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.
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