Kraft Foods:1. What generic strategy does Kraft appear to be following? Kraft appears to be following its more successful competitors such as Campbell’s foods by utilizing the generic focus strategy. That means that Kraft is trying to re-invent some of its most recognized products (such as Macaroni and Cheese) to appeal to groups with specific needs and foci, for example advocates of healthy eating. By using organic ingredients and gluten-free or whole grain products, Kraft can appeal to those who desire to break away from traditional carbohydrate or cholesterol laden foods and purchase specialty items. People are willing to pay a premium for goods they perceive to be in a desirable category, thus Kraft is offering alternatives to its regular mac’n cheese that fit the description of healthier food sought by people concerned with nutrition. To some extent this implementing of focus also involves differentiation, because Kraft is trying to distinguish its macaroni and cheese from that of less distinctive grocery-store labels. Kraft wants to offer more to those who have expected less.

2. How can an organization that is “stuck in the middle” achieve a sustainable competitive advantage? In addition to utilizing the generic focus strategy and upgrading its product, Kraft could follow the example of Coca-Cola a few years ago and try to ride the wave of nostalgia. Coke pulled a major marketing gaffe when it introduced “New Coke.” Soon realizing its mistake, it initiated a huge campaign promoting its original product. Kraft could dedicate some of its resources to the healthier, expensive options, but it could also play on nostalgia by reminding everyone through poignant advertisements of how most of us grew up on regular old Macaroni and Cheese—the more orange and gooey the better. Lowering the price rather than raising it (particularly when cheese prices are down) and trying to stimulate bulk sales based on past association might give Kraft an edge over unknown store brands that currently may be offering cheaper products, but without the association with days gone by that Kraft has.

DaimlerChrysler
1. Identify what you believe were the key reasons for the merger of Daimler Benz and Chrysler. Obviously both companies believed that they could benefit from the merger. Daimler Benz sought to gain easy access into the American market by taking on the lesser of the big three automakers, and help stem Japanese market presence. The executives no doubt believed that their drive for quality and technical know-how would spill over onto Chrysler products and reputation, and boost sales in the U.S. Chrysler also sought to trade on Daimler Benz’s reputation and fine product, but probably without expecting to relinquish control of what they claimed was a “merger of equals.” Had they really been equals, Benz would have never gone for the merger in the first place, one might posit.

2. To what extent have any of these reasons been realized? Chrysler learned a lesson—that it has a long way to go to compete in the really high-end automobile market. Its reputation may have improved temporarily, but in the end it appears the main benefit accrued to Daimler Benz executive Schrempp, who did indeed gain a foothold, but in the Japanese market that was originally his target. Chrysler gained much more from its association with Lee Iacocca in the 1970s and 80s than this ill-fated pairing.

3. Porter contends that many mergers and acquisitions tend to destroy shareholder value and are often based on arrogance. Evaluate the extent to which you believe the merged DaimlerChrysler resulted from wishful thinking or sound business logic. In hindsight it is easy to say that this venture stemmed from wishful thinking on both parts. Daimler Benz hoped they could easily take advantage of Chrysler’s weak position and help them, possibly based on reputation alone, improve their standards and image among consumers of both American and Japanese competition. At the time, this may have made sense to the German giant, who had known mainly success and was unfamiliar with American auto-purchasing habits at the time. Chrysler, on the other hand, could bear responsibility for wishful thinking that they would be treated as equals and that they would not be given short-shrift by their German counterparts, given the breadth of difference between quality and reputation. Certainly Daimler Benz approached the deal with arrogance, but perhaps not totally unfounded. In the end, this was a display of very bad business logic by the Germans, whereas Chrysler got carried to some extent and is still making cars, which is more than it might be able to say otherwise, even if under the Cerberus mantle.