Michael Linehan Aaron Haberern Ethan Rand Leonard Kendall Lawrence Wooten Eddie Malecki Toni Nowak

Table of Contents
Introduction History Background

Vision and Mission Statements

Actual/Revised EFE CPM IFE SWOT Space BCG
Domestic Global

Input Stage

Matching Stage

I/E Gsm Data Collection Matrix QSPM- 3 Rules Recommendations Epilogue Citations

Decision

Conclusion

Introduction
History Background

History
1903- James L. Kraft started manufacturing cheese and selling 1914- Opened first plant 1923- Kraft Cheese Co. acquires Fred Walker and Co. 1928- Kraft Cheese Co. acquires Phenix Cheese Corp. 1937- Kraft Macaroni and Cheese 1986- Kraft purchases Tombstone Pizza Corp. 1988- Phillip Morris Cos. purchases Kraft for $12.9 Billion 1989- General Foods and Kraft merge to become Kraft General Food (KGF) 1990- KGF International acquires Jacobs Suchard AG 1992- KGF International acquires five European confectionary companies 1993- KGF International Freya Marabou for $1.3 Billion 2000- KGF merges with Phillip Morris 2001- Kraft begins trading on NYSE 2004- Kraft launches Tassimo hot beverage system 2005- South Beach Diet Introduced 2007- Kraft is now fully independent 2009- Kraft Food Inc. introduced along with new corporate website

Background

Kraft Foods Inc.

Snacks

Beverages

Cheese

Grocery

Convenient Meals

Biscuits, salted snacks and chocolate confectionery

Coffee, packaged juice drinks, and powdered beverages

Natural, process, and cream cheeses

Spoon able and pourable dressings, condiments, and desserts

Frozen pizza, packaged dinners, lunch combinations, and processed meats

Vision and Mission Statements

Actual/Revised

Actual Vision and Mission Statements

Vision Statement
Helping people around the world eat and live better

Mission Statement
Make Today Delicious
In order to fulfill this mission Kraft Foods Inc. focuses on consumers in everything that they do. The company also understands that actions speak louder than words, so at Kraft Foods:
We inspire trust. We act like owners. We keep it simple. We are open and inclusive. We tell it like it is. We lead from the head and the heart. We discuss. We decide. We deliver.

Revised Mission Statement

Here at Kraft Foods we strive to produce superior products and services (2) to our customers (1) ranging from wholesalers to households. The 21st century is sure to bring more innovation, new products, and new food technology (4), thus enabling us to create and deliver better and healthier products. Kraft Foods continues to lead the food industry as the largest food supplier in North America (7) with plans to continue expansion into new and existing global markets (3). We support the goals of the company by applying the highest ethical conduct within our corporate philosophy in all our business transactions (6), treatment of employees (9), and social and environmental policies (8). We at Kraft Foods focus highly on our consumers lifestyles and aim to grow profitable in the worlds food market and provide a higher than expected return to shareholders (5). Our company takes pride in making today and the future-delicious.

1. 2. 3. 4. 5. 6. 7. 8. 9.

Customers Products and services Markets Technology Concern for survival, growth, and profitability Philosophy Self concept Concern for public image Concern for employees

Input Stage
EFE CPM IFE

External Factor Evaluation Matrix

Key External Threats Opportunities 1. U.S sales of organic food and beverages have increased from 1 billion (1990) to 26.7 billion (2009) 2. Increase sales in packaged and processed foods in the restaurant industry 3. Women are becoming more common in upper management (11.2% in 1995 to 16.4% in 2005) 4. Long-term contracts are being renegotiated (potential advantage) 5. Increased trends of bottle water and flavoring consumption Weight 0.08 0.10 0.06 0.03 0.13 Rating 3 4 4 1 4 Weighted Score 0.24 0.40 0.24 0.03 0.52

6. Growing environmental consensus

Threats 1. Increasing obesity rates in North American 2. How many employees were let go in the industry 3. Rising oil prices used for manufacturing as well as delivery and facility operations 4. Difficult to differentiate product pricing between competitors in the industry 5. Customers switching to generic brands 6. Increased intensity between competitors in European as well as other markets 7. Declining value of the dollar with increasing value of the Euro 8. North American competition is now primarily focused on the food industry Total

0.06
0.03 0.04 0.05 0.04 0.09 0.07 0.02 0.13 1

3
2 1 2 2 3 3 2 4

0.18
0.06 0.04 0.10 0.08 0.27 0.21 0.04 .52 3.14

Competitive Profile Matrix

Kraft Critical Success Factor

1. Advertising 2. Financial Position 3. Global Expansion 4. Market Share 5. Product Diversity 6. Consumer Demands Total

Nestle Score
0.75 0.3 0.75 0.3 0.6 0.6 3.3

ConAgra Score
1 0.4 1 0.3 0.6 0.45 3.75

Weight Rating
0.25 0.1 0.25 0.1 0.15 0.15 1 3 3 3 3 4 4

Rating
4 4 4 3 4 3

Rating
2 2 2 2 3 3

Score
0.5 0.2 0.5 0.2 0.45 0.45 2.3

Internal Factor Evaluation Matrix

Key Internal Threats Strengths 1. Positive sales and operating effectively is all 5 operating segments; Snacks, Beverages, Cheese, Grocery, Convenient Meals 2. High priority and standards on food safety 3. Diverse range of brands and products Weight 0.06 0.06 0.08 Rating 4 3 4 Weighted Score 0.24 0.18 0.32

4. Strong focus on R&D

5. Sales increase by 2.9% in North American markets 6. Strong reputation and perceived value among customers 7. Organic revenue increased by 2.3% in 2009 Weaknesses 1. Possibility of perceived weakness from female CEO in certain foreign markets 2. Risk of contamination in source products 3. Drop in sales in Quarter 2 in 2009 (5.9%) 4. High amounts of goodwill ($27.5 billion) 5. $18.5 billion in long term debt (increased by 50% during 2009) 6. Difficulty launching new brands 7. Margins depend on commodity prices Total

0.08
0.04 0.12 0.07 0.02 0.12 0.08 0.07 0.07 0.09 0.04 1

4
3 4 4 2 1 2 1 1 1

0.32
0.12 0.48 0.28 0.04 0.12 0.16 0.07 0.07 0.09

0.08
2.57

Matching
SWOT Space BCG I/E Gsm Data Collection Matrix

Weaknesses
1.) Possibility of perceived weakness from female CEO in certain foreign markets 2.) Risk of contamination in source products 3.) Sales drop 5.9% in second quarter 2009 4.) High amount of goodwill - over $27.5 billion 5.) $18.5 billion in long-term debt - increased about 50% in 2008 from 2007 6.) Difficulty launching new brands 7.) Margins depend on commodity prices

SWOT Matrix
Opportunities 1.) U.S sales of organic food and beverages have increased from 1 billion (1990) to 26.7 billion (2009) 2.) Increased demand for packaged and processed foods around the world due to change in lifestyles 3.) Women are becoming more common in upper management (11.2% in 1995 to 16.4% in 2005) 4.) Increased trends of bottle water and flavoring consumption 5.) Growing environmental consensus

WO Strategies Increase of food distribution increases risk of source contamination (W2, O2) Renegotiation could lead to lowering Kraft's long-term debt (W5, O4) Target new brands to restaurants instead of households (W6, O2)

Threats 1.) Increasing obesity rates in North American

2.) Due to a weak economy and increased competition, the food processing industry saw a work force reduction on average of 7.5% in 2009 3.) Rising costs of petroleum cause an increase in cost for food companies 4.) Difficult to differentiate product pricing between competitors in the food processing industry 5.) Customers switching to generic brands 6.) Increased intensity between competitors in European as well as other markets 7.) Declining value of the dollar with increasing value of the Euro 8.) North American Competition is now primarily focused on the food industry

WT Strategies Keep advertising to remind our customers of our high quality products (W6, T5) Market dependent; look into closing lower value markets and look to switch to higher value economies

SWOT Matrix

Strengths 1.) Positive sales growth and operating effectively in all 5 operating segments; Snacks, Beverages, Cheese, Grocery, Convenient Meals 2.) High priority and standards on food safety 3.) Diverse range of brands and products 4.) Strong focus on R&D 5.) Sales increase by 2.9% in North American markets 6.) Strong reputation and perceived value among customers 7.) Organic revenue increased by 2.3% in 2009

Opportunities 1.) . U.S sales of organic food and beverages have increased from 1 billion (1990) to 26.7 billion (2009) 2.) Increased demand for packaged and processed foods around the world due to change in lifestyles 3.) Women are becoming more common in upper management (11.2% in 1995 to 16.4% in 2005) 4.) Increased trends of bottle water and flavoring consumption 5.) Growing environmental consensus Threats 1.) Increasing obesity rates in North American 2.) Due to a weak economy and increased competition, the food processing industry saw a work force reduction on average of 7.5% in 2009 3.) Rising costs of petroleum cause an increase in cost for food companies 4.) Difficult to differentiate product pricing between competitors in the industry 5.) Customers switching to generic brands 6.) Increased intensity between competitors in European as well as other markets 7.) Declining value of the dollar with increasing value of the Euro 8.) North American competition is now primarily focused on the food industry

SO Strategies Increased production of organic foods (S7, O1)

Use reputation to increase market share in restaurant industry (S6, O2) Use development to create new products (S4, O5)

ST Strategies Large selection of brands that are all high sellers could be affected by the obesity rates in U.S (S1, S3,T1) New healthier drink (T7, S4) Our reputation will enable us to remain North Americas top distributor (S6, T7)

SPACE Matrix Calculations

FINANCIAL POSITION (FP) Factors Kraft's 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 know how 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

Calculations SP Average: -19/5= -3.8 CP Average: -17/5= -3.4 IP Average: 19/5= 3.8 FP Average: 16/5= 3.2

Directional Vector Coordinates: X-axis: -3.4 + (3.8) = .4 Y-axis: -3.8 + (3.2) = -.6

SPACE Matrix
CONSERVATIVE
10 9 8 7 6 5 4 3 2 1 . -1

AGGRESSIVE

-10

-9

-8

-7

-6

-5

-4

-3

-2

-1

10

DEFENSIVE
-2 -3 -4

COMPETITIVE

-5
-6 -7 -8 -9

Backward, forward, horizontal integration Market penetration Market development Product development

-10

BCG Domestic

BCG Global

I/E

Grand Strategy Matrix

Rapid Market Growth Quadrant II Quadrant I
1.Market Development 2.Market Penetration 3.Product Development 4.Forward Integration 5.Backward Integration 6.Horizontal Integration 7.Related Diversification

Weak Competitive Position

Quadrant III

Quadrant IV

Strong Competitive Position

Slow Market Growth

Data Collection Matrix

Decision
QSPM- 3 Rules

QSPM- 3 Rules

Conclusion

Recommendations

Epilogue

Citations