Kraft Competitive Strategy
The Sweet Success of Oreo in India
Word Count: 2989
March 12, 2012
IESE Business School
Avenida Pearson, 21
Barcelona, 08034
(+34) 93 253 42 00
Web: www.iese.edu
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COMPANY OVERVIEW1
Kraft Foods, Inc. is an American multinational confectionary, food and beverage conglomerate. Kraft is the second largest food company in the world with 2011 revenues of $54,365 million. Approximately 60% of Kraft’s revenues are generated from outside of the US, with the developing markets playing an increasingly important role towards the overall growth of the organization. The company sells its products in approximately 170 countries and its product portfolio contains 11 iconic brands that generate $1 billion or more in annual revenue. As of 2010, Kraft’s snacks portfolio contributed about 50% of the company’s total net revenues.2
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KRAFT’S VALUE CHAIN ANALYSIS
To better understand the activities through which Kraft has been developing a competitive advantage and creating shareholder value, it is useful to separate the business into a series of primary value-generating activities:
R&D
This department is responsible for the design of products and processes and has the expertise and the infrastructure to ensure:
•
•
•
•
Products are safe (self-speaking, un-debated, un-compromised)
Quality remains acceptable
Nutritional value is maintained (prime aspect for food)
Commercial stability is assured (package integrity is key for customers)
In 2011, Kraft spent $702 million on R&D. The R&D team, which consists of engineers and scientist, constantly works on improving and deploying innovations in the foods, beverages and packing concepts.
Operations & Distribution
Kraft has operations in more than 80 countries and 220 manufacturing and processing facilities worldwide, including 101 in developing markets and 33 in Asia Pacific specifically.
The company distributes its products through 228 distribution centers and depots worldwide, with
Word Count: 2989
March 12, 2012
IESE Business School
Avenida Pearson, 21
Barcelona, 08034
(+34) 93 253 42 00
Web: www.iese.edu
2
COMPANY OVERVIEW1
Kraft Foods, Inc. is an American multinational confectionary, food and beverage conglomerate. Kraft is the second largest food company in the world with 2011 revenues of $54,365 million. Approximately 60% of Kraft’s revenues are generated from outside of the US, with the developing markets playing an increasingly important role towards the overall growth of the organization. The company sells its products in approximately 170 countries and its product portfolio contains 11 iconic brands that generate $1 billion or more in annual revenue. As of 2010, Kraft’s snacks portfolio contributed about 50% of the company’s total net revenues.2
3
KRAFT’S VALUE CHAIN ANALYSIS
To better understand the activities through which Kraft has been developing a competitive advantage and creating shareholder value, it is useful to separate the business into a series of primary value-generating activities:
R&D
This department is responsible for the design of products and processes and has the expertise and the infrastructure to ensure:
•
•
•
•
Products are safe (self-speaking, un-debated, un-compromised)
Quality remains acceptable
Nutritional value is maintained (prime aspect for food)
Commercial stability is assured (package integrity is key for customers)
In 2011, Kraft spent $702 million on R&D. The R&D team, which consists of engineers and scientist, constantly works on improving and deploying innovations in the foods, beverages and packing concepts.
Operations & Distribution
Kraft has operations in more than 80 countries and 220 manufacturing and processing facilities worldwide, including 101 in developing markets and 33 in Asia Pacific specifically.
The company distributes its products through 228 distribution centers and depots worldwide, with