When Smaller is Bigger

Jargon, Julie, and Paul Ziobro. "Kraft Hashes Out Details of Split." Wall Street Journal [New York City] 6 Dec 2011, n. pag. Web. 8 Dec. 2011.

Kraft Foods Inc. is in the process of dividing its company into two: North America Grocery and Global Snacks Company. This slip is to be concluded at the end of next year. Yet, there are still many things that need to be done before the split. Right now Kraft is working on sorting out which brands will be included in the different companies. The products that will not be included in one will have to be licensed by the other. The main product that is of concern is Philadelphia cream cheese; it has much overlap with the geographic region encompassed by the global snacks company. Kraft is also concerned about their new size after the split. By being a smaller company, especially if Nabisco is not going to be a Kraft brand anymore, their negotiation power with retailers will be lower. Nabisco is a big part of Kraft and they are worried about the outcomes of giving it up. Other products like Gevalia, an international coffee brand, has not been introduced in the United States grocery stores, and like the Philadelphia cream cheese, Kraft has not decided which company will own it.

Placement of products within store is also affected. It is hard for a company to place a new brand that no one has heard of in a store without a trusted brand on the box. Many times grocery stores don’t want to give up space of Doritos, for example, to place a new bag of chips that no one has heard of. Like the Gevalia coffee, many people in the United States have no clue to what Gevalia is and who owns it. Putting it by its self on shelves in a U.S. grocery can be catastrophic. People will ignore it; it might on the lowest or highest shelve where consumers cannot see it as easily. But, if a trusted brand was on the label like Kraft, then people will be willing to take the risk of trying a new product. All these concerns are being considered in the decision making of what company will get what brands.

Having a smaller company can sometimes be better. It is easier to manage a smaller company and sometimes there may be more profit to be made by being smaller. In the United States we are so accustom to want bigger and bigger things all the time. But, it is not our fault; this is just what we were taught by pop culture. The truth is that sometime smaller is actually bigger. A smaller more manageable company can be more profitable because it can focus on the smaller details that are overseen as a big company. The process of producing goods, delivering goods, and advertising goods and be more closely monitored. By saying this, it is clear that after monitoring processes more precisely companies are able to make appropriate adjustments to the process as necessary. For example, advertising will be more focused on the target market located in the United States rather than those in other countries. But, in many cases a split can be the best thing a company can do.