Ch. 4: Intellectual Assets and Competitive Advantages

Because Kraft-Heinz Company does business in the Food Processing industry, intellectual property, such as patents and trademarks on the Company's products, is essential to ensuring key products are not copied and for building brand (and product) loyalty. According to the Company's most recent annual report, "Our trademarks are material to our business and are among our most valuable assets." Some of the most recognizable trademarks include Kraft, Oscar Mayer, Heinz, Jell-O, and Lunchables. By consistently providing quality products under these brand names, Kraft-Heinz Company has been able to build trust and capitalize on customers' brand loyalty - clearly a key competitive advantage in the Company's respective industry. 

Ch. 3: Internal Analysis and Decision Making

Internal analysis can provide companies with key information as it typically uncovers the source problems and areas for improvement. After Kraft and Heinz's merger in 2015, the new Kraft Heinz Company had to take a deeper look at what was going on within the organization and identify core business strategies. Management wanted to keep the cost of their products low in an effort to remain competitive in the packaged food industry. To do that, the Company adopted zero-based budgeting.

Zero-based budgeting (ZBB) is a method of budgeting where all expenses must be justified. According to Investopedia, "zero-based budgeting allows top-level strategic goals to be implemented into the budgeting process by tying them to specific functional areas of the organization, where costs can be first grouped and then measured against previous results and current expectations." In short, implementing ZBB will enable Kraft-Heinz Company to identify where all expenses are coming from, ultimately helping the Company conduct further internal analysis to determine where costs can be cut in order to keep product costs low. After the ZBB data is collected, the Company will have to make a decision and implement a strategy on how to keep costs low in the long run.

Ch. 2: Competitive Advantages Derived from the External Environment

Kraft Heinz Company has a strong global presence, and thus is subject to a variety of external environmental factors. In the United States, however, the packaged food industry has recently been affected by changes in consumer demand as consumers look for healthier options and avoid the heavily processed foods that were once steady revenue drivers for companies like Kraft Heinz. Kraft Heinz Co. is adjusting to the new trend and creating competitive advantages by introducing products that emphasize natural and organic ingredients.

To appeal to the ingredient-conscious consumer, Kraft Heinz has introduced an organic version of their Capri Sun fruit drinks. The company has also been proactive at removing all artificial flavor, colors, and preservatives from Kraft Mac & Cheese dinners. According to an article published by Triblive, the Tribune-Review Newspaper of the Western Pennsylvania/Pittsburgh Area, "the world's fifth-largest food and beverage company has surprised some observers with early success lifting sales during a challenging time when many of its peers have struggled to find growth." It is evident Kraft Heinz's strategic decision to introduce new 'healthier' products has proven to be effective.  I believe the Company has done an excellent job thus far in adapting to and capitalizing on the new external environmental trends. By remaining cognizant of what is happening in the world around them, the Kraft Heinz Co. has planted the seeds for a potentially sustainable competitive advantage within their diverse product lines.

Ch. 1: Creating Competitive Strategies

Competitive strategies can be defined as a company's long term plan to gain a competitive advantage over its competitors within the company's respective industry. Prior to their merger, both Kraft and Heinz were in the 'Food Processing' industry, which is fairly competitive as there are a multitude of firms manufacturing and producing food products. To expand their market share and achieve their desired level of profitability, Kraft and Heinz strategically merged into Kraft-Heinz Company.

The Kraft-Heinz merger is considered a competitive strategy because synergies between the two merged companies were anticipated and generated. Prior to the merger, Heinz had a global platform with 61% of total sales coming from their international market. On the other hand, Kraft Foods generated 98% of total sales within North America. Combining the two companies was clearly a strategic move to maximize market share in domestic and international markets to ultimately boost revenue growth. In addition, management of both companies anticipated an annual combined savings of $1.5 billion by the end of 2017 due to economies of scale generated through the merger. Less expenditures due to synergies leads to higher profit margins per unit, strategically growing the company's profitability.

Introduction

The Kraft Heinz Company is the world's fifth largest food and beverage company. Co-headquartered in Chicago, Illinois, and Pittsburgh, Pennsylvania, the Company trades on the NASDAQ stock exchange under the ticker symbol KHC. Prior to July of 2015, Kraft and Heinz consisted of two individual companies, however the companies recently underwent a merger. Today, Kraft Heinz Company is a leader in the food industry, selling globally recognized brands such as Kraft Macaroni and Cheese, Oscar Mayer, and Kool-Aid. In addition, the Company is also a leader in the global community by focusing on fighting hunger and operating in an environmentally conscious manner. 

I chose Kraft Heinz Company to analyze and blog about because I feel their company values and missions align with my own. I also feel the Company has a competent management team that has proven they are capable of making strategic decisions. I recently read an article in Time Magazine stating how the Company opted to not air a commercial during the Superbowl, but to give all salaried employees a day off instead. To me, this decision signals that the company values their employees and is not afraid to make decisions that go against the grain. With the Company's decision being highlighted in the media, KHC is benefiting from positive publicity, was able to give their employees a day off, and saved millions of dollars in advertising costs. In addition to having a unique and interesting management team, I am looking forward to blogging about Kraft Heinz Company because I am a huge Heinz Ketchup and Kraft Mac & Cheese enthusiast.