In addition, it makes little sense to split out Canada as a unique reporting segment from the United States. The highly integrated economies, free flow of goods, near parity of currency and nearly identical product lines would indicate that there is little operational or strategic benefit to cutting Canada out from the United States. This may allow Kraft to rationalize production more, improving efficiency. The possibility of rationalizing production for Mexico should also be explored as that nation's economy becomes more integrated with that of the United States.

Conclusions

Kraft attempts to build share in its mature markets through a differentiation strategy. There is evidence, however, in the company's inefficiency and lower than industry averages margins, that the consuming public does not ascribe to Kraft the degree of differentiation that the company seeks. In order to improve efficiency, two steps can be taken. The first is to lower prices, spurring...
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