Over the last few years, Kraft has been dealing with unique challenges. This is from the wide range of products and markets the firm is competing. In this study, there was a focus on the current opportunities and challenges. What was determined is that Kraft is facing considerable risks from a number of industry and external factors. To address these issues, the firm must maintain constant amounts of watchfulness of new changes and quickly adjust to them. This will help the company adapt with critical challenges and address the needs of stakeholders.
For many firms, globalization has increased the competitive pressures they are facing inside the marketplace. This has transformed the kinds of strategies they are utilizing. In the cases of Kraft Foods, they are facing similar issues from these and other factors such as: high raw material and energy costs. This has the potential to hurt their ability to effectively compete over the long-term. ("Our Progress in 2011," 2011)
To fully understand what issues are impacting the firm requires conducting a Porter's Five Forces and PEST analysis. This will be accomplished by studying each idea and offering specific recommendations. Together, these different elements will provide insights that will help the company to adapt with critical challenges. These are the primary objectives of this report. This is when key findings, can establish a foundation for executives to understand the scope of the different problems and potential solutions for them.
Porter's Five Forces
Porter's Five Forces are looking at competitive pressures and risks that a business is facing. This is achieved by concentrating on several different areas to include: the threat of new entries, rivalries, substitutes, the bargaining power of consumers and the bargaining power of suppliers. These factors will allow executives to understand specific issues and the hazards associated with them. ("Porter's Five Forces: A model for industry analysis," 2007) ("Kraft," 2012)
Threat of Entry
The threat of new entrants is when a competitor can easily establish operations and begin to offer alternative products to consumers. In the case of Kraft, their industry is structured in a way that makes it more difficult for new firms to enter the marketplace. This is because there are tremendous upfront costs associated with producing the final merchandise from different raw materials. This discourages many companies from establishing operations in these areas. ("Porter's Five Forces: A model for industry analysis," 2007) ("Kraft," 2012)
Rivalries are the actions taken by competitors and the kinds of strategies they are utilizing to compete against Kraft. There are a number of factors that will have an influence on the intensity and activities of different firms. To include: the number of organizations, the growth of the marketplace, fixed costs, storage capacity, low switching costs, low amounts of product variation, high amounts of risk, a diversity of rivals and high exit barriers. These factors will determine the intensity and scope of competition. ("Porter's Five Forces: A model for industry analysis," 2007) ("Kraft," 2012)
In the case of Kraft Foods, there are intense rivalries they are facing. This is because a number of multi-national and domestically focused companies are competing against them in a variety of markets around the world. This increases the competitive pressures the firm will face in protecting their customer base and maintaining loyalty. At the same time, these levels of competition have become more intense based upon the different kinds of products that Kraft is selling. These include: beverages, liquid concentrates, packaged juice drinks, powdered beverages, coffee, beverage mixers, processed cheese, lunch meats, soy-based meat alternatives, pickles, macaroni & cheese dinners, nuts, trail mixes, peanut butter, corn snacks, dry packaged desserts, refrigerated gelatin and pudding snacks. ("Porter's Five Forces: A model for industry analysis," 2007) ("Kraft," 2012)
Substitutes are when a firm is introducing an alternative product that is hurting the demand of competitors. For Kraft, this is a realistic threat that the company is continually dealing with. This is because the intense rivalries, means that merchandise is sold to consumers which can address their underlying needs in a similar manner. It is at this point that the firm will begin to lose market share as this is eating away at their customer base. ("Porter's Five Forces: A model for industry analysis," 2007) ("Kraft," 2012)
Bargaining Power of Suppliers
The bargaining power of suppliers is when the cost to manufacture the final product will have an impact on firms. This is occurring based upon their…