Comprehensive Analysis of Kraft Foods Business Strategies

This report provides a comprehensive analysis of Kraft Foods, beginning with its founding in 1903 by James Kraft. It delves into a SWOT analysis, highlighting the company's diversified product portfolio, rebranding efforts, and financial performance during the 2008 recession as strengths. Weaknesses include high goodwill and long-term debt. Opportunities lie in the demand for healthy foods and bottled water. Threats include food contamination, rising obesity, and increasing operational costs. A PESTLE analysis examines economic trends in the packaged food market, social aspects like website development, environmental hazards such as contamination, and technological advancements. The report discusses key strategist Rosenfeld's contributions, identifies managerial problems, and analyzes marketing strategies, particularly the use of websites. Recommendations include international market expansion, product innovation, cost reduction, and securing reliable suppliers. The conclusion emphasizes Kraft's strong domestic presence and the need for strategic expansion and financial management. This report is contributed by a student and is available on Desklib, a platform offering AI-based study tools.

Introduction
The Kraft Food company was established and founded in 1903 by James Kraft. Initially the
company specialized in providing cheese in Chicago. The company grew and started distributing cheese
of various kind under the brand name Kraft. In 1916, Kraft obtained patent rights for producing and
distributing processed cheese. Kraft began mass production of cheeses such as Gouda and blue cheese
that were later exported to Canada and Europe.
SWOT analysis
Strengths
Kraft foods has diversified its food products making to leverage on brands that are selling low
with those that are highly demanded. For instance, the company has brands dealing with snacks,
beverages, cheese, grocery and convenient meals.
The company also has rebranded itself through the launch of new websites where visitors
around the world can view the company’s products. The main Kraft website has also undergone a
facelift making the site to be conceived well by the audience as it is user friendly.
The company was able to cope well with the 2008 financial recession as its revenues increased
to $ 42.2 million in 2008 while its earnings increased to $ 2.9 billion.
Weaknesses
The company spends a lot of money in goodwill that stands at $ 27.5 billion which is not healthy
for business. Also, Kraft has a huge long-term debt that increased by 50 percent from 2007 to 2008.
Opportunities
The demand for healthy foods such as those that contain less fat and calories provides
opportunities for Kraft to venture in such a sector. The demand for bottled water has become a
phenomenon in many markets and the consumption of water containing vitamins and supplements all
present new opportunities worth investing.
Threats
The rise of cases of food contamination such as the one witnessed with the fruits and nuts that
saw Kraft shut its manufacturing firms temporarily. According to the case it was noted that more than 2
million pounds of nuts were contaminated and the nuts originated from a major supplier based in
California.
The rise of obesity among teenagers in Canada and the United States is alarmingly high and
according to the health practitioners, obesity is as a result of consumption of certain foods and lack of
physical exercise. Thus, companies such Kraft are losing a large share of revenue in foods that are
perceived to cause obesity.
The rise of the cost of petrol affects the operation of food industry. The cost of agricultural raw
materials is high making the production and transportation of agricultural products expensive. The
competitive nature of food industry makes it hard to raise the prices and this affects the profit margins
making firms lose optimal profits in the end.

PESTLE ANALYSIS
Economic
The market for packaged and processed food in the United States have enjoyed large profits and
increased sales. The global demand for this type of food is also on the rise as many people prefer a
lifestyle that involves less time for food preparation. Many food outlets have realized the secret behind
increased sales and are thus investing in building their reputation and valuing their customers.
Social
Kraft has gone a mile further in building two websites one that is corporate and the other which
is primary for the company. The corporate website is intended for visitors to view the commercials while
at the same time learn about new products from Kraft that have been innovated. Kraft also has other
websites that may be classified as viral. One of the sites is Double Stuf Racing League where visitors may
watch videos and play games. Such sites provide a good way of increasing interaction with the visitor.
Environmental
The contamination of nuts and fruits by Salmonella bacterium in 2007 may be termed as an
environmental hazard. The company had conducted numerous tests that identified where the nuts
came from and such contaminations originate from infections.
Technological
Kraft has been able to customize its websites to cater for the customers who now use
configured phones and gadgets that are internet enabling online purchases and sales a move that can be
termed as technological improvement.
Key strategist
Rosenfeld has been identified as the key strategist who has been leading Kraft to sustainable
growth. At the end of the financial year 2009, Rosenfeld helped Kraft save a total of $ 1.1 billion by
streamlining the manufacturing department and simplifying the organizational structure. Some of these
savings were realized following closure of 36 plants and termination of 19000 positions. The company
targeted to save $ 200 million in 2009.
Major managerial problem
The managerial structure of the organization is planned based on geographic division however, a
more effective approach would be employing a byproduct divisional structure.
Minor managerial problem
The remuneration issues by the CEO Rosenfeld has received much criticism as the CEO was awarded
50% salary increment though being the most effective and transformative leader who sailed the
company through hardships to success.
Marketing strategies being followed

The use of internet to create websites has been the most effective where Kraft has two websites
that is the corporate website and the primary website. The corporate website informs visitors of the
products that the company stocks.
Positioning
Kraft has a position statement that comprises that state
We inspire trust
We act like owners
Recommendations
The company needs to venture in international markets since it already has a strong market
domestically.
The company is facing threats from its domestic competitors and thus innovating new products
and finding new ways of producing its products at the lowest cost possible marks a huge milestone.
Kraft needs to work on its revenues by cutting down the costs associated with goodwill and the
long-term debt.
General recommendations
The company needs to venture in other foreign markets so that it can increase its revenues.
There is need to have reliable suppliers of nuts and fruits to avoid cases of contamination as witnessed
in the previous years at Kraft.
Conclusion
Kraft has a strong presence in the United States despite being ranked as the second after Nestle, the
company needs to consider options of venturing foreign markets so that it increases its revenue and
compete strategically. The company also needs to cut down its expenditure in terms of the goodwill and
the long-term debts if it is to operate efficiently.