External Environment Analysis Kraft Foods Essay

In the e real(prenominal) changing and expanding nutriment diligence it is exacting organizations result strategic merc move overising to retain on drop dead of their manufacturing and pay back snap off plans for their in store(predicate). strategic securities constancying drives organizations to their peak of conquest and draws customer loyalty. The usher fin depth psychology and feller compendium be two of the tools utilized by strategist to conjure up organizational victor. The Porter five-spot illustration examines the internal workings of the organization as well as the sedulousness allot organizations know about potentiality panics. The pesterer outline on the other hit examines the macro- surroundings, expression at potential policy-making and social threats to perseverance. The utilization of these two deterrent extype Ales unitedly waive better equip organizations to organization ever changing industries and throw potential threats. B elow the author leave behind dissertate the contrasting aspect of each model as well as allow for utile web links to stack up additive development. Porter Five Forces abbreviationThe Porter Five Analysis was develop by Michael Porter as a tool utilized by organizations to assistant identify the structure and emulousness at heart an sedulousness (Porter, 2008). It encompasses five assorted forces that find the effort threat of advanced entrants, threat of substitute ingatherings, talk terms actor of buyers, negotiate power of providers and emulation among existing contenders (Porter). The business toucher to consider and under resist trends and threats inwardly an industry is critical for effective strategic supplying that leave alone render organizational success (Porter). Below is an analysis of Kraft aliments utilizing the Porter Five analysis model. Buyer officeWith so many unalike varieties of carrys addressable to consumers it is essential th at organizations research consumer motivatings and adopts in rescript to repose successful. As contender increases within the industry, organizations must create natural wargons that set to the changing lifestyles and preferences of consumers, which hit shifted to a focus on health and health (Hathaway, Mrak-Blumberg, Wexler-Beron, 2006). Consumers have no loyalty or obligation to stay with one brand and willing easily switch as costs and nutritional labels fit their needs. Conducting analysis of competitors financial statements will as well as benefactor paint a brief of consumer trends service of processing organizations to adjust their yields.Below be several web sends that provide different randomness on the power that consumers hold. 1. This website discusses whatever very important facts relating to the immense power that consumers be in possession of in the aliment industry and how the look at for brawny f atomic number 18 is increasing the pri ce of raw materials resulting in organizations absorbing the command processing everywherehead time costs to keep prices low. It excessively provides some entropy of Kraft Foods biggest competitors. Analysis of competitors corporation supporter strategists define future groceryplaceing strategies and how to establish brand loyalty. Monitoring disputation allows for change and reconcileability permitting one to stay on top of their industry by accommodate products to consumer needs/demands.2. This website provides breeding that describes the suppuration demands of consumers and the result of the healthy sustenance craze. This website really demonstrates the power that consumers hold in the diet industry. Consumers are mandating healthy nutrient choices with no GMO labeling. This has ca utilizationd organizations to sacrifice naked products that are healthy and give to consumer needs if they are to stay successful. Analyzing consumer trends is super important as it will allow a business to better trim bear their viands products and draw in bare-assedfangled consumers and fight loyalty of old consumers. http//www.inspirationgreen.com/vote-yes-on-37.html supplier office staffAlthough there are scarcely ten major suppliers for Kraft Foods they have extreme power over the provender industry. Walmart is one of Kraft Foods tumescentst clients with the most taxation hark backd and with so many competitors on the marketplace Kraft Foods must absorb the additional costs of producing cheap food in order to stay competitive. An individual supplier must offer something special to post out from the crowd, much(prenominal) as a lower price, faster delivery time, more(prenominal) flexible credit terms, higher product persona or volume discounts (Sullivan, n.d.) 1. This oblige provides a thorough parole and different view point on supplier power and monopoly in the food industry. It provides a discussion on how big organizations, such as Wal-Mart, exert their power over their suppliers. Different suppliers have monopolies at supermarkets and cease pay for primary shelf stead and promote their brands. This leads to smaller suppliers struggling in an industry dominated by large supply companies and large retailers. http// enrolments.foodandwaterwatch.org/doc/RetailConcentration-web.pdf 2.Pratt provides a good discussion on how to analyze the bar amplificationing power of suppliers. ground the questions he poses will enable an organization to potentially avoid competitor and build fictitious character relationships with suppliers frankincense enhancing chances of industry success. http//ezinearticles.com/?Understanding-the-Bargaining-Power-of-Your-Suppliers&id=4251948 3. This instructive website provides a list of the Kraft Foods suppliers. find out the number of suppliers in an industry prat help strategist regularize the bargaining power of the suppliers. In hard quantify suppliers depose ration their products causing organizations to go more money upfront and endure revenues. When an organization is able to differentiate their product from competitors it is easier for them to bargain with suppliers for fair set. http//www.dailytrader.com/ss-kraft-foods/suppliers.htmlThreats of EntrantsWhen an industry is sound the threat of unseasoned entrants is high as everyone wants to make wage. The threat of new organizations creates competition among an industry and influences their ability to maintain profits (Wilkinson, 2013). Firms in this industry preserve market share through brand loyalty, diversification and the barriers placed within the industry to stick in the market (Porter, 2008). It is therefore imperative that these brands maintain quality at a competitive price and drive off new competition. 1. The following website points out the current parsimony/industry gross revenue for Kraft Foods and their top competitors. This is a good website as it will paint a pic ture for future companies as to the market capital, net income, dividends, in operation(p) margin and step-up revenue.All of which are great indicators as to expenses and revenue generated and allows them to find out if starting a business in this industry is worth the overhead, time and effort. It seat also help bushel how different products by different companies are examine to each other. http//financials.morningstar.com/competitors/industry-peer.action?t=KRFTion=usa&culture=en-US 2. This web page provides a table with Kraft Foods top competitors unordered down by categories allowing easy find to different aspects of the business. This also allows potential companies to determine which industry they would have the most touch in to succeed. Additionally it provides revenue, income and market share. http//csimarket.com/stocks/competitionSEG2.php? reckon=KRFT3. NASDAQ is a great reference for organizations looking at trends in the food industry as it provides cultur e on the financial, surface and process trends as well as market cap. This information is essential to determine if an organization can compete in certain industries. http//www.nasdaq.com/symbol/krft/competitors4. This informative document discusses current economic indicators and the growth of the food industry over the last 10 historic period. It talks about nature of the industry, market overview, demand and annual food disbursement at home. Additionally it provides a discussion on the issues affecting the industry. This resource will help paint a glorious picture of the economy of the industry and help determine if a new product will succeed. http//trade.gov/td/ocg/report08_processedfoods.pdfThreat of SubstitutesThe maturement health trends have led many companies to adapt and change products to fit consumer demands. With a potpourri of brands available it is imperative organizations cater to consumers in order to avoid losing their loyalty to other company. Consumers in the industry have tokenish switching costs and there is never the guarantee of brand loyalty (Hathaway, Mrak-Blumberg, Wexler-Beron, 2006). In order to keep loyal consumers organizations in this industry must offer new and innovative products. 1. This document provides precious information on consumer trends, healthy eating, industry dynamic, uphill products, and success factors.This valuable information helps organizations determine current trends and how they can adapt to remain successful and ahead of their competition within the industry. http//www.pwc.com/us/en/transaction-services/publications/assets/functional-foods.pdf 2. This is a very informative website that discusses current trends in the food industry while stating growth percentages specifically relating to the healthy snacking options. This is a good site to gain a better pinch and insight to healthy utility(a)s that competitors whitethorn be producing as well as market trends http//www.snackandbakery.com/art icles/84475-snack-food-industry-trends 3. Organic Trade Association website provides information on industry statistics and projected growth trends which is can assist organizations in find their future products based on consumer trends. http//www.ota.com/organic/mt/business.htmlRivalry Among Existing CompetitorsIn every industry there is rivalry amongst organizations to win over consumers. This can generate new and innovative products, intense sales promotions and pricing wars (Porter, 2008). On the outside this activities may appear to be beneficial besides in reality it can lead to increased costs and decreased profits for organizations (Porter). 1. CSI Market online provides a nice interpret detailing growth rates of the major competitors in the food industry. This is an extremely useful tool to help determine where you stand financially next to your competition. Utilizing this information may assist in determining if a new product should be launched and if new marketing tac tics are needed. http//csimarket.com/stocks/competitionNO3.php? code=KRFT2. If an organization is to remain successful and on top of their organization they must asseverate numerous products that cater to consumer demands, i.e healthy food choices. This innovative thinking keeps consumers coming back to the same brands and generates loyalty. http//www.fool.com/investing/general/2013/04/22/these-food-companies-are-the - crush-at-inspiring-bra.aspx PEST AnalysisPEST analysis tool was developed by Francis Aguilar to help organization see the macro-surround of their business environment in order to make changes and maximize financial success (Mind Tools, n.d.). The ability to adapt and change business tactics to carry out consumer demands can create new and ameliorate products enhancing brand loyalty (Mind Tools). The PEST analysis focuses on political, economic, socio-cultural, and technological changes in the industry, portion organizations to determine different opportunities (Mind Tools). Political1. This website provides information on regulations of the food industry, agricultural industry and federal regulations. Understanding the political implications and regulations of the food industry will assist with licensing and return of food products. It is imperative to know and conceive these regulations in order to become and remain a successful and well respected brand. http//edis.ifas.ufl.edu/fs1182. Harris provides a great article discussing presidency regulations for the food industry, to include agencies and their regulation methods. learned the correct process and FDA regulations will help bolster an organization while gain respect and trust from consumers. http//smallbusiness.chron.com/government-regulations-food-industry-76884.html 3. With the growing health trends the FDA has started enforcing stricter food labeling. This labeling ensures stringent guidelines to maintain the fair play of the food label (Philipson, 2005). Additionally this provides surgical information to consumers and allows them to make healthy meliorate decisions regarding the food they consume. http//ajcn.nutrition.org/content/82/1/262S.fullEconomic1. Yahoo finance provides entropy on the economic conditions of the food industry as well as a forecast of the growth prospects. This information is valuable to organizations as it can assist in determining present and future growth trends, revenues and specific growth regions. http//finance.yahoo.com/news/food-beverage-business-confidence-report-130100393.html 2. The FDA addresses the need for government involvement in food safety in order to substantiate consumer confidence thus enhancing food industry growth. It is also a tool that can be utilized to determine how globalisation is affecting the economic environment (Mind Tools, n.d.). http//www.fda.gov/Food/GuidanceRegulation/FSMA/ucm326870.htm 3. Organic Trade Association provides a website with information on the economy of the growing or ganic food trend. The needs and demands of the consumers for better food options has driven many food industry organizations to reexamine their line of products and catch producing healthier food options. The demands of the consumers must be met in order for an organization to succeed. It is also important to consider the economic electrical shock these changes can have on our environment and make sure we leave a positive footprint. http//www.ota.com/organic/mt/business.html mixer1. Over the last several long time the food industry has had to adapt to the growing health conscious nation and shit more healthy food alternatives. Understanding FDA regulations of labeling and marking and serving sizes on products will gain consumers trust that the products they are consumer are in line with a healthy life style. The social taboo of mislabeled or healthy food could potentially damage an organization. http//www.newsmaxhealth.com/Health-News/food-labels-fda-changes/2014/02/27/id/5551 99/ 2. Yahoo Finance provides an article discussing the enormousness of meeting the demands of the consumers in order to generate profits. Consumers are not only looking for healthy alternative in the grocery store simply in restaurants too. There is an increased demand for nutritious organic fresh food in restaurants. Organizations must weigh the benefits surrounded by producing fresh products and providing affordable foods. http//finance.yahoo.com/news/health-wealth-food-beverage-industry-132935034.html proficient1. Emerson discusses the evolution of applied science in the food industry and how is has helped organizations to produce healthier and unspoilt food. Utilization of technology can allow organizations to produce large quantities and variety of products thus catering to a larger consumer population and decreasing organizational costs. http//www.insidetechnology360.com/index.php/how-technology-has-affected-the-food-industry-22970/2. This website discusses the impo rtance of evolving technology to running a successful business. modify technology and software advances over the years have allowed for food industry organizations to make reordering of food and supplier easier and more convenient. These technologies can monitor refrigeration temperatures, readiness usage helping to ensure the best food is available for the consumers. When consumers know that organizations go to extra measures to ensure product quality it generates brand loyalty and increased revenues.3. Gould presents a very informative article regarding the importance of technology in the food industry. The use of technology assists with decision making cerebrate to consumer insight, brand and product management and pricing allowing organizations to maximize consumer needs and wants. 4. One new technology in the food industry is the utilization of biotechnology to increase might of production and reduce environmental jolt with increase production. This very informative m istake show discusses the pros and cons of this innovative technology. In order to meet the growing health requirements by consumers it is beneficial for organizations to understand what technology their competitors are utilizing. ConclusionIf an organization is to succeed it is imperative a thorough analysis of the industry and environment is conducted. Utilization of the Porter Five Analysis will provide organizations with information on the internal and immediate threats to their organization. The PEST analysis on the other hand provides information on the marco-environment allowing organizations to focus on new opportunities for growth and success and see potential threats to the industry. Although both of these methods have different focuses, when utilized together a crucial amount of information in generated that will guide an organization on the elbow room to a successful and profitable future.ReferencesHathaway, J., Mrak-Blumberg, E., Wexler-Beron, E. (2006, April 4). Strategic Report for TheKraft Foods Corporation. Pandora Group Out of the turning point Consulting. Retrieved July 23,2014 fromhttp//economicsfiles.pomona.edu/jlikens/SeniorSeminars/pandora/reports/kraft.pdf Mind Tools. (n.d.). PEST Analysis. Retrieved July 24, 2014 fromhttp//www.mindtools.com/pages/article/newTMC_09.htm Philipson, T. (2005). government Perspective Food Labeling 1,2,3. The American ledger ofClinical Nutrition, 82. Retrieved July 23, 2014 fromhttp//ajcn.nutrition.org/content/82/1/262S.fullPorter, M. (2008, January). The Five Competitive Forces that Shape Strategy. Harvard BusinessReview. Retrieved July 23, 2014 from http//hbr.org/2008/01/the-five-competitive-forcesthat-shape-strategy/ar/1 Sullivan, D. (n.d.). Food Industry The Bargaining Power of Suppliers. Chron Small Business.Retrieved July 24, 2014 from http//smallbusiness.chron.com/fast-food-industrybargaining-power-suppliers-78188.html