EFE Matrix for Kraft Foods Inc. Key External Factors Opportunities 1.

Increase in the demand of processed and packaged food 2.Brand reputation is expected to become increasingly important 3.Growing demand for health and wellness products 4.Growing environmental consensus. 5.Increased trend for flavor enhancer for bottled water 6.More people prefer dinning out 7. Changing Lifestyle Threats 1.Increasing childhood obesity rates all over the world 2.Rising costs of petroleum 3.Declining value of the dollar with increasing value of the Euro. 4.Increasing trend in dinning out 5.Customers switching to generic brands 6.High competition with Nestle, ConAgra Foods, Heinz Company 7.Difficult to differentiate product pricing between competitors Total

Weight 0.1 0.07 0.1 0.04 0.12 0.03 0.04 0.04 0.05 0.03 0.1 0.1 0.14 0.04 1

Rating 3 4 3 3 4 1 3 2 2 1 3 3 4 2

Weighted Score 0.3 0.28 0.3 0.12 0.48 0.03 0.12 0.08 0.1 0.03 0.3 0.3 0.56 0.08 3.08

CPM Matrix for Kraft Foods Inc. Kraft Critical Success Factors Advertising Financial Position Global Expansion Market Share Product Diversity Consumer Demands Consumer Loyalty Product Safety Total Weight 0.12 0.1 0.09 0.1 0.14 0.14 0.13 0.18 1 Rating 3 3 3 3 4 4 3 2 Score 0.36 0.3 0.27 0.3 0.56 0.56 0.39 0.36 3.1 Rating 4 4 4 3 4 3 3 3 Nestle Score 0.48 0.4 0.36 0.3 0.56 0.42 0.39 0.54 3.45

ConAgra Rating 2 2 2 2 3 3 2 3 Score 0.24 0.2 0.18 0.2 0.42 0.42 0.26 0.54 2.46

Key Internal Factors Stengths 1. A total of 100 different brand name 2.High priority and standards on food safety 3. Five operating segments 4. Introduction of new websites 5. Renovation of Kraft main website 6. Company's revenues and earnings increased in 2008 7. Strong reputation and perceived value among customers Weaknesses 1. 0,3% drop in the market share in 2008 2. Over $27.5 billion in goodwill 3. Increase of 50% in the long term debt between 2007 & 2008 4. Difficulty launching new brands 5. Margins depend on commodity prices 6. Most of growth is dependent on acquisitions or expantions Total

Wheight 0.08 0.06 0.04 0.06 0.1 0.07 0.12 0.15 0.07 0.07 0.09 0.04 0.05 1

Rating 4 4 4 4 4 4 3 2 1 1 2 2 2

Weighted Score 0.32 0.24 0.16 0.24 0.4 0.28 0.36 0.3 0.07 0.07 0.18 0.08 0.1 2.8

Opportunities 1.Increase in the demand of processed and packaged food 2.Brand reputation is expected to become increasingly important 3.Growing demand for health and wellness products 4.Growing environmental consensus. 5.Increased trend for flavor enhancer for bottled water 6.More people prefer dinning out 7.Changing Lifestyle Threats 1.Increasing childhood obesity rates all over the world 2.Rising costs of petroleum 3.Declining value of the dollar with increasing value of the Euro. 4.Increasing trend in dinning out 5.Customers switching to generic brands 6.High competition with Nestle, ConAgra Foods, Heinz Company 7.Difficult to differentiate product pricing between competitors

Stengths 1. A total of 100 different brand name 2.High priority and standards on food safety 3. Five operating segments 4. Introduction of new websites 5. Renovation of Kraft main website 6. Company's revenues and earnings increased in 2008 7. Strong reputation and perceived value among customers SO Strategies Position itself as a healthy food producer (S7,O2,O3) Produce ready to drink beverages (S2,S6,O5) Focus on ready to eat products(S2,S7,O7)

ST Strategies Use future contracts to offset the volatily of $ and (S6,T3) Continue marketing efforts to retain loyal customers (T5,S7)

Weaknesses 1. 0,3% drop in the market share in 2008 2. Over $27.5 billion in goodwill 3. Increase of 50% in the long term debt between 2007 & 2008 4. Difficulty launching new brands 5. Margins depend on commodity prices 6. Most of growth is dependent on acquisitions or expantions

WO Strategies Target new brands to restaurants instead of housholds (W1,W4,O6) Conquer the African and Asian markets (W1,O7)

WT Strategies Launch diet products to fight obesity (W4,T1) Maintain ads to remind customers of Kraft's high quality products(T6,W3)

FINANCIAL POSITION (FP) Factors Revenues increased 16.8% to $42.2 billion Earnings increased 12% to 2.9 billion Total L+SE+ Assets decreased 7.5% to $6.3 billion Gross profit margin of 34.1 compared to the industry average of 31.1 Current ratio of 1.1 TOTALS INDUSTRY POSITION (IP) Factors Growth potential Ease of market entry Profit potential Financial stability Resource utilization TOTALS STABILITY POSITION (SP) Factors Competitive pressure Barriers to entry Unemployment Technology changes Price range of competitors products TOTALS COMPETETIVE POSITION (CP) Factors Customer loyalty Product quality Market share Technological knowledge Competition TOTALS

Rating 4 3 3 4 2 16 Rating 5 4 4 3 3 19 Rating -4 -4 -5 -2 -4 -19

Rating -3 -3 -2 -4 -5 -17

Financial Position (FP) Revenues increased by 16.8% to 42.2 billion $ Earnings increased 12% to 2.9 billion $ Total L+SE+ Assets decreased 7.5% to $6.3 billion Gross profit margin of 34.1 compared to the industry average of 31.1 Current ratio of 1.1 Industry Position (IP) Growth potential Ease of market entry Profit potential Financial stability Resource utilization Stability Position (SP) Competitive pressure Barriers to entry Unemployment Technology changes Price range of competitors products Competitive Position (CP) Customer loyalty Product quality Market share Technological knowledge Competition Conclusion SP Average is -19/5= -3.8 CP Average is -17/5= -3.4 x-axis: -3.4+3.8= 0.4

Ratings 4 3 3 4 2

5 4 4 3 3

-4 -4 -5 -2 -4

-3 -3 -2 -4 -5

IP Average is 19/5=3.8 FP Average is 16/5=3.2 y-axis: -3.8+ 3.2= -0.6

0.4 -0.6

STRATEGIC ALTERNATIVES 1 Target new brands for restaurants instead of housholds Key Factors Opportunities 1.Increase in the demand of processed and packaged food 2.Brand reputation is expected to become increasingly important 3.Growing demand for health and wellness products 4.Growing environmental consensus. 5.Increased trend for flavor enhancer for bottled water 6.More people prefer dinning out 7. Changing Lifestyle Threats 1.Increasing childhood obesity rates all over the world 2.Rising costs of petroleum 3.Declining value of the dollar with increasing value of the Euro. 4.Increasing trend in dinning out 5.Customers switching to generic brands 6.High competition with Nestle, ConAgra Foods, Heinz Company 7.Difficult to differentiate product pricing between competitors Total Strengths 1. A total of 100 different brand name 2.High priority and standards on food safety 3. Five operating segments 4. Introduction of new websites 5. Renovation of Kraft main website 6. Company's revenues and earnings increased in 2008 7. Strong reputation and perceived value among customers Weaknesses 1. 0,3% drop in the market share in 2008 2. Over $27.5 billion in goodwill 3. Increase of 50% in the long term debt between 2007 & 2008 4. Difficulty launching new brands 5. Margins depend on commodity prices 6. Most of growth is dependent on acquisitions or expantions Total Weight 0.1 0.07 0.1 0.04 0.12 0.03 0.04 0.04 0.05 0.03 0.1 0.1 0.14 0.04 1 0.08 0.06 0.04 0.06 0.1 0.07 0.12 0.15 0.07 0.07 0.09 0.04 0.05 1 AS 4 4 3

4 4

4 1 1

4 4

1 1

STRATEGIC ALTERNATIVES Target new brands for restaurants instead of 2 Focus on ready to eat products

TAS 0.4 0.28 0.3

AS 4 4 2

TAS 0.4 0.28 0.2

0.12 0.16

4 1

0.16 0.04

0.4 0.1 0.14

1 1

0.1 0.14

0.32 0.24

4 4

0.32 0.24

0.36

0.36

0.09 0.04 2.95

1 1

0.09 0.04 2.37

Opportunities 1.Increase in the demand of processed and packaged food 2.Brand reputation is becoming important 3.Growing demand for health and wellness products 4.Growing environmental consensus. 5.Increased trend for flavor enhancer for bottled water 6.More people prefer dinning out 7.Changing Lifestyle Threats 1.Increasing childhood obesity rates all over the world 2.Rising costs of petroleum 3.Declining value of the dollar with increasing value of the Euro. 4.Increasing trend in dinning out 5.Customers switching to generic brands 6.High competition with Nestle, ConAgra Foods 7.Difficult to differentiate product pricing between competitors

Weaknesses 1. 0,3% drop in the market share in 2008 2. Over $27.5 billion in goodwill 3. Increase of 50% in the long term debt between 2007 & 2008 4. Difficulty launching new brands 5. Margins depend on commodity prices 6. Most of growth is dependent on acquisitions or expantions

WO Strategies -Target new brands to restaurants instead of housholds (W1,W4,O6) -Conquer the African and Asian markets (W1,O7)

WT Strategies -Launch diet products to fight obesity (W4,T1) -Maintain ads to remind customers of Kraft's high quality products(T6,W3)