ENVIRONMENT

Environment Analysis - Kraft Foods



Environment Analysis - Kraft Foods

Introduction

Strategic Management allows any organization to conduct its business in a radically different way beyond the traditional boundaries. In fact, strategic management enables a company to conduct environmental analysis that further enables a company to meet business challenges in order to meet customer demand and gain competitive advantage in its competitive landscape (Andriopoulos & Dawson, 2008). Kraft Food is recognized as a well-known and popular grocery manufacturer and processing company in the UK. It is also important to know that company's main customers are simple domestic audience. In fact, Kraft Foods can be seen as one of leading producers, sellers and distributors of grocery, dairy products and other food items. In addition, company's brand strategy is to increase the customer base putting emphasis on the product promotion with creative marketing strategies (Kraft Foods, 2011).

In order to understand the industry environment, it is vital to use Five Forces Model. As far as external environment is concerned, the external analysis is an important component in the strategic thinking process that causes the organization or the senior management to develop new strategic options or take away from the everyday operational problems (Morrison, 2011). The suggested procedure to conduct external analysis includes PEST analysis.

Discussion

PEST Analysis

PEST analysis is a useful tool for understanding the growth or decline of a market, and therefore, the position, potential and direction of a business. It is a measurement tool business (Henry, 2008). PEST is composed of the initials of political, economic, social and technological used to assess the market where there is a business or unit. The PEST analysis of Kraft Food will allow the company to understand the external environment and industry situation in order to develop its growth strategy.

Political Environment

No one can deny the fact that there are some political values and system in every country of this world (Palmer & Hartley, 2011). The UK has established political environment where uncertainty it low in comparison of other countries. In addition, the government intervention in businesses is also very low that provides a healthy business environment. Further the taxation and other government tariffs also provide benefits to not only businesses but consumers as well. However, import/export policy may affect the businesses in the UK due to legal or human rights issues with other countries. In fact, it would not be wrong to say that the political situation of the UK market is conducive for Kraft Food to invest enough in order to manufacture and promote its products.

Economic Environment

The role of economic policies of a country is very important in foreign investment as any economic policy and business activities affect the local market of that country (Hitt et al., 2012). Fortunately, the business environment for Kraft Food is also very good in the grocery industry as there are considerable opportunities for the company to invest in the market and grow in the region. In fact, the grocery market is an increasing place where many foreign as well as local companies are ...