HomeKraft Foods UK Case Study Budgeting and Strategy
Kraft Foods UK Case Study Budgeting and Strategy
The report is been written about the Kraft Foods Corporation which is been situated in America. The Kraft Foods Group is a food manufacturing and processing business based in Chicago, Illinois, that was spun out from Kraft Foods Inc. in 2012. In 2015, it was acquired by Kraft Heinz. On July 2, 2015, Heinz owners Berkshire Hathaway and 3G Capital concluded a merger with Kraft, becoming The Kraft Heinz Firm, is the fifth largest Food and Beverage Company in the world (Alom 2020). The purpose of the report is to use the marketing tools to identify the position of the business in the market.
About the company
Kraft Foods Inc. stated in August 2011 that it would split into two publicly traded companies: a snack food company and a grocery store company. Kraft Foods Inc. said on April 2, 2012 that it has filed a Form 10 Registration Statement with the Securities and Exchange Commission to separate the company into two businesses to service the "North American grocery industry."
Kraft Foods Inc. split out its North American supermarket operations to a separate business called Kraft Foods Group, Inc. on October 1, 2012. The rest of Kraft Foods Inc. was renamed Mondelz International, Inc. and repositioned as an international snack and confection firm. Starbucks was compelled to pay Kraft Foods Inc. $2.7 billion by an arbitration judgement on November 19, 2013, due to an early termination of the contract Mondelez International, Inc. will receive the funds (Alom 2020).
Kraft and Heinz merger
Kraft Foods Group Inc. announced a merger with the H.J. Heinz Company, which is owned by 3G Capital and Berkshire Hathaway Inc. on March 25, 2015. Following the announcement of the deal, Kraft's stock jumped by 17% in premarket trade, bringing Heinz back to the public market after a two-year takeover. On July 2, 2015, the companies completed their merger (Feslioglou 2019).
Kraft Foods Sponsorships and promotions
All Major League Soccer and the National Hockey League have Kraft as an official partner and sponsor. Kraft Foods has endorsed Kraft Hockeyville, a CBC/SRC Sports reality television series in which localities show their passion to something like the game of ice hockey in such a competition centered mostly on subject of sense of community, from 2006.
The victorious group will get a financial award to improve their local arena, and also the chance to host an NHL playoff series. This was eventually demoted to parts on Hockey Night in Canada in 2007. Kraft Hockeyville was launched in the United States in 2015, with such a distinct tournament targeting surrounding people. Kraft sponsored the Kraft Nabisco Championship, including some of the four "majors" on the LPGA tour, from 2002 until 2014. From 2010 to 2012, the corporation also sponsored the Kraft Fight Hunger Bowl, a post-season college football bowl event (Brista 2020).
· The brand value of the company.
· The wide product line
· The use of the Research and development wing
· Strong Network of the supply chain
· Association with the sports team.
· Product recalls have harmed the brand's reputation.
· Because of the fierce rivalry, there is a lot of brand turnover in this segment.
· Cadbury's acquisition allows the company to expand its footprint in underdeveloped regions.
· Acquisition of a competitor's
· Product line extension and the introduction of pet food
· Person's growing health awareness poses a danger to the confectionery industry.
· Cost of raw materials has risen.
· The Eurozone crisis and the global economic slump are intertwined.
· The competition is fierce.
The strength of Kraft Foods
The brand value of the company helps the company to gain a competitive advantage over the other competitors in the market as they already have loyal customers.
The wide product line helps the company to capture more market like Oreo, Cadbury, Milka, etc.
The use of the Research and development wing which helps the company to continuously develop and helps to gain the competitive advantage.
Strong Network of the supply chain helps in the proper assortment of the product as a result, helps to meet customers demand, and earn revenue for the company.
Association with the sports team helps to get in to the schema of the customers which triggers the customers to attract towards the products.
The weakness of Kraft Foods
Product recalls have harmed the brand's reputation, there are many situations when the product after launching in the market is been withdrawn due to some issues leads to the downfall of the company’s brand image.
Because of the fierce rivalry, there is a lot of brand turnover in this segment, this confectionary segment of the market has competitions from both international and local players in the market.
The opportunity of Kraft Foods
Cadbury's acquisition allows the company to expand its footprint in underdeveloped regions, the policy of the company is to acquire the local players in the market to expand the business.
Acquisition of a competitor's in the market helps the company to run a monopoly in the market and to enjoy competitive advantage.
Product line extension and the introduction of pet food will help the company to increase its domain and also the market share of the company.
The threat of Kraft Foods
Person's growing health awareness poses a danger to the confectionery industry, as peoples habits are changing and they are availing healthy foods only gives a blow to the company.
Cost of raw materials has risen due to the increase in the local and foreign competitors the bargaining power of the suppliers rises as a result cost has increased.
The Eurozone crisis and the global economic slump are intertwined leads to the threat to the company to become sustainable.
The competition is fierce from both the international, local and from the substitutes in the market (HIDIROĞLU 2019).
· Growing the number of international trade agreements
· Diet and health recommendations from the government
· Public health policies are changing.
· Developed countries are growing slowly yet steadily.
· The Chinese economy is slowing down.
· Developing countries are seeing rapid growth.
· Increased disposable income
· Urban lifestyles are characterized by a high level of activity.
· Increasing the diversity of cultures
· Healthy living is becoming more popular.
· Increased business automation and moderate R&D effort in the industry
· Boosting revenue with mobile devices
· Health standards in the workplace and in schools are becoming more stringent.
· Animal welfare standards are becoming more stringent.
· Legal minimum salaries are increasing.
· Corporate environmental programs are gaining popularity.
· Increasing the focus on long-term business strategy
· Climate change in several parts of the world
The Political factors influencing Kraft Foods
Growing the number of international trade agreements which can affect the business to run business in different countries.
Diet and health recommendations from the government this policies can reduce the revenue of the chocolates industry.
Public health policies are changing as a result the company need to adopt the new norms to run in the market.
The Economical factors influencing Kraft Foods
Developed countries are growing slowly yet steadily as a result the company need to focus on developing countries and plan accordingly.
The Chinese economy is slowing down leads to the downfall of the business.
Developing countries are seeing rapid growth in the industry which need to be focused upon by the company.
The Social factors influencing Kraft Foods
Increased disposable income as a result new opportunities is opening for the company.
Urban lifestyles are characterized by a high level of activity which includes chilling in restaurants, party, etc. benefit the company.
Increasing the diversity of cultures as a result the company will face problem of focusing on particular culture.
Healthy living is becoming more popular as a result the chocolates industry will suffer loss and downfall due to this, similarly the company will also get affected.
The Technological factors influencing Kraft Foods
Increased business automation and moderate R&D effort in the industry which will help to increase innovativeness within the business.
Boosting revenue with mobile devices like introducing apps or tying up with third party apps to increase reach.
The Environmental factors influencing Kraft Foods
Corporate environmental programs are gaining popularity as a result the company need to focus on that.
Increasing the focus on long-term business strategy by considering the environmental factors.
Climate change in several parts of the world so the company should focus accordingly to offer their product.
The Legal factors influencing Kraft Foods
Health standards in the workplace and in schools are becoming more stringent towards bad eating habits like chocolates.
Animal welfare standards are becoming more stringent company will face issue regarding raw materials.
Legal minimum salaries are increasing as a result the company need to give more salary to the employees which increases companies cost (Varma and Ravi 2017).
The report is been written upon Kraft Foods and in this report the detail analysis of the marketing strategy of Kraft Foods is been done. The tools used in this report is the SWOT analysis to identify the company’s internal and external analysis and the Pestle analysis is done to understand the external factors that is affecting the business.
Alom, S., 2020. An Empirical Case Study of Kraft Foods (IPO) & Kyber Network (ICO). South Asian Journal of Social Sciences and Humanities, 1(1), pp.136-151.
Brista, L., 2020. Analyses of Five Industries, Potential Job Prospects, and Expatriate Employment in Spain.
HIDIROĞLU, D., 2019. An application of SWOT analysis as a strategic planning tool: A case of Cadbury, Inc. in confectionery industry. Uluslararası İktisadi ve İdari İncelemeler Dergisi, (25), pp.153-164.
Feslioglou, I., 2019. Mergers and Acquisitions: The current state of the debate.
Varma, G.R. and Ravi, J., 2017. Strategic Analysis on FMCG Goods: A Case Study on Nestle. International Journal of Research in Management Studies, pp.12-22.