The Kraft Turn-Around

The Oreo bicycle campaign in China was the idea of local managers, which Rosenfeld characterized as “a stroke of genius that only could have come from local managers. ” She stated that local managers’ opportunities to address local conditions will be “a source of competitive advantage” for Kraft. Do you agree? I believe that Rosenfeld’s primary goal in making these statements were aimed at strengthening her strategic thrust of enabling local responsiveness by strengthening Kraft’s values of supporting front line innovation, and empowering workers at all levels.

The Kraft China website lists these values in these words: We inspire trust. We act like owner. We keep it simple. We are open and inclusive. We tell like it is. We lead from head and the heart. We discuss. We decide. We deliver. (1) Could the Oreo-bike-wheel idea have possibly come from some other source? Yes, but they also say that give an infinite number of monkeys an infinite number of typewriters and sooner or later, one of them will type the collected works of William Shakespeare.

But if you do not have infinite resources and can’t afford to wait, using people who understand the local culture, history, habits, and trends will find something brilliant much faster than taking the infinite number of monkeys approach. Is using empowered local managers a competitive advantage? At this point in time I would say yes. But this is a time-limited advantage. More and more companies have found that expat management is not a high success percentage path. According to research by Black and Mendenhall (1990), 16% to 40% of expatriate managers terminate their overseas missions ahead of time due to poor performance or mal-adaptation.

Furthermore, 50% of them are unable to return to their original positions because of poor performance (Black and Mendenhall, 1990). In addition, based on a study of more than eighty transnational corporations, researcher Tung pointed out that in more than 40 companies, 10% to 20% of expatriate managers were repatriated or dismissed due to their inability to effectively carry out assigned missions (Tung, 1982). Numerous studies have attempted to pinpoint the exact reasons for failure in order to develop solutions that counteract these problems, boosting success rates and developing strategies to avoid failure (Hall and Yeaton, 2008).

In my experience, many multi- and trans- national companies put people on an expatriate assignment with little expectation other than they become acclimatized to the uniqueness of the local market. Especially in the Asia-Pacific region, I have seen many expats ‘pay their dues’ on their way up the corporate ladder, but personally view their time abroad as an extended, company paid vacation. Could it be that companies see the long term value of this cross-cultural exposure has value well beyond any immediate performance during the expat assignment?

Kraft’s strategy for future global growth involves a limited number of markets and products and focuses on going only where management believes the company can win a market share. How does this strategy align with Irene Rosenfeld’s restructuring plan? The restructuring described in the text certainly does appear reflect a strategy to focus on a portfolio including fewer product categories and markets. The worldwide restructuring includes encouraging mature market growth in addition to emerging markets where larger growth may be possible.

In a recent interview with the Wall Street Journal, Rosenfeld noted 2008 figures of 3% growth in Europe, 5% in the US, and 28% in emerging markets (2). The strategy includes dropping certain product/brand types/markets and replacing them with others, eg. trading Post Cereals and Cream of Wheat for a the French cereal and cookie firm Groupe Danone. REFERENCES (1) Accessed from http://www. kraftfoodscompany. com/cn/en/about/values. aspx (2) Accessed from http://online. wsj. com/ad/article/wbf-rosenfeld Black, J. S. and Mendenhall, M. 1990), Cross cultural training effectiveness: A review and theoretical framework for future research, Academy of Management Review, 15(1), 113-136. Hall, N. & Yeaton, K. (2008), Expatriates: Reducing failure rates, The Journal of Corporate Accounting & Finance, March/April, 75-78. Tung, R. L. (1982), Selection and training procedures of U. S. , European, and Japanese multinationals, California Management Review, 25(1), 57-71. Essentials of Business Development 2, BUS5602 2nd Edition Edited on Saturday, November 24, 2012 – 6:37 PM