Porter’s 5 forces and PEST analyses of Kraft Foods.
MGT 599 Module 2 SLP
This paper will show the various analyses of Porter’s 5 Forces upon Kraft Foods as well as a PEST analysis of external factors influencing the company. Porter’s 5 Forces are industry environments:
1. The threat of new entrants to the foods industry (low) Online grocery shopping is proving to be a formidable threat. (Food Retailing Industry, 02/2/12) 2. The bargaining power of suppliers (medium to high) Agriculture has been impoverished by the U. S. drought in 2011-12 causing enormous loss of crops and animals. This devastation has resulted in less supply and much higher price demands. (Lempert, P. 12/12) 3. The bargaining power of customers (medium to high) Poor economic conditions, obesity and other health concerns mean customers are demanding healthier foods and snacks (Lempert, P. 12/12 Baby boomers, millennials, and cultural diversity are using smartphones and apps to search for similar products at better prices (Food Retailing 2/2/12). 4. The availability of substitutes (low)
Grow your own, buy fresh foods, and eating out would be alternatives to Kraft’s processed foods. (Kraft Annual Report 10K 12/31/11). For most consumers, time and money constraints would preclude these alternatives. 5. The degree of rivalry among competitors (high)
Kellogg holds 34.2% of the cereal market. This is a large percentage considering there is a greater demand for cereal nationwide. Other significant competitors are General Mills, Hershey, Nestle, and PepsiCo. (Kraft Foods Annual Report 2011). PEST analyses represent macro-environment:
In 2011, political upheaval in Egypt forced Kraft to suspend operations there (Just Food 2/11). Of the 300 workers, 250 joined to form a Union. In 2012, the new government instituted a social allowance which Kraft...