BA 600 Kraft Case Essay

Submitted By Larsenm44GmailCo
Words: 442
Pages: 2

Mike Larsen
BA 600
Kraft Foods Case

1. The company’s corporate strategy is to spin off its North American grocery business by creating a high-growth global snacks business and a high – margin North American grocery business. The snacks business will include Kraft Food’s business units as well as brands in Europe and also developing markets. In addition, the corporate strategy calls for a new name, Mondelez International. The rest of the North American business unit will be known as Kraft Foods Group. The goal of this spin off is to create value for its shareholders. Prior to this strategy, the company had acquired Nabisco for $15 billion. Soon after, Kraft Foods sold its North American pizza business to Nestle for $3.7 billion. Kraft was the world’s second largest food company by 2011
2. The industry that Kraft foods is in is very well represented. It can be described as ‘processed foods’. In 2011, all of Kraft Foods business segments competed in industries that were highly competitive. This required strong distribution and marketing to attract consumer demand. Their products were in supermarkets, discount stores, mass merchandisers, convenience stores, drug stores, and retail food locations. As mentioned in the text, one of the main reasons that Kraft is able to turn a profit is because of their constant price increases. The cost of raw materials is rising at a rate that cannot be matched without unit price increases. The long term attractiveness of this industry is rather poor. As the consumer becomes more health conscious, this segment of the foods industry will suffer great losses.
3. Kraft Foods utilizes the differentiation strategy quite well. Their ability to successfully differentiate products from lower-priced alternatives kept them