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The company Kraft Foods Group is one of the leading packaged food and beverage companies worldwide. The company’s net revenues are $18.3 billion and it has assets of more than $23 billion (Kraft Foods Inc., 2012). The company operates mainly in the USA and Canada, but it also collaborates with distributors who sale their products in other countries. The company sells its products to retail chains. Notably, Wal-Mart accounted for “approximately 25%” of the company’s “combined net revenues” (Kraft Foods Inc., 2012, p. 3).
The company, named J.L. Kraft & Bros. Company, was set up by Charles, Fred, Norman and John Kraft in Chicago in 1909. Since then, the company has been growing and developing into an international corporation. Interestingly, business increased 125% during 1910 and the brothers established a sales office in New York (Kraft Foods corporate timeline, 2012).
In 1910, the company patented new methods of producing food in tins. Acquisition and international expansion started as far back as 1920s for the company when they purchased the MacLaren Imperial Cheese Co., Ltd. in Montreal, Canada. In 1924, the company had a sales office in London. The company went through a number of mergers and acquisitions.
This brief account of Kraft Foods Group’s history suggests that merger and acquisition was a part of the company’s strategy from the first years of its existence. The company has entered a market with a new and rather revolutionary product as tinned cheese and meals were not common. It is clear that one of the major corporate strategies of the company has been expansion through mergers and acquisitions.
It is necessary to note that this strategy is quite winning as it enables the company expand rapidly. First of all, the company acquires new capabilities and improve efficiency by “acquiring a customer, supplier, or competitor” (DePamphilis, 2013, p. 5).
This strategy also contributes to diversification as the company can develop new products and enter new markets. This also helps adapt to the changing environment. Besides, mergers and acquisitions help reduce costs as newly acquired companies have facilities and resources so the company does not need to invest funds in development of such facilities.
It is necessary to add that the strategy has proved to be effective as the company is now one of the leaders of the market. Kraft Foods Group has understood opportunities and challenges of the market and managed to remain efficient. The company saved a lot of funds acquiring facilities of other smaller companies. At that, Kraft Foods Group also reduced the number of its competitors which is also important.
The company has also gone through a number of mergers. Notably, lots of companies are reluctant to merge as they are afraid to lose control over their business. Nonetheless, Kraft Foods Inc. is an illustration of successful operation through numerous mergers. The fact that the company remains one of the leaders in the market after severe financial crises suggests that in times of financial constraints merger and acquisition can be good options.
As far as local corporations are concerned, it is possible to single out Angus Meats, Inc. This corporation operates in the USA and is located in Washington State. Its revenue is over $5 million. Angus Meats, Inc. produces a wide range of meat products. The company sells its products through its distributors and directly to its customers.
The company’s customers are restaurants, hotels, educational establishments, health care units and so on. The company also gets orders online through its website (Angus Meats, 2014). It is one of the priorities of Angus Meats, Inc. to buy only high-quality meat from farming businesses.
Therefore, it can be a winning strategy to acquire a small farming business or merge with it. Thus, Angus Meats, Inc. will have stock to produce meat products. Admittedly, this should be a reliable partner having its customers and operating in another state. This will enable the companies enter new markets in the states they operate in and in other US states.
One of possible partners for merger or acquisition is Sugar Mountain Farm. This is a family run farm that raise a variety of animals (cattle, poultry), though the key product is pigs. The company has numerous clients who value its products for high quality. The company has slaughter facility and can produce whole and half pigs.
Notably, they have built a new facility and are looking for investors (Sugar Mountain Farm, 2014). Therefore, Angus Meats, Inc. can address the company and start negotiations on merger. Though, Sugar Mountain Farm is located in Vermont which is far from Angus Meats, Inc.
This can be a risky move though it can turn out to be an effective strategy as two companies can expand and market products in other states. Angus Meats, Inc. can invest money into acquisition of a facility by acquiring another company. It is also possible to construct the necessary facility on the basis of the slaughter house of Sugar Mountain Farm.
Thus, the two companies will have high-quality meat products that already have loyal customers in the two states. A number of acquisitions can help the companies expand their markets and even move to the international market.
It is also necessary to note that this merger should be accompanied by potent advertising campaign. The companies’ customers should know about this and should understand advantages of this strategy. In fact, effectiveness of this campaign will have a great impact on the development of the newly created company. Hence, it should be developed thoroughly. It is possible to involve an agency to make sure that the advertising campaign will be professional and successful.
As has been mentioned above, Kraft Foods Group is an international company which has implemented successful strategies at both business and corporate levels. As for business-level strategies, it is possible to point out that the company tries to meet its customer’s needs. Thus, Kraft Foods Group is constantly expanding its wide range of products. Remarkably, the products have certain regional features to meet expectations of customers in different countries.
The company also launches numerous advertising campaigns to market its products. The ideas of high-quality and sustainability are essential to these campaigns. When it comes to pricing, the corporation also tries to attract more customers by introducing products of different pricing categories (Kraft Foods Inc., 2012).
Notably, Kraft Foods Inc. states that they compete with other companies “primarily on the basis of product quality and innovation, brand recognition and loyalty, service, the ability to identify and satisfy consumer preferences, and price” (Kraft Foods Inc., 2012, p. 5). Admittedly, advertising campaigns focus on customers’ needs in each region.
As far as corporate-level strategies are concerned, the key strategy is diversification and change. The company has been producing new products and expanding to new markets. Notably, expansion is seen as another priority of the corporation. As the company’s history suggests, expansion to new areas began during the first years of the business’ existence. The company is operating in numerous countries worldwide, which enables it to remain competitive.
It is also necessary to add that acquisition of new companies and merging with other businesses is also integrated into the corporation’s strategy. The company sees acquisition as an effective way to expand. Instead of building new capabilities, Kraft Foods Inc. acquires companies with existing capabilities. Importantly, the customers of newly acquired company become new customers of Kraft Foods Inc.
Furthermore, Kraft Foods Inc. invests a lot (more than $190 million) into innovation and research (Kraft Foods Inc., 2012). The company continues developing new products. R&D department comes up with new flavors, colors, packaging materials, marketing strategies and so on. It is necessary to note that the company employs scientists, engineers and other professionals.
Kraft Foods Inc. still patents its products and lots of existing products are protected by copyright law. This helps the company be innovative and offer unique products which differ from the rest in the market. Thus, Kraft Foods Inc. manages to be competitive in the international market.
Sustainability is another key component of the company’s corporate strategy. First of all, Kraft Foods Inc. invests into development of neighborhoods and environment. Of course, Kraft Foods Inc. follows all the necessary environmental requirements in every region it operates in. Finally, the company exploits principles of sustainability when it comes to its relations with its employees. People are seen as major asset of the company and employees have an opportunity to develop through numerous trainings.
When it comes to a small local business, it is necessary to choose the most effective business- and corporate-level strategies. As for the corporate-level strategy, Angus Meats, Inc. should consider utilizing acquisition and merger as a way to expand. This expansion can be aimed at American or even international market.
First, it can be beneficial to merge with another meat producing company in another state. Of course, the expansion should be held steadily. Through a number of acquisitions, it is possible to enter Canadian market and markets in other countries. Admittedly, small business can hardly compete with such international corporations as Tyson Foods or JBS. Therefore, it is important to expand to be able to compete with larger companies.
As for business-level strategy, Angus Meats should consider developing a wide advertising campaign. The high-quality of products is valued by loyal customers of Angus Meats. However, the company sales to hospitality unites, educational and healthcare units, which limit the number of customers as people do not always know what products they are served. However, it is possible to promote the company’s products in a number of ways. Online advertising is a cost-effective way to advertise products.
Products in retail chains can be advertised more effectively as well. Local radio stations can also be regarded as potent tools to make people aware of products of Angus Meats. Thus, word of mouth advertising is an effective way to make people know about a company, but it is not enough in the highly competitive world. Thus, the company can benefit from developing potent advertising campaigns.
Reference List
Angus Meats. (2014). Web.
DePamphilis, D.M. (2013). Mergers, acquisitions, and other restructuring activities: An integrated approach to process, tools, cases, and solutions. San Diego, CA: Academic Press.
Kraft Foods corporate timeline. (2012). Web.
Kraft Foods Inc. (2012). Web.
Sugar Mountain Farm. (2014). Web.
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