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Kraft Foods
Using planning analysts at the center of brand development
Summary Concepts:
Business, planning, planning analysts, Kraft, brands, market, managers, plans, goals, Finance, accounting, forecasts, consumer, supply chain, support.
Summary:
In a competitive market, the organisations most likely to meet their objectives are those that are capable of leading rather than following changes within that market. Managers therefore need to build a business that is capable of responding quickly to changes in both consumer requirements and the business environment. This case study illustrates how Kraft Foods' management accountants act as financial planning analysts to support the process of brand development. The study highlights how Kraft's forward planning and supporting processes of investment/forecast analysis supports its core brands in a fast-changing market place. In order to achieve the corporate goals, Kraft employs accountants in planning analyst roles who work within customer and consumer marketing teams. Kraft encourages its financial managers to take qualifications such as those provided by the Chartered Institute of Management Accountants (CIMA), a professional accounting body. To support these goals, Kraft has established a set of core values that help to guide employees. Kraft concentrates on the innovation and rapid development of these Power Brands, with a view to having new, exciting products 'out there, now'. The planning process involves using the budget to co-ordinate the whole business, including operations and organisations within its supply chain.
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Kraft Foods printed from The Times100 website: www.tt100.biz Having created an operating plan within the annual planning cycle, a business must monitor the plan to ensure that targets for growth, sales, profitability and cashflow are met. Using their analysis of variance between actuals, plans and forecasts, planning analysts work with the business teams to develop suitable plans of action. Managers work with the business teams involved with the supply chain and various marketing departments to co-ordinate their spending and investment programmes. In order to meet Kraft's business objectives, its planning analysts work with other financial managers to ensure that transactional accounting and financial controls work efficiently.
Introduction
In a competitive market, the organisations most likely to meet their objectives are those that are capable of leading rather than following changes within that market. Managers therefore need to build a business that is capable ofresponding quickly to changes in both consumer requirements and the business environment. This means not only constantly developing innovations but also being able to launch them into the market place. Successful organisations consist of different people united in a common purpose or corporate goal. Within every organisation the key element in keeping people focused is a corporate strategy that builds the business so that it can adapt and move forward through time. In order to change, a business must plan ahead so that the actions of each of its parts fit together and are co-ordinated to meet the corporate goal. This case study illustrates how Kraft Foods' management accountants act as financial planning analysts to support the process of brand development. The study highlights how Kraft's forward planning and supporting processes of investment/forecast analysis supports its core brands in a fast-changing market place.
Planning analysts
The word 'accountant' conjures up the stereotype of somebody sitting in a office, often on their own, inspecting and auditing books, from which they produce historical financial reports. In a fast moving commercial environment such as that at Kraft, the difference could not be starker. In order to achieve the corporate goals, Kraft employs accountants in planning analyst roles who work within customer and consumer marketing teams. The role of planning analysts is to: * help decision making processes
* provide detailed value added analysis rather than accounting reports - i.e. why? rather than what?
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Kraft Foods printed from The Times100 website: www.tt100.biz
* help the brands to deliver value for customers, yet at the same time develop their distinct position within the market place * * enable the teams to understand events and trends help teams plan for the future. For example, this role involves 3 types of planning:
1. forward - strategic planning for the long-term future of the business 2. budgeting - setting and managing budgets across the business 3. forecasting - managing the business and making sure that activities meet annual and quarterly forecasts. The demanding role of a planning analyst is supported by a process of professional development. Kraft encourages its financial managers to take qualifications such as those provided by the Chartered Institute of Management Accountants (CIMA), a professional accounting body. It actively supports their learning through paying for courses and adopting a flexible approach to allow managers to balance their workload and their learning.
Corporate goals, vision and strategies
The starting point for planning is to set a corporate goal or target. With this, a business sets out a vision of where it wants to be and how it wishes to be viewed by others. The Kraft vision is to be recognised as the undisputed leader in the global market for foods. In pursuit of this aim, Kraft has devised strategies that are intended to ensure that: * * * * * * its products become consumers' first choice retailers and other customers view Kraft as an indispensable partner it is well placed to form alliances people are keen to work for the company it is viewed as a responsible business enterprise it is acknowledged as a high quality performer in its sector.
In order to achieve these goals Kraft aims to: * * accelerate the growth of core brands extend awareness of these brands into developing countries
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* * *
strengthen the portfolio of brands improve quality and service at the lowest cost develop company values that are supported by committed employees.
To support these goals, Kraft has established a set of core values that help to guide employees. These set out the aspects of its day to day operations that are vital in helping it achieve its goals. These values include: * * * * * * a strong belief in staying focused showing a willingness to innovate, demonstrating commitment moving quickly to reach and implement decisions practising teamwork demonstrating trust and confidence in fellow employees turning strong results orientation into a passion to win.
Within the context of this case study, these core values emphasise how it is essential that employees from all backgrounds and levels of experience work together to support the organisation's core brands. To achieve its strategies/objectives and ultimately its mission Kraft has structured its organisation in " Category Teams " to ensure a cross functional approach to its decision making. As a key member of this team the planning analysts physically sit within their teams to help communication and co-operation. This approach enables the planning analyst to be at the heart of the decision making process.
Managing the product portfolio
One of Kraft's aims is to ensure that its products become consumers' first choice. To achieve this, Kraft has identified and developed a range of distinctive key brands which are known within the company as its Power Brands. Kraft concentrates on the innovation and rapid development of these Power Brands, with a view to having new, exciting products 'out there, now'. The major element in managing and developing these Power Brands to ensure that they provide more value for consumers, is to use the experience of key managers to make important planning decisions about their future. Fixing tight deadlines for product
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Kraft Foods printed from The Times100 website: www.tt100.biz launches and then achieving those deadlines calls for careful, co-ordinated planning to ensure that the: * * * * * necessary production capacity is available marketing effort is ready sales and supply chain effort is ready funds to support the venture are in place whole exercise stays within budget.
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