Kraft Foods is the world's second largest food company, with revenues of $40.4 billion and earnings from continuing operations before income taxes of $4.3 billion in 2009. Kraft Foods was incorporated in 2000 in the Commonwealth of Virginia. It has approximately 97,000 employees worldwide, and it manufactures and markets packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products. It sells products to consumers in approximately 160 countries. At December 31, 2009, it had operations in more than 70 countries and made our products at 159 manufacturing and processing facilities worldwide.
2. Understanding Industry Economics
The food industry is a complex, global collective of diverse businesses. In this section, we apply Porter's five forces framework to the food industry to understand the industry economics.
* Rivalry among Existing Firm
Currently Kraft Food is the world's second largest food company, while Nestlé is the world's largest food and beverage company. Regarding to the rivalry among existing firm, Kraft Foods faces competitions in all aspects of its business. Competitors include large national and international companies and numerous local and regional companies. Some competitors have different profit objectives and some international competitors are less susceptible to currency exchange rate. It also competes with generic products and retailer brand, wholesalers and cooperatives. It competes primarily on the basis of product quality, brand recognition, brand loyalty, service, marketing, advertising and price. Also, the food market in the United States is mature and intense rivalries have a tendency to reduce profitability. However, large market players dominate the market and have distinct advantages compare with small and middle-size companies. Therefore, we characterize industry rivalry as moderate.