NAMA
NO
MATRIKS
NORHAIRIZAM BIN ABDUL MANAP
GA00685
AHMAD YUS SHAHRIL FEEZRIE BIN
YAACOB
GA00447
SAHRA BINTI SANUSI
GA00647
YULINDA BINTI YUSNEL
GA00487
OUTLINE

INTRODUCTION
EXTERNAL ANALYSIS
INTERNAL ANALYSIS
STRATEGY ANALYSIS AND CHOICE
STRATEGY IMPLEMENTATION
CONCLUSION
INTRODUCTION

HISTORY
COMPANY
BACKGROUND
MAIN ISSUE’S
HISTORY

1903: James Kraft
founder – sell
cheese in chicago
1914: available in
town at US
1920: export
product to
Canada & Europe
1916: known as
processed cheese
COMPANY
BACKGROUND

Largest food &
beverage company in
North America
Well positioned in
deliver steady, reliable
growth
Mission : to be the best
food & company in
North America
Product : beverage,
cheese, refrigerated
meals & grocery
categories
MAIN ISSUE’S

KNAC sales
were flat
Revenue
declined 5.9%
International
segment, net
revenue in EU
decreased 17.4%
Expected
earning of at
least $1.93
per share
Financial – High
Goodwill and
LTD
EXTERNAL ANALYSIS

PESTDEL
ANALYSIS
PORTER’S
FIVE FORCES
ANALYSIS
COMPETITIVE
PROFILE
MATRIX
EFE MATRIX
PESTDEL ANALYSIS

Political, Government, and Legal Forces
• Food safety programs
• Global warming
Economy Forces
• Raising cost of petroleum
• Consumer prices for baked food increased by 10.7%
• Input cost of bakers have declined
• US Market for packaged and processed food has seen large
profit in retail sales
• Food cost climbing
PESTDEL ANALYSIS
– cont.

Social, Cultural, Demographic, and Natural Environment Forces
• More people are dining out and food
• Development of health food
• Childhood obesity
Technological Forces
• Web site / Portal has undergone facelift
Competitors
• Competes with numbers of companies
• Many consumer switching to store brand products
PORTER’S FIVE
FORCES ANALYSIS

1. Barries to
entry
•Spending more researching consumer
•Development of health food
•Large profit in retail sales – U.S market
2. Threat of
substitutes
•More people are dining out
•Food safety program
3. Buyers
•Available in 150 countries
•Jan 2009: consumer price for baked goods increased 10.7%
due to rising costs of petroleum.
•Demand in world wide increase due to lifestyle
PORTER’S FIVE FORCES
ANALYSIS-cont

4. Bargaining
power of
suppliers
•Dec 2007 & 2008: workers at one’s Kraft manufactures
in Illinois turned up a batch fruits and nuts that were
contaminated with salmonella
•The tainted nuts came from a California based
supplier, more specifically from Setton Pitachio of
Terra Bella,Inc
5. Rivalry
among the
existing
players
•2nd largest food processing company behind Nestle
(health , beauty and pet care products behind food)
•Kraft itself competing with generic product & retailer
brands, wholesalers and cooperatives.
•Competitor : ConArga Food largest publicly in U.S
•Significant in commercial food products & nation’s
leading specialty potato providers.
COMPETITORS PROFILE
MATRIX
Kraft Foods Inc.
ConAgra Foods
1. 2nd largest food processing
company
1. Largest publicly held firm that
Kraft Foods competes in the U.S.
market.
2. Vision Statement “Helping people
around the world eat and live
better”.
2. Vision statement “ One company
growing by nourishing lives and
finding a better way today one bite at
a time”.
3.Competing with generic products
and retailer brands, wholesalers and
cooperatives instead of packaged
food companies.
3. Leading branded foods company
and trusted name behind many
leading brands such as Healthy
Choice, Chef Boyardee etc.
4. Kraft Foods products more
expensive due to U.S. dollar gains
stregth overseas.
4.Their consumer brands are found
in 97% of U.S. households and 26
ranked first or 2nd in their category.
COMPETITIVE PROFILE
MATRIX – cont.

Critical Success Factor
Weight
Kraft
ConAgra
Rating
Score
Rating
Score
1. Advertising
0.25
3
0.75
2
0.5
2. Financial Position
0.1
3
0.3
2
0.2
3. Global Expansion
0.25
3
0.75
2
0.5
4. Market Share
0.1
3
0.3
2
0.2
5. Product Diversity
0.15
4
0.6
3
0.45
6. Consumer Demands
0.15
4
0.6
3
0.45
Total
1
3.3
2.3
KEY EXTERNAL FACTOR – EFE
MATRIX
Key External Threats
Weight
Rating
Weighted
Score
0.08
3
0.24
0.10
4
0.40
0.06
4
0.24
0.06
3
0.18
0.13
4
0.52
0.06
2
0.12
Opportunities
1. US Market for packaged and processed food
has seen large profit in retail sales
2. More people are dining out and food producers
are devoting more attention to product designed
for restaurants, vending machines and other
foodservice provider
3. Development of health food
4. Web site / Portal as marketing medium
5. Input cost of bakers have declined
6. Food safety programs have been adopted
recently as issues of chemical and bacterial
contamination and new food-borne pathogens
remain a public health concern
Total Opportunities
0.49
1.70
KEY EXTERNAL FACTOR – EFE MATRIX
– cont.
Key External Threats
Threats
1. Competes with numbers of companies
Weight Rating
Weighted
Score
0.13
4
0.52
0.09
3
0.27
0.07
3
0.21
4. Many consumer switching to store brand
products
0.04
3
0.12
5. Consumer prices for baked food increased
by 10.7%
0.05
2
0.10
6. Food cost climbing
7. Childhood obesity
0.06
2
0.12
0.05
2
0.10
Total Threats
Total
0.51
1
2. Global warming
3. Raising cost of petroleum
1.44
3.14
4 = the response is superior, 3 = the response is above average, 2 = the response is average, 1 = the response is poor
INTERNAL ANALYSIS

MISSION
ANALYSIS
FUNCTIONAL
ANALYSIS
IFE MATRIX
MISSION ANALYSIS
Vision Statement

 Helping people around the world eat and live better
Mission Statement
 Make Today Delicious
 In order to fulfill this mission Kraft Foods Inc. focuses on
consumers in everything that they do. The company also
understands that actions speak louder than words, so at
Kraft Foods:







We inspire trust.
We act like owners.
We keep it simple.
We are open and inclusive.
We tell it like it is.
We lead from the head and the heart.
We discuss. We decide. We deliver.
MISSION ANALYSIS – cont.
Mission Statement

 Make Today Delicious
 In order to fulfill this mission Kraft Foods Inc. focuses on
consumers in everything that they do(1). The company also
understands that actions speak louder than words, so at
Kraft Foods(2):







We inspire trust(3).
We keep it simple(3).
We lead from the head and the heart(3).
We are open and inclusive(4).
We tell it like it is(4).
We act like owners(5).
We discuss. We decide. We deliver(6).
Components of a Mission Statement:
1.Customer
2.Product of Service
3.Philosophy
4.Concern for Public Image
5.Concern for Employees
6.Concern of Survival, Growth &
Profitability
FUNCTIONAL ANALYSIS

1.
2.
3.
4.
Organizational Structure
Operating Segments
Financials
Current Strategies
FUNCTIONAL
ANALYSIS – cont.
1. Organisational Structure
David Brearton Exec. VP of Operations
& Business Services
Marc Firestone Exec. VP of Corp. &
Legal Affairs
Michael Clarke Exec. VP and President
Kraft Europe
Irene Rosenfeld
Chaiman and
CEO
Karen May Exec. VP of Global Human
Resources
Sanjay Khosla Exec. VP of Global
Human Resources
Richard Searer Exec. VP and President
North America
Jean Spence Exec. VP of Research,
Development & quality
Michael Osanloc Exec. VP of Strategy
Mary Best West Exec. VP and Chief
Marketing Officer
FUNCTIONAL ANALYSIS – cont.
2. Operating Segments
Biscuits, salted
snacks and
chocolate
confectionery
Coffee,
packaged juice
drinks, and
powdered
beverages

Natural,
process, and
cream cheeses
Spoon able and
pourable
dressings,
condiments, and
desserts
Frozen pizza,
packaged
dinners, lunch
combinations,
and processed
meats
FUNCTIONAL ANALYSIS – cont.
Kraft Foods Inc. and Subsidiaries
Summary of Financial Analysis
Financial Ratio
2008
2007
2006
Comment
Current Ratio
1.03
0.63
0.79
Satisfied
Quick Ratio
0.69
0.39
0.45
Satisfied
Cash Ratio
0.11
0.03
0.02
Satisfied
Debt Ratio
0.97
1.59
1.27
Satisfied
Inventory Turnover Ratio
7.56
5.87
6.09
Unsatisfied
Day's Sales in Inventory
40.69
52.50
42.46
Satisfied
Total Asset Turnover (x)
0.67
0.53
0.60
Satisfied
Fixed Asset Turnover (x)
4.26
3.35
3.43
Satisfied
Profit Margin (%)
6.87
7.17
9.20
Unsatisfied
Return on asset (ROA) (%)
4.60
3.81
5.51
Satisfied
Return on equity (ROE) (%)
13.07
9.49
10.72
Satisfied
1.95
1.64
1.86
Satisfied
Basic Earning per share (EPS)
FUNCTIONAL ANALYSIS –
cont.
4. Current Strategies
Had saved a total of $1.1 billion
through streamlined
manufacturing and a simplified
organizational structure
36 plants
The elimination
of 19,000
positions
KEY INTERNAL FACTOR – IFE MATRIX
Key Internal Threats
Strength
1. Organic revenue increased 2.3 percent
2. North American sales growth 2.9% - higher
demand for its cereal
3. Commitment to develop new products (R&D)
4. Innovative advertising method
5. Kraft Foods Inc. manages over 100 different
brand-name food products and tracks operating
income to five specific consumer segments.
6. Company’s revenue increased to $42.2 billion
2008, while earnings increased to $2.9 billion
Total Strength
4 = major strength, 3 = minor strength
Weight
Rating
Weighted
Score
0.07
3
0.21
0.07
3
0.21
0.08
4
0.32
0.09
4
0.36
0.13
4
0.52
0.13
4
0.52
0.62
2.14
KEY INTERNAL FACTOR – IFE MATRIX
– cont.
Key Internal Threats
Weakness
1. Risk of contamination in source products
2. High amounts of goodwill ($27.5 billion)
3. $18.5 billion in long term debt (increased by 50%
during 2009)
4. Margins depend on commodity prices
5. Drop in sales in Quarter 2 in 2009 (5.9%)
Total Weakness
Total
2 = minor weakness, 1 = major weakness
Weight
Rating
Weighted
Score
0.03
2
0.06
0.08
1
0.08
0.07
2
0.14
0.04
2
0.08
0.09
1
0.09
0.38
1
0.43
2.57
STRATEGY ANALYSIS
AND CHOICE

SWOT
MATRIX
BCG
MATRIX
SPACE
MATRIX
GRAND
STRATEGY
MATRIX
IE MATRIX
TABLE
SWOT
MATRIX
OPPORTUNITIES
1 US Market for packaged
and processed food has
large profit in retail sales
2 More people are dining out
and product designed for
restaurants, and other
foodservice provider
increasing
3 Development of health food
4 Web site / Portal as
marketing medium
5 Input cost of bakers have
declined
6 Food safety programs
1
2
3
4
5
6
S1
O3
S3
O2
STRENGTH
Organic revenue increased 2.3 percent
North American sales growth 2.9% higher demand for its cereal
Commitment to develop new products
(R&D)
Innovative advertising method
Kraft Foods Inc. manages over 100
different brand-name food products and
tracks operating income to five specific
consumer segments.
Company’s revenue increased to $42.2
billion 2008, while earnings increased to
$2.9 billion
SO STRATEGIES
Create new organic food products to
accommodate the trend of healthy food.
(Product Development)
R & D to be focus on product design for
restaurants, vending machines and other
food service provider. (Product
Development)
WEAKNESS
1 Risk of contamination in source products
2 High amounts of goodwill ($27.5 billion)
3 $18.5 billion in long term debt (increased by
50% during 2009)
4 Margins depend on commodity prices
5 Drop in sales in Quarter 2 in 2009 (5.9%)
W1
O1
W5
O1
WO STRATEGIES
Use quality organic ingredients to reduce
risk of contamination. (Product Development
& Related Diversification)
Focusing on retails sales. (Market
Penetration)
W4 Renegotiated current contract for
S3 Using interactive method in portal to
O5 commodity. (Related diversification)
O4 promote ideas from customer for new
products. (Product Development)
S4 Using games or any interactive method
O4 to promote about products. (Market
Penetration)
S4 Using more interactive method such as
O3 application for smartphone to promote
about healthy food. (Market Penetration)
S5 Promoted in convenient meals segment
O1 in Retail (Market Penetration)
TABLE
SWOT
MATRIX
1
2
– cont.
6
3
4
5
STRENGTH
Organic revenue increased 2.3 percent
North American sales growth 2.9% - higher
demand for its cereal
Commitment to develop new products
(R&D)
Innovative advertising method
Kraft Foods Inc. manages over 100 different
brand-name food products and tracks
operating income to five specific consumer
segments.
Company’s revenue increased to $42.2
billion 2008, while earnings increased to
$2.9 billion
WEAKNESS
Risk
of
contamination
in source products
1
2 High amounts of goodwill ($27.5 billion)
3 $18.5 billion in long term debt (increased by
50% during 2009)
4 Margins depend on commodity prices
5 Drop in sales in Quarter 2 in 2009 (5.9%)
THREAT
ST STRATEGIES
1 Competes with numbers S4 Using interactive advertising to promote
of companies
T1 brand. (Market Penetration)
WT STRATEGIES
W4 Agreement with supplier to reduce price and
T1 got competitive pricing
2 Global warming
W1
T2
W2
T3
3 Raising cost of
petroleum
4 Many consumer
switching to store brand
products
5 Consumer prices for
baked food increased
by 10.7%
6 Food cost climbing
7 Childhood obesity
S5 Coleberate with store to supply products.
T4
S1 Use R&D capabilities to develop new
T7 healthier food options due to increasing
obesity rates. ( Product Development)
Promote organic food that healthy and
environmental friendly
Using Fleet Management System to control
cost of petrol
GRAND STRATEGY MATRIX
Rapid Market
Growth
Quadrant II
Quadrant I
1.Market Development
2.Market Penetration
3.Product Development
4.Forward Integration
5.Backward Integration
6.Horizontal Integration
7.Related Diversification
Weak
Competitive
Position
Quadrant III
Quadrant IV
Slow Market
Growth
Strong
Competitive
Position
BCG MATRIX

BCG MATRIX – cont.
BCG Matrix

100
90
Market Growth
80
70
60
50
40
30
20
10
0
120
100
80
60
40
20
0
Relative Market Share
Division
Revenue
(millions)
Percent
Revenues
Profit
(millions)
Percent
Profit
Company
$42,201
100%
$2,901
100%
Relative
Market
Share
-
Industry
Growth
Rate (%)
-
SPACE MATRIX –
Factors & Conclusions
FINANCIAL POSITION (FP)
Factors
Revenues increased 16.8% to $42.2 billion
Earnings increased 12% to 2.9 billion
Total L+SE+ Assets decreased 7.5% to $6.3 billion
Gross profit margin of 33.2 compared to the industry average of
33.7
Current ratio of 1.1
TOTALS
INDUSTRY POSITION (IP)
Factors
Growth potential
Ease of market entry
Profit potential
Financial stability
Resource utilization
TOTALS
Rating
4
3
3
4
2
16
Rating
5
4
4
3
3
19
SPACE MATRIX –
Factors & Conclusions – cont.
STABILITY POSITION (SP)
Factors
Competitive pressure
Barriers to entry
Unemployment
Technology changes
Price range of competitors products
TOTALS
COMPETETIVE POSITION (CP)
Factors
Customer loyalty
Product quality
Market share
Technological knowledge
Competition
TOTALS
Conclusions
SP Average: -19/5= -3.8
CP Average: -17/5= -3.4
IP Average: 19/5= 3.8
FP Average: 16/5= 3.2
Directional Vector Coordinates: X-axis: -3.4 + (3.8) = .4
Y-axis: -3.8 + (3.2) = -.6
Rating
-4
-4
-5
-2
-4
-19
Rating
-3
-3
-2
-4
-5
-17
SPACE MATRIX – cont.
Internal-External (I/E)
Matrix
IFE Total Weighted Scores
4.0
Strong
3.0 to 4.0
I
Average
2.0 to 2.99
2.0
1.0
II
High
3.0 to 4.0
EFE Total Weighted Scores
Weak
1.0 to 1.99
3.0
III
Grow and Build
•Forward, Backward, or
Horizontal Integration
•Market Penetration
•Market Development
•Product Development
2.57, 3.14
3.0
IV
V
VI
VII
VIII
IX
Medium
2.0 to 2.99
2.0
Low
1.0 to 1.99
1.0
Division
Revenues
(millions)
Percent
Revenues
Profit
(millions)
Percent
Profit
IFE
Scores
EFE
Scores
Company
$42,201
100%
$2,901
100%
2.57
3.14
STRATEGY
IMPLEMENTATION

QSPM MATRIX
STRATEGY
RECOMMAND
ATION
POLICY
SUGGESTION
ACTION
EXECUTED
QUANTITATIVE STRATEGIC
PLANING (QSPM)

QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
1
2
3
4
5
6
1
2
3
4
5
6
7
Key Factors
Opportunities
US Market for packaged and processed food has seen large profit
in retail sales
More people are dining out and food producers are devoting more
attention to product designed for restaurants, vending machines
and other foodservice provider
Development of health food
Web site / Portal as marketing medium
Input cost of bakers have declined
Food safety programs have been adopted recently as issues of
chemical and bacterial contamination and new food-borne
pathogens remain a public health concern
Threats
Competes with numbers of companies
Global warming
Raising cost of petroleum
Many consumer switching to store brand products
Consumer prices for baked food increased by 10.7%
Food cost climbing
Childhood obesity
Weight
STRATEGIC ALTERNATIVES
1
2
Market
Product Development
Penetration
Promoted in
Create new organic
convenient
food products to
meals segment
accommodate the
in Retail
trend of healthy food
AS
TAS
AS
TAS
0.08
4
0.10
-
0.06
0.06
0.13
0.06
2
2
2
0.12
0.13
0.09
0.07
0.04
0.05
0.06
0.05
1
1
3
2
3
2
0.13
0.09
0.21
0.32
1
0.08
-
0.26
0.12
0.1
0.18
0.1
4
2
3
0.24
1
3
2
2
3
4
0.13
0.27
0.14
0.26
0.18
0.1
0.18
0.2
QUANTITATIVE STRATEGIC
PLANING (QSPM) – cont.

QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
1
2
3
4
5
6
1
2
3
4
5
Key Factors
Strengths
Organic revenue increased 2.3 percent
North American sales growth 2.9% - higher demand for its
cereal
Commitment to develop new products (R&D)
Innovative advertising method
Kraft Foods Inc. manages over 100 different brand-name
food products and tracks operating income to five specific
consumer segments.
Company’s revenue increased to $42.2 billion 2008, while
earnings increased to $2.9 billion
Weaknesses
Risk of contamination in source products
High amounts of goodwill ($27.5 billion)
$18.5 billion in long term debt (increased by 50% during
2009)
Margins depend on commodity prices
Drop in sales in Quarter 2 in 2009 (5.9%)
Weight
STRATEGIC ALTERNATIVES
1
2
Market Penetration Product Development
Promoted in
Create new organic
convenient meals
food products to
segment in Retail
accommodate the
trend of healthy food
AS
TAS
AS
TAS
0.07
0.07
1
1
0.07
0.07
4
1
0.28
0.07
0.08
0.09
0.13
1
3
0.08
2
3
0.16
0.13
-
0.03
2
0.08
0.07
-
0.04
0.09
3
-
0.39
0.39
-
0.06
4
0.12
0.12
2.42
3
-
0.12
2.92
STRATEGY RECOMMENDATION

Create new organic food products to
accommodate the trend of healthy food
KRAFT
Organic
commitment to
Development
revenue
of Health Food
develop new
increase by
product
(Opportunities)
2.3% (Strength)
(Strength)
Obesity
(Threats)
POLICY SUGGESTION

Company Strategy
• Create new organic food products to accommodate the
trend of healthy food.
Supporting Policies
• Each product segment will be “oriented” by organic foods
• Marketing and R & D focus on new organic products.
• Sales strategy - US focus in retail and in International,
establish brand as organic producer.
ACTION EXECUTED

EPS
Organic
Revenue
• Expected to
increase $
1.93 / unit
(increase by
2.66%)
• Increase from
2.3% to at
least 2.66%.
• Sales
expected to
increase 30%
• COGS
increase 25%
• Marketing
costs increase
15%
Financial Policy
• Goodwill
policy will be
revised.
• R&D will be
amortized up
to 5 years.
ACTION EXECUTED – cont.
Kraft Foods Inc. and Subsidiaries
Consolidated Statements of Earnings
For the Year Ended 31st December (in million of dollars, except per share data)
2009 (expected)
2008
Net Revenues
54,861 100.0%
42,201 100.0%
Cost of Goods Sold
35,233 64.2%
28,186
66.8%
Gross Profit
19,629 35.8%
14,015 33.2%
Marketing, admin and research costs
10,418 19.0%
9,059 16.5%
Asset Impairment and exit costs
2007
36,134 100.0%
24,057 57.0%
12,077 43.0%
7,673 18.2%
1,024
1.9%
1,024
1.9%
440
1.0%
-
0.0%
-
0.0%
-
0.0%
Loses / (gains) on divestitures, net
92
0.2%
92
0.2%
(15)
0.0%
Amortization of Intangibles
23
0.0%
23
0.0%
13
0.0%
8,072
14.7%
3,817
14.6%
3,966
23.8%
Interest Expenses
1,240
2.3%
1,240
2.3%
604
1.4%
EBT
Provision for Income Taxes
6,832
728
12.5%
1.3%
2,577
728
12.4%
1.7%
3,362
1,002
22.3%
2.4%
6,104
13.4%
1,849
12.9%
2,360
21.4%
Earnings and gain from discontinued operations, net of
1,052
1.9%
1,052
2.5%
230
0.5%
Net Earnings
Per share data:
7,156
15.3%
2,901
15.4%
2,590
21.9%
Gain on redemption of United Biscuits investment
Operating Income
Earnings from continuing operations
Basic EPS
* Unit share - 6.72 millions
1.93
1.95
1.64
CONCLUSION

New organic
products
Expected EPS
$1.93
Organic revenue
increase to 2.66%
Commitment to
R&D
Raising
awareness of
healthy food
TQ
44