Triumphant Kraft !!! Part 2/2

First and foremost, I will like to thank you guys for coming back to read the part 2 of the post.

I really appreciate it from the bottom of my heart ! Thank you!


Let's begin.


As I was saying, even though the bid has been beautifully closed, there are actually insidious problem behind the deal which can be really disastrous towards Kraft in the near future.




The most palpable one right now is that Kraft has just been fraught with a new load of debts. And worst of all, it's a gargantuan sum of $11.9 billion pounds. This is by no means a small sum and as seen from the financial crisis, many banks have collapsed as they drown themselves in billions of debts.



The good news is, Kraft will not be defeated by the additional $11.9 billion debt for sure.

But, the bad news is that Kraft will have to take the radical approach or they will be forced into an impasse in no time in this economy which is still in its nascent stage of recovery.



Usually, Kraft should be able to deal with this problem easily by selling away some of their key brands to raise enough funds to tide itself over this crisis. But if you guys are not aware of this, Kraft has already sold a number of its key brands including one of its top selling brands "Digiorno Pizza". It has almost given all that it can possibly give to Cadbury.



I believe that this is the key reason why Cadbury has given in.



1. Because they sensed that Kraft is still poignant about the deal.



2. It is near to their targeted $20billion bid.



So back to the issue about the debts.



The only way to solve is to take the hard approach now that is to resort to the cutting of staffs. I guess this is truly what they call, inevitable and imperative.

While this might seem like a bad thing especially when we are hearing that the unemployment rate is still at its double-digit level, and that the firing of workers at Cadbury will further raise the unemployment rate, there is actually something to be happy about, not for the fired workers of course.



As Jim Collins mentioned in his book, “Good to Great”, we should be more concerned about having the right people at the right seats. Useless incumbents can easily be removed and that will in turn save the company a lot of money.

This is not to say that Cadbury has useless people around, just that in today’s economy, it is imperative to have minimum number of layers and corporate executives at the top to ensure that the organisation is fluent and operations are effectively executed.



If an organisation is filled with a plethora of people, it will actually be impeded and progress will be slow with a paucity of innovations along the way.



In the long run, it is potent and even fatal to the organisation.



Hence, all in all, by removing the adjunct members on board, Kraft could actually develop a much more adroit Cadbury with a cadre of employees, which are of paramount importance to the organisation.



That is all for now, sorry for the expatiate writing style of mine again.



Now go look at some greenery and ruminate over this case study.

Bye Bye and have a nice day!


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