Kraft-Foods Case study.doc
-
Upload
levi-lazareno-eugenio -
Category
Documents
-
view
233 -
download
0
Transcript of Kraft-Foods Case study.doc
-
8/16/2019 Kraft-Foods Case study.doc
1/18
Kraft Foods Inc. – 2009Case Notes Prepared by: Dr. Mernoush Banton
Case uthor: Kr!stopher ". B#anchard
. Case bstract
Kraft Foods Inc. (www.Kraftfoodscompany.com ) is a comprehensive strategic
management case that includes the company’s calendar December 3! "##$ financialstatements! competitor information and more. %he case time setting is the year
"##&. 'ufficient internal and eternal data are provided to enable students toevaluate current strategies and recommend a threeyear strategic plan for the
company. *ead+uartered in ,orthfield in the -.'. state of Illinois! Kraft Foods Inc. istraded on the ,ew or/ 'toc/ 0change under tic/er symbol KF%.
B. $!s!on %tate&ent 'ctua#(
12ne company growing by nourishing lives and finding a better way today one bite at
a time.
C. M!ss!on %tate&ent 'ctua#(
14a/e %oday Delicious.
M!ss!on %tate&ent 'Proposed(
5s a global company (3)! we pride ourselves in producing superior products andservices (") to our customers. 6ith superior technology (7) and dedicated employees(&)! we are constantly wor/ing on introducing new and innovative products! meeting
our customer’s epectation (8) and ensuring to achieve higher than epected returnto our shareholders (9). 2ur desire is to be the number one choice for our loyal
customers (:! $).
. ;ustomer".
-
8/16/2019 Kraft-Foods Case study.doc
2/18
D. )*terna# ud!t
CPM – Co&pet!t!+e Prof!#e Matr!*
Kraft Nest#e Con,raCr!t!ca# %uccess
Factors -e!,ht at!n,
-e!,hted
%core at!n,
-e!,hted
%core at!n,
-e!,h
%core
-
8/16/2019 Kraft-Foods Case study.doc
3/18
/hreats
. 2besity is increasing drastically in both children and adults and accordinglyconsumers are deviating from having snac/s! cheeses and such
". ising costs of petroleum cause an increase in cost for companies in the foodindustry and in the agriculture end
3. Food safety programs have been adopted recently as issues of chemical andbacterial contamination and new foodborne pathogens remain a public health
concern7. Because the industry is so competitive! it is difficult for these companies to
raise their prices accordingly! and profit margins have suffered as a result dueto wea/ economy and increase in unemployment! many consumers have
switched from brand name to generics9. Due to increase in fuel charges! the cost of distribution can increase as well
8. ?lobal warming becoming a maEor political issue and food producers aresimultaneously cast as perpetrator and potential healer
)*terna# Factor )+a#uat!on ')F)( Matr!*
Key )*terna# Factors -e!,ht at!n, -e!,hted
%core
4pportun!t!es
. 4ore people are dining out! and food producers
are devoting more attention to productsdesigned for restaurants! vending machines!
and other foodservice providers
#.#8 7 #."7
". Be able to sell to restaurants at a higher margin #.#: 3 #."
3. ;onsumers are shifting toward food containingless trans fat or fewer calories! or those
containing only organic ingredients
#.#: " #.7
7. Bottled water has become well established in
the mar/et and enhanced waters containingvitamins or supplements are gaining popularity
#.#: 3 #."
9. ;onsumer prices for ba/ed goods increased#.: percent in Canuary "##& compared to
Canuary "##$
#.#8 3 #.$
8. Input costs for ba/ers! included commodities
such as wheat! eggs! and natural gas! have
declined recently
#.#7 " #.#$
:. %he -.'. mar/et for pac/aged and processedfoods has seen large profits in retail sales! and
this number is epected to see steady growth
#.#& 7 #.38
8. 6orldwide! demand is also on the rise for
pac/aged type of food as more people adopt alifestyle that includes less time for the
preparation of food
#.#& 3 #.":
&. %he greatest asset of any retail and consumer
product company is its reputation andperceived value among consumer
#.#8 3 #.$
;opyright = "# imited
-
8/16/2019 Kraft-Foods Case study.doc
4/18
/hreats
1. 2besity is increasing drastically in both children
and adults and accordingly consumers are
deviating from having snac/s! cheeses andsuch
#.#$ 3 #."7
". ising costs of petroleum cause an increase incost for companies in the food industry and in
the agriculture end
#.#& 7 #.38
3. Food safety programs have been adopted
recently as issues of chemical and bacterialcontamination and new foodborne pathogens
remain a public health concern
#.#: 7 #."$
7. Because the industry is so competitive! it is
difficult for these companies to raise theirprices accordingly! and profit margins have
suffered as a result due to wea/ economy andincrease in unemployment! many consumers
have switched from brand name to generics
#.#7 7 #.8
9. Due to increase in fuel! the cost of distributioncan increase as well
#.#8 3 #.$
8. ?lobal warming becoming a maEor politicalissue and food producers are simultaneously
cast as perpetrator and potential healer
#.#9 " #.
/ota# .00 1.9
Pos!t!on!n, Map
;opyright = "# imited
,estle
Brand>oyalty(*igh)
Brand>oyalty(>ow)
-
8/16/2019 Kraft-Foods Case study.doc
5/18
). Interna# ud!t
%tren,ths
. 5fter two incidents of contamination! the company voluntarily recalled more
than " million pounds of nuts and has temporarily shut down itsmanufacturing plants
". Increase in sale in the developing international mar/ets by " percent
3. %he company operates in 9 different business segments snac/s! beverages!cheese! grocery and convenient meals
7. Despite economic downturn! the company’s revenues increased to -'G7"."billion "##$! while earnings increased to -'G".& billion
9. Increase in current asset from "##: to "##$ by almost -'G8## million8. Decrease in current liabilities by around -'G8 billion from "##: to "##$
:. Kraft sells over ## different brand names
-ea5nesses
. 6or/ers at one of Kraft’s manufacturers in Illinois turned up a batch of fruitsand nuts that were contaminated with salmonella in December "##: with a
similar incident in 'eptember "##$". Drop in sales in the company’s snac/ division from "##: to "##$ by ".3#
percent3. Drop in sales in the 0uropean -nion mar/et by 7. percent from "##: to "##$
7. Despite &.$ percent increase in price! Kraft Foods lost #.3 percent mar/etshare during "##$
9. %he company has over -'G":.9 billion in ?oodwill8. Increase in longterm debt by about 9# percent in "##$ from "##:
:. ,o new innovative product introduction in recent years$. ,ew ;02 in "##8
;opyright = "# imited
-
8/16/2019 Kraft-Foods Case study.doc
6/18
F!nanc!a# at!o na#ys!s (December "##&)
6ro7th ates 8 Kraft Industry %P 00
'ales (Atr vs year ago +tr) 9.:# 3.3# 7.$#
,et Income (%D vs %D) 33.## "#.:# 8.##
,et Income (Atr vs year ago +tr) 9&.7# :. "8.$#
'ales (9ear 5nnual 5vg.) 8.: 8.7 ".&&
,et Income (9ear 5nnual 5vg.) .38 9.#& ".8&
Dividends (9ear 5nnual 5vg.) .8 #.97 .$3
Pr!ce at!os Kraft Industry %P 00
;urrent
-
8/16/2019 Kraft-Foods Case study.doc
7/18
"H#: "".8# .77 .$3 8.9
"H#8 $.$# .:$ ".#9 $.9
"H#9 $.3# .7# .9& $.9
"H#7 "#.:# . ".#3 $.3
"H#3 9.$# .$3 .&7 .
"H#" "#.7# ".3 ".8 .3
"H# ":. .$: ".9 8.7
"H## ,5 ,5 ,5 $.:
"H#$ "7.$# #.&8 .:$ 7.7
Boo5 $a#ue;
%hare
Debt;
)
-
8/16/2019 Kraft-Foods Case study.doc
8/18
2. Increase in sale in the developing international
mar/ets by " percent
#.#$ 7 #.3"
3. %he company operates in 9 different business
segments snac/s! beverages! cheese! grocery
and convenient meals
#.#8 7 #."7
4. Despite economic downturn! the companyJs
revenues increased to -'G7"." billion "##$!while earnings increased to -'G".& billion
#.#$ 7 #.3"
5. Increase in current asset from "##: to "##$ by
almost -'G8## million
#.#$ 7 #.3"
6. Decrease in current liabilities by around -'G8
billion from "##: to "##$
#.#$ 7 #.3"
:. Kraft sells over ## different brand names #.#9 3 #.9
-ea5nesses
1. 6or/ers at one of Kraft’s manufacturers in
Illinois turned up a batch of fruits and nuts that
were contaminated with salmonella in December"##: with a similar incident in 'eptember "##$
#.#8 #.#8
2. Drop in sales in the companyJs snac/ division
from "##: to "##$ by ".3# percent
#.#: #.#:
3. Drop in sales in the 0uropean -nion mar/et by
7. percent from "##: to "##$
#.#8 " #."
7. Despite &.$ percent increase in price! KraftFoods lost #.3 percent mar/et share during "##$
#.#8 " #."
5. %he company has over -'G":.9 billion in
?oodwill
#.#8 #.#8
8. Increase in longterm debt by about 9# percent
in "##$ from "##:
#.#: #.#:
:. ,o new innovative product introduction in recentyears
#.#& #.#&
$. ,ew ;02 in "##8 #.#7 " #.#$
/ota# .00 2.2
F. %-4/ %trate,!es
%tren,ths -ea5nesses
. 5fter two incidents of
contamination! thecompany voluntarily
recalled more than "million pounds of nuts
and has temporarilyshut down its
. 6or/ers at one of
Kraft’s manufacturersin Illinois turned up a
batch of fruits and nutsthat were contaminated
with salmonella inDecember "##: with a
;opyright = "# imited
-
8/16/2019 Kraft-Foods Case study.doc
9/18
manufacturing plants". Increase in sale in the
developinginternational mar/ets
by " percent3. %he company operates
in 9 different businesssegments snac/s!
beverages! cheese!grocery and convenient
meals7. Despite economic
downtime! thecompany’s revenues
increased to -'G7"."
billion "##$! whileearnings increased to
-'G".& billion
9. Increase in currentasset from "##: to
"##$ by almost-'G8## million
8. Decrease in currentliabilities by around
-'G8 billion from "##:to "##$
:. Kraft sells over ##different brand names
similar incident in'eptember "##$
". Drop in sales in thecompany’s snac/
division from "##: to"##$ by ".3# percent
3. Drop in sales in the0uropean -nion mar/et
by 7. percent from"##: to "##$
7. Despite &.$ percentincrease in price! Kraft
Foods lost #.3 percentmar/et share during
"##$
9. %he company has over-'G":.9 billion in
?oodwill
8. Increase in longtermdebt by about 9#
percent in "##$ from"##:
:. ,o new innovativeproduct introduction in
recent years$. ,ew ;02 in "##8
4pportun!t!es %=4 %trate,!es -=4 %trate,!es
. 4ore people are dining
out! and foodproducers are devoting
more attention toproducts designed for
restaurants! vendingmachines! and other
foodservice providers". Be able to sell to
restaurants at a highermargin
3. ;onsumers are shiftingtoward food containing
less trans fat or fewercalories! or those
containing only organicingredients
7. Bottled water hasbecome well
established in themar/et and enhanced
waters containing
. Develop a new product
line! focusing onorganic ingredients
(23! 28! '7! '9! ':)
2. 5c+uire a small
competitor that sells torestaurants and H or
intermediary channels(2! 2"! 28! 2$! '"!
'3)
. Improve the +uality by
educating the wor/erson how to test and
sample products beforethey are shipped (6!
2&)
;opyright = "# imited
-
8/16/2019 Kraft-Foods Case study.doc
10/18
vitamins or
supplements aregaining popularity
9. ;onsumer prices forba/ed goods increased
#.: percent in
Canuary "##&compared to Canuary"##$
8. Input costs for ba/ers!included commodities
such as wheat! eggs!and natural gas! have
declined recently:. %he -.'. mar/et for
pac/aged and
processed foods hasseen large profits in
retail sales! and this
number is epected tosee steady growth
$. 6orldwide! demand isalso on the rise for
pac/aged type of foodas more people adopt
a lifestyle that includesless time for the
preparation of food&. %he greatest asset of
any retail andconsumer product
company is itsreputation and
perceived value amongconsumers
/hreats %=/ %trate,!es -=/ %trate,!es
. 2besity is increasing
drastically in bothchildren and adults and
accordingly consumersare deviating from
having snac/s! cheeses
and such". ising costs ofpetroleum cause an
increase in cost forcompanies in the food
industry and in theagriculture end
3. Food safety programshave been adopted
. Improve distribution in
0uropean mar/et withnew and innovative
organic products ('"!'3! '7! '9! %! %"! %3)
". 2pen additional small
distribution center in0urope and otherregions where sales
are increasing in orderto reduce distribution
costs ('"! '3! ':! 2!2"! 2$)
. Implement a better
+uality controlinternally and with
suppliers to reducefood contamination
(6! %3! %8)
". Discontinue products insnac/ division that arenot selling (6"! 67!
%! %"! %9! %8)
;opyright = "# imited
-
8/16/2019 Kraft-Foods Case study.doc
11/18
recently as issues of
chemical and bacterialcontamination and new
foodborne pathogensremain a public health
concern
7. Because the industry isso competitive! it isdifficult for these
companies to raisetheir prices
accordingly! and profitmargins have suffered
as a result due to wea/economy and increase
in unemployment!
many consumers haveswitched from brand
name to generics
9. Due to increase in fuelcharges! the cost of
distribution canincrease as well
8. ?lobal warmingbecoming a maEor
political issue and foodproducers are
simultaneously cast asperpetrator and
potential healer
;opyright = "# imited
-
8/16/2019 Kraft-Foods Case study.doc
12/18
6. %PC) Matr!*
F!nanc!a# %tab!#!ty 'F%( )n+!ron&enta# %tab!#!ty ')%(
eturn on Investment 3 -nemployment 9
>everage %echnological ;hanges 3
>i+uidity 7
-
8/16/2019 Kraft-Foods Case study.doc
13/18
ais F' 0' L 3." (3.8) L #.7Mais ;' I' L (3.") (7.#) L #.$
@. 6rand %trate,y Matr!*
. 4ar/et development". 4ar/et penetration
3.
-
8/16/2019 Kraft-Foods Case study.doc
14/18
I. /he Interna#=)*terna# 'I)( Matr!*
/he IF) /ota# -e!,hted %core
'trong3.# to 7.#
5verage".# to ".&&
6ea/.# to .&&
*igh
3.# to3.&&
I II
Kraft Foods Inc.
III
4edium".# to
".&&
I I I
>ow
.# to.&&
II III IM
;opyright = "# imited
he )F)
/ota#e!,hted
%core
-
8/16/2019 Kraft-Foods Case study.doc
15/18
". A%PM
Develop a
new product
line!focusing onorganic
ingredients
5c+uire a
smallcompetitor
that sells to
restaurantsand H orintermediary
channels
Key Factors -e!,ht % /% % /%
4pportun!t!es
. 4ore people are dining out! and food
producers are devoting more attention toproducts designed for restaurants!
vending machines! and other foodserviceproviders
#.#8 " #." 7 #."7
". Be able to sell to restaurants at a highermargin
#.#: #.#: 7 #."$
3. ;onsumers are shifting toward foodcontaining less trans fat or fewer calories!
or those containing only organicingredients
#.#: 7 #."$ #.#:
7. Bottled water has become well established
in the mar/et and enhanced waters
containing vitamins or supplements aregaining popularity
#.#:
9. ;onsumer prices for ba/ed goodsincreased #.: percent in Canuary "##&
compared to Canuary "##$
#.#8
8. Input costs for ba/ers! includedcommodities such as wheat! eggs! andnatural gas! have declined recently
#.#7
:. %he -.'. mar/et for pac/aged andprocessed foods has seen large profits in
retail sales! and this number is epectedto see steady growth
#.#& 3 #.": #.#&
$. 6orldwide! demand is also on the rise forpac/aged type of food as more people
adopt a lifestyle that includes less time forthe preparation of food
#.#& 7 #.38 " #.$
&. %he greatest asset of any retail and
consumer product company is itsreputation and perceived value amongconsumer
#.#8 7 #."7 #.#8
/hreats
. 2besity is increasing drastically in bothchildren and adults and accordingly
consumers are deviating from havingsnac/s! cheeses and such
#.#$ 7 #.3" #.#$
". ising costs of petroleum cause an #.#& 3 #.": " #.$
;opyright = "# imited
-
8/16/2019 Kraft-Foods Case study.doc
16/18
increase in cost for companies in the food
industry and in the agriculture end
3. Food safety programs have been adoptedrecently as issues of chemical and
bacterial contamination and new foodborne pathogens remain a public health
concern
#.#:
7. Because the industry is so competitive! it
is difficult for these companies to raisetheir prices accordingly! and profit
margins have suffered as a result due towea/ economy and increase in
unemployment! many consumers haveswitched from brand name to generics
#.#7 #.#7 " #.#$
9. Due to increase in fuel! the cost ofdistribution can increase as well
#.#8 #.#8 3 #.$
8. ?lobal warming becoming a maEor politicalissue and food producers are
simultaneously cast as perpetrator andpotential healer
#.#9
/4/ .00 2.01 .??
%tren,ths
. 5fter two incidents of contamination! thecompany voluntarily recalled more than "
million pounds of nuts and hastemporarily shut down its manufacturing
plants
#.#8
2. Increase in sale in the developing
international mar/ets by " percent
#.#$ 3 #."7 #.#$
3. %he company operates in 9 different
business segments snac/s! beverages!cheese! grocery and convenient meals
#.#8 7 #."7 3 #.$
4. Despite economic downtime! the
companyJs revenues increased to -'G7"."
billion "##$! while earnings increased to-'G".& billion
#.#$
5. Increase in current asset from "##: to
"##$ by almost -'G8## million
#.#$
6. Decrease in current liabilities by around
-'G8 billion from "##: to "##$
#.#$
:. Kraft sells over ## different brand names #.#9 7 #." " #.
-ea5nesses
1. 6or/ers at one of Kraft’s manufacturers inIllinois turned up a batch of fruits and
nuts that were contaminated withsalmonella in December "##: with a
similar incident in 'eptember "##$
#.#8
2. Drop in sales in the companyJs snac/
division from "##: to "##$ by ".3#percent
#.#: 3 #." #.#:
3. Drop in sales in the 0uropean -nion #.#8 7 #."7 " #."
;opyright = "# imited
-
8/16/2019 Kraft-Foods Case study.doc
17/18
mar/et by 7. percent from "##: to "##$
7. Despite &.$ percent increase in price!Kraft Foods lost #.3 percent mar/et share
during "##$
#.#8
5. %he company has over -'G":.9 billion in
?oodwill
#.#8
8. Increase in longterm debt by about 9#percent in "##$ from "##:
#.#: 7 #."$ " #.7
:. ,o new innovative product introduction in
recent years
#.#& 7 #.38 " #.$
$. ,ew ;02 in "##8 #.#7
%B/4/ .00 . 0.3
%M /4/ //C/I$)N)%% %C4) 1.3 2.1
K. eco&&endat!ons
Develop a series of products mainly made with organic products and arehealthy in nature by having low carb! low saturated fat and sugar. Introduce
the new product under its own business unit in case the company decides toepand its line or sell it off.
. )P%;)BI/ na#ys!s
-'G 5mount ,eeded G## million'toc/
-
8/16/2019 Kraft-Foods Case study.doc
18/18
% "!:"7!$99!&9" "!$8$!799!&9" 3!"":!799!&9" "!:":!93!&$$ "!$:!3!&$$ 3!"3#!3!
ares !9#"!9:9!7"3 !9#"!9:9!7"3 !9#"!9:9!7"3 !9#!#3!:93 !9#!#3!:93 !9#!#3!
' .3 .9 2. .32 .9 2.
M. )p!#o,ue
ecently! Kraft announced that they will be cutting the salt in its products sold in
,orth 5merica by an average of # percent over the net two years. %his decisionwas based on consumers demanding healthier products and better ingredients in the
food they consume. Kraft is planning to complete the reduction of salt over the nettwo years.
Kraft also has made an offer to ac+uire ;adbury which many analysts have rated as
a positive move on behalf of Kraft Foods! Inc. and accordingly! the stoc/ price was
raised by -'G3 from G33 to G38.
;opyright = "# imited