Strategic analysis of organizations includes the consideration of internal and external organizational environment. From the internal perspective, there exist two approaches: value creation approach and resource-based view. While value creation approach is focused on the “inside” value created by the organization and offered to the customers, resource-based view provides a response to external competitive environment using internal resources of the organization and its distinctive capabilities (Henry, 2007). The purpose of this paper is to perform a resource-based analysis of Mondelez International Inc. (Kraft Foods) and to determine distinctive capabilities of the company.
1. Resource-based analysis
The focus of resource-based view is on internal capabilities of the organization, and on formulating strategy which allows to build sustainable competitive advantage at the market (Henry, 2007). Resources are the organizational inputs which enable the functioning of the organization. They can be classified as tangible and intangible.
Key groups of tangible resources include financial, physical and human resources; intangible resources can be divided into such groups as technical resources, intellectual resources, reputation (goodwill) (Henry, 2007), and other intangible factors like organizational culture, other cultural factors, strategic partnerships, etc.
Resource-based view can be used for building new organizational strategy, because it provides an inside-out path for building and maintaining competitive advantages. Three following sections will be devoted to analysis of tangible and intangible resources, and to identification of distinct capabilities of Mondelez International Inc.
2. Tangible Resources
2.1. Physical resources
Mondelez International has productive capacities in such market sectors as biscuits, candy, chocolate, powdered beverages, gum and coffee (Mondelez International 2012b). The products of the company are marketed in 170 countries, and the operations take place in more than 80 countries (Mondelez International, 2012a). Productive capacity of Mondelez International has significantly increased due to acquisition of Cadbury. Using its rich network of suppliers and distributors, Mondelez International can optimize production and reach economy of scale.
2.2. Financial resources
Strong financial performance of Kraft Foods and Cadbury created solid financial background for Mondelez International. The spin-off resulted in reduced debt leveraging and greater financial viability of the company. Combined resources of Kraft Foods and Cadbury created extra revenue synergy for Mondelez International: currently the company’s shares experience average increase in 0.23%, compared to average industry level of 0.02% (Yahoo Finance, 2012b).
At the same time, the revenue of Mondelez International Inc. fell by 2% in the third quarter of 2013, and due to stronger dollar position net income reduced by 29% (Yahoo Finance, 2012c). Financial adjusting which takes into account the spin-off show that reveals that revenue decreased by 5.1% (Yahoo Finance, 2012c). The spin-off adjustment process have reduced the power of financial resources of Mondelez International Inc.
2.3. Human resources
During the recent years, Mondelez International (Kraft Foods) passed from direct market expansion and promotion of products towards building more close customer relationships in customer-focused teams (Leihs, Dahringer & Muhlbacher, 2006). The sales force of Mondelez International creates additional value for the company’s products. The experts from Kraft Foods and Cadbury have formed a combined team which is likely to reach operational excellence. Organizational culture of learning and performance can also be viewed as important human resource of Mondelez International.