Kraft Case Group 1_Jerwin (1).doc

8/16/2019 Kraft Case Group 1_Jerwin (1).doc

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PHILIPPINE CHRISTIAN UNIVERSITY GRADUATE SCHOOL

STRATEGIC MANAGEMENT

Submitted by: Submitted to:Prof Mur!""o#

$er%i& Tub!y 'r!ft C!#eStudyOde##! $!ri&! A##um(tioMi)*e""e Lou Prob"emSt!teme&t +

A"ter&!ti,e Cour#e# of A)tio&

A. Assumptions

1. General Environment Stability

• Expected steady growth of packaged and processed food in US market which will givelarge profit in retail sales.

• Increase in worldwide demand because people do not have enough time to prepare for

their foods.

• ising rate of obesity

• ising cost of petroleum

!. Industry Growth "rospects

• Expected positive growth revenue for U.S. market

• Expected negative growth in revenue for international market due to dollar gains.

#. $inancial Strength and competitive position%. Show relevant ratios

Actual

-../ -..0 -..1 Remarks

Financial ratios

&urrent atio 1.03 0.63 0.79 Weak

'cid test ratio 0.54 0.34 0.39 Weak

(ebt)to)E*uity atio 84% 47% 25% Highly leveraged

'sset)to)debt ratio 154% 167% 206% Can liquidate debt upon liquidation'ccounts eceivable

turnover 8.52 7.97 N/A Increasing trendInventory turnover 10.79 9.51 N/A Increasing trend

+E 11.7% 9.3% N/A Increasing trend

+' 4.4% 4.2% N/A Steady growth

I PRO2LEM STATEMENT

Maintaining to be the leading and largest food o!"an# in the $nited tates andbeo!ing the largest food o!"an# globall# both in ter!s of re&en'e and "ro(t.

1. '""ort infor!ation )h# this is a "roble!


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a. *here is no e&ident negati&e "roble! that a+ets ,raft that )ill red'edtheir "ro(t and "osition in the !ar-et. *h's their "roble! is to !aintaintheir "osition and gro) !ore

2. *i!e ontet 20093. ie) oint rene osenfeld

II ALTERNATIVE COURSES O3 ACTIONS

4 TO5S 6 S5OT M!tri7

Stre&8t* 5e!9&e##e#1. ,ighly leveraged with -%

debt)to)e*uity ratio for !//- whichmeans making profit out of others

money.

!. Solvent enough to pay)off all

liabilities with 10% and 12asset)to)debt ratio for !//- and

!//2 respectively

#. Increasing accounts receivable

and inventory turn)over ratios of-.0!x from 2.32x for accountsreceivable and 1/.23x and 3.01x

for inventory all in years !//- and

!//2 respectively.

%. Increasing return on e*uity andreturn on assets ratio of 11.2

from 3.# for e*uity and %.% and

%.! for assets all in years !//-

and !//2 respectively.

0. "ositive revenue growth in US

convenient meals 4256 USGrocery 4256 US 7everages

456 US Snacks 415.

. Early user of all

communications media 4outdoor billboards6 8ournals6 maga9ines6

radio5

2. Effective launch of several

websites for advertising and publicity 4+reo (ouble Stuf

acing :eague 4(S:5

-. ,aving customer interactivewebsite which include "roduct

Info and ecipe 7ox which allowthe visitor to store and retrieve

favorite recipe whether personal or

own by ;raft.

3. Simple and clear missionstatement

1/. ,aving a &E+ regarded as

highly effective female manager in

United States.

1. =orth 'merican

$oodservice 41/5 andEuropean Union 4125

#. (ivisions are determined

by geographical area and no

by product.


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11. &ommitment in developing

new products and innovation

1!. $ood safety program has been

adopted as issues of chemical asissues of chemical and bacterial

contamination and new food)borne

pathogens remain a public healthconcern.

1#. 'ctively researching

consumers? eating habits and preferences at home and atestaurants

O((ortu&itie# SO 5O

1. Enhance waters containing

vitamins or supplements are

gaining popularity.

!. Expected steady growth of

packaged and processed foodin US market which will give

large profit in retail sales.

#. Increase in worldwide

demand because people do

not have enough time to prepare for their foods.

%. Expiration and

renegotiation of commodity

prices in mid)!//- will expectto lower the production cost

of baked products relying on

wheat6 eggs and natural gas.

1. btain a loan fro! ban-a!o'nting to 3.6billion to(nane f'rther e"ansionstrategies 1 1 2 3:2. nrease !ar-et a" foradditional (naning 4 12 3:

3. "ansion of b'sinesso"erations not onl# in $ b'talso internationall# li-e Asia5 1 2 3:4. reate an ad&ertising)ebsite that )ill f'rthers'""ort the "ositi&e gro)thrate of the de!and of"rod'ts. 6 7 8 1 23:5. esearh and de&elo" ne)"rod't or ra) !aterials ofeisting "rod't that are!'h hea"er to 'rrentones. 11 13 4:

4 ;oo- for ne) s'""lierontrat that )ill gi&elo)er "ries to red'ethe 'rrent oro"erational liabilities


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2. &on'gra $oods A primarycompetitor domestically

4=orth 'merica5 together with

other domestic stores such as

,ein9 &ompany and Sara :ee.

-. (evelopment of healthyfoods or those not containing

less trans)fat and fewer

calories or made of only

organic ingredients.

onta!ination.4. esearh and de&elo" ne)"rod't that an be "re"ared)itho't the 'se of "etrole'!li-e grilled. 11 13 *4:5. esearh ra) !aterials'bstit'te that an bei!"orted fro! othero'ntries to lo)er the ost of

"rod't bro'ght b# $ dollargains 11 13 *5:6. n&est in foreign (nanialinstr'!ent to inreaseinternational o"erationsthro'gh foreign 'rren#gains 1 2 *6:7. Mar-et enetration toe"and o"erations and!aintain "osition in $ 45 *7:

- I3E6E3E M!tri7

I3Etrong 3.0 4.0:

A&erage 2.0 2.9:

4.0:

E3E Medi'!2.0 2.0:

;o) 1.0 1.99:

?

onl'sion@ ro) and B'ilda. Ba-)ard Cor)ard or =oriDontal ntegrationb. Mar-et enetration. Mar-et Ee&elo"!entd. rod't Ee&elo"!ent

SPACE M!tri7


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onl'sion@ Aggressi&ea. Ba-)ard Cor)ard or =oriDontal ntegrationb. Mar-et enetration. Mar-et Ee&elo"!entd. rod't Ee&elo"!ent

e. Ei&ersi(ation

; GRAND Str!te8y M!tri7

RMG

B! B1

WCP SCP

F3 F4 SMG

,C fall 'nder Quadrant 1 for ha&ing ra"id gro)th ind'str# and strongo!"etiti&e "osition. 'ggested trategies are@1. Mar-et Ee&elo"!ent2. Mar-et enetration3. rod't Ee&elo"!ent4. Cor)ard ntegration5. Ba-)ard ntegration

6. =oriDontal ntegration7. elated Ei&ersi(ation


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Kraft Case Group 1_Jerwin (1).doc