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Resource Based View for Kraft Foods

In the background materials section of this module, we discussed the process and utility of conducting an internal analysis as a means of critically assessing a company's strengths and weaknesses. One of the tools discussed in the background materials was the Resource Based View (RBV) analysis.

Required Reading

Refer to the required and optional readings on Internal Analysis, the theme for this module.

Session Long Project

In this SLP, you will complete a modified RBV analysis of the Kraft Foods Company. You will incorporate this information into your Case analysis for this module.

Note: Throughout this course, you should complete the SLP before you undertake the case analysis. Before you begin the SLP, you need to read the background materials thoroughly.

Keys to the Assignment
Step One: Resources are the inputs into a production process. They can be capital, equipment, patents, skill sets of individual employees and/or managers, financial resources, etc. Resources can be tangible or intangible. Individually, they may not necessarily lead to a competitive advantage - it is how they are used and the synergies they create that make them strategically valuable. Give me as much information as you can find about the following as it relates to the Kraft Foods Company:

Tangible Resources
1. Physical Resources
2. Financial Resources
3. Human Resources
4. Other

Intangible Resources
1. Technical Resources
2. Intellectual Resources
3. Goodwill
4. Other (cultural, reputational, strategic alliances)

Step Two: Distinctive capabilities are those competencies possessed by a firm that cannot be copied or can be replicated only with great difficulty or resources. Determine the distinctive capabilities of the Kraft Foods Company as it relates to as many of the following as you can:
1. Architecture,
2. Reputation, and
3. Innovation.

Step Three: Provide the above information in a 4-page paper (not including cover page or references).

Tips and Suggestions
Remember: You may need to speculate to the extent that information is not readily available. Doing so is fine - so long as you rely on the theory and your analysis is logical.
Include a cover page and reference page, in addition to the 2-page requirement described above.
Include headings for all papers greater than 2 pages (basically all papers), but do not use headings as "space fillers."
Cite and reference all sources that you use in your work, including those that you do not quote but paraphrase. This means include citations and quotation marks for direct quotes of more than 5 words, and citations for that information which you have "borrowed" or paraphrased from other sources.
Follow guidelines for well-written papers.
Submit your analysis when it is completed.


Solution Preview

The importance of resources emerged in early 1990s with a purpose of achieving competitive advantage. The main essence of this model is that an organization should look within its internal environment to find sources of competitive advantage instead of just relying on competitive environment for it. In RBV model resources are emphasized as critical to organizations aiming for higher performance. RBV differentiates resources into tangible resources and intangible resources. Tangible resources are physical resources like land, building, machinery, equipment and capital. Intangible assets do not have physical presence but these are owned by the company for competitive position. Examples of intangible assets include reputation, goodwill, trademarks, intellectual property, etc. Unlike tangible assets, it takes a longer time to build intangible assets and for this reason these remain with the company and are main source of competitive advantage (Jurevicius, 2013).

Tangible Resources
Physical resources
The total assets for the company increased from $21,539 million in 2011 to $23,329 million in 2012. There are 37 manufacturing and processing facilities in the United States and 3 in Canada. The company has a widely spread capital base which spreads across 170 countries all over the world. Most recently the company acquired Cadbury PLC, which further strengthened the industry presence as compared to competitors.

Financial Resources
Kraft Foods has a strong focus on cash flow as a means to fund highly competitive dividend and reinvestment in people, innovation and brand-building. Net revenues for Kraft Foods in 2013 were $18.2 billion and net income before taxes was $4.1 billion. The company expects to be well positioned over the long term to deliver steady and reliable growth. Because of such backup of cash flow the company has capability of expansion ...

Solution Summary

This tutorial is outlining a RBV analysis for Kraft foods.