Which of the four generic (Porter) strategies does the Kraft Foods Company follow, and how do you know?

2) Integrate the strategy you’ve identifed above with the strengths, weaknesses, opportunities, and threats you identified in modules 2 and 3. Doing so should give you some specific actions the company is taking relative to their strengths, weaknesses, opportunities, and threats. These actions are referred to as “strategic choices.” Do the Kraft Foods Company’s strategic choices align with the firm’s generic strategy? If not, what are the points of disconnect? You need to think critically about this step, as no company achieves perfect alignment of its strengths, weaknesses, opportunities and threats with its chosen strategy. It is your job to uncover the discrepancies and problems.

3) How can the Kraft Foods Company leverage its strengths and shore up its weaknesses by altering its strategic choices? How can the company take advantage of environmental opportunities and minimize environmental threats by altering its strategic choices? Be very specific!

4) Complete the paper by commenting on how your view of the Kraft Foods Company’s vision and mission has changed or has been reconfirmed by this process of strategic analysis. Would you make any suggestions to revise company’s mission or vision statements, or any of its goals/objectives?

5) Consider the Case as a formal business report that you are developing for the Board of Directors and CEO as the Kraft Foods Company’s consultant. This is a professional document. Follow the format below:

Executive summary: a synopsis of the main points, conclusions and recommendations made in the longer report. If you have never written an executive summary before, or would like a refresher, check this website: https://www.highendfinance.com/CommercialLoans/Docs/07-4%20ES%20Guidelines.doc
Introduction: State the main purpose of the paper (thesis statement), what you hope to accomplish, and how you will go about doing it.
Main Body: The “meat” of the paper. Emphasize analysis, not just description. Delineate separate topics or sections with headings.
Conclusion: Summarize your paper in light of your thesis statement. ———-use some of this material for the assignment…….
In Module 4, we will concentrate our efforts on strategic alternatives at the corporate, business, and functional levels. Companies follow strategies at each of these levels, as well as at the global level.

At the functional level, strategies are short-term in nature, and refer to such company functions as marketing, manufacturing, materials management, customer service, and R&D.
At the business level, strategies are of medium range. They include the company’s market positioning, geographic locations, and distribution channels.
At the corporate level, strategies are long-term, and include such options as horizontal and vertical integration, diversification, strategic alliances, and mergers and acquisitions (M&A).
Please click here for a presentation on strategic choices by Professor Anastasia Luca.

Competitive Advantage

In this module, we will focus on the strategic options available to companies at the business level. Companies select business strategies to obtain sustained competitive advantage (SCA) against competitors. SCA’s are advantages that cannot be easily copied or imitated by competitors. A few years ago, strategists talked in terms of Porter’s generic strategies (basically cost and differentiation). Today, we have four distinct strategies we use to analyze strategic options, although there are various approaches to achieving these strategies employed by different firms. They are:

Cost leadership
Differentiation
Niche focus
Preemptive move (or first-mover advantage)
Cost leadership

Most people think of economies of scale when they think of low cost strategies. McDonalds and Wal-Mart notwithstanding, high volume is not the only way to achieve low prices. Here are some other approaches to implementing a low cost strategy:

No frills. Southwest Airlines eschewed big airports and cut costs by flying in to smaller fields. Competitors such as Delta and American were too heavily invested in the hub business model to change.

Product design. Masonite developed an alternative to expensive wood products by using sawdust and woodchips. Some telecommunications companies “bundle” products offering cable/satellite TV, high speed internet and telephone service for one low price. Hershey’s shrank the chocolate bar to keep from raising their low price.

Operational economies. Firms can save money by eliminating high costs in the value chain. Amazon was able to significantly cut costs by eliminating physical stores, inventories, and cutting the 30% return rate of bookstores to just 3%.

Economies of Scale. With higher sales, fixed costs such as R&D, overhead, advertising, and even legal support, can be spread over a larger revenue base.

Experience. Costs decline at a predictable rate with a firms accumulated experience. Such declines are attributed to the learning curve, technological improvements, and product redesign resulting in product and process efficiencies.

Here is another way of looking at low-cost strategies:

Algasae (n.d.) Promoting thought leadership…Customer focused low-cost strategy. Retrieved on August 15, 2011 from: https://www.alagse.com/strategy/s10.php

Differentiation Strategies
If a company positions itself as offering a product or service that is different from its competitors in a way that customers value, it is following a differentiation strategy.

A successful differentiation strategy will create customer value that is perceived as such by the customer. Many so-called “new-and-improved” products have fallen flat because the customer simply didn’t care! In addition, a successful differentiation strategy will only build a sustained competitive advantage to the degree that it is difficult to copy.

There are many ways to add value to any aspect of a business through differentiation:

Ingredients/components: Healthier, “greener”, more lasting ingredients/materials. (Maytag, Healthy Choice frozen dinners)
Product offering: Better designed products (Blackberry touch screen, Dell ‘ultra thin” notebooks)
Combining products: Two is better than 1! (Colgate 2 in 1 toothpaste with mouthwash)
Added services: Extra services beyond the basic purpose of the product or service (Concierge service with American Express Cards)
Breadth of Product Line: Extra convenience in dealing with fewer vendors. (Wal-Mart super stores offer one stop shopping, eliminating the need to go to multiple stores.)
Channel: Offering items or services through a medium or channel unavailable in that form anywhere else. (E-bay offers instant access to hundreds of individuals located worldwide simultaneously – asynchronously.)
Design: Product or service is unique, e.g., bed-and-breakfasts offer a more ”homey” alternative to standardized hotel rooms.
In general, there are two ways to build SCA through differentiation strategies. Most of the methods of adding value mentioned above can be related to either quality or brand recognition.

Quality Strategy. In this type of differentiation, a company tries to set it’s product/service appart on the basis of superior quality It is probably the most widely used method of attaining sustained competitive advantage. Usually, quality means superior performance, and a primium brand as opposed to discount or economy brands. These top of the line offerings command a high price tag. However, quality does not always mean pricey. Both Mercedes and VW connote high quality German engineering.

Branding. Brands build SCA through customer familiarity, loyalty, and trust. Aspirin is aspirin, but Bayer continues to trive against low-priced generics due to the power of the brand.

Blue Ocean: An Alternative Approach

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