Organizational Components at Kraft Case Study

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Business

The Alignment of Organizational Components, Mission and Strategy at Kraft Foods

Organizational Components

Organizational Design

Key Strategic Controls

Primary Human Resource Concerns

Cultural Factors

Alignment of Organizational Components, Mission, and Strategy

Kraft Foods are a major North American Food manufacturer. The firm has a duel mission, to be the best food and beverage firm in North America selling products that people love and becoming the best investment in the industry. To achieve these goals and overcome, the challenges of the past, the firm has developed a new divisional structure based on products to increase the focus on the individual brands. The culture values the employees, and one of the main areas of focus is the R&D, with more than 500 staff employed in 2 R&D centers. The past culture of Kraft saw innovation associated with failure, this has now been turned around using an approach referred to "positive discontent', where disconnect of the past is used to stimulate ideas of change and improvement, and increased risk taking is encouraged. The risks themselves and movement towards the financial goals are ensured with the development of the planning analyst teams. Overall, there is a strong alignment of the firms' organizational components and the mission and strategy, but this does not mean there is no room for improvement. It is suggested more strategies to support innovation are adopted, such as innovation workshops and scenario planning based of consumer forecasts.

2.

Introduction

Kraft Foods is a major U.S. food manufacturer, known for many well-known brands, such as Jell-O, A1, Philadelphia, Planters, and Maxwell House, with most branding holding a leader or a second position in their markets, with 98% of U.S. households having at least one Kraft Foods product in their home (Kraft Foods, 2014). The company, which is described by Tony Vernon the CEO is made in 1903, and remade 2012, has changed significantly over the last few years. The company mission statement is to be "North America's best food and beverage company, and we'll get there by continuing to offer products consumers love, creating a performance-based culture that motivates and excites employees and becoming the best investment in the industry" (Kraft Foods, 2014).

These aims demonstrate the goal of the organization in terms of its performance the consumers, as well as for shareholders. In order to provide the superior performance demanded by organizations mission and goal, the organizational components need to be aligned with the strategy used to achieve those goals. The aim of this paper is to examine the organizational components, assessing the alignment of aspects such as the organizational design/structure, strategic controls, human resource focus, and organizational culture with the organizations goals. The high level of success in the organization, and changes which have been undertaken since 2011 in order to improve performance, may be hypothesized as placing the company in a strong position, facilitating alignment between operations and strategy, through the careful management of the various organizational components.

3.

Organizational Components

An organization is greater than the sum of its parts; when the various components are aligned to the organizational goals the potential for goals to be achieved increases exponentially (Mintzberg et al., 2011). Components may include the organizational structure or design, focus of the organization and controls.

3.1

Organizational Design

Kraft Foods has undergone significant change over the last few years. In 2012 is a significant change occurred with a demerger, which impacted on the structure of the organization, making it much smaller. However, the increased focus that resulted from the demerger and Kraft Foods remaining focused on North American market grocery products, was to be followed by further focus in 2013 (Retail Marketing, 2013). The company has since shifting towards a more divisional structure, where the divisions are autonomous business units, based on product type; the latest change being the division of the grocery division into two smaller units, the meals and desserts and the enhancers and snack products (Retailing Today, 2013). Where there are natural synergies between products, such as Jell-O and Cool Whip, they will remain together and other product categories that have been split in the past are brought together; such as Planters where the snacks and peanut butter have been brought together (Retail Marketing, 2013). The division structure may be argued as undertaken in an intelligent manner, linking similar and complimentary products, taking advantage of synergies, while empowering the divisions to focus on only a few brands. The firm is diversified, and the adoption of this less centralized approach towards brand management has the potential to create value with the increased focus and empowerment of the management.

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Increased empowerment is associated with increased motivation and productivity, and also creates a greater scope for innovation (Buchanan & Huczynski, 2010).

3.2

Key Strategic Controls

The firm has developed a number of strategic controls. The key elements of the firms' strategy have been distilled into a four part plan; to make people the firms' competitive edge, to execute with excellent, to turbo charge the iconic brands, and the redefine efficiency (Kraft Foods, 2014).

A key aspect has been the development of a team of planning analysts, which are made up of the firms' accountants. The team is involved in the assessment of new products, assessing the cost of launches and assessing if they can be produced within the budgetary limits. Planning analysts work with the firms goals to determine if new products will be able to meet the firms' goals (Kraft Foods, 2014).

The quality of inputs are controlled with the use of only predetermined list if suppliers, Food inputs for Kraft only come from 23 suppliers, this facilitates control over the supply chain and the ability to develop good relations with suppliers. This also allows for costs to be controlled as well as quality though the use of very specific contracts (Kraft Foods, 2014). These measures all appear to be aligned with the desire to increase value and create high returns with a financial focus.

3.3

Primary Human Resource Concerns

The desire to remain a leader in the industry, and the commitment to make people the firms' competitive edge indicates that HR resource concerns are a major consideration. The firm has a significant level on R&D, with more than 525 skilled R&D staff across two development centers (Kraft Foods, 2014). The focus on R&D is aligned with the goals, as the mission statement says the firm wants to be the best food and beverage firm, which means the firm, would need to continue to innovate and improve products. R&D may also be argued as potentially adding value with research into production methods and improving operations as well as simply focusing on products, this would also be aligned with the firms' mission and goals.

3.4

Cultural Factors

The organizational culture has been a weak point in the past, but the restructuring has created change. The past has seen the firm struggle with innovations at all levels, with the failures creating a culture where people do not want to try and avoid risk and claim there were too many barriers in place (Forbes, 2013). The view of the past was joining a Kraft Foods innovation team would kill the employees career (Forbes, 2013). The symptoms were typical of complacency. The organization has been changed using an approach referred to as 'positive discontent'. The aim was to leverage the dissatisfaction of the workers and turn it around so it could be used to find ways to innovate based in the existing areas of dissatisfaction, and encouraged increased risk taking (Forbes, 2014). The risk taking has been constrained with the planning analysts. The change in structure and increased empowerment has allowed this to take place, by breaking down barriers (Forbes, 2013). The culture is now moving to one where there is a greater acceptance of change and desire for innovation.

4.

Alignment of Organizational Components, Mission, and Strategy

The mission statement indicates the position the firm wants to attain and retain; being the leader in the North American food and beverage industry, with products people love and efficient performance. Notable, the firm also wants to be the best investment for investors in its' sector.

The main change has been in the stricture of the organization, which has reduced bureaucracy; a move that is often associated with increased efficiency (Mintzberg et al., 2011). The increased level of empowerment is allowing the divisions to focus in the brands they known and can specialize on the individual product categories; and may help with improving overall performance. Autonomy of the business units means decisions are made at a lower level, closer to where operations are taking place, this may improve the decision making process. The empowerment may also support increased productivity (Buchanan & Huczynski, 2010). Increased empowerment along with the ongoing investment in the R&D teams may also support a greater level of innovation, especially with the process of the 'positive discontent' to help generate change. These are all strategies which are highly aligned with the mission. The planning analysts also ensure….....

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