- April 17, 2014
- Posted by: essay
- Category: Term paper writing
Final stage of strategic analysis includes identification of the generic strategy pursued by the target company, identification of strategic choices performed by the company and analysis of the alignment between generic strategy, strategic choices and SWOT variables. The goal of the report was to perform such analysis for Mondelez International Inc. and to generate recommendations for the strategic choices as well as for the mission, vision and goals of the company.
Strategy analysis showed that Mondelez International pursued the strategy of differentiation. Consideration of strategic choices applied to SWOT variables revealed two strengths, two weaknesses, two opportunities and one threat which were not addressed by the strategic choices of Mondelez International Inc. Basing on these data, recommendations for altering strategic choices were generated for Mondelez International, and recommendations towards formulating clear mission and vision were also provided.
The final purpose of strategic analysis is to determine optimal strategy for the target organization. After analysis of internal and external environment and SWOT analysis, it is necessary to determine what strategy the company is pursuing and to asses this strategy in the context of organizational strengths, weaknesses, opportunities and threats. The purpose of this paper is to identify the generic strategy used by Mondelez International Inc. (former Kraft Foods), analyze strategic choices of Mondelez International Inc. and their alignment with the general strategy, and generate recommendation on altering strategic choices for Mondelez International Inc.
1. Overview of generic strategies
Porter originally outlined three generic strategies: cost leadership, differentiation and focus (Wilson & Gilligan, 2012). The first two strategies are appropriate for companies operating at industry-wide level. The goal of cost leadership strategy is to become the low cost producer at the market, while maintaining reasonable quality (Wilson & Gilligan, 2012). Differentiation strategy means that the company is developing products with some unique attributes which create value for customers (Wilson & Gilligan, 2012).
Focus strategy means concentrating on a specific market segment and maintaining either differentiation or low cost strategy in this segment (Wilson & Gilligan, 2012). Later on, one more specific type of strategy was identified which was called preemptive, or the first-move strategy. A company pursuing such strategy is the first to create a certain product or technology, and receives unique experience which cannot be easily duplicated or imitated by competitors (Wilson & Gilligan, 2012).
Mondelez International employs more than 100,000 people worldwide, and is a well-known leader in confectionery industry (Mondelez International, 2012). In particular, the company holds leading position in such market segments as chocolate, candy, biscuits and powdered beverages, and is the second largest manufacturer of gum and coffee in the world (Mondelez International, 2012). The company is operating on industry-wide level, and three appropriate strategies for Mondelez International are cost leadership, differentiation and preemptive strategy. The next section will be devoted to the identification of the type of strategy pursued now by the company.
2. Strategy of Mondelez International Inc.
The products of Mondelez International are marketed in 170 countries (Mondelez International, 2012). The company’s powerful brands are concentrated in such categories as candy, chocolate, biscuits and gum; 15 worldwide known brands are expected to make 70% of the company’s revenue (Mondelez International, 2012). According to the recent news, the company is planning to increase investments for its core products (Dairylea, Cadbury, etc.) to increase the performance of the chocolate business. In general, there are five core segments now targeted by Mondelez International Inc.: coffee, chocolate, candy, gum and cheese (Joseph, 2012). The focus is on the chocolate segment, which is expected to generate at least 27% of the company’s revenue (Joseph, 2012).
Almost half of the company’s revenue comes from emerging markets, and future significant investments into these markets are also planned (Mondelez International, 2012). The fact sheet of Mondelez International outlines the following competitive advantages of the company: fast-growing categories, favorite snacks brands, advanced geographic footprint, leading innovation platforms, strong route-to-market, and world class talents (Mondelez International, 2012).
Mondelez International also demonstrates innovative approach to marketing: it is reviewing its current media strategy and redesigning it to ensure integration between digital and traditional marketing channels (Joseph, 2012). The company is also making progress in the sustainability sphere: Mondelez International launched a campaign named “Coffee Made Happy”, and is planning to invest $200 million to support small-scale coffee farming (SeekingAlpha.com, 2012). It is highly likely that more steps aimed at making the company’s supply chain more efficient and sustainable will follow.
Overall, the following strategic choices of Mondelez International can be determined: building global power brands, revolutionizing the process of selling, leveraging global innovation platforms across regions and driving efficiency to encourage growth (Mondelez International, 2012). All these approaches indicate that Mondelez International Inc. is pursuing the strategy of differentiation, since the company focuses on its strong brand portfolio and is planning to strengthen and optimize this portfolio. Other steps undertaken by Mondelez International also point out at the differentiation strategy: sustainability solutions, innovative marketing decisions, optimization of production, etc.