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presentation
INNOVATIVE GROUP
 Group Profile
SL no. Name ID

1. Al Amin 176

2. Ridoy Babu 183

3. Abu Yousuf Shagor 184

4. Abdullah Al Mamun 266

5. Md. Imdadul Haque FR-1179

6. Md. Rafiquel Islam 101(BBA 8th Batch)

Kraft &Heinz Company (KHC)
Kraft & Heinz

• The Kraft Heinz Company (KHC), commonly known as Kraft Heinz, is

an American multinational food company formed by the merger
of Kraft Foods and Heinz co-headquartered in Chicago, Illinois,
and Pittsburgh, Pennsylvania. Kraft Heinz is the third-largest food and
beverage company in North America and the fifth-largest in the world
with over $26.0 billion in annual sales as of 2020.
• In addition to Kraft and Heinz, over 20 other brands are part of the
company's profile including Boca Burger, Gevalia, Grey Poupon, Oscar
Mayer, Philadelphia Cream Cheese, Primal Kitchen, and Wattie's, eight
of which have total individual sales of over $1 billion.
James Lewis Kraft (1874–1953) and Henry John Heinz (1844–1919), the
founding fathers of the companies that merged into today's The Kraft
Heinz Company.

James L. Kraft Henry J. Heinz

History of merger between Kraft & Heinz
• The merger between the H.J. Heinz Company and Kraft Foods Group was
approved by each company’s Board of Directors and shareholders in the
beginning of 2015. In July of 2015, investors 3G capital and Berkshire Hathaway
teamed up to create the new Kraft Heinz Company, of which they held a 51%
stake in.

• As a publicly traded company, other shareholders of Kraft, would hold the

remaining 49% of Kraft Heinz. In addition, each share owned of the Kraft Foods
Group company, prior to the merger, would equate to exactly one share of the
new company. These additional shareholders would also receive $10 billion in
total dividends, which equated to about $16.50 per share, paid by both 3G
Capital and Berkshire Hathaway.
Reasons for Merger
• Due to Heinz’s global reach, the combination of the two companies aimed
to increase revenues and profits by bringing some of Kraft’s big-name
products, such as A.1, Velveeta, MiO, Lunchables, and Planters, to the
international market. They also envisioned cost cuts, which would come
in the form of reducing human capital, as well as better opportunities for
bargaining with retail outlets, restaurants, and food companies.
• Investment firms, 3G capital and Berkshire Hathaway, have teamed up to
create a new company through the merger of H.J. Heinz Co. and The Kraft
Foods Group. The new company thus created will be called The Kraft
Heinz Company. In terms of annual sales, it is expected to be the fifth-
largest food company in the world and the third-largest in the U.S.
Important Point From Lectures
• Synergy: Combined action or operation. The increased effectiveness that results when
two or more people or businesses work together.
-The new Kraft Heinz Company became the world's fifth-largest food and beverage
company and the third-largest in the United States

• Economies Of scale: Economies of scale happen when a company reaches a point in

production where the cost of production no longer increases ; rather it gets reduced.
It happens only in bulk production.

• Mismanagement (Agency Problem): Agency problems arises when there is a

difference between the interests of incumbent managers and the firm’s shareholders.
Important Point From Lectures
• Acquisitions: On October 19, 2017, Kraft Heinz announced that it was
acquiring . Cerebos Pacific, including the Saxa salt, Gregg's and Bisto
brands, from Suntory.
• Divestment: A divestment is the partial or full disposal of a business
unit through sale, exchange, closure, or bankruptcy.
-In September 2020, Kraft Heinz reached a deal to sell part of its
cheese business to French multinational dairy products corporation for
Lactalis $3.2 billion.
 Shareholder value
The result of merger created the third largest food and Beverage Company
in North America and fifth largest food and Beverage Company in the world
 the existing Heinz shareholders held 51% stake in the newly formed
company.
 The Kraft shareholders received 49% of shares in the combined
company.
 The combination of Kraft’s brands with Heinz’s international brands
provided a strong platform for organic growth in North America. The
merger was expected to realize cost synergies of $1.5 billion in annual
cost savings by the year 2017. 
 The cumulative returns during the merger period July 2015–March 2016
were approximately 7.1%.
 the company reported a decreased revenue of US$ 26.232 billion and it
currently occupies an approximate number of 39,000 employees.
Theories of merger and acquisitions
It pursues growth and the creation of synergies by applying an aggressive
acquiring policy.
Firms merge because one firm is undervalued
Firms merge to reduce business risk
Firms merge to increase earnings growth
modernizing and optimizing the supply chain
restructuring products into consumer-centric platforms
Major actors of Kraft and Heinz
acquisitions
the 3G Capital Inc. (3G)
3G Capital is a Brazilian-American long term investment firm. It is the major actor
of their meager and acquisitions.. 3G has partnered with BHI in several deals in the
past and recently with Heinz and Kraft. It also played a significant role in creating
the largest global beer-brewer
Berkshire Hathaway Inc.
(BHI) is a US-based multinational conglomerate holding company. It is headed by
its well-known CEO and Chairman Warren Buffett. BHI wholly owns, or holds a
significant minority stake in a large variety of companies ranging from insurance,
flight services and media, to food & beverage, clothing and financial services.
 Diversification & other tactics of Heinz & Kraft

 Since 2015, they have established a solid foundation of awareness across the
organization and celebrated numerous impactful achievements in the diversity, inclusion,
and belonging space. They have been steadfast in educating and training their leaders to
be inclusive, creating a nurturing community. they’ve spotlighted exemplary leaders
from all backgrounds and expanded a team of practitioners across our global footprint.
They have made significant progress, and they are energized for the long journey ahead
of them.

 2020 was a year that amplified their focus on diversity, inclusion, and belonging. They
expanded the Company Values to affirm, they demand diversity, and launched their
Global Inclusion Council, chaired by our CEO, Miguel Patricio. The Council comprises
executive leadership from across the Company and members of their Board of Directors.
The Council creates strategic accountability for results, and provides governance,
oversight, and reporting on diversity efforts and initiatives. The Council is also a critical
driver in fostering real organizational change, establishing priorities, managing integrated
and cross-functional initiatives, and thoughtfully considering how to fully live their
Company Values.
From 55 categories to 6 platforms
Consumers don't consider isolated items when they buy food anymore, Barton said, so it was time for
Kraft Heinz to start working with its products using the broader viewpoint its customers have. They
broke the company's brands up into six platforms: Taste Elevation — enhancing taste, flavor and
texture of foods; Easy Meals Made Better — meals that are both simple to make and healthy; Real
Food Snacking — snacks that are nutritious, convenient and clean label; Fast Fresh Meals — to help
consumers quickly prepare fresh, easy meals; Easy Indulgent Desserts — sweet, indulgent treats and
desserts; and Flavorful Hydration — drinks and mixes for both kids and adults.

Smarter innovation
New product development was once seen as Kraft Heinz's top priority. Now, the focus is
making meaningful changes in big brands — cleaning up labels, adding healthier ingredients
and taking away sugar and sodium, creating new versions of products to meet specific
consumer needs, and unlocking brands' potential. About 60% of R&D time and effort will go
toward new innovations, while 40% will go toward renovation.
 Other Tactics:

1. Tapping the trends: exploration, health & sustainability

2. Blockbuster & breakthrough brands
 The Heinz & Kraft’s Porter’s Five Forces Analysis
1. Threats of New Entrants
New entrants in Food - Major Diversified brings innovation, new ways of doing things and put pressure on The Kraft
Heinz Company through lower pricing strategy, reducing  costs, and providing new value propositions to the customers.
The Kraft Heinz Company has to manage all these challenges and build effective barriers to safeguard its competitive
edge.
How The Kraft Heinz Company can tackle the Threats of New Entrants
• By innovating new products and services. New products not only brings new customers to the fold but also
give old customer a reason to buy The Kraft Heinz Company ‘s products.
• By building economies of scale so that it can lower the fixed cost per unit. 
• Building capacities and spending money on research and development. New entrants are less likely to enter
a dynamic industry where the established players such as The Kraft Heinz Company keep defining the
standards regularly. It significantly reduces the window of extraordinary profits for the new firms thus
discourage new players in the industry.
 The Heinz & Kraft’s Porter’s Five Forces Analysis
2. Bargaining Power of Suppliers
Suppliers in dominant position can decrease the margins The Kraft Heinz
Company can earn in the market. Powerful suppliers in Consumer Goods
sector use their negotiating power to extract higher prices from the firms. The
overall impact of higher supplier bargaining power is that it lowers the overall
profitability of the firm.
How The Kraft Heinz Company tackles Bargaining Power of Suppliers
• By building efficient supply chain with multiple suppliers.
• By experimenting with product designs using different materials so that if
the prices go up of one raw material then company can shift to another.
• Developing dedicated suppliers whose business depends upon the firm.
 The Heinz & Kraft’s Porter’s Five Forces Analysis
3. Bargaining Power of Buyers
Buyers are often a demanding lot. They want to buy the best offerings available by
paying the minimum price as possible. This put pressure on The Kraft Heinz
Company profitability in the long run.
How The Kraft Heinz Company can tackle the Bargaining Power of Buyers
• By building a large base of customers.
• By rapidly innovating new products.
• New products will also reduce the defection of existing customers of The Kraft
Heinz Company to its competitors.
 The Heinz & Kraft’s Porter’s Five Forces Analysis
4. Threats of Substitute Products or Services
When a new product or service meets a similar customer needs in different ways, industry
profitability suffers. For example services like Dropbox and Google Drive are substitute to
storage hardware drives. The threat of a substitute product or service is high if it offers a
value proposition that is uniquely different from present offerings of the industry.

How The Kraft Heinz Company tackles the Treat of Substitute Products / Services
By being service oriented rather than just product oriented.
By understanding the core need of the customer rather than what the customer is buying.
By increasing the switching cost for the customers.
 The Heinz & Kraft’s Porter’s Five Forces Analysis
5. Rivalry among the Existing Competitors
If the rivalry among the existing players in an industry is intense then it will drive down
prices and decrease the overall profitability of the industry. The Kraft Heinz Company
operates in a very competitive Food - Major Diversified industry. This competition does take
toll on the overall long term profitability of the organization.
How The Kraft Heinz Company tackles Intense Rivalry
• By building a sustainable differentiation
• By building scale so that it can compete better
• Collaborating with competitors to increase the market size rather than just competing for
small market.
Company Succeed/ Fail?
 What Makes the Company Failed
Failed To Invest Enough In
New Product

Too Much
Profit Taking
Tendency
Had to Written off $15
billion from its Kraft and
Oscar Mayer brands
12.6 Billion USD Loss In
2017’s 1st Quarter
 CONCLUSION
KHC Is Struggling With It’s Corporate Culture

Employees Having Problem With Rigorous

Focus On Cost Cutting

Still A Very Attractive Enterprise With 23%

EBIT Margin
 KHC Needs To Re-structure & Should Focus
More On Research & Development