Kraft Foods

I chose a company that most of us have contact with on some basis, Kraft foods. I was amazed during my research how many products Kraft actually produces and how far their reach extends in the product world.

Executive Summary

Kraft is the largest branded food and beverage company in North America and the second largest in the world, it operates in more than 150 countries worldwide (Kraft, 2008). Kraft Foods markets the world's favorite food and beverage brands in five product sectors namely the snacks, beverages, cheese and dairy, grocery and convenient meals (Kraft, 2008). They also have 35 major brands with more than 100 years of remarkable achievements in products such as Oscar Mayer meats, Maxwell House coffee, Jell-O gelatin, and Cadbury (Kraft, 2008). Kraft is always looking for way to continue making historic records with the launch of different new products designed to meet the ever-changing needs of the consumer.

Company Background

Kraft Foods Inc. is the largest food company in the United States and holds the number two position worldwide, behind Nestlé S.A. The firm has two main operating units, Kraft Foods North America and Kraft Foods International. Seven of Kraft's brands bring in more than $1 billion in revenues each year, like Kraft cheeses and other products ($4.3 billion in 2000 revenue), Nabisco cookies and crackers ($3.5 billion), Oscar Mayer processed meats (number one in the United States), Post cereals (number three in the United States), Maxwell House coffee and Philadelphia cream cheeses (number one in western Europe) (Company, 2010). Also, more than 60 other company brands generate annual revenue in excess of $100 million, including A.1. steak sauce, Altoids candy, Balance energy bars, Cheez Whiz process cheese sauce, Cool Whip whipped toppings, DiGiorno pizza, Gevalia coffee, Jell-O desserts, Kool-Aid drink mix, Life Savers candy, Miracle Whip dressing, Oreo cookies, Planters nuts, Ritz crackers, Stove Top stuffing mix, Tang drink mix, and Toblerone chocolate (Company, 2010). The company holds a top global position in 11 product categories: coffee, cookies, crackers, cream cheese, dessert mixes, dry packaged dinners, lunch combinations, powdered soft drinks, process cheese, salad dressings, and snack nuts (Company, 2010). Kraft Foods' products are made at more than 220 manufacturing facilities around the world and are sold in more than 140 countries (Company, 2010).

Mission Statement & Vision Statement

Mission -- For Kraft to remain successful in the long-run, they have to ensure that they constantly restrategize their products categories to suit the needs of the consumers and seize the opportunity to exploit its sales capabilities by coming up with different marketing strategies (Kraft, 2008).

Our Vision...Helping People Around the World Eat and Live Better

Kraft’s vision captures the essence of who they are and everything they do flows from their vision (Man, 2005). Their vision is about meeting consumers' needs and making food an easier, healthier, more enjoyable part of life (Man, 2005). Kraft’s vision tells the world, their employees, customers, and the communities where they make and sell products that they care (Man, 2005).

Internal Analysis & External Analysis

An analysis of Kraft Foods led to some strengths, weaknesses, opportunities, and threats to be identified. First, some key strength were positioning themselves in key food categories, having a diverse range of leading brand, and earning approximately $50 billion in revenues (Consumer, 2010). Next, some of their weaknesses noted were a difficulty in launching new brands, poor stock performance, and a strong competition from competitors like Nestle and Hershey (Consumer, 2010). But, there were opportunities out there to seek, for instance branching out into new areas like dog food, organic health based food, international markets, and the acquisition of Cadbury (Consumer, 2010). Last, Kraft faced some threats, for one competition, difficulty expanding into new markets, volatile resource costs for items like sugar, and consumers spending less due to having less (Consumer, 2010).

Long Term Objectives

The long term objectives of Kraft Foods are to move into safer markets like using organic food in their products, pesticide free raw materials, and avoid using any genetically modified food. Also, with so much focus being put on healthier lifestyles, they began to look at more fat free foods and food products. Kraft began reducing the portion sizes of some of its products and launched 100-calorie "snack packs" of several Nabisco products, including Chips Ahoy! and Wheat Thins, to help people keep their consumption of snack items under control (Hoovers, 2010). Kraft also began removing artery clogging trans fats from their products, like Triscuits and Oreos, and it stopped marketing certain products to children under 12 after a major government commissioned study linked advertising to childhood obesity (Hoovers, 2010). In 2003, the company gained a foothold in the fast-growing organic sector by acquiring the small Back to Nature brand, which has subsequently expanded via the introduction of a number of new products, including granolas, cereals, macaroni and cheese dinners, and cheeses (Hoovers, 2010).

Strategic Analysis and Choice

The strong points of Kraft are its beverage brands, convenient meals brands and snack foods brands. Its North America Beverages organic net revenues grew 3.9% primarily driven by favorable product mix in powdered beverages and coffee and the introduction of Crystal Light with antioxidantsAntioxidants

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..... Click the link for more information. and functional benefits have continued the success of the single serve sticks, leading to a strong powdered beverage growth (Kraft Foods, 2007). Its weakness however is the association with the Atria Group which is associated with the promotion of tobacco. There are immediate opportunities for quick expansion in the areas of confectionery, coffee; juice based drinks and powdered beverages. In the United States market the main opportunities are in ready to eat cereals, enhancers, desserts, frozen pizza, packaged dinners, lunch combination and processed meats. The long term opportunities are in health food. Kraft is currently putting focus on the health food arena and looking at how they can redo some of their high sugar and high fat food into health food arena.

Plan, Goals, and Implementation

1. Build a High-Performing Organization – by thinking about their employees first, since they are the ones powering Kraft’s success, having a strong leadership team, and having a simplified organization that puts local business units at the heart of the company so decisions are made closer to the consumer (Strategies, 2010).

2. Reframe Our Categories – Focusing on building a global powerhouse in snacks, confectionary and quick meals, but also still making them delicious (Strategies, 2010).

3. Exploit Our Sales Capabilities – taking full advantage of their size and broad reach, store managers have a single sales representative who handles all of their products, and working closely with their global customers like Tesco and Wal-Mart (Strategies, 2010).

4. Drive Down Costs Without Compromising Quality -- product quality always comes first, looking for ways to reduce costs, so investment can be made towards making truly delicious products that people love (Strategies, 2010).

Critical Success Factors

Kraft is dedicated to preserving the world’s land, air, water and people. They have aimed their focus at six areas where they feel they have the greatest impact, agricultural commodities, packaging, energy, water, waste, and transportation/distribution (Sustainability, 2010). Kraft uses a steady supply of farm products, like coffee, cocoa, cashews, sugar, dairy products, wheat and vegetable oil. They are looking at ways to encourage more sustainable farming practices for a number of their raw materials (Sustainability, 2010). Kraft is promoting sustainable farming which supports biodiversity and causes less water pollution and soil erosion (Sustainability, 2010). Sustainable agriculture helps farmers and their families earn decent wages and improve their housing; opens more educational opportunities; and can lead to a better quality of life (Sustainability, 2010). Their current efforts to promote sustainable farming are focused on developing countries in Africa, Latin America and South Asia (Sustainability, 2010).

Controls and Evaluation

Kraft has a global compliance and integrity program that helps guide their employees to obey all applicable laws and regulations while conducting business around the world (Responsibility, 2010). This program emphasizes how important it is for employees of Kraft to act with integrity and make ethical decisions for Kraft, shareholders, employees and consumers, because their trust and confidence is critical to the business’s success (Responsibility, 2010). Kraft also has corporate governance attributes like disclosure of the board's processes, independence of a majority of the directors, and compliance with legislation and regulations (Responsibility, 2010). Last, Kraft is also dedicated to listening to their consumers and what they want in a product.

References

Company Histories. (2010). Retrieved 3 September 2010, from

http://www.fundinguniverse.com/company-histories/Kraft-Foods-Inc-Company-History.html

Consumer Packaged Goods >> Kraft Foods SWOT Analysis. (2010). Retrieved 3 September 2010 from http://www.wikiswot.com/SWOT/3_Consumer_Packaged_Goods_ (CPGs)/Kraft_Foods.html

Hoover's Profile: Kraft Foods Inc. (2010). Retrieved 2 September 2010, from

http://www.answers.com/topic/kraft-foods-inc

Kraft Food Inc. (2008). Retrieved 2 September 2010, from

http://www.oppapers.com/essays/Kraft-Food-Inc/151533

Kraft Foods Reports Progress on Growth Strategy. (2007). Retrieved 2 September 2010, from

http://www.thefreelibrary.com/Kraft+Foods+Reports+Progress+on+Growth+Strategy.-a0162248662

Man on a Mission. (2005). Retrieved 3 September 2010, from

http://manonamission.blogspot.com/2005/07/kraft-foods-kft-mission-statement.html

Responsibility (2010). Retrieved 3 September 2010, from

http://www.kraftfoodscompany.com/Responsibility/compliance-integrity/index.aspx

Strategies. (2010). Retrieved 3 September 2010, from

http://www.kraftfoodscompany.com/About/strategies/index.aspx

Sustainability – Protecting our Resources (2010). Retrieved 3 September 2010, from

http://www.kraftfoodscompany.com/Responsibility/sustainability/index.asp