Strategic Analysis and Competitive Dynamics of Kraft Foods (BUS 301)

This report provides a comprehensive strategic management analysis of Kraft Foods, examining its external environment through PESTLE and Porter's Five Forces models, and its competitive landscape. It delves into the food processing industry, identifying key competitors such as Nestle and PepsiCo, and analyzes the impact of various factors like political, economic, social, technological, legal, and environmental aspects. The report also explores Kraft's internal analysis, including its tangible and intangible resources, capabilities, and strategic group positioning. The study further considers competitive dynamics, merger and acquisition strategies, and overall market commonality to assess Kraft's position and performance, concluding with an evaluation of its strategic choices and recommendations for future growth and sustainability within the global food industry.

STRATEGIC MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
Q.1 External environment...........................................................................................................1
Q.2 General business environment.............................................................................................1
Q. 3. Competitor environment....................................................................................................5
Q.4 Strategic group.....................................................................................................................5
Q. 5 Internal analysis...................................................................................................................7
Q.6 Competitive dynamics..........................................................................................................9
Q.7 Merger & Acquisition strategies........................................................................................10
CONCLUSION..............................................................................................................................11
References......................................................................................................................................12

Illustration Index
Illustration 1: PESTLE analysis.......................................................................................................3
Illustration 2: Porter five forces model............................................................................................5
1

INTRODUCTION
Strategic management includes planning and execution of important goals and objectives
which are taken top level directors or owners on the basis of current human and other resources,
internal and external of organisation. It helps the management of corporation to achieve effective
profit and revenues in the specific sector (Roome, Raven. and Martineau, 2014). Kraft is a
American food manufacturing organisation which provides better products and services to
consumers in the all countries (About us. 2016). The present report describes about the External
environment of organisation in the market. It explains the competitive analysis of Kraft
corporation. It introduce about strategic group which cover various factors for organisation. In
addition to this, it represents the internal environment as well as competitive dynamics of
corporation.
Q.1 External environment
External environment are those aspects which affect the organizational working
externally in the sector. It is described as follows.
Industry: Kraft company is food manufacturing corporation which serve its products and
services across world. So this organisation is come under food processing industry. Along with
this, food processing is the transformation of raw ingredients into finished foods (van den Brink,
Fruytier, and Thunnissen, 2013). It associates raw food ingredients to make marketable food
commodities which is easily produced and serve by customers.
Competitors: Generally, Kraft organisation is a multinational company in the food processing
across world. So there are many domestic and global competitors such as Nestle, PepsiCo,
Anheuser-Busch InBev, Coca cola, JBS S.A as well as Archer Daniels Midland Company in the
various countries. In addition to this, other names of rivals are Unilever, Mars Inc and Tyson
food in the world (Food processing top 100 companies. 2016).
Q.2 General business environment
PESTLE analysis: This tool help the Kraft management to analyses external factors in
the food processing industry.
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Political factors: These aspects are supportive in the United States which help the organization
to establish its business in a appropriate manner. For example, taxes, tariffs as well as political
stability support the Kraft foods corporation to gain effective profit in the market.
Economic aspect: These factors are effective as per current condition which contribute
effectively to expand its business activities in better way (Thite Wilkinson and Shah, 2012). For
example, Current Gross Domestic Product, inflation rate and Gross national product support the
Kraft corporation to expand its business activities in the market.
Social: Generally, social factors contribute effective for management of corporation to increase
its business activities in the US markets. For example, income and rational understanding people
as well as lifestyle help the the Kraft corporation to gain better profit by providing effective
products and services to consumers in the market.
Technological: Technological aspects are supportive for organization which aids to manage its
operation in the market (Azhashemi, 2012). For example, better communication facilities like
internet and efficiency of food manufacturing play important role for Kraft to manage its internal
and external operation in a appropriate manner.
3
Illustration 1: PESTLE analysis
(Source:Thite Wilkinson and Shah, 2012)

Legal: These aspect affect the business of organization in the food processing industry. For
example, health safety, employment polices and other rules and regulation compel the Kraft
corporation to increase expenditure which decreases its profit in the market.
Environmental: Environmental factor does not create not negative effect on working of
corporation (Brand, 2007). For example, Kraft corporation does not manufacture any kind food
products which are harmful environment and people health. So these factors support to manage
its business operations in the food processing industry.
Demographic factors
These aspects are personal characteristics which are utilized to collect and analyses data
on people in a target population in the specific area. There demographics factors like marital
status, age, income, gender, race, education as well as occupation which helps the corporation
to develop effective strategies in the market (Chase., 2000).
Price taking
As per research, organization uses pricing taking policies because there are many food
processing companies which sell similar products in the market. In addition to this, Kraft is not
holding leading position in the same sector (Carroll and Buchholtz, 2014). So these reasons
compel the management of corporation to follow price taking policies in the market.
Perfect competition
Generally, Kraft corporation is come under perfect competition market structure because
there are many buyers and sellers in the market. In addition to this, competitors like Nestle as
well as Pepsi Co also affect its profits and operations of corporation in the domestic and
international market (Spence, Jeurissen and Rutherfoord, 2000).
Porter Five forces model: This model is used to find out level of rivalry in the specific industry.
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Factors Level of
competition
Description
Threat of new
entry
Medium Generally, it require higher budget and investment which
create issues for new corporation in the food processing
industry.
Threat of
substitution
Low Mainly, Kraft corporation develop effective quality products
for consumers in affordable price which reduce issues (Shook,
and et.al., 2004). In addition to this, organisation also find out
information about its new competitors products in the market.
Level of
competition
High Level of competition is high very due to presence of domestic
and international competitors which sell food products in
lower prices as comparison of Kraft organisation.
Bargaining
power of
Suppliers
Medium Organisation has many suppliers which provide quality raw
material and effective services to Kraft corporation in the
market.
Bargaining High Due to existence of many rivals, bargaining power of
5
Illustration 2: Porter five forces model
(Source:Ullah and Lai, 2011)

power of
consumers
consumers is higher (Shook and et.al., 2004). There are many
other organisations available which provide quality material in
lower prices.
Q. 3. Competitor environment
Competitor environment contribute effective role for management of Kraft to develop
effective competitive strategies in food processing industry. Some of factors are described below
in the paragraph.
Analysing market commonality: This concept contribute effective role for management of Kraft
to identify their competitors in the market. There are many factors like resource similarity which
helps the organisation to analyse its rivals in the food processing industry (Thite Wilkinson and
Shah, 2012). This aspect the plays important role for Kraft to find out rivals on the basis of
various type resources used by other organisations. This process helps the enterprise to develop
new strategies and plans to sustain in the market for sustainable amount of time. For example,
Nestle and Kraft use similar type of resource to manufacture and serve their food products to
consumers in the food processing industry.
Analysing competitor strategies: It is played important role for management of Kraft
organisation to analyse the opportunities and threats which aids to find out competitors
strategies. This concept helps the corporation to formulate new strategies according to market
situation in the market (Garcia‐Castr and Aguilera, 2015). For example, Analysing competitor
strategies help the Kraft corporation to develop counter strategies for beating sales of rivals on
the basis of their strength and weakness in the market. It aids the corporation to gain effective
market share, growth as well as profits in the food processing industry.
Q.4 Strategic group
Strategic group
It is concept which is used in strategic management. In this process, groups of companies
in the same industry that follows business models or combinations strategies to manage its
business operations. Identification of strategic group can be represented on the basis of low price
and service and high price and high service which can help to show shopping market in the
market (Hill, Jones. and Schilling, 2014). Company products are sold in Super markets, retail
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stores which are come higher price and service. In addition to this, ware house store and super
ware house store are categorized in lower price and service.
Regionally and global focused brand line producers:
There are many regionally brand line producers like Dairy farmers of America, Hill shire
Brands and Flower foods who manages business their operations in the United Kingdom of
America. These organizations perform effectively to gain effective profit and revenue from
consumers in food processing industry (Hitt, Ireland and Hoskisson, 2012). In addition to this,
there are many global brand line procedures like Nestle, Pepsi corporation as well as coca cola
which manages their operations in the various countries. Further, they also achieve better market
share, growth as well as profit in the United states of America.
Luxury
There are many luxurious organization like Nestle, Pepsi corporation, Kraft as well as
coca cola who has effective effective reputation in the global and national market. Along with
this, they also sell better quality food products to its consumers in affordable price. These factors
contribute better role for corporations to gain higher profit as comparison of previous years in the
market. They help the organization to increase its image front of consumers in food processing
industry (Roome, Raven and Martineau, 2014). Further, they also attract the customers to
purchase organizational products from market.
Performance
Performance of organisation is effective as comparison its competitors in the food
processing industry. In addition to this, rank of organisation is come under top five food
manufacturing companies in the world. As per report of 2013, profit of Kraft management was
2715 million US dollars. Along with this, sales of organisation was 14346 units in the same year.
Effective efforts of corporation increase the efficiency and productivity as compare with
previous years in the market. Further, corporation design new strategies and plans to reach top
position by improving manufacturing system and offering better quality foods to consumers
(Food processing top 100 companies. 2016). This process also helps the Kraft to enhance
organisational sales in the food processing industry.
Global suppliers
There are many global suppliers such as Sonic boom, Navistar, Tootie pie, Enval as well
as Six flages of Kraft organisation which contribute effectively to manage its business in a
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appropriate manner. In addition to this, these vendors help the corporation to manage its
manufacturing operation and providing effective quality products to consumers in the market
(Kraft food suppliers. 2016).
Q. 5 Internal analysis
Management of Kraft can do internal analyses through many ways which are described
below in the paragraph.
Resources
Generally, corporation uses tangible and intangible resources to develop new strategies
and manage its operations in the food processing industry.
Tangible resources: Tangible resources are visible and these assets aids Management of Kraft
corporation to manage its manufacturing and other operations in the market. For example,
organisation has land, machineries and employees which help to manage its business activities
(van den Brink, Fruytier and Thunnissen, 2013). In addition to this, these tangible resources
support the corporation to increase its growth and marker share providing effective services.
Intangible resources: Generally, Intangible resources are non-physical and they also aid the
Kraft corporation to handle its business activities in the market. For example, Copyrights,
patients, Licensing agreements, service contracts as well as brand value are intangible resource
which play important role for corporation to manage its productions and other business
operations in food processing sector (Thite, Wilkinson and Shah, 2012). Further, intangible
assets also helps to increase its performance and efficiency in the market.
Capabilities
Capability is the ability to conduct or get specific activities and results with help of
controllable and measurable facilities and functions. According to research, production,
financial, human resource, operational capabilities if Kraft are effective which provides better
opportunities to gain profit and revenues from consumers. Along with this, management of firm
improve its capabilities through training and development, new innovations and design new
policies and plans in the recent years (Azhashemi, 2012). These efforts help the Kraft to enhance
its capabilities as comparison of previous years.
Core competencies
There are many core competencies of corporation which contribute effectively to expand
its business in the market. Generally, corporation is good in innovation strategies which helps to
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increase its market share and growth as comparison of previous years. This core competency also
helps the management of Kraft organisation to attract more consumers which increases its sales.
For better innovation, enterprise also hires effective and experienced scientists. This process
helps the corporation to manufacture good food products as comparison of its competitors in the
market (Brand, 2007). In addition to this, management of Kraft corporation also invest effective
monetary funds to innovate new products to increase its profits in food processing industry.
Discovering core competencies
There are many criteria available which helps the Kraft corporation to discover core
competencies of organisation.
Valuable: It enable the organisation to search new opportunities and reduce level of threat which
help to take competitive advantages in the external environment.
Rare capabilities: Competitors should not have capabilities to produce products which helps
Kraft to take rival advantages in the market (Chase., 2000).
Imitable: Competitors should not have effective resources to make duplicate products which
contribute effective role for Kraft to take rival advantages in food processing industry.
Non substitutable: Organisation products should not be substitutable with aid of any resources
which aid to take rival benefits.
Value chain analysis
Value chain analysis is approach for organization to create effective possible value for
consumers. In addition to this, it helps the Kraft to increase satisfaction level of consumers by
providing effective quality of products in food processing industry. Value chain analysis divides
the organisational activities in primary and secondary category. Along with this, Primary
activities contains inbound logistics, operations, outbound, Marketing, sales and Service of
corporation. Further, Secondary activities is divided in infrastructure, technology, human
resources and procurements of enterprise (The value chain. 2010). So these actions contribute
effective role for management Kraft to improve its overall operations at the workplace which
help to attain various type of advantages in the market.
Competitive advantages
There are many ways to achieve competitive advantages which can help the Kraft to
attain effective profit in food processing industry.
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 Management of organisation can procure rivals benefits by developing effective
strategies.
 Kraft can get competitive benefits on the basis of innovation techniques for development
of effective food products (Carroll and Buchholtz, 2014).
Strategic competitiveness
Strategic competitiveness is a one kind of strategy which is used to develop long term
plans to achieve organisational goals in the market. It also play important role for management of
corporation to achieve competitive which help to increase sales of food products as comparison
of its rivals in the market.
Q.6 Competitive dynamics
Competitive dynamics is the strategy of competition at the activity and response level
which help the management of corporation to react against competitors in the market. In addition
to this, it provides better guidance to Kraft corporation for implementing competitive strategies
in food processing industry (Spence, Jeurissen and Rutherfoord, 2000).
First mover
A organisation that enter into first into industry which provide reliability to establish
itself in the market. This step also helps the organisation to take competitive advantages in the
market.
Second mover
A corporation that take entry into specific sector after first organisation to set in itself.
This step also help the corporation to know about more details of market which support to take
rival advantage in the market (Ullah and Lai, 2011). Kraft organisation is also consider as second
mover to reduce investment risk and other environmental risks.
Last mover
Organisation that enter into sector after arrival of many organisations to earn profit by
selling its products in the market. This step the create complexities for corporation to establish
itself due to presence of many competitors.
Organisation size:
Corporation size of corporation is very high due to presence in many countries. In
addition to this, management of Kraft is expanded all developed countries like UK, France and
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Germany. Organisation have staff members 126000 to manage its operations in many countries
(Brinkman, Navarro and Harper, 2014).
Quality
Kraft organization also provide quality food products by using continuous innovation
strategies which attract its consumers to purchase its products.
Type of competitive actions
Generally competitive action is divided in strategic and tactical actions in the market.
Strategic activities helps the corporation to achieve strategic response by developing effective
plans (Shook and et.al., 2004). On the other side, tactical action aids the Kraft to get tactical
response by implementing designed activities.
Market dependence
Kraft Organization is also dependent from market because profit and revenues are
generated from market.
Q.7 Merger & Acquisition strategies
There are many types of acquisition strategies which help the organization to expand its
operations in the market.
Horizontal acquisition: By acquiring similar company in same industry is called horizontal
acquisition. Management of Kraft can achieve many advantages by using these strategy in the
market (Stevens and et.al., 2013). This method can help the corporation to increase profits and
revenues as comparison of previous years. In addition to this, it can aid to enhance the frequency
of consumers in the food processing industry. It can contribute effective role for Kraft to enhance
its efficiency and performance in the market.
Vertical acquisition: Vertical acquisition can enable the organization to integrate its supply
chain in the market. It can play important role for management of Kraft to reduce its operational
cost in the food processing industry. In addition to this, It can support the corporation to enhance
its efficiency by improving manufacturing and other operations in a appropriate manner (Thite,
Wilkinson and Shah, 2012). Further, Vertical acquisition aid the Kraft firm to increase market
share by controlling competitors access in the market.
Related acquisition: It can be defined as the activities in which a organization can acquires other
corporation with similar business/culture size/ technology/ to increase its product and service
offerings in the market (Garcia‐Castro and Aguilera, 2015). This approach can contribute
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effective role for management of Kraft to increase their market growth and profits in the food
processing industry.
CONCLUSION
From the report, it is found that information of competitors help the Kraft food
organisation to develop its effective marketing strategies. PESTLE and porter five force model
help the corporation to analyse the external environment. Analysing competitors strategies aids
the Kraft organisation to design effective rival planning to beat sales of other firms. Further,
internal analysis like core competencies helps the corporation to achieve competitive advantages
in the food processing industry. In addition to this, Competitive dynamics contribute effective
role for Kraft corporation to improve its business operations in the market. It can be concluded
that acquisition strategies like vertical and horizontal help the corporation to expand its business
activities in national and international market.
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References
Books and journals
Azhashemi, M., 2012. Operations Management in Context. Routledge.
Brand, N., 2007. Operations Strategy and Management. GRIN Verlag.
Brinkman, J., Navarro, I. and Harper, D., 2014. Unlocking the Business Environment.
Routledge.
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder
management. Cengage Learning.
Chase., 2000. Operations Supply management. Tata McGraw-Hill Education
Garcia‐Castro, R. and Aguilera, R. V., 2015. Incremental value creation and appropriation in a
world with multiple stakeholders. Strategic Management Journal. 36(1). pp. 137-147.
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approach. Cengage Learning.
Hitt, M., Ireland, R. D. and Hoskisson, R., 2012. Strategic management cases: competitiveness
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Stevens, R.E. and et.al., 2013. Strategic planning for private higher education. Routledge
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van den Brink, M., Fruytier, B. and Thunnissen, M., 2013. Talent management in academia:
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pp.180-195.
Online
About us. 2016. [Online]. Available Through:<http://ir.kraftfoodsgroup.com/>. [Accessed on
16th April 2016].
Food processing top 100 companies. 2016. [Online]. Available Through:
<http://www.foodprocessing.com/top100/top-100-2014/>. [Accessed on 16th April 2016].
Kraft food suppliers. 2016. [Online]. Available Through:<http://spiderbook.com/kraftfoods-
suppliers.html>. [Accessed on 16th April 2016].
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The value chain. 2010. [Online]. Available Through: <http://www.netmba.com/strategy/value-
chain/>. [Accessed on 16th April 2016].
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