Analysis of Mondelēz’s Global Strategy

Mondelēz adopted an offensive strategy when Rosenfeld took the helm as CEO. Accordingly, Rosenfeld offensive served to ensure that Mondelēz remained a global leader in the industry. During this time, companies in the CPG industry focused on growing their international presence, creating brand value to end consumers through innovation and product positioning based on consumer insights on behaviour and perception, delivering value to their distribution channels and improving operational efficiency (Collis et al. 2018). To this end, companies expanded their presence in emerging markets, combined through mergers and acquisitions, concentrated on their power brands with aggressive marketing and promotion, curled smaller and non-performing brands, developed products to suit the growing demand for healthier and more natural products, pursued alternative sale avenues such as e-commerce, adopted zero-based budgeting and improved their attention to margins (Anwar 2015).

The current changes in the industry presented several threats to Mondelēz. First, the expansion into global markets, combinations through mergers and acquisitions and increased focus on power brands threatened to eat into Mondelēz market and product category leadership (George and Lorsch 2014). Besides, the industry’s response to consumer trends on e-commerce, health and wellness provided that Mondelēz failure to adopt would lead to a loss in customers and subsequently a decreased market share (Behk 2016). Finally, the industry’s increased focus on operational efficiency would mean that the companies would have a stronger financial base to leverage growth opportunities and hence threatening Mondelēz market leadership (Collis et al. 2018). Accordingly, against this backdrop, it is justified for Mondelēz to go global.

Rosenfeld decision to focus on snacking, impulse buying and focus on products with significant market shares was justified. First, snacking is a fast-growing sector that can allow for global scaling (Fernandez, Gupta and Vidyasagar 2016). Also, people buy snacks on impulse and hence snacking can increase rapidly with high disposable income levels. Therefore, with a rise in disposable income levels in emerging markets, a focus on snacking was justified. As regards products with a large market share, Mondelēz could easily leverage on their past success, reputation, brand visibility and brand consumer knowledge to grow them further (Hoffman 2010).

Hardest and Easiest Decisions

The hardest decision for Rosenfeld must have been the acquisition of Cadbury considering the value of the transaction and the differences in the firm’s organizational cultures. On the other hand, the easiest decisions must have been the Kraft spin-off owing to the apparent differences in the product portfolio and business models of Kraft and Mondelēz.

Regarding the difficulty in implementing the global strategy in Mondelēz relative to Zero Based Budgeting in Kraft Heinz, Rosenfeld had several difficult and expertise and time intensive considerations and decisions to make and implement. The going global strategy would require Mondelēz to understand several market dynamics such as the level of competition in the markets, the tastes and preferences, the disposable income and economic prowess, and the buying trends and culture among others (Henson 2016). Besides, the company would have to set up new distribution channels, set up new manufacturing units, and synergise their operations with those of the acquired firms (Thach, Unni and Abdelmeoety 2018). On the other hand, Zero Based Budgeting (ZBB) would mainly require the identification of key cost drivers and their levels of expenditure for cost-cutting.  

Corporate Strategy Sequencing

The strategy proposed by Rosenfeld would require resources such as finances, technology, plants, human resources, and distribution channels. Initially, Kraft had the funds; however, it had to sell its pizza business to make the Cadbury acquisition (Collis et al. 2018). Kraft also had staff but had to acquire some with a global exposure through its Cadbury acquisition. Kraft also set up new manufacturing firms and made developed new and existing distribution channels through the acquisition of Cadbury, Lu and United Biscuits.

The idea of re-launching Kraft as a global company was realistic to remain competitive in the market. Other companies in the industry at the time continued global expansion through mergers and acquisitions. Besides, Kraft’s shareholders demanded more value and margins and hence the need to go global (Collis et al. 2018). As regards the Cadbury acquisition, the acquisition was justified and strategic. The acquisition opened up distribution channels for Mondelēz in many markets to sell Cadbury’s products alongside Kraft’s other products. Besides, Kraft was ready for the acquisition as it had for a long time eyed Cadbury and only approached when the dollar devalued against the pound.

Rosenfeld decided to spin-off Kraft to concentrate on snacking. The spin-off consolidated related businesses and activities in specific geographical segments. Accordingly, the spin-off helped the execution of the global strategy by concerting efforts, products, and markets together towards a common purpose (McGee, Wilson and Thomas 2010). Regardless, the spinoff might hinder global expansion by reducing the size of the company’s portfolio and by reducing the company’s financial base.

There are several challenges that a manager may face while executing a spinoff. Among the problems is the re-allocation of resources to the two companies. A manager must strike a balance of how to equitably divide resources such as assets, finances, and employees amongst the companies according to their needs (McGee, Wilson and Thomas 2010). Also, the spin-off process should be seamless in transition to avoid possible conflicts from critical stakeholders.

In review, the CPG industry requires a financially robust, innovative and global company to survive as the industry has companies with strong asset bases, high revenues, and a strong worldwide presence and continuously innovate to meet the consumer demands (Forsgren 2017). As regards the changes made by Rosenfeld, they fit into her strategy to go global. However, Rosenfeld ought to have first streamlined the company’s operations and costs by using methods such as ZBB. Doing so would have, perhaps, saved Kraft from a spin-off and ultimate divestiture. The trade-offs managed included adopting some of Cadbury’s corporate culture despite a clash between Kraft’s North American finance focused culture and Cadbury’s England historic culture.

In conclusion, the aspects that would have been easier to change for corporate transformation relate to internal activities such as cost management and optimizing operations. However, Rosenfeld’s tenure as CEO concentrated with transformation aimed at increasing the company’s capabilities.

References

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