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Over the last 100 years Kraft Foods has developed a positive reputation for quality food, making them one of the world’s most recognized brands (Kraft Foods, 2014). They are a large multinational organization with branches in 72 countries and products sold in over 150 countries giving them a competitive edge and strong market presence in the food industry thus enhancing their financial portfolio (Kraft Foods). The large revenues generated allows Kraft Foods to build and maintain their extensive physical assets, valued at $23B, giving them a competitive advantage (Kraft Foods Financial Report, 2013). Analysis of financial trends reveals Kraft Foods is in a strong financial position with a positive outlook for continued growth over the next several years (Vuru Financial, 2014).
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Vuru Financial calculates the growth rate for the market at 20.20%. Despite financial recession and penny pinching consumers net revenues over the last year increased by $9M, a 0.3% increase (Kraft Foods Financial Report, 2013). Kraft Foods was able to increase their total assets by $1.1M while simultaneously decreasing their long term debt (Kraft Foods Financial Report). The consistent gain in profits over the last several years has put Kraft Foods in a strong financial position to invest in new equipment, research, development and advertising, all of which will improve their long term financial growth (Vuru Finance, 2014). The patents and trademarks owned by Kraft Foods also help contribute to their continued financial success. For example, Kraft Foods owns a trademark with Ehancer worth $261M with a carrying value of 12% (Kraft Foods Financial Report). Additionally Kraft Foods continues to build the portfolios of their shareholders through increased stock buybacks and an increased discount rate of 15%, which is above the national average of 8-10% (Vuru Financials). With the large financials available to Kraft Foods they have a vast amount of machineries, land and employees allowing them to generate and distribute products their consumers demand and have an advantage over their competitors and stay on top of the industry (Kraft Foods Financial Report). Kraft Foods has nearly 23,000 employees and takes pride in “hiring, training, educating and retaining qualified individuals that “make their company stronger” (Kraft Foods, 2014). Kraft Foods understands that happy satisfied employees enhance their products and brand name and without these people the company would not be as successful (Kraft Foods). Through empowerment of their employees innovative ideas are generated enhancing brand quality and rendering increased revenues (Kraft Foods, 2014). Additionally in 2008 Kraft developed the website ‘Innovate with Kraft’ which sought to obtain creative ideas from consumers relating to products, packaging and processes (Key, n.d.). Weaknesses Organizations must analyze internal weaknesses to determine ways in which to accomplish their mission and achieve full potential and financial success (Management Study Guide, 2013). …show more content…
Determining weaknesses can generate opportunities for future success. Although Kraft Foods is number two in the food industry there are numerous factors to be improved upon. A major weakness of Kraft Foods is their low market share, only 9% in a $40B global food industry (Vuru Financials, 2014). This demonstrates weak geographic positioning, especially in markets outside North America (Vuru Financials). Nestle, Kraft Foods number one rival, enhanced their net profits by nearly 11.5%, while Kraft Foods only increased by 8.95%, this 2.56% difference in net profits indicates Nestles global efficiency (Kraft Foods, 2013 and Nestle, 2013). Although Kraft Foods has decreased their debt over the last several years they still have an extremely high debt ratio indicating enhanced financial risk (Investopedia, 2014). Their liquid ratio is also very high at 0.27% indicating they will not be able to meet all the debt obligations if due (Kraft Foods Financial Report, 2013). In addition Kraft Foods has been unable to generate sufficient returns from investments; machinery, buildings and projects. According to Vuru Financials Kraft Foods has only generated $4.72 of cash for every $100 invested (2013). The food industry has intense competition and it is imperative Kraft Foods separate and distinguish themselves from the competition. SWOT Analysis Kraft Foods is a large multinational iconic and well established organization that has been successful for over 100 years by providing consumers with quality products at a good value. Over the years they have continually experienced financial success and diversified
Vuru Financial calculates the growth rate for the market at 20.20%. Despite financial recession and penny pinching consumers net revenues over the last year increased by $9M, a 0.3% increase (Kraft Foods Financial Report, 2013). Kraft Foods was able to increase their total assets by $1.1M while simultaneously decreasing their long term debt (Kraft Foods Financial Report). The consistent gain in profits over the last several years has put Kraft Foods in a strong financial position to invest in new equipment, research, development and advertising, all of which will improve their long term financial growth (Vuru Finance, 2014). The patents and trademarks owned by Kraft Foods also help contribute to their continued financial success. For example, Kraft Foods owns a trademark with Ehancer worth $261M with a carrying value of 12% (Kraft Foods Financial Report). Additionally Kraft Foods continues to build the portfolios of their shareholders through increased stock buybacks and an increased discount rate of 15%, which is above the national average of 8-10% (Vuru Financials). With the large financials available to Kraft Foods they have a vast amount of machineries, land and employees allowing them to generate and distribute products their consumers demand and have an advantage over their competitors and stay on top of the industry (Kraft Foods Financial Report). Kraft Foods has nearly 23,000 employees and takes pride in “hiring, training, educating and retaining qualified individuals that “make their company stronger” (Kraft Foods, 2014). Kraft Foods understands that happy satisfied employees enhance their products and brand name and without these people the company would not be as successful (Kraft Foods). Through empowerment of their employees innovative ideas are generated enhancing brand quality and rendering increased revenues (Kraft Foods, 2014). Additionally in 2008 Kraft developed the website ‘Innovate with Kraft’ which sought to obtain creative ideas from consumers relating to products, packaging and processes (Key, n.d.). Weaknesses Organizations must analyze internal weaknesses to determine ways in which to accomplish their mission and achieve full potential and financial success (Management Study Guide, 2013). …show more content…
Determining weaknesses can generate opportunities for future success. Although Kraft Foods is number two in the food industry there are numerous factors to be improved upon. A major weakness of Kraft Foods is their low market share, only 9% in a $40B global food industry (Vuru Financials, 2014). This demonstrates weak geographic positioning, especially in markets outside North America (Vuru Financials). Nestle, Kraft Foods number one rival, enhanced their net profits by nearly 11.5%, while Kraft Foods only increased by 8.95%, this 2.56% difference in net profits indicates Nestles global efficiency (Kraft Foods, 2013 and Nestle, 2013). Although Kraft Foods has decreased their debt over the last several years they still have an extremely high debt ratio indicating enhanced financial risk (Investopedia, 2014). Their liquid ratio is also very high at 0.27% indicating they will not be able to meet all the debt obligations if due (Kraft Foods Financial Report, 2013). In addition Kraft Foods has been unable to generate sufficient returns from investments; machinery, buildings and projects. According to Vuru Financials Kraft Foods has only generated $4.72 of cash for every $100 invested (2013). The food industry has intense competition and it is imperative Kraft Foods separate and distinguish themselves from the competition. SWOT Analysis Kraft Foods is a large multinational iconic and well established organization that has been successful for over 100 years by providing consumers with quality products at a good value. Over the years they have continually experienced financial success and diversified