Business Strategy Business and Corporate

business strategy analysis of kraft foods

Analysis of Business Level Strategy

Kraft Foods Inc. is the second largest food company in the world and makes annual revenues in excess of $54 billion (Kraft Foods Annual Report, 2012). It operates in a highly competitive consumer foods industry where high volume sales are essential for competitive success. Tapping into new markets and growing one's brand portfolio are also important for growth and success.

Kraft Foods Inc. pursues a number of business-level strategies to support its corporate level strategies. The business level strategies are determined by answering the question How do we compete? (Ireland, Hoskisson & Hitt, 2008). Kraft Foods Inc. has selected product differentiation and brand development as its primary business level strategy. Product differentiation involves creating and conveying to the consumer a unique feature of the product portfolio that distinguishes the company from the competition and offers something that the consumers value. Kraft Foods Inc. develops brands in a number of product categories including biscuits, confectionery, beverages and convenience meals. Some of the well-known brands of the company are Tang, Cadbury, Kraft, Oreo and Lu. The company has adopted nutritional value as the differentiating feature to market its products in 170 countries around the world (Kraft Foods Annual Report, 2012). In addition to differentiation, the company also pursues low costs through sustainable sourcing, efficient packaging and reduced transportation costs (Kraft Foods Annual Report, 2012). These strategies project the image of a responsible company and keep costs low.

In my opinion, the differentiation strategy is the most effective business level strategy for the company because a diverse brand portfolio enables the company to address the diverse needs and tastes of the consumer segments. Consumers prefer localized products; therefore Kraft Foods Inc. needs to expand its brand portfolio...

This would enable the firms to seek growth in new markets.
Analysis of Corporate Level Strategy

The corporate level strategy of any company reflects how the company perceives its competitive and general environment and how it chooses to respond to it. Corporate level strategies are determined in consideration of the product, geographic reach and level of vertical integration (Furrer, 2011).

Because the market is rapidly expanding along with the competitive activity, Kraft Foods has adopted strategies to pursue growth. To pursue its growth objective, the company has been pursuing a policy of strategic mergers, divestments and acquisitions. However, since 2000, the acquisitions strategy has been the primary corporate level growth strategy of the company. Since 2000, the company has acquired a number of important brands such as the Back to Nature cereal brand in 2003, the Lu biscuit brand in 2007 and Cadbury in 2010. During the same period, the company has divested brands like Post in 2008 and its pizza business in 2010. In 2011, Kraft Foods Inc. announced its most ambitious strategic move by revealing plans to enter the grocery business and the global snacks market by launching two independent spinoff companies by the end of 2012 (Kraft Foods Fact Sheet, 2011).

Kraft Foods has been seen to prune its brand and business portfolio by strategic acquisitions and divestments of brands. Of these strategies, the most effective is the acquisition strategy because it allows the company to respond with flexibility to the changing environment. By the strength of its capital, the company gets access to established brands that can be used to enter new markets. The strategic move to enter the grocery business is an attempt at moving down the value chain by controlling the distribution and retailing activities of the value chain. This does not appear to be an effective strategy since the competitive strength of the company has always been its…