Although Kraft is the second biggest Food Company in the world and it also needs to face a few non-financial challenges, such as labours, competition and consumer behaviour.
The Congress of South African Trade Unions (COSATU) called its members to boycott products manufactured by Kraft Foods in support of the 384 members of the Food and Allied Workers Union on strike. The legal strike began on June 9, 2006 after Kraft Foods Inc refused to negotiate or recognize the union. Demands of the workers include:
1. A 12 percent increase to all permanent staff.
2. Minimum wage to all workers.
3. Severance pay on retirement to be three weeks’ pay for every year worked.
4. End to racial discrimination in the company.
5. End to the victimization of union members (Co-op America, 2006).
Demand is related to eating trends and to the changing structure of the grocery industry. Profitability for individual companies is determined by efficiency of operations. Large companies have scale advantages in procurement, production, and distribution. Small companies can compete by offering specialty goods or superior local distribution services. Despite high automation, the low value of the product produces a fairly modest $150,000 in annual revenue per employee for commercial bakers (Hoovers, 2008).
Changes of Consumer Behaviour:
The consumers are increasingly moving to store from name brand as food prices rise and the US economy weakens. Bakeries supplying breads sold as a store's brand are likely to benefit. The nation's biggest grocers, including Wal-Mart, Kroger, Supervalu, and Safeway, report that sales of their own brands are rising (Hoovers, 2008).
Ethics and Governance:
Kraft has confirmed that it is no longer running advertisements suggesting that dairy products encourage weight loss. Some related group forced Kraft to stop their dairy food advertisements, because they realized that the ads were deceptive, such...