External Analysis of Kraft Foods
External Analysis of Kraft Foods using Porter’s 5-Forces Model and PEST
MGT 599 Module 2 CASE
EXECUTIVE SUMMARY Kraft is the number one manufacturer of snacks in the U. S. and the world’s number two food company (Kraft Foods SWOT analysis, n.d.). Our goal is to maintain and improve those statistics. Results of the Porter’s 5-Forces
There is a low threat of entry of new manufacturers. The food industry is already glutted with companies who rival Kraft. ConAgra ($11.62B revenues in 2012), and Nestle ($93.06B) represent the top across-the-board rivals. The Kellogg Company (13.65B) also holds 34.2% of the cereal market (Kraft Annual Report, 12/31/2011). There is a low availability of substitutes. The devastating drought in the U. S. has caused enormous drops in the supply of crops and animals. With diminished supplies when demand is high, suppliers bargaining power is also medium to high. Poor economic conditions coupled with heightened sensitivity to nutritional values have given customers a medium bargaining power (Lempert, P., 12/21/12). Results of the PEST analysis Political unrest in Egypt forced Kraft to suspend operations there (IUF newsier 2012). Likewise, the takeover of the Cadbury company and subsequent closing of the major plan in England have spawned much negativity toward Kraft (Chellel, Kit 5/23/2011). America’s middle class has shrunk by ten percent in the last 40 years and unemployment means consumers are being very cautious with how they spend their money (Lempert, P., 12/21/12). Shopping trends are focusing on health concerns and especially obesity (Kraft Foods SWOT analysis, n.d.). Over the net grocery shopping is becoming more popular (Lempert, P., 12/21/2012). With the advent of Facebook and Twitter, jilted employees, their families, and others who perceive unfairness dramatically weaken a company’s revenues with a few keystrokes. (Kraft Annual Report 10K 12/31/2011). Opportunities and
MGT 599 Module 2 CASE
EXECUTIVE SUMMARY Kraft is the number one manufacturer of snacks in the U. S. and the world’s number two food company (Kraft Foods SWOT analysis, n.d.). Our goal is to maintain and improve those statistics. Results of the Porter’s 5-Forces
There is a low threat of entry of new manufacturers. The food industry is already glutted with companies who rival Kraft. ConAgra ($11.62B revenues in 2012), and Nestle ($93.06B) represent the top across-the-board rivals. The Kellogg Company (13.65B) also holds 34.2% of the cereal market (Kraft Annual Report, 12/31/2011). There is a low availability of substitutes. The devastating drought in the U. S. has caused enormous drops in the supply of crops and animals. With diminished supplies when demand is high, suppliers bargaining power is also medium to high. Poor economic conditions coupled with heightened sensitivity to nutritional values have given customers a medium bargaining power (Lempert, P., 12/21/12). Results of the PEST analysis Political unrest in Egypt forced Kraft to suspend operations there (IUF newsier 2012). Likewise, the takeover of the Cadbury company and subsequent closing of the major plan in England have spawned much negativity toward Kraft (Chellel, Kit 5/23/2011). America’s middle class has shrunk by ten percent in the last 40 years and unemployment means consumers are being very cautious with how they spend their money (Lempert, P., 12/21/12). Shopping trends are focusing on health concerns and especially obesity (Kraft Foods SWOT analysis, n.d.). Over the net grocery shopping is becoming more popular (Lempert, P., 12/21/2012). With the advent of Facebook and Twitter, jilted employees, their families, and others who perceive unfairness dramatically weaken a company’s revenues with a few keystrokes. (Kraft Annual Report 10K 12/31/2011). Opportunities and
References: Chellel, Kit (5/23/2011) eFinancial News. Kraft vs. Cadbury: A bittersweet deal. Retrieved 2/3/13 from http://www.efinancialnews.com/story/2011-05-23/kraft-cadbury-bittersweet-deal. External analysis for Kraft Foods, (June, 2011) Retrieved 2/4/13 from https://docs.google.com/document/d/19liGjGKT76-tSjr_lz1M47bLd99BDFBJlSvHv5BYhzw/preview IUF newsier (2012) Kraft Egypt removes union leaders who called for company to obey the law! Retrieved 2/1/13 from http://cms.iuf.org/?q=node/1889 Kraft Annual Report, (12/31/2011) Form 10K Retrieved 1/31/13 from http://quote.morningstar.com/stock-filing/Annual-Report/2011/12/31/t.aspx?t=:KFT&ft=10-K&d=79e2c83f0f96a172d195dbf3a3cc6579 Kraft Foods SWOT analysis Retrieved 2/1/13 from http://yousigma.com/comparativeanalysis/kraftfoods.html Lempert, Phil (12/21/2012) Top ten food trends. Facts, Figures, Future. Retrieved 2/1/13 from http://www.factsfiguresfuture.com/issues/december-2012/top-ten-food-trends-2013.html Reports, Statistics and Analysis (2/2/12). Food Retailing Industry: Market Research Retrieved 1/31/13 from http://www.reportlinker.com/ci02212/Food-Retailing.html