Doing Business

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ASSIGNMENT

Kraft Food Inc.

SM0376
Doing Business in Europe, Asia and the Americas
Northumbria University

Presented by

09 January 2011

NU Student Number: 11035717
SHAPE Student Number: 117011424

Table of Contents
PART A
1 Question 1

1.1 Defining Partnership…………………………………………………...…5 1.2 Advantages of Kraft chooses Cadbury as a partner……………………...….5

2 Question 2

2.1 Potential risks of this acquisition………………………………………….6 2.2 Impacts of cross-cultural risk……………………………………………...6 2.3 Impacts of country risk (as Political risk)………………………………….7 2.4 Impacts of currency risk……………………………………………………7 2.5 Impacts of commercial risk………………………………………………...8

3 Question 3

3.1 Impact of the two national cultures on this ‘partnership’…………………..8 3.2 Discussing the two corporate cultures on this ‘partnership’……………....10

4 Question 4

4.1 Impact of profitability to Kraft shareholders……………………………....11

PART B

5 Question 5
5.1 Discussing 4 aspects of doing business internationally…………………….12

6 Appendix………………………………………………………………………15

7 Reference List…………………………………………………………………19

Exhibition

Exhibit 1.Hofstede’s Cultural Dimensions regarding United States and United Kingdom……………………………………………………………9

Exhibit 2.Ansoff’s Product/Market Matrix…………………………………..16

Figure

Figure 1 Porter’s Five Forces…………………………………………………15 List of abbreviation

EBITDAEarnings Before Interest, Tax, Depreciation and Amortization

EPSEarning Per Share

USAUnited States of America

1 Question 1

2.1 Defining Partnership
This is defined to the group of “Two or more persons” combine “their resources and expertise” to operate an event to be a more “efficient unit” (Adrian Palmer & Bob Hartley, 2009, p.218). Wall & Ress tell the true “Few firms can afford to be sophisticated in all areas” (Stuart Wall & Bronwen Ress, 2001, p.19). Hereby, normally partnership would be seemed as “share the risk”.

2.2 Advantages of Kraft chooses Cadbury as a partner
Concerning with the strategy of Kraft, they are “a rag-bag of businesses” (Christopher Hughes and Edward Hadas, 2009). Precisely that means “These include some large commodity food businesses”. In fact, Kraft’s portfolio has already included many brands before December 2010 (Kraft Foot .com, no date). They believed that Kraft desire to merger more brands to “strengthen its corporate profile”.

In 2009, Kraft Food took action of acquisition of the British confectioner Cadbury. Kraft CEO Irene Rosenfeld persisted for this merger can “[strengthen] companies,” to achieve “our worldwide scale and scope”, and “capitalizing on significant opportunities to build a global leader” (Irene Rosenfeld, 2009). With regard to Cadbury’s profile, they have done an excellent business and “strong brands occupying leading market position” not only “developed markets” but also with “high growth emerging economies” Cadbury’s chairman, Roger Carr said, their business “replicate and with a unique position in the global confectionery market” (cited in Dealbook, Cadbury Chairman reiterates opposition to Kraft bid, 2009). Analyst Paul Waldie expected that “[Kraft] will vault from a bit player in the candy and gum business” to the world leader commanding 15 percent of the global market” (Paul Waldie, 2009) after Kraft take over Cadbury. On the other hand, it is an opportunity to Kraft “entry into several developing markets, such an India” (Paul Waldie, 2009). It’s what Rosenfeld’s point, “a geographically diversified combined business, with leading positions and significant scale in key developing markets including India, Mexico Brazil, China and Russia” (Irene B. Rosenfeld, 2009). Ms. Rosenfeld anticipated developing the emerging market through this collaboration.

Although Kraft has a large business, they “suffered in from shrinking profit margin” (Christopher Hughes and Edward Hadas, 2009). In...
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