Ch. 9: Strategic Control and Corporate Governance

 Chapter 9 covered two main concepts: strategic control and corporate governance. By analyzing Kraft Heinz Company (KHC), examples of how each were implemented and how the company obtained competitive advantages through them can be found.

Strategic control is the process of monitoring and correcting a firm's strategy and performance. One way to do this is to focus on organizational culture. Organizational culture is a system of shared values and beliefs that shape a company's people, organizational structure, and control systems to produce behavioral norms. A variety of studies have proven that culture has a powerful influence on how an organization performs. To capitalize on corporate culture's effectiveness, KHC emphasizes a 'culture of ownership.' According to the company's website, "Our values of Ownership and Meritocracy are two exciting elements of the Kraft Heinz culture. They create an environment of empowerment unique to our company and provide high-potential employees with unlimited growth opportunity." By following through with this shared ownership attitude, KHC will be able to retain employees who feel valued, which will ultimately prove to be a competitive advantage.

Corporate governance is the relationship among various participants in determining the direction and performance of corporations. The primary participants are the shareholders,  management, and the board of directors. Having a CEO and a chairman of the board who are independent of each other can serve as a competitive advantage as they will both be able to positively serve the corporation and keep each other's actions in check. Having separate people in separate positions such as chairman and CEO is also a competitive advantage because all company stakeholders can be further assured no fraud or corruption is taking place. The current chairman, Mr. Alexandre Behring, was the previous chairman for Heinz company, prior to KHC's merger. KHC's current CEO is Bernardo Hees, prior to the merger of Kraft Foods Group and the H.J. Heinz Company in 2015, Mr. Hees occupied H.J. Heinz Company's CEO position since 2013. Although KHC may derive slight competitive advantages from having separate individuals in the CEO and board chairman positions, both Hees and Behring have similar work histories, and thus it is possible they are well known acquaintances, or even good friends. Although their expertise in the industry may also serve as a competitive advantage to the company, investors should also acknowledge their relationship may not be entirely independent.