Kraft Past and Present Challenges

Kraft

Past and Present Challenges for Kraft Foods

Kraft Food, Inc. is one of the most immediately recognized names in food retail. The American brand is associated with packaged goods and is the owner of a number of subsidiary brands -- Post, Maxwell House and Nabisco key among them -- that are also highly familiar household items. Kraft's penetration today remains extremely high, however as the case study and additional resources consulted here below will demonstrate, its market-share has experienced a steady decline as a consequence of its strategic orientation and its brand image.

Strategic Challenges:

According to the study provided by Langenfeld (2005), several key strategic challenges help to explain Kraft's difficulty in retaining its historically high level of sales performance. In many ways, the problems facing Kraft are not unique to the firm but in fact are indicative of industry-wide trends. Particularly, Langenfeld asserts, in the years leading into and concurring with Kraft's declining fortune, high fuel and transport costs would combine with an increasingly fragmented retail food market in order to impact firms large and small within the sector. According to the case study, "food manufacturers were facing higher commodity and input costs. Following several years of mostly benign increases, key commodity prices rose and remained at elevated levels for several quarters. Meanwhile, high competition limited manufacturers' ability to raise prices." (Langenfeld, p. 357)

More than these factors though, what would perhaps be most damaging to Kraft's sales performance and what would present its greatest strategic challenge would be its association with high-sodium and pre-packaged comestibles. According to the case study, Kraft and many brand-name food giants like it had been particularly vulnerable to claims coming from the medical and scientific communities regarding the lower health value of such packaged goods. The result would be a shift in consumer habits toward better value through store-name brands and higher nutritional value through smaller-label or independently owned firms. This denotes a critical challenge for Kraft to present itself as providing healthy and organic lines of food, absorbing the cost of this strategic investment and pushing for a general change in its long-held image as a factory-firm with little direct interest in nutritional quality control.

Current Challenges: