Strategy Selection, Implementation, and Evaluation Kraft Heinz

Companies use the Qualitative Strategic Planning Matrix to determine which strategies are effective. The matrix is created using key internal and external factors drawn from the SWOT, Internal Factor Evaluation, and External Factor Evaluation matrix. This task will involve the creation of a QSPM matrix for Kraft and Heinz from key factors drawn from the SWOT analysis, IFE, and EFE matrices, to come three appropriate strategies for the company, as well as rank the strategies from the most important to the least important. In addition, the task describes the reasoning behind the strategy prioritization and the importance of the matrix in strategy formulation. In addition to this, the factors considered in analyzing and choosing among alternative strategies are described, and the procedures Kraft and Heinz should follow to implement the chosen strategies. The task will also adequately describe who, what and how to implement the strategies at the corporate, business-unit, and functional levels, procedures, framework, and tools for strategy evaluation and a corrective action plan at the corporate, business unit, and functional levels in case of the failure of effective implementation of the strategies.

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Alternative Strategy Selection

Companies use the Qualitative Strategic Planning Matrix to determine which strategies are effective. In developing this matrix for Kraft Heinz, a selection of three strategies the company is supposed to implement were selected directly from the SWOT matrix. In addition, the key internal and external factors related to the selection from the SWOT analysis were drawn from the IFE and EFE. The first strategy is product development. There is a need for new differentiated and healthier organic products to be added to the existing product lines. The second strategy is excellent customer service for increased sales and market penetration by promoting customer loyalty. The final strategy is advertising via the internet, which is more effective and cost-effective. After careful examination of each factor, a determination of the attractiveness score to indicate how much each strategy was attractive was made. The scores range from one to four, where one means not attractive, two means that the strategy is somewhat attractive, three shows that the strategy is reasonably attractive, and four indicates that the strategy is highly attractive. Each factor was also assigned a weight multiplied by the attractiveness score to get the total attractiveness score. The total attractiveness scores were all summed up to determine the importance of each strategy.

Cultural and Organizational Factors that Should be Considered in Analyzing and Choosing Alternative Strategies.

Some of the factors considered in analyzing and choosing among alternative strategies are the attitude of the management towards risk. Some are risk-averse which others have a high-risk appetite. This influences the choice of strategy. Another factor is the time dimension factor, where time pressure and time constraints can force the management to choose a strategy they would not have chosen if they had more time. In the same respect, another aspect here is the time frame where the management will consider a particular strategy’s long-term and short-term implications. For instance, managers may ignore long-term strategic considerations if they are compensated in line with short-run earning performance. Cultural factors include aspects such as cultural preferences. For instance, each international market will have different preferences for products, food, or even food quality levels. These cultural factors should be considered. For instance, the Coca-Cola Company has adapted the flavoring of Fanta to different cultures. It tastes like flowers in Japan, like passion fruit in France, and its peach flavored in Botswana. Different languages may also impact its advertising strategy. Religious beliefs can also affect the company’s strategy. For instance, all major religions have holidays that include feasting, such as Ramadan among Muslims. Such holidays tend to be prime shopping seasons; hence the company can choose advertising campaigns during such seasons (Klingen, 2015). Culture also affects how different individuals make a decision, even in business. For instance, managers from Japan prefer cost-leadership strategies more than managers from the United States. Past strategies also influence current strategies. According to research, it is often difficult for organizations to change successful older strategies; hence, even if the management changes, the current strategies often stem from the older ones.

Strategy Prioritization

The strategies selected for the company include product development, customer service, internet advertising ranked from the most important. First, product development is critical if the company wants to stay ahead of the competition. The food industry is very robust, with a global packaged foods market valued at $2.1 trillion according to Statista as of 2015 (Zarling, 2018). The company faces competition from potent players such as Mondelez International and Nestle. These companies produce almost similar goods, making it easy for consumers to easily switch from one company to the other. In addition to this, due to the prevalence of lifestyle diseases, people favor healthier food alternatives. Due to this, even mass merchandisers like Target and Walmart are allocating less shelf space to the processed products by the company. This shelf space is being replaced by grocery retailers who are now stocking more fresh fare. Regarding new product development, the company needs to come to with products that are different from those of the competition and healthier alternatives. First, the company can differentiate its products through taste elevation, which involves enhancing the flavor and texture of their foods and making them taste better. It can also come up with more convenient, ready-to-eat, and nutritious snacks. In addition, the company should develop more fast preparation fresh products and indulgent desserts and a variety of drinks for both kids and adults.  New products will also enable the company to increase its market segment. For instance, the global baby food market is set to grow at a CAGR of 10% till the end of 2021 (CSI Market, 2021). The company should hence have more baby food products.

The second most important strategy for the company would be revamping its customer service. We have already discussed that the company operates in a highly competitive environment with close substitutes. This is why the company needs to have excellent customer service to maintain customer loyalty. Customer service is also crucial in getting feedback about the brand from customer feedback, enabling it to work on customer suggestions and solve customer problems leading to more customer satisfaction hence customer retention. Four strategies can be employed here (Overton, 2007). The first is seeking customer feedback, which can be done via emails for feedback or through telephone surveys. The company can also establish a complaint system for customers to raise their issues by establishing a web hosting service provider, SiteGround, which accepts feedback via channels such as live chat, phone, and tickets. The company should also hire a highly skilled customer service team and offer them more training, for instance, customer service skills such as excellent communication and empathy. It should also set Key Performance Indicators for the team. These KPIs should be constantly monitored using tools such as the Customer Satisfaction Score to measure customer happiness or the Net Promoter Score to measure the referrals and consider the first contact issue resolution rate. Finally, the company should develop an efficient CRM system to manage its interactions with customers (Overton, 2007). CRM enables the streamlining of processes, improved customer service, and a better relationship with customers. Via excellent customer service, the company will differentiate itself from its competitors, know what new products customers want, and improve their products. This will enable it to gain loyalty from customers of emerging markets, tap into emerging markets, retain the loyalty of existing customers and be ahead of the competition.

The final strategy for the company is the internet and online advertising.  Unlike traditional advertising, the company will stay ahead of the competition via internet advertising. First, there are no restrictions, such as opening hours in digital marketing, which is excellent for brand engagement and optimization. It is also cost-effective, and the company will not have to spend millions of dollars on promoting its products.  These funds can be channeled into the research and development of new products. In addition to this, one post will be seen by millions in seconds worldwide, giving it an excellent avenue to communicate about its new products and also know what new products people may be interested in. Even the people who do not buy immediately may later turn into customers (Fritz, 2009). Via different algorithms of the internet, online advertising targets people who are more likely to buy the products, making it easier for online display ads on social media sites such as Twitter, Facebook, and Twitter Ads to reach the target audience of the company. Finally, with the help of online analytics tools, the company can know which strategies are working. The company can also analyze customer data such as keyword data enabling it to track how effective its campaigns are hence pointing out areas of improvement. In this regard, its internet market advertising strategy can involve search engine marketing to promote its website, increasing traffic to its online pages and website. Search Engine Marketing will also allow it to reach customers that conduct search questions related to the company (Fritz, 2009). Finally, the company can generate traffic using media such as external links on other websites, email marketing campaigns, and social media.

Strategy Selection: Qualitative Strategic Planning Matrix (QSPM Matrix) and its Value

KEY FACTORS	WEIGHT	PRODUCT DEVELOPMENT		CUSTOMER SERVICE		INTERNET ADVERTISING
OPPORTUNITIES		AS	TAS	AS	TAS	AS	TAS
Demand for healthier foods	0.3	4	1.2	3	0.9	3	0.9
Emerging markets	0.2	4	0.8	3	0.6	4	0.8
Increasing demand for baby foods	0.3	4	1.2	3	0.9	4	1.2
Internet shopping	0.2	3	0.6	4	0.8	4	0.8
THREATS
Falling processed food demand	0.2	4	0.8	3	0.6	3	0.6
New Entrants	0.2	3	0.6	4	0.8	4	0.8
Low product differentiation	0.2	4	0.8	4	0.8	4	0.8
Intense Competition	0.2	4	0.8	4	0.8	4	0.8
Falling processed food demand	0.2	4	0.8	2	0.4	2	0.4
TOTAL	1.00		7.6		7.4		7.4
SUCCESS FACTORS
Customer Loyalty	0.3	4	1.2	4	1.2	4	1.2
Advertising	0.2	4	0.8	4	0.8	4	0.8
Brand Reputation	0.3	4	1.2	4	1.2	4	1.2
Strong online presence	0.2	4	0.8	4	0.8	3	0.6
TOTAL	1.00		4.0		4.0		3.8
Total Attractiveness Score			11.6		11.4		11.2

 

As discussed above, the quantitative strategic matrix is an essential tool in evaluating strategies that a company can implement. The QSPM is important because, first, it provides an organization with a framework with which it can use to prioritize different strategies. It is also objective as it uses the numbers obtained. For instance, using the QSPM analysis is above, the different strategies, product development, customer service, and internet adverting have total attractiveness scores of 11.6, 11.4, and 11.2, respectively.

Recommendation for the Best Strategy

The most crucial strategy for the company would be to develop new, more differentiated products, make its customer service more efficient, and revamp its internet advertising. In addition, the tool enables the company to get the correct strategies to implement as it uses both the external and internal factors that affect the company. Finally, it enables companies to consider their strategies simultaneously and sequentially.

Strategy Implementation

There are six significant steps in implementing different strategies for an organization. The first step is defining the strategy framework and communicating it to everyone. This means that the strategy should be embedded in everything the organization does. It should be in the DNA of all the employees such that if you randomly ask one of them about the strategic objectives, everyone is on the same page. The second step involves building a plan for the implementation (Klingen, 2015). This involves first gathering the company’s leadership, such as the directors, to ensure that they agree with the vision. This also involves the leadership deliberating on what areas need to be addressed to implement the strategies. For instance, the company is supposed to develop new products. For instance, the leadership may determine that more budgetary allocations need to be made towards research and development. A specific focus area can also be assigned a member in the leadership team who is supposed to inform the rest of the team and spearhead the team towards achieving the objectives associated with that area. For instance, the marketing team may be charged with researching consumer preferences, new products, and information about the competitors. The third step is defining the key performance indicators, which keep the management honest about the progress and assist the management in defining if the objectives towards the implementation of different strategies are being met. The KPIs should be simple and relatable to all the company members. In addition, at least one KPI should be chosen for each strategic objective. Finally, Key Performance Indicators should not be all about money. Profit may be the end game for the company, but KPIs should drive revenue. Examples of KPIs for the internet advertising strategy would be the number of people who visit the company’s website per month or total Google searches for the company’s keywords. The fourth stage would be deciding the strategy rhythm, which includes matters such as how often there will be meetings to discuss progress, the people who will meet, and the structure of such meetings, including the reports that will be used. The company can, for instance, organize monthly meetings referred to as “Strategy Checkpoints,” which can be followed up with quarterly all-staff sessions. The fifth step involves the implementation of consistent and straightforward strategy reports.  The reports should offer information at a glance about how the strategies are progressing, ensure all employees know what they need to do before meetings, ensure that the reports include the individuals spearheading each goal and those who are getting things done. Finally, the reports need to include an overview of how the strategy looks and the progress over time. The final step is linking performance reviews to the strategy (Klingen, 2015). An easy way to get started with this is to create a formal link between strategy and performance reviews. Nothing shows people how important strategy is more than when it impacts their reviews and potentially even their reward/remuneration.

Who, what, and how to implement the selected strategies at the corporate, business-unit, and functional levels.

When it comes to strategy implementation, there is the corporate, business unit, and the functional level. The corporate level is the highest, defining the company’s primary purpose. Corporate-level strategies focus on the company’s long-term profitability via managing operations in multiple businesses. An example of a corporate-level strategy for Kraft and Heinz would be the merging of Kraft and Heinz in 2015. Before, 61% of the total sales from Heinz were from the international market, while 98% of the sales of Kraft were from the domestic market (Klingen, 2015). For instance, for more product development, a corporate-level strategy would be merging with other companies that make baby food products or organic plan products. This can lead to competitive advantages and a more significant market share. These strategies are spearheaded by the company’s top management, such as the Chief Executive Officer and the board of directors. Strategies are formulated for the specific business units at the business unit level. For instance, an example of strategy in product development would be the differentiation of its products, such as making its packaging biodegradable or more attractive. Here strategies are implemented by the company’s top managers, such as the brand managers. Finally, functional level strategies are related to the different functional areas of the business, such as marketing, production, and human resources. For instance, in line with the product development strategy, at the functional level, an example of a strategy following the differentiation strategy at the business unit level would be opening retail outlets that specifically sell products of Kraft and Heinz to sell its differentiated goods. This is spearheaded by managers such as marketing managers, distribution managers, and human resource managers. Regarding the strategy evaluation, the same leaders in the three levels discussed above conduct the strategy evaluation.

Procedures and framework and tools for Strategy Evaluation

Strategy evaluation is when managers ensure that a strategy is implemented correctly and meets the intended objective. The framework for strategy evaluation has several steps, the first being fixing a performance benchmark. Both quantitative and qualitative criteria can be used to assess performance. The second step is measuring performance, where the benchmark and actual performance are compared. During this step, managers are supposed to create variable objectives against which to measure performance measurement. Financial statements such as balance sheets should be prepared to measure performance (Klingen, 2015). The third step is analyzing variance after comparing actual and standard performance. The company needs to define the degree of tolerance between the acceptable variance between the standard and actual performances. Here, it is imperative to assess the causes of negative deviations. After this, there is a need to take corrective action, for instance, reframing the plan. Other tools of strategy evaluation include Gap analysis which enables an organization to identify the gaps in the organizations that impede the successful implementation of a strategy. This is done by comparing the organization’s current state to where it needs to be in the future, after which actions to bridge this gap are created. Another tool is the VRIO analysis which identifies the organization’s resources that give it a competitive advantage. It enables the organization to identify and categorize its resources based on whether they assist in achieving the current strategy.

Discuss a corrective action plan (including who, what, when, and how) at the corporate, business unit, and functional levels.

A corrective action plan refers to a plan used by an organization to resolve undesired outcomes, such as failure to achieve strategic goals by a company. Corrective action plans improve efficiency and lead to cost-effective error correction ways. The first element of a corrective action plan is defining the problem and the root cause of the problem, which enables the team to know what to do (Klingen, 2015). This results from resources such as audit reports and customer complaints. It also includes what needs to be done to correct the problem, metrics for completion. For instance, despite developing new products, having excellent customer service, and advertising on the internet, the company’s sales may not increase in a particular region. To increase the market share in this region, the board of directors of Kraft and Heinz may decide to acquire or merge with another company in the area with a significant market share. When it comes to the business-unit level, Kraft Heinz may discover that it is not making sales in a particular region. It may then do research and discover that its strategy of selling, say, a product with beef in India is resulting in low sales in India due to the culture there. The corrective action plan here will be implemented by developing new products for the region, with the approval of the brand manager, for instance (Klingen, 2015).  When it comes to the functional levels, the customer service representatives may lack the necessary skills to serve customers leading to negative feedback. Here, the human resource manager will intervene to offer more training in customer service and make sure they all meet the set Key Performance Indicators.

Conclusion

In conclusion, a Qualitative Strategic Planning Matrix was created to determine effective strategies. In developing the matrix for Kraft Heinz, key internal and external factors are drawn from the IFE and EFE matrices. The strategies selected for the company include product development, customer service, internet advertising ranked from the most important. Product development is critical if the company wants to stay ahead of the competition. This is also due to consumers shifting to healthier food alternatives and the growing baby food market. The second most important strategy for the company would be revamping its customer service. The company needs to have excellent customer service to maintain customer loyalty hence retaining them. This can be done by seeking customer feedback via emails and telephone surveys. The company should also establish a complaint system where customers can raise their issues and establish a web hosting service provider, SiteGround, which accepts feedback via live chat phone and tickets. The final strategy for the company is internet and online advertising. In addition, there was a description of the value of the QSPM analysis for strategy selection which includes the fact that it provides an organization with a framework with which it can use to prioritize different strategies. It also enables the company to get the correct strategies to implement as it uses both the external and internal factors that affect the company. In addition, the cultural and organizational factors to be considered in analyzing and choosing among alternative strategies have been described. These include the risk appetite and culture of the management, the culture in the target markets, the time dimension factor. In addition, there was a description of the procedures for strategy implementation. These include defining the strategy framework and communicating it to everyone in the organization, building a plan for the implementation, defining the key performance indicators, deciding the strategy rhythm, which includes matters such as how often there will be meetings to discuss progress, and linking performance reviews to the strategy. The task also described who, what, how, and how to implement the selected strategies at the corporate, business unit, and functional levels. Corporate-level strategies focus on the company’s long-term profitability via managing operations in multiple businesses. Strategies are formulated for the specific business units at the business unit level. In contrast, functional level strategies are related to the different functional areas of the business, such as marketing, production, and human resources. Procedures and framework, and tools for strategy evaluation, which has several steps, has also been described. These steps include fixing a performance benchmark, comparing the benchmark and actual performance, analyzing variance after comparing actual and the standard performance, and taking corrective action, for instance, reframing the plan in case of an unfavorable deviation.

References

CSI Market (2021).Kraft Heinz Co (KHC). Retrieved from https://csimarket.com/stocks/compet_glance.php?code=KHC

Fritz, W. (2009). Internet-Marketing und Electronic Commerce. Wiesbaden: Gabler.

Klingen, J. S. (2015). Company strategy: A managerial approach. Westmead: Saxon.

Overton, R. (2007). Customer Service. Murwillumbah: Martin Books.

Zarling, P. (2018). Kraft Heinz gives legacy brands a healthy make-over to stay relevant. Retrieved from https://www.grocerydive.com/news/grocery–kraft-heinz-gives-legacy-brands-a-healthy-makeover-to-stay-relevant/533765/