Strategic Choices
Every business is established with the aim of making profits. It is, therefore, important that businesses adopt various strategies that will ensure that they remain competitive and achieve their goals and objectives. This paper provides an analysis of the strategies that Kraft Foods incorporates and should adopt to ensure that it remains competitive in its operations. The discussion incorporates various strategies it has embraced including SWOT analysis, PEST, Porters value chain, and Resource Based View Analysis for Kraft Foods Group.
Porter’s generic strategies, which include low cost, differentiation, focus, and preemptive are adopted by companies to ensure that they remain competitive and achieve their targets and objectives (Porter, 1985). A company may decide to focus on costs by offering its products and services at low costs (Porter, 1985). Many customers that are moved by low products will definitely opt to buy from such companies. Differentiation strategy is, on the other hand, meant for customers that are not price sensitive. The company, therefore, ensures that the products are of high quality and meet the tastes and preferences of the customers (Porter, 1985). Companies that adopt focus strategy aim at a given segment of audience, while those that use preemptive strategies focus on winning over customers in a given target market by projecting themselves as the best.
SWOT analysis is an acronym representing strengths, weaknesses, opportunities and threats on a company (Porter, 1985). A company puts more focus on its strength, tries to overcome its weaknesses and takes advantage of the opportunities as it puts in place measures to counter its threats.
| Low cost | Differentiation | Focus | Preemptive | |
| Strength : Operations | Expansion of its manufacturing plants to reduce costs of distribution to sell at competitive prices | Establish efficient production plants that provides quality products | Set its manufacturing plants and distribution channels in areas that they have ready markets | Invest in innovation to remain at the top of its rivals. |
| Weaknesses: Higher bargaining power of the buyers | Diverse its target markets to ensure that it maintains its profits | Ensure that it provides healthy products and reduce its advertisement costs | Take advantage of the underserved markets and offer their products at a competitive price | Ensure that the customers are fully satisfied to reduce recalls and to build good image |
| Opportunities: Socio-cultural factors | Provide health food at a competitive prices | Deal with high quality and health food to attract more customers | Take advantage by focusing on the new upcoming customers that require health foods | Establish a dominant position by expanding in other markets |
| Threats: Higher competition rivals | Win over competitors on price through operational economies | Brand loyalty helps to attract repeat customers | Find and take advantage of the underserved markets that rivals are unwilling to operate | Win over the rivals through establishing a dominant position |
From this analysis, Kraft Food Group is faced with threats of higher competition rivals. The company is operating in a market that has other competitors that are dealing in similar products. Some of the competitors include companies such as Pepsi and Coca-Cola. These companies are all targeting similar companies. It, therefore, becomes important for the Kraft Food Group to find out ways through which it can remain competitive. The company has a choice of adapting to various generic strategies. It has an option of reducing its prices to win over its competitors that are offering higher prices. This strategy will enable the company to sell more of its products hence enabling it to accrue profits. Though the large or huge products that will be sold will earn low profits, it will in the long run enable the company to make higher profits. The profit margin for a unit of its product will reduce but by selling them in huge quantities, the company will be able to make higher profits. Another strategy is differentiation whereby it will seek to create brand loyalty that will attract customers to repurchase its products. Even though customers are exposed to more products options, they will still remain loyal to the company if it establishes a brand loyalty through such initiatives such as promotions. The other strategy is to focus on the areas that are underserved by competitors and take the opportunity. This will help the company to expand its markets as well as its profit margins. The last strategy is preemptive. The company is able to win over its competitors or rivals through establishing a dominant position in the market. It should package itself as the best company that is meeting the customer needs to be able to win over its competitors or rivals through establishing a dominant position in the market. It should package itself as the best company that is meeting the customer requirements.
Kraft Food Group is has a number of opportunities that it should not relent to take advantage of. Some of these opportunities include a growing demand for health and wellness products and services, rising immigration population, and a growing buying power as well as a growing food service market. The company can as well select the appropriate generic strategies to take advantage of these opportunities. These opportunities relate to socio cultural factors as the people or consumers change their eating habits. The company can adopt a low costs strategy by providing health food services at a competitive price. Because, of high demand of these health products, the company stands a chance of remaining competitive by offering products at this competitive prices. The company can also adopt differentiation strategy by dealing in high quality products that will enable it to attract more customers that will be able to meet the prices of the food products. Focus strategy is also another option whereby the company should focus on expanding to other areas in high quality products that will enable them to attract more customers that will be able to meet the prices the food products are sold. Focus strategy is also another option whereby the company should focus on expanding to other areas to take advantage of the new immigrating customers that are in need of health food. The last strategy is preemptive whereby the company should endeavor to establish a dominant position through its market expansion.
On the other hand, Kraft Food Group has a number of weaknesses such as reliance on large retail customers and high rates of product recalls. These are weaknesses that the company needs to find ways of overcoming to ensure that it achieves higher profit margin. They are contributed by the higher bargaining powers of the buyers. The company can adopt a low cost strategy by diversifying its target markets to maintain its profitability. The company will be able to offer low prices to its customers hence making it possible to maintain its profitability. If it adopts differentiation strategy, it requires to provide quality products to avoid recalls as well it will reduce promotions and advertisement costs as customers will be always satisfied with the products. It can as well adopt focus strategy whereby it will take advantage of the underserved areas making it to have higher bargaining power hence accrue higher profits. A preemptive strategy is another option that the company can adopt. This will ensure that customers are satisfied hence reduce recalls; the brand image of the company will improve making it remain the preferred company.
The company’s strengths are in its operations. It has diversified products, strong manufacturing and distribution capabilities, as well as cash reserves. The company, therefore, requires to adapt to appropriate strategies to maintains its strengths. The company can adopt low costs strategy by expanding its manufacturing plants to reduce costs of distributions to sell its products at competitive prices. It can as well adapt to differentiation strategy by establishing efficient production plants to provide quality products that meets the needs of the customers. If its adopts the focus strategy, it needs to sets its plants and distribution channels in specific locations that it has ready markets. Adopting the preemptive strategy will see the company invest in innovations to ensure it remains at the top.
In conclusion, Kraft Foods Group has various options in terms of strategies to ensure that it remains competitive. It has the discretion of analyzing the best out of these four against its strengths, weaknesses, opportunities, and threats before selecting the best option.
Reference
Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York. Simon and Schuster.
