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PESTEL Analysis Kraft Foods Inc. sample essay

PESTEL ANALYSIS

The PESTEL framework categorises environmental influences into six main types: political, economic, social, technological, environmental and legal. Thus PESTEL provides a comprehensive list of influences on the possible success or failure of particular strategies. (G. Johnson, R. Whittington, K. Scholes (2011): 50).

Political

Relating to the protection of the environment Kraft Foods Inc. is subject to various federal and state laws in the United States, taking into account that it has manufacturing facilities in approximately 70 countries and a presence in 170 countries worldwide. Another factor is that the UK government took a decision to increase value added tax up to 20% that its previous level of 17.5% in January 2011 this can negatively the profits made in the UK (HMRC, 2010; The Guardian, 2010).

Economic

Kraft Foods Inc. products are made with fresh raw materials such as sugar, corn, grains, and coffee therefore, the price unpredictability can affect the profitability of the company. Given the economic uncertainty this has reduced the spending power of consumers. The overall operation of Kraft Foods Inc. is wide and large, however there are negative impacts on the company for example the exchange rates, fluctuations in currency can have an impact on the company’s earnings.

Social

The world is leaning towards being more health conscious therefore, consumers are looking for the more healthy option. This social pattern has provided the company in entering new and emerging markets where consumers are willing to spend more.

Technological

In recent years technology has advanced to help companies to reduce carbon-dioxide emission to protect the environment. Kraft Foods has adopted a course of action to assist with this cause. The company is investing in nanotechnology (Kraft Foods, 2010).

Environmental

There are constant pressure from the Government and public agencies about the way in which companies operate and its impact on the environment. The use of new technology would assist with this problem.

Legal

The highly rigid and competitive industry is threatened by the inherent risks arising out of legal actions and failure to comply with laws and policies could affect sales and create consumer skepticism.

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