RBV Analysis of Kraft Foods: Resources and Capabilities
This paper applies the resource-based view (RBV) framework to Kraft Foods, examining how the company's tangible and intangible resources combine to create competitive advantage. Tangible resources discussed include physical assets such as manufacturing facilities and distribution centers, financial performance metrics, and the company's large skilled workforce. Intangible resources covered include proprietary IT systems, well-known brand trademarks, intellectual property, goodwill valued at over $11 billion, and cooperative relationships with key retail partners such as Walmart. Together, these resources illustrate how Kraft Foods configures its asset base to maintain market leadership across multiple food and beverage categories.
- Introduction to RBV and Kraft Foods: Defines RBV framework and its application to Kraft
- Physical Assets: Manufacturing facilities, distribution centers, R&D infrastructure
- Financial and Human Resources: Profit margins, equity growth, workforce composition
- Intangible Technical Assets: IT systems, Walmart integration, digital apps
- Intellectual Property and Brand Value: Trademarks, patents, goodwill, brand survey results
- Conclusion: Summary of Kraft's combined resource competencies
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What makes this paper effective
- Clear application of a recognized strategic framework (RBV) to a real-world company, giving the analysis academic grounding and practical relevance.
- Systematic organization that separates tangible from intangible resources, then breaks each category into logical subcategories, making the argument easy to follow.
- Consistent use of quantitative data — facility counts, profit margins, stockholder equity figures, and goodwill valuations — drawn from Kraft's own 10-K filing to substantiate claims.
Key academic technique demonstrated
The paper demonstrates applied framework analysis: rather than describing the company generically, it filters all observations through the RBV lens, asking how each resource contributes to competitive advantage and value creation. This technique — anchoring every descriptive detail to the framework's categories — is a core skill in strategic management writing and shows the student can operationalize theory.
Structure breakdown
The paper opens with a brief introduction defining the RBV framework and its relevance to Kraft Foods. It then proceeds through two main sections — tangible and intangible resources — each subdivided into named categories (physical, financial, human; technical, intellectual property, other). A short conclusion synthesizes the overall resource picture. This top-down, category-driven structure mirrors how RBV analyses are typically presented in strategic management literature.
Introduction to RBV and Kraft Foods
Kraft Foods is a large corporation with interests in many sectors of the food and beverage markets. The basis of the firm's success — and its challenges — can be appreciated by examining the company from an internal perspective using the resource-based view (RBV). In a resource-based view analysis, a firm is seen as more than its output; instead, it is viewed in the context of its combined assets and competencies, and the way in which they are configured — or can be reconfigured — in order to compete and create value.
The resources themselves may be considered in two main categories: tangible and intangible resources. The different asset types may be assessed individually, with consideration of the way they are configured.
Physical Assets
A major category of Kraft Foods assets — and one on which the firm is highly reliant — is physical assets. Physical assets are the tangible assets that include real estate and property, machinery, and equipment. The company holds a significant advantage compared to many other firms, given the number and type of facilities it owns. At the end of 2013, the company operated a total of 36 different manufacturing facilities: 34 located in the United States and two in Canada (Kraft, 2014). The company owns all of these facilities rather than leasing them, which not only creates a strong asset class but also establishes a solid asset foundation, giving the organization significant control over its supply chain. Some facilities are specialized production facilities where only one product can be produced, while others provide a degree of flexibility by producing several products within similar categories. Cheese can be made in 12 locations, beverages in 8 locations, meals and desserts in 10 locations, and refrigerated meals in 9 locations. Snacks, nuts, and enhancers can be manufactured in 8 locations (Kraft, 2014). In addition to these production facilities, the company also has access to resources through third parties, using outsourcing agreements in order to increase overall levels of production (Kraft, 2014).
The production facilities are supported by a network of 39 distribution centers — 36 located in the United States and three in Canada. Of these, 4 are owned and 35 are leased. The leasing of the distribution centers provides the organization with a high degree of flexibility should distribution strategies change (Mintzberg et al., 2011).
Another major resource is the company's three research and development centers, which focus on new developments including improvements to existing lines, product extensions, and new products. The centers contain a significant level of up-to-date equipment and support a high level of research and development activity; the net expense for this in 2013 was $118 million (Kraft, 2014). The ability to develop new products and improve existing lines is enhanced by the company owning its production facilities, as this increases operational integration and agility.
In total, the book value of the property, plant, and equipment — the main categories of physical assets — was declared at $4,115 million in the 2013 annual accounts (Kraft, 2014).
Financial and Human Resources
The company has significant financial resources, as indicated by the $118 million spent in 2013 on research and development (Kraft, 2014). The organization is able to take advantage of economies of scope and scale and benefits from efficient operations. The financial resources are aided by a superior profit margin compared to the industry average: the pre-tax profit margin is 20.25%, compared to the industry average of 15.27%, and the net profit margin is 13.4%, compared to an industry average of 10.25% (MSN Money, 2014). The organization also has an increasing level of stockholders' equity, which was $3,572 million in 2012 and grew to $5,170 million in 2013.
Human resources are equally important to the organization. The company employs approximately 22,500 workers, the majority located in the United States (approximately 20,400), with 2,100 in Canada (Kraft, 2014). The company has a large number of highly skilled and qualified staff who provide significant intellectual capital and operational support. For example, there are 525 specialist staff located within the research and development facilities, including chemists, engineers, and food scientists, all of whom work towards developing new products or improving existing product lines (Kraft, 2014). The leadership of the organization may also be considered a key asset, as executives have evolved and developed the current strategies that have enabled the company to gain and retain significant market share — such as the 39.68% share of the cheese market in North America (CSI Market, 2014).
Conclusion
The organization has a significant amount of resources and competencies embodied within those resources, which are combined in a manner that allows the organization to adapt and develop, meeting market needs in a responsive way. This gives the firm sufficient flexibility to continue to change and adapt as the competitive environment evolves.
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