Strengths and weaknesses of food and beverage company Kraft Foods

INTRODUCTION

Kraft Foods Inc. is the largest foods and beverage company in US and the world second largest industry which is after Nestle. Kraft had been offered consumers delicious and wholesome foods for more than 100 years. Kraft Foods headquarter is in North America. Kraft Foods has many of the best-known brands in the world with operations in 72 countries and sales in 155 countries. Kraft Foods has 140,000 diverse employees around the world and this is one of the reasons why they can succeed.

Kraft Foods Inc. is a company which has different roots and founders. The three most successful food entrepreneurs are J.L. Kraft, who started his Chinese business in 1930; C.W. Post, who founded Postum Cereal Company in 1895; and Oscar Mayer, who began his meat business in 1883.

Kraft Foods Malaysia was established in the year of 1959 in Malaysia and started with Tyre Hong Biscuit and Confectionary factory. Kraft Foods manufacturing in Malaysia and the factories located at Johor Bahru and Penang.

VISION, MISSION AND GOAL

Kraft’s company vision is to lend a helping hand to the people all around the world in order to have a better life and a healthy life-style. Kraft’s vision is satisfy consumer needs and making healthier foods. Kraft deliver the message to the customers that they concern about the health and wellness of everyone and wanted to provide high quality food and services.

Kraft mission is to remain successful in the long-run. Constantly re-strategize the products categories to satisfy the needs of consumers is necessary for Kraft to operate in the future. Seize the opportunity to exploit sales capabilities by coming up with different marketng strategies

Kraft’s corporate goals is to ensure that the products are innovative, high-quality, safe to consume, respectful to environmental needs, and the openness and integrity which seek to commit to the consumers

TYPE OF PRODUCT

Kraft’s products are divided into five categories which are grocery, beverages, cheese & dairy, snacks & cereals, and convenient meals. The well known brands that Kraft have in Malaysia includes Oreo, Jacob’s, Chipsmore, Twisties and so on.

MARKET SEGMENTATION

Every consumer might have different taste and preferences. Hence, using a same marketing segmentation, which is also known as mass marketing by offering a single marketing mix to all consumers are not able to fulfill the needs and wants of all customers. In addition, the global market are becoming competitive and high customers requirements which is very dificult to satisfy. Therefore, Kraft’s seperate the operation in two main segments: Kraft North America Commercial and Kraft International Commercial.

Besides, Kraft target to the customer who concern with their health and wellness. For example, most of the teenagers do not meet the recommended daily intake for calcium. Kraft then shift out the not-so-healthy snacks advertisement such as Oreo cookies and change to the products which meet new nutritional criteria. Kraft will also add the Sensible Solution label on products in order to transfer the message to all parents that the goods are meeting the nutrition criteria and save to consume. Kraft also doubled the calcium in traditional favourites such as Kraft Singles and Kraft Macaroni & Cheese.

Kraft’s business was launched internationally and realised that the consumer behaviour are depends on the local eating and social behaviour due to the particular country’s cultures, practices and traditions. Thus, Kraft always shown respect for different cultures, for example, selling ‘HALAL’ food in Muslim Countries. Furthermore, in the nuts business, Kraft have more of a skew towards men versus other brands that may have more of a skew toward women. Kraft spend a lot of time to understand all the consumers attitudes, beliefs, etc.

For example, Kraft focus on the Hispanic consumer as one of the core consumers of the brands. Hispanic consumer preference the brands like Oreo and Chips Ahoy. Kraft marketing will be customized around the insights for the different consumers.

STRENGTHS

Kraft is a multinational company and having the capability to attract consumer all over the world compare to the local companies. Besides of high market share and financial power, Kraft also has greater financial capability in altering existing products in terms of packaging, the formula of the particular product and others or creating new products, as well as to adapt or upgrade latest information system technology in manufacturing, order processing and other related fields in order to sustain their competitive advantage by delivering lower cost of goods and services than their competitors in this dynamic environment.

Secondly, Kraft has an effective strategic marketing capability. For example, Kraft products such as Oreo cookies have built a strong and stable patent in many countries. Although Oreo has many competitors such as Cream-O, whereas the strong advertisements have indoctrinated most of the people that Kraft’s Oreo is the products of origin. Kraft iconic heritage brands are loved by the consumers worldwide. Around 80 percent of these heritage brands holding number one or two positions in the respective categories and are household names.

Besides, Kraft also has great leadership attributes. The management team such as the top executives, branch managers, and others are responsible for the day-to-day operations and success of the company. The management group has extensive food industry experience and management depth.

PROBLEMS AND SOLUTIONS

Kraft Food company faces serious problem in the production sector. Kraft is not able to control the supply of the production. This is due to a sudden and unexpected increased in demand, which will cause extreme supply shortages for commodities that will result in major price increases. For instance, bad weather and natural disasters have always been an issue affecting incoming raw materials. The main problem is the shortage of raw material, Cocoa. Cocoa is a major ingredient for Kraft. Cocoa always used in the production of chocolates, cookies, desserts and others. Because of the importantly of cocoa, therefore, consistency of supply, in terms of price, quality and volume is the main consideration for Kraft. Kraft wants to improve the welfare of cocoa farmers and farm communities in order to maintain the long-term stability of the cocoa supply chain. West Africa is the country that produces seventy percent of cocoa among the world. Unfortunately, farmers face many challenges because of poverty. They do not have adequate infrastructure, lack of the educational opportunities and have only little investment in cocoa farming. These challenges are so complex, requiring the coordinated effort from the local government, industry and other organizations. In addition, this will cause Kraft to encounter a great loss due to the inaccuracy of supply because the farmers could not produce the actual quality and quantity of cocoa.

In orders to resolve this problem, Kraft Foods is working as part of the coordinated effort to help to maintain the supply of cocoa. Kraft believes that to improve farmers’ income can solve these problems and also promoting efficiency effectiveness in the supply chain, quality and productivity. Kraft also works with the non-governmental organizations and industry partners in order to help cocoa farmers and their families. Kraft’s reaching out to governments and supports the programs that giving education to farmers and promote responsible farm practices. Kraft primary focus is in West Africa, while Kraft also is a member of cocoa sustainability programs in Latin America. Kraft wanted to empower cocoa farmers, their families and communities in order to build better lives for themselves while this can make sure that Kraft is able to maintain an adequate supply of quality cocoa for the generations to come.

RECOMMENDATIONS

There are some suggestion which can be considered by Kraft to solve the problem of inconsistency and shortage of raw materials. Firstly, Kraft can increase the safety stock level. Safety stock is the quantity of stock which can be used to satisfy unexpectedly high requirements in the stock out period. The purpose of the safety stock is to prevent the occurred of material shortage whereas usually will not be used in production. Therefore, Kraft might need to increase the safety stock in order to avoid the risk of shortage or back order which may incur higher costs. Safety stock can also help to lower down the customer turnover rate. In order to determine the accurate safety stock level, Kraft’s manufacturing department can implement the Manufacturing Require Planning II (MRP-II) system. MRP-II is an integrated information system used by businesses to centralize, integrate and process information for effective decision making. The function of MRP-II includes business planning, production planning and scheduling, order processing, and performance measurement and so on. With the help of MRP-II, Kraft can improve the production process by reduced the inventory level, improved the used of manufacturing facilities, response faster in changing conditions and so on. This will increase the competitive advantage of Kraft to compete with the competitor.

Besides, Kraft can engage with multiple suppliers or dealers in particular region, so they could acquire inventories from multiple dealers, which will definitely decrease the risk of shortage due to incontrollable situation. Other than that, mutual trust and strong relationship with all the dealers are needed in order to increase the flexibility of material supply management, as well as to enhance the bargaining power of Kraft. Lastly, Kraft should also refer to the demand and purchase planning on last couple of years of sales to forecast current year of demand and supply.

CONCLUSION

Contributing towards a better and healthier society are the cocernstone of Kraft Food’s business values and philosophy. In addition, Kraft also study about the consumer’s needs from time to time and satisfy the consumers as much as possible. Kraft’s strengths such as high financial power, effective strategic marketing capability and great leadership attributes have helped them through the obstacles. In order to achieve the goal, Kraft might need to solve the problem of the production.