Kraft foods business level strategy
Understand that one size does not fit all.
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To achieve this, we had to essentially dismantle the existing organizational matrix and replace it with a decentralized structure that gave our newly reorganized business units more direct lines of responsibility. Lance Friedmann: An example from mid might show how siloed we were. This is the story of our reorganization and the changes that it helped deliver. Major change initiatives work best when key stakeholders have had a chance to articulate their concerns — and when the team involved in the decision has had the time to think through the implications of the new model and establish some guiding principles. RP news wires Kraft Foods Inc. Had we been making this kind of change at a time when all was quiet on the business front, it would not have been as big a deal. And each team had at least two KET sponsors — that was critical. The KET sponsors provided a necessary buffer between the team and the rest of the executives. Kraft went further, addressing work-flow processes, decision rights, metrics, career paths, corporate policies, incentives, and talent development. Product and Service Description North American division represents several departments, such as the production of drinks, cheese, food for fast food semi-finished , groceries, snacks, biscuits, confectionery, as well as the Canadian and North American division of catering. Brian Davison: The research and development function would have a goal for cost reduction. There is often a tendency to believe that when you make a structural change first, everything else will follow. We have several mechanisms in place.
Which business processes should change? Where does it make sense to enable each business unit to be nimble, and where does it make sense to take advantage of the scale of Kraft?
To answer that, you have to understand how the company of today came to be. Functional leaders were making decisions that might have made sense for the whole but clearly did not make sense for individual business units. Sanjay Khosla: There was a good reason for our varied models.
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Roughly 80 percent of these "heritage" brands hold No. For instance, by the time of the Tarrytown meeting, our Canadian business had basically been taken apart, and most of the business decisions about Canada were being made in the United States. Start with the business strategy. Customers Before deciding on a generic business level strategy the company must look at its customers. We deliver. They also carry high margins and generate strong cash flow. The extent of diversification is signified by the fact that it also ventured into the business of glass-packaging with the Metro Glass acquisition. The organization is adopting good practices and has embraced it very positively. How I felt was irrelevant, though — it was really about how the team felt, and whether they would get behind the decision. Each team had a work stream and a deliverable. Irene Rosenfeld: To give BUs a better chance of succeeding, we changed the way we aggregated data on the individual businesses and evaluated their performance.
At the same time, some of the functions have actually become, in effect, too hands-off. The highest-profile example is our category executive teams. How I felt was irrelevant, though — it was really about how the team felt, and whether they would get behind the decision.
Neilson, Karla L.
Kraft foods business level strategy
The Defining Moment Irene Rosenfeld: We began talking about a sweeping decentralization in early Thus there are minimal switching costs for the consumer and the products are generally price elastic in nature. And the answer is still evolving. The business managers supported it from Day One — no big surprise there; when all was said and done, such a change was going to give them more autonomy. However, estimation errors are unavoidable as it is very difficult to predict he exact roadmap of how the deal would turn out. And that clearly was not true. At the same time, some of the functions have actually become, in effect, too hands-off. I had just spent three years running the Frito-Lay division of PepsiCo, where decision making was highly decentralized. That involved thinking through what this new organization meant function by function, geography by geography. Suddenly we had a timetable. The extent of diversification is signified by the fact that it also ventured into the business of glass-packaging with the Metro Glass acquisition. And there has been an equal impact on the effectiveness of our management. The comprehensive review of the company's power brands, global categories and regional business units detailed the plan by which Kraft Foods will deliver organic revenue growth of 5 percent or more, margins in the mid- to high-teens and earnings per share EPS growth of 9 to 11 percent, making it a top-tier performer in the global food industry.
For example, in India and Mexico, the strategy is to push Krafts marquee brands Oreos and Lacta chocolate through Cadburys established network of mom-and-pop stores. Economic: Food and Beverages industry is non-cyclical in nature and hence is not impacted by broader economic conditions to a high degree.
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