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KHC Business Strategy: KHC has a market-to-market model. This means that they analyze the market and find any certain opportunity in the international market and they will exploit this opportunity and take the appropriate risk. For example, some of the risks they took included buying small brands in different countries, and then with time growth comes and this gives KHC an impact on the market and makes them a globalized brand. In terms of a comparison with their competition such as General Mills, which is more focused on lowering the cost of sales price to also lower the price for consumers. Also a really valid strategy however I think the way KHC is approaching its growth plan by attacking and taking risks in international markets is a more solid plan.
Competitive Advantage: KHC has some competitive advantage in comparison to the competitors in their industry. One of them is legacy. The brands from KHC have been since so many years ago. Heinz Ketchup, Mac and Cheese, Caprisun, Velvetta, Philadelphia, etc... These brands have been in the industry for so many years that consumers are loyal to these brands, just because of the name and because people recognize them they will opt to buy KHC´s brand than any other, and sometimes maybe pay more for it which is something not all brands can have the luxury of doing. This competitive advantage means that competitors will have a really difficult entry barrier to try and compete against these products. So much cash will have to be spent to try and convince consumers to get away from their classic brands.
SWOT ANALYSIS IN DEPTH
SWOT ANALYSIS IN DEPTH
Strengths: Kraft has built its reputation through its name. Not, the brand itself but the name of different products such as Mac and Cheese, Heinz Ketchup, Burger Cheese, etc... All of these products have some certain customer loyalty related to the brand which makes customers select KHC products even when they are not the cheapest on the market. This is due to their products having some signature flavor that differentiates them from other brands making them the first choice of their customers. This strength can be translated to extra profit and also the ability to not have to lower prices of certain products due to their unique flavor.
Opportunities: One opportunity that they can abuse is the new healthy food market industry. This marker has higher margins than the normal industry due to being more ecological and healthier to consume. This is also an industry in which consumers do not care about prices and they give more weight to calories and ingredients. KHC could create more product lines that are in this category and mix them with the loyalty of their clientele this will make them produce some extra income from this new and profitable emerging food market.
Weakness: The food and beverage industry can become very expensive, due to the main ingredients of the products are commodities that are very volatile to the economy and inflation. This can raise the COGS of KHC making them increase also the price of their products. Another weakness is the fact that KHC has to calculate correctly how much inventory they hold since their products all have expiration days and when they expire they are worthless for the company which translates to a financial loss.
Threats: KHC main threats overall are their main competitors. Competitors that also have loyalty retention with their customers can be a problem for KHC. Such as General Mills or Nestle which also have products that have unique flavors and can affect their clientele. Another important threat is that the food and beverage industry is heavily regulated meaning that they need to follow a lot of protocols to have their products approved which can be expensive for the company and can also become a financial threat.
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