- April 17, 2014
- Posted by: essay
- Category: Term paper writing
3. Integration of the strategy with SWOT
Mondelez International builds its current strategy on the following strengths: broad network of suppliers and distributors, geographic diversity, focus on confectionery market, strong goodwill, strong brand loyalty and brand awareness and strong R&D capacity (iStockAnalyst, 2012). The company is further improving its innovative selling technologies and sustainability of production, and is planning to integrate these strengths into the strategy as well. There are two strengths not addressed in the strategy: broad range of products and the economies of scale. As for the range of products, the company decided to focus its strategy on core brands, and integrate other products around these brands. This strategic choice is very promising because the heritage of Kraft and Cadbury needs integration, and this decision allows to create synergy.
As a result of Cadbury acquisition, the portfolio of Kraft Foods has become strongly polarized (Szalai, 2012). Although the spin-off of Kraft Foods into Kraft Foods Group and Mondelez International Inc. has improved the company’s strategic position, the aggressive trend for expansion and competition in the foods industry remained (Szalai, 2012). Now the strategy of Mondelez International is to concentrate organizational resources on core brands and further expand into international markets, especially into the emerging markets. The idea of “building global power brands” combined with innovative marketing allows to shore up such weaknesses as integration and empowerment of acquisitions, too large and complex portfolio, gum production integration issues and the lack of synergy between different directions of production.
The decision of Mondelez International to move into emerging markets allows to address such weaknesses as challenges at local markets. However, such weaknesses as management missteps in emerging markets and rising costs of post retirement benefits are not addressed in the company’s strategic choices.
With regard to opportunities, the strategic choice of Mondelez International to invest preliminarily into emerging markets helps the company take advantage of such opportunities as expansion into emerging markets and differentiation in these markets and overcoming the main international competitor Nestle S.A. Another choice of Mondelez International is active use of innovative marketing, which is the realization of the opportunity “use of mobile and social marketing to increase customer loyalty”. Two other opportunities ”“ manufacturing of healthy and nutritional food products and purchase of smaller companies in the growing economies ”“ are not addressed by Mondelez International in its current strategy.
The key threat for Mondelez International is intensive competition and similar product offerings. According to Szalai (2012), Mondelez International is now facing strong international competition worldwide, especially in China and Russia. The decision of Mondelez International to build global power brands and to consolidate brands allows to mitigate this threat (Reuters.com, 2012). Other strategic choices (sustainability, innovative marketing and selling, R&D solutions, etc.) are also aimed at addressing this key threat. Innovating approach to marketing will help mitigate the threat of decreasing demand for confectionery foods. New sustainability investments address the threat of litigation cases related to obesity and food supplements. The only threat which is not addressed by Mondelez International in their strategy is the tightening of international regulations which might hinder growth and increase costs of expansion.
4. Strategic alternatives
With regard to strengths, it is recommended for Mondelez International to reduce costs and drive up profits using the economies of scale. This decision will also allow to shore up such weakness of Mondelez International as rising costs of post retirement benefits using profits generated by economies of scale, and will lead to mitigation of such threat as increasing supplier prices. It is highly recommended to undertake additional research of each emerging economy where Mondelez International is planning to market its products in order to avoid management missteps in future.
As for opportunities, it is highly recommended to market a product line of healthy and organic brands in order to take advantage of the growing customer preferences towards preferences towards healthy and nutritional food products. Regarding such opportunity as purchase of smaller companies in the emerging markets, it is not recommended for Mondelez International to make such steps during the next 2 years, because the company should first of all reach synergy between existing brands and improve its financial position. However, in the long-term perspective Mondelez International should consider buying local confectionery companies in the emerging markets, since such decision will speed up international expansion and growth. Furthermore, Mondelez International should focus on international regulations and legislation in the sphere of food processing, since non-compliance might hinder growth and increase costs of expansion.
5. Vision, mission and goals of Mondelez International
Mondelez International does not currently provide explicit formulation of its mission, clearly outline such advantages as worldwide leadership in confectionery, brands of global power, combined capacity of divisions located in 80 countries and strong innovative potential. With regard to vision statement, it is also recommended for Mondelez International to develop a clearly formulated vision (similar to the one outlined in the fact sheet) and communicate it to all stakeholders involved in the operations of Mondelez International. Currently the company lacks clarity of vision and mission, and such situation might implicitly affect the company’s development. With regard to the goals, Mondelez International has clearly outlined them in the fact sheet and in the briefings, and no changes are recommended to these goals and objectives.
Analysis of generic strategy of Mondelez International showed that the company clearly pursued differentiation strategy. In the context of this strategy, key strategic choices were identified. Analysis of the alignment between these choices and SWOT variables identified several strengths, weaknesses, opportunities and threats which were either not addressed in the company’s strategic choices, or were incorrectly addressed. Basing on the results of this analysis, the recommendations towards more effective use of threats and opportunities, and more reasonable treatment of weaknesses and threats were generated. In addition to that, recommendations towards formulating clear mission and vision of Mondelez International were formulated.