Strategic Choices - The Kraft Foods

Strategic Choices - The Kraft Foods
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Institution
Executive Summary
The Kraft Foods Company is one of the largest firms in the world dealing with consumer packed food and beverages. For more than a century the company has been in existence, the company has managed to establish itself as a well-recognized household name. This is demonstrated through the firm’s excellent performance that has been responsible for the high revenues it enjoys, of approximately $19 Billion (Kraft Foods, 2015). By utilizing its SWOT analysis, the company has always been in a position to identify its internal threats and opportunities besides the external ones. This has enabled the firm positioned itself strategically to remain relevant and on top in the food and beverage industry. With constant entries of new firms in the industry, the competition in the industry is continuing to grow. Consequently, for a company to survive it has to be unique in its ways of operations. To sustain its competitiveness, Kraft Foods Company has always remained flexible in providing better quality foods and services at low prices comparable to none. Through such a strategy, the firm has managed to sustain its reputation in the market, safeguarding its customers’ loyalty besides expanding its market base in the food industry (Chairman and Rosenfeld, 2009).
Notably, Kraft Foods has utilized its cost leadership strategy to enhance its strengths and tackling its weaknesses in addition to identifying and taking advantage of its opportunities. The cost leadership strategy has also helped in the recognizing of the potential threats. Through such an operational strategy, the company has remained successful for many years by enjoy a strong competitive position in the market. Accordingly, the firm’s capitalization on its strong brand image to come up with new innovative products will enhance continued growth and development in all areas of the company; for instance, in the research and development, and the acquisition of more facilities. Sociological factors such as being environment-friendly provide the firm with the opportunity to promote its corporate image. This helps the company become more competitive, capable of generating more revenues, which is necessary for continuous growth and development in the food industry. By remaining flexible in adapting to the changes in the industry, in terms of consumers demand, Kraft Foods Company will manage to utilize its strategies more effectively to compete well with its close rivals (Chairman and Rosenfeld, 2009). Although the firm is enjoying a strong position in the food industry, it must keep on adapting new innovative strategies, to its existing strategies, in responding to its threats in order to sustain its competitiveness.
Introduction
As the world food industry becomes more competitive with new entries and highly competitive strategies adopted by different companies, companies need to analyze their internal and external capabilities through a SWOT analysis. Conducting a SWOT analysis is necessary in order to make better decisions on planning the future (Porter's Generic Strategies, 2007). A SWOT analysis provides a firm with the knowledge of its strength, weaknesses, opportunities and threats which are important in the strategic management functions of the organization. It helps a company identify new innovative ideas and competitive strategies that can be utilized as additional strength to capitalize on the identified opportunities, necessary to propel the firm into the brim of success (Chairman and Rosenfeld, 2009). Pairing the SWOT analysis with Porters generic strategies provides a glimpse of how a company can exploit market base, attracting more customers necessary for expanding the firm’s position in the market.
The Porter Strategy Used By the Company
The Kraft Foods Company embraces low cost as its primary strategy in the Porter strategies (Kraft Foods, 2015). This is a cost leadership strategy used to market the firm as one of the companies providing quality foods and beverages at the lowest prices in the market. To make the strategy a reality, the Kraft Foods utilizes the operations that ensure of costs efficiency minimizing its costs of operations, whose benefits are transferred to the customers in the form of low-priced goods and services. According to experts, companies in the food industry have little chances of differentiating their products in terms of quality, which has been standardized, and so prices become the most important variable valued by the customers (Davey, 2014). This way, the consumers are left to focus on prices to differentiate the competing companies in the market, becoming more price-sensitive to the foods they buy. This explains why the Kraft Foods Company focuses on the costs leadership strategy as the way to acquire its competitive edge in the highly competitive market.
Strength
Since its inception, the Kraft Foods has provided its customers with quality foods at low prices (Kraft Foods, 2015). The cost leadership strategies have been achieved through taking advantage of the economies of scale where the company produces more quantity of products reducing the costs of operation. The Kraft Foods is a big organization operating not only in many regions in the U.S, but also in other countries in the world. With its vast presence, the company is able to produce high volume of products, consequently reducing the cost per unit. This way, it derives more revenues per unit, which gives it the reason to reduce its prices to attract more customers.
The company spends millions of dollars in its research and development, which has helped it identify and implement new technologies; for instance, in the packaging materials where it uses recyclable materials (Kraft Foods, 2015). This has substantially reduced the overall costs of operation, saving a lot of money for the firm. The ability of the firm to operate at low costs gives the Kraft Foods a cost advantage over other small competitors, preventing such firms from providing a considerable competition to the Kraft Foods (Chairman and Rosenfeld, 2009). The strategic choice of the firm of utilizing its repute to provide high-quality products aligns with the company’s cost leadership strategy of providing the customers with low-priced quality products.
Weakness
Although the Kraft Foods has been recording profits for many years, the firm’s financial portfolio is still weak (Kraft Foods, 2015). The company needs to continue adopting new ideas to further utilize its cost leadership strategy to facilitate an increase in the financial portfolio, which is vital for the expansion of the company. In order to realize the position, the firm needs to continue identifying the areas where it can reduce costs. For instance, it can utilize its reputable brand image to market its...