo

ds


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. Internal!External (IE) Matrix

Kraft’s IE matrix is as follows!

Figure '-: IE Matrix for Kraft Foos In!.

EFE "eighe& Scores

IFE "eighte& Score

&."

?ih

$."

6edium

'."

7ow

#."

Strong 'verage "ea# 3./ 0 ./ 2./ 0 2. 1./ 0 1.

$." '." #."

III

A'.*(/$."*B

III

IV

V VI

VII VIII IG

Kraft Foods o. is in the 5row and :uild position which means that its internal

strenths are on the averae and response to the external factors are on the

above averae. This means that Kraft can proceed in doin intensive and

interative strateies as suested by the IE 6atrix.

%"

KraftFoods o.

?arvest or 8ivest

?old = 6aintain

(ro& an buil


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Figure '/: (S Matrix for Kraft Foos In!.

"ea0ompetitieosition

$api Mar0et (ro&t#Huadrant II Huadrant I

#. 6ar0et 8evelopment '. 6ar0et Penetration $. Product 8evelopment &. Forward Interation +. :ac0ward Interation

(. ?ori,ontal Interation ).


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. T#e *e!ision stage

Table '/: SM Matrix for Kraft Foos In!.

Strategy 1 Strategy '

Key Fa!tors "eig#t AS TAS AS TAS

%pportunities

1. %perates in many fast gro&ing !ategories "."+ ' ".# & ".'

'. (ro&ing eman for #ealt# an &ellness prou!ts ".#"

). *e!rease input !osts Bra& materialsC ".#+ ' ".$ ' ".$

-. #anging lifestyles "."+

/. (ro&t# in t#e mar0et oerall ".#" & ".& ' ".'

2. (ro&t# in global !onfe!tionary an sna!0s mar0et

3. abury a!4uisition proies ne& prou!ts

"."$

"."+

$

$

".'&

# "."%

T#reats

1. In!reasing tren of ining out "."+ & ".' & ".'

'. 5ealt# !on!erns ".#" $ ".$ $ ".$

). In!reasing obesity rates "."% ' ".#( # "."%

-. Inflation BtransportationC ".#

/. 6nfaorable impa!t of foreign !urren!y "."(

2. Intense !ompetition from Mars In!7 8estle SA "."% & ".$' & ".$'

Key Fa!tors "eig#t AS TAS AS TAS

Strengt#s

1. Strong $s se!on largest foo !ompany1. '/@ reenue from leaing mar0et

"."$ ' "."( & ".#'

"ea0nesses ".#' & ".&% & ".&%

1. *iffi!ulty in laun!#ing ne& brans ".#" ' ".' # ".#

'. Most of gro&t# is epenent on a!4uisition or expaning into

ne& mar0et

"."% & ".$' # "."%

). Strong !ompetition from 8estle7 5ers#ey Et!. "."( & ".'&

-. oor performan!e of 8ort#?Ameri!an segment "."% & ".$' # "."%

Total

Stratey #!

%'


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J 4 new line of low@fat products for the health conscious sement

Stratey '!

J 8evelop the 6axwell ?ouse mar0et by introducin it to cafes.

$esult Stratey # Total T4S! +.""

Stratey ' Total T4S! $.*+

The recommended stratey for Kraft Foods Inc. would be to introduce a new line

of low@fat products for the health conscious sement.

Position its products as a healthy and oranic.

VI. Strategy Implementation

%$


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A. $e!ommene $eise Vision Statement

4fter a thorouh analysis of Kraft Foods ision Statement/ we come up the a

decision which is not to revise the vision of this company because as we analy,e

the statement it shows that the vision encompasses the thouht and content on

how the company position their selves in the mar0et. The impact made by the

vision truly captures the sentiments of its consumer and also the vision ives us

a clear understandin that the company is customer@oriented and promotes a

better way of livin.

. $e!ommene $eise Mission Statement

4fter a thorouh study of Kraft Foods Inc. we can say the its mission statement

contains information in terms of the company’s concerns when it comes to its

customer/ public imae and concern for its employees. 4lthouh it has a ood

mission statement we thin0 that it would be better if we do some revisions in

order to elaborate more about how the company could fulfill its oals

;e hereby revise the mission statement and this would be the recommended

mission for the company!

In providin -uality products and services to the public/ ;e/ Kraft Foods Inc.

commit ourselves to excellent and satisfyin production of products by

#.


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$. Promotin ood relationship between our company and customer and also the

suppliers of our business.

&. Seein to eat that we have the best employees that could participate in the

decision ma0in and providin them ood wor0in facility and -uality trainins

+. Participatin in community proram and helpin the community have a stable

proress.

. $e!ommene *epartmental %bHe!ties

6ar0etin 1b2ectives

• To increase sales by #+> for the next three years

• To increase mar0et share by at least $> for the next $ years

• To maintain customer loyalty by developin more healthy products.

Financial 1b2ectives

• To increase net income at least $"> of the sales for the next three years.

• To increase asset turnover by at least +> per year.

?uman


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• To be able to built a new


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• Pac0ae products that are inter@related

• Improve technoloical systems/ especially the online shoppin center for

mothers at home.

F. Finan!ial roHe!tions

Table '2: Finan!ial roHe!tions for Kraft Foos In! +'11?'1),

%)


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en!#mar0

Jear'1

'11 '1' '1) Assumptions

roHe!te In!ome Statement +in MioD,

Total $eenue &*/'")." +&/#')." +*/+$*." (+/&*'." 4ssumin that revenueincreases at #">

ost of

8epreciationM4morti,ation '##." '''." '$$." '&&." 4ssumin this increase at +>per annum

Total operatin expenses #'/%&)." #$/%+%." #+/'$%." #(/)+)."1peratin income or loss +/+." )/$**." */)%%." #'/&*)."

Income From ontinuin 1perations Earnin before interest and taxes +/+." )/$**." */)%%." #'/&*)." Interest Expense #/)*"." '/#(+." '/$%#." '/(#*." 4ssumin this increases at

&> of revenue Income before tax $/(&'." +/'$&." )/&")." */%)%." Income Tax expense #/#&)." #/%$#." '/+*'." $/&+)." 4ssumin the tax rate is $+> 3et Income &/##&." $/&"$." &/%#+." (/&'#."

roHe!te alan!e S#eet

Total urrent 4ssets #(/''#." '#/"%)." ')/$." $+/($(."

Total 3on@current 4ssets )*/"(%." %'/'$"." %+/+#*." %%/*$&." Increases assumed for build@up of new facilities andinteration of technoloy

Total Assets *+/'%*." #"$/$#)."

##'/*$'."

#'&/+)"."

Total 7iabilities +*/&++." +$/#+"." &'/(**." '(/'&&." 8ecrease as e-uity increasesand revenue

E-uity $+/%$&." +"/#()." )"/'$$." *%/$'(."

Total liabilities an e4uity *+/'%*." #"$/$#)."

##'/*$'."

#'&/+)"."

VII. Strategy Ealuation

%%


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4s an evaluation tool/ the balanced scorecard shows the various selected 0ey

strateies on aspects of consumer perspective/ internal business processes/

financial perspective and learnin rowth. 4 set of -uantitative measures has

been enumerated for each stratey to enable the company to monitor proress

or stratey attainment on a reular basis and review whether these need to be

chaned or revised.

Table '3: alan!e S!ore!ar for Kraft Foos In!.

(oals Strategies Measures Timeompletion

ustomer perspe!tie

roie 4uality prou!ts forall !ustomers

Product development 8evelopin -uality productssuch as low fat and lesscholesterol products

Immeiatelyafter '11

Internal business pro!ess

More effi!ient internal!ontrol.

Semi@centrali,ation of theorani,ation

4 main branch per areawhich controls othersmaller branches

-t# 4uarter'/ '2

Finan!ial perspe!tie

Attainment of '117 '1'7 an'1) reenue target

?avin a lare share in the lobaleconomy

sin effective mar0etinand extensive productdevelopmentuttin cost if possible

)n4uarter'11

;earning an gro&t#

%*


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In!rease inustry a&arenessregaring seri!e in ot#er!ountry*eelopment of intensietraining program for #umanresour!e

Intensify mar0eting promotions

%ffering seminars t#at &illen#an!e s0ills in !ommuni!atingan e!ision?ma0ing

6se t#e partner!ompany>s expertiseregaring t#emar0etability of t#e!ountryIn!rease of effe!tienessan effi!ien!y of s0ill

performan!e

'n )r 4uarter '1'

Immeiatelyafter '11

VIII. on!luing $emar0s

Food industry is one of the fast rowin industries ever since it started to appear

in the lobal mar0et. nited States is the home where leadin food companies

are principally located. Indeed the advance technoloical adaptation in this

country led the food industry to become innovative and more eaer to develop

new products as time oes by. The challene in this industry is the touh

competition of the various companies belonin in the same industry. 1n how

they could penetrate the mar0et and what would be their advantae over their

competitor. Kraft Foods is one of the companies belonin in this cateory. It can

achieve its leadership and rowth by doin intensive promotion and manaement

of its existin clients and venturin other countries to promote business.

*"

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77538204-Kraft-Matrixes.doc