Case Analysis
Kraft Food ‘s Oreo and China
Case Analysis
In order for a concern to be successful in another state besides the state that their concern is based out of, a concern must understand the market conditions of the peculiar state they are looking at puting their merchandises in. A market conditions that a concern must see when doing a move to another state includes that of how good their merchandise will make in another state. If a concern has non to the full analyzed this construct, so their merchandise may non make every bit good as they hoped for in that peculiar state and in all will hold an consequence on the overall gross for the concern. In this peculiar assignment, I will analyse the instance of the Oreo cooky manufactured by Kraft Foods and it acceptance into the state of China. The instance analysis of the Oreo cooky manufactured by Kraft Foods and it acceptance into the state of China will include a sum-up of the basic state of affairs described in the instance, a treatment of China’ market, a treatment of the alterations in China’s market place over the last 20-30 old ages, an account of the attempts by Kraft Foods to come in China’s market place, and a treatment of the of import factors that make entry into China’s market place challenging and potentially hazardous for Kraft Foods.
Basic Situation
Kraft Foods is one of the universe leaders in the production of drinks, bite nutrients, dairy merchandises, and nutrient ( Kraft Foods, 2011 ) . Kraft Foods began its company in the twelvemonth of 1903 in Chicago, Illinois ( Kraft Foods, 2011 ) . Kraft Foods has expanded its concern from Chicago to New York to international over the twelvemonth which has contributed much to the success of their concern ( Kraft Foods, 2011 ) . Kraft Foods began the fabrication of the Oreo cooky in 1912 ( Clement, S. , Jain, T. , Jose, S. , Koellmann, B, 2013 ) .
The basic state of affairs in the instance of the Oreo cooky manufactured by Kraft Foods and it acceptance into the state of China is how Kraft Foods did non expect the credence of their Oreo cooky in China to be unfavourable. Kraft Foods merely marketed their Oreo cooky in the United States until the twelvemonth of 1996 ( Clement, S. , Jain, T. , Jose, S. , Koellmann, B, 2013 ) . In the twelvemonth of 1996, Kraft Foods decided to market their Oreo cooky globally get downing in China ( Clement, S. , Jain, T. , Jose, S. , Koellmann, B, 2013, para 3 ) . However, Kraft Foods discovered that over the last 10 old ages, their Oreo cooky was non as favourable in China as it was in the United States ( Clement, S. , Jain, T. , Jose, S. , Koellmann, B. , 2013, para 4 ) .
The cause of this unfavourable accpetance of Kraft Foods Oreo cooky in China was chiefly due to the concern scheme of Kraft Foods. Kraft Foods decided it would be acceptable if they used the concern scheme of their Oreo cooky merely like what they used in the United States. However, this concern scheme was non every bit successful as Kraft Foods would hold hoped it would be. The concern scheme of Kraft Foods and their Oreo cooky in the United States was that of a sweet and acrimonious cooky which was non accepted good in China ( Clement, S. , Jain, T. , Jose, S. , Koellmann, B. , 2013, para 6 ) . In add-on to the Oreo cooky being to sweet and bitter for China, the monetary value for a bundle of Oreo cookies was high which was non accpeted by China ( Clement, S. , Jain, T. , Jose, S. , Koellmann, B. , 2013, para 7 ) . This led to Kraft Foods measuring how it could alter their concern scheme to accommodate to the demands of China. After measuring the Oreo cooky to the demands of China, Kraft Foods discovered that the Oreo cooky needed to do the Oreo cooky to incorporate more cocoa and less sugar in the pick filling ( Clement, S. , Jain, T. , Jose, S. , Koellmann, B. , 2013, para 8 ) . Kraft Foods besides found that they needed to do the pricing of a bundle of Oreo cookies more sensible to the Chinese market. Kraft Foods reduced their pricing of their Oreo cooky bundles to $ 0.29 with less cookies in the bundle which is more sutiable for the demands of China’s people ( Clement, S. , Jain, T. , Jose, S. , Koellmann, B. , 2013, para 8 ) . With these accommodations to Kraft Foods Oreo cooky, may the credence of the Oreo cooky more favourable in China.
China’s Market
It is indispensable for Kraft Foods to understand the market and retail market for cookies in China prior to carry oning concern in their state. However, Kraft Foods went into China with a mentality that their Oreo cooky would be good accepted without any alterations to their market and retail scheme. Soon Kraft Foods discovered that this was non the instance and needed to do accommodations to their market and retail scheme in order for their Oreo cooky to be successful in China.
The United States market for cookies is favourable whereas in China it is in the center. The people of the United States typically like their cookies more sweet and acrimonious whereas in China they do non care for that type of cooky. In order for the Oreo cooky to be every bit successful in China as it was in the United States, Kraft Foods needed to measure the spirit and type of cookies that the people of China cared for in which Kraft Foods complied excessively. In add-on to measuring the spirit and type of cooky the people of China cared for, Kraft Foods needed to measure the packaging and pricing of their Oreo cookies to run into the demands of the people of China. After measuring the demands of the people in China for the packaging and pricing of their cookies, Kraft Foods discovered that they needed to cut down the sum of cookies in a bundle every bit good as cut down the monetary value for a bundle of cookies. Once Kraft Foods was able to do these accommodations to their Oreo cookies to run into the demands of the people of China, so the credence and gross revenues of the Oreo cooky increased in China.
The market and retail market of cookies in China was rather different than that of the United States which Kraft Foods was non prepared for. In the United States, the Oreo cooky is more recognized as a Sweet and acrimonious cooky alternatively of more cocoa and less sugar in the pick type of cooky in which the people of China prefer. In add-on to the type of cooky preferred, Kraft Foods is able to box more cookies in a bundle and charge more for the bundle compared to that of China. Once Kraft Foods was cognizant of these differences between the United States penchant in an Oreo cooky and that of the penchant of the Oreo cooky in China, Kraft Foods was able to resile back from their hapless credence of their Oreo cooky in China.
Changes in China’s Marketplace
China’s market place has increased over the last 20-30 old ages which has led to an increasing economic system for China. Changes to Torahs and ordinances by the Chinese authorities every bit good as altering their economic system to more of a free market are what have contributed to the addition in China’s market place over the last 20-30 old ages ( Berry, 2010, p.5, para 1 ) .
China is considered an agricultural state in which it is expected to take the universe in agricultural in the following 10 to 20 old ages ( Berry, 2010, p. 3, para 1 ) . The agricultural goods that China is known for include that of tea, murphies, rice, peanuts, wheat, cotton, millet, apples, oil-rich seed, barley, fish, cotton, and porc ( Berry, 2010, p. 16, para 4 ) . In murphy production and consumer, China is the universe leader ( Berry, 2010, p. 16, para 4 ) .
Attempts by Kraft Foods to Enter China’s Marketplace
Kraft Foods decided to come in China’s market place with no alterations to their Oreo cooky. Kraft Foods learned that this was non the ideal attack in doing no alterations to their Oreo cooky for the Chinese market. Kraft Foods discovered non merely did they need to do the Oreo cooky with more cocoa and less sugar pick to run into the demands cookie demands for the people of China but besides subsequently discovered extra alterations needed for their Oreo cooky ( Jargan, 2008 ) . Kraft Foods decided to orient the Oreo cooky to run into the demands of the people of China a measure farther. In 2006, harmonizing to Jargan ( 2008, para 16 ) , Kraft Foods decided to orient the Oreo cooky to run into the demands for the people of China to “consist of four beds of crispy wafer filled with vanilla and cocoa pick, coated in chocolate.” With this orienting to the demands of the people of China, the Oreo cooky became China’s top cooky marketer in 2006 ( Jargan, 2008, para 19 ) . The new Oreo cooky in China was outselling the original Oreo cooky in China which led to Kraft Foods sell them in Canada, Asia, and Australia ( Berry, 2008, para 19 ) . Once Kraft Foods decided to do alterations to their Oreo cooky in China, it led to the success of their merchandise in China.
Important Factors
The two most of import factors that I feel do the entry into a host country’s market place challenging and potentially hazardous for a United States company includes that of non understanding the demands of the host country’s demands and non holding a specific concern scheme in topographic point prior to come ining a host country’s market place. It is indispensable for a company to understand the civilization and demands of the host state prior come ining that peculiar state with their merchandise. States may differ from each other based on their civilizations in which a company needs to understand in order to be successful in that peculiar state. Companies need to hold a concern program tailored to that peculiar state prior to carry oning concern in that state. A concern scheme that works for one state may non needfully work for another state. Having a concern scheme that is tailored to a peculiar state, can help in the success of that company when come ining into a state to carry on concern.
Mentions
Berry, B. ( 2010, June ) .Agri-Food Past, Present, Future China.Retrieved December 18, 2013, from Ats-sea.arg.gc.ca: hypertext transfer protocol: //www.ats-sea.agr.gc.ca/asi/pdf/3833-eng.pdf
Clement, S. , Jain, T. , Jose, S. , Koellmann, B. ( 2013, March 31 ) .Smart cooky.Retrieved December 18, 2013, from Businesstoday.com: hypertext transfer protocol: //businesstoday.intoday.in/story/how-kraft-foods-won-over-customers-in-china-and-india/1/193162.html
KraftFoods. ( 2011, September 6 ) .Brief History of Kraft Food ‘s.Retrieved December 18, 2013, from Kraftblogr.blogspot.com: hypertext transfer protocol: //kraftblogr.blogspot.com/2011/09/brief-history-of-kraft-foods.html
Jargon, J. ( 2008, May 1 ) .Kraft Reformulates Oreo, Scores in China.Retrieved December 18, 2013, from Wsj.com: hypertext transfer protocol: //online.wsj.com/news/articles/SB120958152962857053
