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Pre-Acquisition Operational Evaluation

Reasons for Krafts Acquisition Decision

Johnson and Scholes - SFA Matrix
The suitability for the strategic choice will be determine through the assessment of the external
environment to identify opportunities and threats faced by Kraft before the merger.
Diagram 1

North American market low growth
Emerging markets and greater market share
Cadbury global presence in confectionery industry

Kraft had a history of diversifying its product portfolio and markets by merging and
acquiring other companies. http://www.reuters.com/article/us-cadbury-kraft-factboxidUSTRE60I1JI20100119 http://www.wsj.com/articles/SB125230432582989903 A major
portion of Krafts revenue come from the North American market, which had seen a significant
drop of 15% from FY2008 to FY2009. It would be very risky for Kraft to rely heavily in its North
American market when the region was predicted to experience a growth slowdown in the next
few years. Therefore, an expansion into the emerging markets will help hedge the risk. When a
new CEO was appointed in 2007, Kraft had undergone a three-years strategic plan to improve
the companys sustainable, long-term growth. This involved
Based on Euromonitors data included in Cadburys 2008 Annual Report, 60% of
Cadburys revenue growth was from emerging markets and the annual growth rate had been
going strong in the last five years. Cadbury ranked first
Cadbury had a growing presence in the emerging markets like Brazil, India and China.
was expected to provide greater access to new emerging markets like Brazil, India and China,
where Cadbury had a growing presence in those countries. It will enable Kraft to gain bigger

global market share and brand presence in the confectionery business.

http://www.nasdaq.com/article/emerging-markets-drive-krafts-chocolate-candy-market-sharecm57216 Cadburys reported revenue for the Asia-Pacific region in FY2009 represented 20.2%
of its total revenue, a 4.4% growth compared to the previous year. (Cadbury FS)

The strategy involved the restructuring of the business, sales of poor performing brands
and purchase of profitable business.
In addition, the introduction of a three-year turnaround plan by Kraft newly appointed
CEO in 2007, caused a shift in focus for its snack division. Krafts rivals in the confectionery
industry like Hershey and Ferrero had both expressed interest in Cadbury. If its bid for the
Cadbury was successful, the company will gain a competitive advantage among its rivals.

Feasibility: analysing the feasibility is concern with whether a strategy could be made to work in
practice and helps in the assessment of organisational, resources and competences to deliver a