Managing in Troubled Times Case Study

Kraft: Deromedi’s Dilemma

OR

Abstract:
When Roger Deromedi (Deromedi) is brought on board as Kraft’s CEO in December 2003, all Kraft's flagship businesses -- cheese, biscuits, cold cuts, and coffee – are losing market share and sales volumes. Kraft, the icon of Oreo and Mac and Cheese innovation, has not launched a significant new brand since DiGiorno pizza in 1995. Deromedi has introduced a series of initiatives hoping to arrest falling profits. He is reinventing the brand portfolio and divesting laggard and peripheral product lines that account for less than 5% of total revenues and concentrating on blockbuster brands that are or can be market leaders in their categories worldwide. He has narrowed Kraft’s thrust to four core areas: coffee, cheese and dairy. To transform the portfolio, Kraft accelerates the shift towards growing categories and geographies where it can leverage its sustainable competitive advantages and scale. The October 2004 launch of the Tassimo is expected to give Kraft a chance to prove that it can be more than just a commodity broker.

Pedagogical Objectives:

• The case highlights how once considered a ‘category captain’, Kraft’s acquisition strategy, brand extension strategy and its product portfolio management has stagnated its growth.

Keywords : Market leadership; Growth; Managing in Troubled Times Case Study; Turnaround

Contents:

• Introduction
• Background
• Roger Deremodi's growth plan
• Alliance Strategy
• Looking ahead