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.