Kraft Case Study

Starting with our key external opportunities, U.S sales of organic foods and beverages have increased from $1 billion in 1990 to $26.7 billion in 2009. This key external factor was given a weight of 0.08 to show that this is an important factor that the food processing industry can potentially take advantage of because organic food is a rapidly growing trend with areas to be capitalized. We rated this external factor a 3 because Kraft has developed organic product lines that target a more health conscious consumer group. However we feel that their response wasn't superior because there are many more products within all of their business segments that have the potential to be redesigned to fit the organic label. Another key external factor is

There is a huge market for bottled water which Kraft saw an opportunity in when they designed their new innovative bottle water flavor enhancer MiO. We weighted and rated this opportunity 0.13 and 4, respectively. Another important external factor is the growing environmental awareness in the U.S and Europe. We weighted this factor a 0.06 because we feel that for food processing companies to go green they would have to allocate many resources in developing new ways to reduce waste. These changes would be expensive and long running so companies would find them overvalued and not profitable. We rated this 3 because Kraft has reduced the waste in 6 out 9 of their major manufacturing plants in the U.S. by 80% with plans to reduce waste disposal to zero by 2015. Our final key external factor under opportunities was the increased demand for packaged and processed foods around the world as a result of a change in lifestyles. These days it is more common to have double income families who are bound to have less time to cook and having extra cash for quicker meals. We felt that this was a fairly important success factor for the food processing industry because of the high demand for convenience food. We rated Kraft’s response to this as above average because they focus on developing quick meals that

We weighted this threat low because most of the products within the food processing industry are labeled “junk” food and cannot be the primary source of nutrition for kids and adults. We rated this factor a 2 because even though Kraft has developed healthy choice product lines, many of their best selling products still contain high levels of saturated fat, sodium and sugar. Kraft has responded to this by not advertising to children under 6, only promoting their Better-For-You products for children between the ages of 6-11 and absolutely no school advertising. Another key threat we observed was a workforce reduction in the food processing industry of 7.5% in 2009. This was due to a weak economy and increase competition which is affecting most companies within the industry evenly which is why we weighted this factor 0.04. Prior to 2008 companies where experiencing the peaks of a booming economy resulting in a bloated work force. These peaks were quickly diminished when the recession took effect resulting in many companies reducing their work force in order to remain operational. We rated this factor 1 because Kraft reduced its work force by 19,000 employees in 2009, which is way above the industry average. Petroleum is used for many operations within the food processing industry, from agricultural costs, to shipping and