Kraft Foods - Case Assignment Strategic Management

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Q: Which generic strategy does kraft foods appear to be following?

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Kraft Foods aims to become a global snacks and portfolio of brands people love. To achieve these objectives Kraft Foods will follow the three generic strategies.

Strategies for Kraft Foods which have broad product lines across several product categories, specific business level strategies may vary from one line to another. For example, the Maxwell House Division coffee brand marketed by Kraft Foods pursues cost leadership with its regular ground coffee, but a strategy of differentiation with a few of its other offerings like Colombian Supreme and Rich French Roast.

 Although the combination of multiple product lines along with cost leadership is not easy to achieve, Kraft is able to do it due to the impressive distribution efficiencies associated with its size and scale together with its rich experience in the foods and beverage industry. Thus while business level strategy may vary from product line to product line, the broad corporate level strategy indicates that Kraft Foods follows strategies:

·        Cost leadership Strategy

·        Differentiation strategy

The Cost Leadership Strategy

·        Porter's generic strategies are ways of gaining competitive advantage – in other words, developing the "edge" that gets you the sale and takes it away from your competitors. There are two main ways of achieving this within a Cost Leadership strategy:

The Differentiation Strategy

 

Differentiation involves making your products or services different from and more attractive those of your competitors. How you do this depends on the exact nature of your industry and of the products and services themselves, but will typically involve features, functionality, durability, support and also brand image that your customers value

  

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Q: How can an organization that is stuck in the middle achieve a sustainable competitive advantage?

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To achieve the sustainable competitive advantage, organization can implement the “build in the middle” strategy which will balance the key strategic elements of competitive difference, product price and market focus. As per to Michael Porter a business can secure a sustainable competitive advantage by adopting and executing only ‘one’ of three generic strategies, namely; cost leadership, differentiation, niche focus and, when a business attempts to adopts more than one or a combination of these three strategies, then the business becomes ‘stuck in the middle’, which is a losing proposition

Organizations are employing a hybrid business strategy that is low-cost and differentiation. The business that fails to develop its strategy in one of the directions; cost leadership, differentiation, niche focus, and is a business that is ‘stuck in the middle’ and is in an extremely poor strategic situation and is almost guaranteed low profitability. Businesses that are truly differentiated can fend off the competition because they are perceived as having a unique product-service, they are more likely to earn superior margins, and are virtually ‘competitive proof’.

 Porter’s strategy is very simple– organization can use one of these strategies.

As per porter it is the strategic mistake is to be stuck in the middle due to trying the all the strategies enforce simultaneously and this is the reason of low performance. Because adopting all the strategies together means that business is unable to achieve any of the one strategy objectives.

To achieve the sustainable competitive advantage, organization must focus one of the competitive advantage strategies.

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