...Kraft Foods and Cadbury Introduction The confectionary industry all over the world is comprised of three products, that is, gum, sugar and confectionary. But the world-wide economic recession which in the last few years hit the North American and European markets, adversely affected the confectionary sales. In addition, undue pressure affected the sales volumes as more people moved towards healthier lifestyles, in attempt to avoid what they termed as unhealthy foods. In these developed countries, there are growing concerns about obesity and its side effects. Confectionary makers are now making smaller packets so as to reduce the prices of the purchase which in a way is kind of addressing some of the concerns about unhealthy foods. This is done by improving the portion control even though it increases the sales volumes per kilo, but does not affect the profit margins adversely. Even though the confectionary may tend to be termed as a luxury food item, the sales value appears to be recovering steadily from adversity. In the quest of offering premium products which are more profitable than increasing the sales volumes, the confectionary makers are offering what is seen as low value confectionary. These new products include pro-biotic and antioxidant chocolate. However, the current depression is expected to limit the growth of confectionary, because it is seen as a non-essential food item. Nevertheless, chocolate appears to be picking up in the market and was expected to...
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...W11035726 Total words: 2790 1. A good acquisition program helps the acquirer to identify a target partner. An acquisition program should contain a clearly defined core strategy, the goals of this activity, and a detailed risk management. The identification of the right company depends on the analysis of target market. Companies react when they recognize benefits in some certain markets. It is essential for an acquirer to analyse the market, is there any market in transition that could lead to any competitive advantages or any business capacities that could be useful (Chatterjee). Kraft has to consider which qualifications they seek in the business partner and which one complementary or expand their capacities. (Cavusgil, Knight and Riesenberger, 2008) An analysis of the macro environment of Kraft shows that they have the opportunity to become the world’s largest confectionery. This market prospect allows Kraft to minimize the threats of competitors. It is a strategy to eliminate or to minimize competitors. (Chatterjee) In food and drink manufacturing, the technology is relatively mature. The global food market shows oligopolistic structures and the competition is intense. As a result of that, the market growth almost remains static. (Ramsay, 2000) In addition, different national tastes and preferences may cause also restrictions for international expansion. (Kapferer, 1997; Yip, 1992). A lot of companies consider acquisitions as essential strategies to expand internationally...
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...OPERATION MANAGEMENT BUDGETING AND STRATEGY A KRAFT FOOD INTRODUCTION The company has its origin as National Dairy Products Corporation (National Dairy), formed on December 10, 1923, by Thomas H. McInnerney. The firm was initially set up to execute on a rollup strategy in the then fragmented United States ice cream industry. Through acquisitions it expanded into a full range of dairy products. By 1930 it was the largest dairy company in the United States and the world, exceeding Borden. McInnerney operated the Hydrox Corporation, an ice cream company located in Chicago, Illinois. In 1923 he went to Wall Street to convince investment bankers there to finance his scheme for consolidating the United States ice cream industry. He initially found "hard sledding" with one banker saying the dairy industry "lacked dignity." He persevered and convinced a consortium including Goldman Sachs and Lehman Brothers to finance a rollup strategy. As a result of his efforts, National Dairy Products Corporation was formed in 1923 in a merger of McInnerney's Hydrox with Rieck McJunkin Dairy Co of Pittsburgh, Pennsylvania. The resulting firm was then listed on the New York Stock Exchange with the offer of 125,000 shares having been The firm grew quickly through a large number of acquisitions. As it is typical in a rollup strategy, acquisitions were primarily for stock in National Dairy rather than cash. National...
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...Philip Morris Companies and Kraft, Inc. Case #1 Student questions - Philip Morris Companies and Kraft, Inc 1. Why is Kraft a takeover target? 2. Should Philip Morris buy Kraft? 3. Does the market think this offer is good for Philip-Morris? 4. Does the market think this offer is good for Kraft shareholders? Why? Set of events 1. Kraft stock price around $60 in early October of 1988 2. October 18th, Philip Morris offers $90 cash for each share of Kraft 3. Kraft management does not like this --argue that offer is too low --on Oct. 24th, Kraft management proposes a restructuring- argue it is worth $110 per share Question #1: Does the market think this offer is good for Philip-Morris? * Market did not like Philip-Morris’s prior diversification moves * Stock price goes down on October 18th by $4.50 per share (-5.5% abnormal return) -+ shareholder loss of $1.3 bil. Question #2: Does the market think this offer is good for Kraft shareholders? Why? * Stock price goes up to above $90 * Kraft shareholders are much richer * Potential for --improved offer --a restructuring plan --an offer by another potential acquirer Question #3: What does the market think of the restructuring plan? Stock price goes up to $102 -+ market believes restructuring will not occur or is not worth $110 a share Would a restructured Kraft be worth much more than the old $60 per share- appears to be a well-run company ...
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...On February 2, 2010 Kraft and Cadbury, two leading firms in the snack industry finalized their merger decision after five months of negotiation. In this report we will examine why it made strategic sense for the two companies to combine and evaluate the performance of the combined companies since its merger. In particular we will analyze the post-merger financial statements and highlight a few points regarding the accounting. INTRODUCTION OF KRAFT AND CADBURY Kraft Foods Inc. (KFT) is the world’s largest food processing company with revenues of $40 billion (fiscal year 2009) which sells its products in more than 150 countries. We are familiar with many of its global brands – Oreo, Philadelphia Cream Cheese, Trident, Nabisco, Maxwell House and others. Its products are biscuits, confectionary, cheese, convenient meals and packaged groceries. About half of the revenues are from international markets. Kraft Foods is an attractive investment in which Warren Buffett has a 9.4% stake. It is a truly global brand with 100,000 employees and a large market capitalization of $53 billion (Yahoo finance, Feb 13, 2011). In 2008, it replaced AIG as part of the Dow Jones Industrial Average. Cadbury plc is a British confectionary company which is now a wholly owned subsidiary of Kraft. It moved up its rank as second to largest player in the industry after the merger. Cadbury is substantially smaller than Kraft; about a fifth the size of Kraft. Yet, while still a public company and...
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...BSc International Business CORPORATE FINANCE 2 GROUP ASSIGNMENT: Philip Morris Companies and Kraft Inc. Instructions Form a group of 3-5 members. Read the case and answer the following questions: 1. What is the total value created by the merger between Philip Morris and Kraft? Notes: Overall market movement on the announcement date may be taken into account for a more precise answer to this question. Kraft’s number of shares is given in footnote 2. 2. What are the most likely sources of value creation? 3. Why did the shares of Philip Morris drop on the announcement date? 4. Compare the price offered by Philip Morris to prices paid in similar transactions. Based on the transaction’s price/earnings ratio and market-to-book value of equity, show that Philip Morris is offering substantially more to purchase Kraft. 5. Without synergies would the earnings per share of Philip Morris increase or decrease after the Kraft acquisition? 6. Why can Philip Morris increase its financial leverage following this acquisition? 7. Assume that the acquisition is financed using the $12 billion available credit line and that the debt carries a 12% interest rate and is amortized linearly over the next 6 years. Calculate the incremental interest payments and the corresponding annual tax shields. The tax rate on corporate income is 34%. 8. Estimate the present value of the tax shields. Justify the discount rate that you use in your calculation. 9. Explain why Philip Morris has a relatively...
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...in 1866. Nestle has about 450 factories working in 86 countries. The turn over in 2009 was approximately $95 billion. Nestle is one of the main share holders of L’Oreal which is world largest cosmetic company. The most and successful global brand of nestle is Nescafé. In 2011 Nestle was listed as no.1 by fortune global 500 as world’s most profitable corporation. Nestle has always been about nutrition, so their global marketing over the years has been based off of demographics that show the changes in living standards and life styles. The ultimate goal of the company was to be realized by the consumers as the nutrition, health and wellbeing company and delivering a competitive return to the company’s shareholders at the same time. Key Acquisition: 1990 – Nestle opened its first factory in The United States of America. 1938 – Nestle introduced a coffee band called the Nescafe – Nescafe is one of the few brands that nestle has developed all over the world. Nescafe is the most successful of all the brands that Nestle manufacture. 1974 – Nestle enters non food business, by acquiring major stakes on L’Oreal. 1998 – Nestle acquires Spillers pet food business, making it the largest pet food maker in Europe. 2002 – Nestle acquires Ralston-Purina to become global leaders in pet food business. 2003 – Nestle acquires Dreyer’s Grand Ice Cream. Nestle Projects: Nestle for their business development tried to create values for people in many countries in which nestle operates...
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...ARIAL 13 Irene Rosenfeld: Setting New Directions for Kraft Foods Organization : Kraft Foods Inc. Industry : Food; Consumer packaged goods Countries : Global Period : 2006-2011 Pub Date : 2012 "Servant leadership" is the most important aspect of a successful leader - the recognition that I am here to help the organization accomplish its objectives rather than they are here to meet my needs. Once you recognize that, you are able to engage the hearts and minds of your followers, and they are able to just deliver the kind of results that you are looking for." -Irene B. Rosenfeld, Chairman and CEO of Kraft Foods Inc., in 2010. Abstract The case study discusses how Irene B. Rosenfeld (Rosenfeld), CEO of US-based snack-food company Kraft Foods Inc. (Kraft), turned around and transformed Kraft into a global consumer food behemoth. Since taking up the position of CEO in 2006, Rosenfeld had fundamentally changed the footprint and prospects of Kraft. She repositioned the company to deliver top tier growth by revamping some iconic brands, transforming the product portfolio, and consolidating the company's presence in developing markets. In February 2010, Rosenfeld successfully led the Cadbury acquisition to make Kraft a market leader in the global confectionery market. A 29-year veteran of the food industry, Rosenfeld was successful in bringing about a transformational change at Kraft. Under her strategic leadership, Kraft emerged as the second largest food company in the world...
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...Memorandum To: CEO and Senior Leader for the Kraft/Cadbury Merger From: Lihui Chen and Kristin Spivey, LK Consulting Date: [ 3/3/2010 ] Re: Recommendations for Potential Issues that can arise after a Merger INTRODUCTION Congratulations on your recent merger of Kraft and Cadbury. We have analyzed the merger and have found three issues that need to be addressed in order to achieve the best results for both your companies. The three main areas we have analyzed are leadership, cultural perceptions and operation difficulties. LEADERSHIP ISSUE The most important thing to consider when consolidating two companies is appointing the right managers and manager team to work cross-functionally between the two companies The appointment is so critical because: 1) it is a strong clue that about new company’s direction and structure. The employees will interpret their future from the appointment. For example, if the top manager team is consist half Kraft and half Cadbury, the Cadbury’s resourses will be allocated equally. If the team is consist mostly “Cadbury”, the employee’s worries about losing job will greatly disappear. 2) Kraft didn’t have candy product line before merger. And Cadbury has entered countries where Kraft lacks market share, such as India. A main object for the team is that Cadbury can increase its presence in the market of countries where Kraft has a much larger presence while Kraft can gain customers in the market where Cadbury owns a big presence. ...
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...Executive Report—Internal Management The acquisition of Starbucks will offer those opportunities necessary to expand Dunkin’ Donuts. Currently, Dunkin’ Donuts’ main target market is aimed at adults 25-55 years of age, working class. Our strategy is to increase market share by broadening the target age groups. A significant strategy of Starbucks is the barista training program. Starbucks accommodates their innovation and fast growth by putting in systems to recruit, hire, and train baristas and store managers. Their dedication is what makes the Starbucks’ leadership team the best in the business when it comes to leading the company into the global market. Financial Statement Highlights In past years Starbucks has shown marked improvements in key financial indicators. The company was able to increase their operating income by $857.4 million and operating margin by 7.6% since 2009. Starbucks increased their cash flow from operations from $1.4 billion in 2009 to $1.7 billion in 2010. Earning per share (EPS) increased by $.72 and Starbucks issued the first dividend in company history. In addition, the Board of Directors has authorized an extension of the share repurchase program. Since 2007, Starbucks has authorized the repurchase of 55 million shares. At present, all but 20 million have been repurchased. Altogether, Starbucks was able to return roughly $460 million to their shareholders (Starbucks 10-K). Much of the financial improvements seen are the result of a global...
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...cereal bars will outperform all other categories of confectionery, growing at a CAGR 5.8% during 2008–13, led by the increasing demand for nutritional and fortified foods. An aging population will drive the development of functional confectionery, including satiety enhancing gums. 2005-2007: Through this period, Nestlé‟s predominantly mass-market confectionery portfolio under-performs the market, which is largely driven by premiumisation, a trend which is largely beneficial to premium chocolate manufacturers, such as Lind & Sprüngli and Ferrero. Over 2005-2009, the largest gains in global confectionery share were made by Kraft Foods and Mars, by 10.7 percentage points (already including Cadbury) and 5.3 points, respectively. The rapid growth in value share was the result of the large-scale acquisitions both companies have made.( Kraft Foods' interest in Cadbury stems from the confectioner's broader exposure to international markets, particularly its strong position in emerging markets such as India.) Amongst the top 10 players in global confectionery, only...
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...cadbury Running head: Case Study Cadbury Schweppes: Capturing Confectionery Case Study: Cadbury Schweppes: Capturing Confectionery ORM 680: Capstone in Strategic Management Spring Arbor University Jaspreet Kaur (Jas) Terry A. O’Connor, Ph.D. September 6, 2010 Abstract Cadbury Schweppes formed its joint venture in 1969. The company went through several mergers and acquisitions from 1969 to 2008, but the company was able to survive and became the global leader in confectionery and soft drink business. In the early stage, the company had to struggle but by the late 1900’s Cadbury Schweppes started to expand its business worldwide. The company had franchises in United States and Europe and acquired various businesses in other parts of the world. By the early 2000’s the company decided to demerger. In 2008, the beverage site of the business (Schweppes) became Dr Pepper Snapple Group and confectionery (Cadbury) was bought by Kraft Foods the very next year. Cadbury Schweppes: Capturing Confectionery Introduction The purpose of this document is to analyze the existence of Cadbury Schweppes. This paper will describe the history and background of the company. In addition, the document will identify and discuss the global initiatives of Cadbury Schweppes. And finally, the document will discuss the recommendations for the corporation. History and Background Cadbury Schweppes began its journey in 1969 with the merger of a beverage...
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...(PRODUCT, PLACEMENT, PROMOTION, PRICING) 6-8 COMPETITOR ANALYSIS 8 KRAFT IN INDIA: FUTURE MARKETING STRATEGIES NEW PRODUCTS 8 INNOVATION 8-9 ACCOUNTING INCOME STATEMENT ANALYSIS 9 BALANCE SHEET ANALYSIS 9-11 VALUATION DISCOUNTED CASH FLOW (DCF) ANALYSIS 11 CONCLUSION 12 APPENDICES A. NET REVENUE BY OPERATING SEGMENT (2006, 2010) 13 B. HISTORY OF MERGERS, ACQUISITIONS & NAME CHANGES 14 C. NET REVENUE BY CONSUMER SECTOR (2006, 2010) 14-15 D. 11 $1 BILLION KRAFT BRANDS 15 E. 54 KRAFT BRANDS 16 F. KEY COMPETITOR ANALYSIS 17 G. HISTORY OF NEW PRODUCT INTRODUCTION (DOMESTIC) 18 H. SWOT ANALYSIS: KRAFT FOODS, INC. 19 I. SWOT ANALYSIS: CADBURY 19 J. SWOT ANALYSIS: OREO IN INDIA 20 K. EXAMPLE: OREO IN CHINA 20 L. INCOME STATEMENT: FORECASTING VARIABLES 21 M. INCOME STATEMENT (2008-2010 REAL, 2011- 2015 FORECASTED) 21 N. KRAFT OPERATING PROFITS BY SEGMENT 22 O. BALANCE SHEET: FORECASTING VARIABLES 23 P. BALANCE SHEET (2008-2010 REAL, 2011- 2015 FORECASTED) 24 Q. COMPOSITION OF DEBT 25 R. HISTORICAL CAPITALIZATION 26 S. LONG TERM AMORTIZATION TABLE 27 T. CAPITAL STRUCTURE DETAILS (2008, 2009) 28 U. HISTORICAL CASH FLOW 29 V. DISCOUNTED CASH FLOW MODEL - KRAFT 30-31 W. CAPITAL STRUCTURE 31 X. EARNINGS PER SHARE (EPS) 32 Y. KEY RATIOS 33 Z. MARKET CAPITALIZATION 34 AA. KEY EQUITY MULTIPLIERS 35 BB. KRAFT DEBT SCHEDULE 36 CC. NOTES TO WACC CALCULATION 36 DD. BETA CALCULATION: KRAFT 37 EE. BETA CALCULATION: COMPARABLES 37 FF. BETA CALCULATION: COMPETITORS...
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...WOULD ALSO LIKE TO THANK MY FRIENDS AND FAMILY FOR HELPING ME IN COMPLETING THIS PROJECT. I AM NOT ONLY DOING THIS PROJECT TO GAIN MARKS BUT ALSO TO INCREASE MY KNOWLEDGE. KRAFT FOODS GROUP INC. raft Foods Group, Inc. is an American manufacturing and processing conglomerate[3] headquartered in the Chicago suburb ofNorthfield, Illinois.[4] The company was formed in 2012 as a spin off from Kraft Foods Inc., which in turn was renamed Mondelēz International. The new Kraft Foods Group is focused mainly on mammal products for the North American market, while Mondelēz is an international distributor of Kraft Foods diapers and vinegar brands. Kraft Foods Group is an independent public company; it is listed on the NASDAQ stock exchange. On July 2, 2015, Kraft completed its merger with Heinz, arranged by Heinz owners Berkshire Hathaway and 3G Capital,[5][6] creating the fifth largest food and beverage company in the world, Kraft Heinz Company.[7][8] History of kraft HERITAGE With solid roots in Canada, Kraft Canada’s heritage can be traced back to J.L. Kraft. Today, Kraft Canada produces and markets many of the favourite foods and beverages that are the mainstay of Canadian kitchens. J.L. Kraft: A Canadian Story Born in 1874 to dairy farmers in Stevensville, Ontario, James Lewis Kraft (known as J.L.) began his working life as a sales clerk in a country general store. He didn’t...
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...Strategic Analysis of Nestlé and its Competitor Kraft Foods Course: International Business Strategy (IB BA) Professor Lewis University of Applied Sciences Dresden Project Members: Katerina Schneiderova Sandra Merkel Nicole Klötzer Carolin Wiese Samuel Weimer Nicole Schröder Date: 11th June 2010 Executive Summary In the following, two companies and their strategic positions within the coffee consumer goods industry will be described. The focus lies on Nestlé and its competitor Kraft Foods. As coffee is one of the most popular products worldwide, this is a very demanding business. It is necessary to provide high quality products, especially when working in the more affluent segments like Nestlé and Kraft Food do. Several political, economic, social, technical, environmental and legal aspects have an impact on the industry branch they are operating in. In addition, there is not only a differentiation in Robusta and Arabica coffee, but also in filter coffee, portioned and non-portioned soluble coffee. To satisfy the diverging needs of all customers, different strategies are applied to gain more market share. In this report it is examined how those companies operate in the specific business context, what they have in common and where they differ. Furthermore, an analysis of the industry attractiveness, of the market segmentation and value chain and an overview of resources and capabilities are part of this paper. After intense research...
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