Cost Structure Assignment Help

Cost Structure Assignment Help

Overview To examine the nature and cost structure, Kraft Foods is selected as the case company. Kraft Food is the largest food company in US and operates its business worldwide. It has its operation in more than 75 countries and sells its products in more than 170 countries around the world (Kraft Foods, 2011). This cost structure case study assignment help paper will analyze the cost structure of Kraft Foods.


Cost Structure There are several costs that affect to Kraft Foods and its cost structure. The cost structure of Kraft foods includes the fixed, variable, life style and operation cost. The level of fixed cost is relatively low in Wal-Mart in the comparison of its level of variable cost due to use of several types of products and machines to operate the business (Kraft Foods, 2011). The fixed cost of the firm is related with the manufacturing equipments, operation of the factories, pension plan, borrowing cost etc. But restructuring program of the firms lowered the cost structure of the firm and increased the capacity optimization. The increasing revenue worldwide is also causing an increase in tax cost of the firm, which is a fixed obligation for the firm (Kraft Foods Inc, 2011). Exhibit 1 shows the pension plan cost of the firm, which is increasing the level of its fixed cost. Variable cost is another element of its cost structure as it includes the cost of operations in the firm. The operating, selling and administrative expenses are the major variable cost, which occurs in the operations of the firm. The cost of raw material, interest expenses, service cost, are some of the major variable costs occurring within the firm. Exhibit 2 presents some of the variables cost of the firm (Kraft Foods Inc, 2011). The strategic investment in the marketing and operations is increasing the efficiency of the cost structure of the firm. Kraft Foods also includes the life cycle cost related to the organizational restructuring, exit cost, implementation cost, non-recurring expanses etc (Needles, Powers & Crosson, 2008). In 2008, Kraft Foods recorded exit cost of $884 million and implementation cost of $108 million. The cost of acquiring the Cadbury is the major part of its life cycle cost, which also affect the overall profitability of the firm. But the continuous increasing revenue from Cadbury is beneficial for the firm. The life cycle cost and its impact over the operating revenue of the firm could be seen in exhibit 3. The reorganization of the firm in Europe market also caused an increase in the life cycle cost of the firm. It also uses the technology know-how, which create the life cycle cost for the firm related to its maintenance, implementation etc (Kraft Foods, 2011). Operational cost is another major element of the cost structure of Kraft Foods as it sometimes it face the downfall in its technology. It has 15 technology centers worldwide to run its business smoothly (Kraft Foods Inc, 2011). The failure of technology creates operating cost for the firm. The cost structure of Kraft Foods can be distinguished quite appropriately, which is beneficial to manage them properly and to increase the organizational profitability.


Past, Current and Future Cost Considerations The cost structure of Kraft Foods is quite significant as it is helpful for the firm to lower the costs and to increase the optimization capacity of the firm. The past cost consideration of the firm is to reduce the overall cost of the firm, so that it could achieve a good competitive position within the industry (Kraft Foods, 2011). To reduce the cost, it increased its operation in the different regions, which facilitated economies of scale for the firm and reduced the overall cost (Kraft Foods Inc, 2011). The current cost consideration of the firm is to develop an effective cost structure and to be competitive in the industry. For this, the firm is adopting strategic marketing and innovation practices, which are beneficial for the firm to achieve this cost consideration. It is also taking the performance of the firm to next level (Kraft Foods Lays Out Its New Global Growth Strategy, 2010). The future consideration of the firm is also in the reduction of cost related to operations, pension expenses and insurance and advertising costs and to reduce the overall cost for the customers.


Strategies to Enhance Profits In order to achieve the cost consideration related objectives and to enhance the organizational profitability, following strategies could be followed by Kraft Foods:


  • Leverage the resources: This strategy will help to utilize the resources optimally and reduce the cost associated with the resource utilization and increase the profitability consequently (Needles, Powers & Crosson, 2008).
  • Acquisition and business expansion: Kraft Foods should also look for the regions in Asian countries, as these regions are still unexplored, which would be effective for the firm to facilitate it as the market leaders and to increase the organizational profitability (Hill & Jones, 2007). At the same time, it should also look for the acquisition of the firms that may be beneficial for it to increase the profitability as it has experienced in the case of Cadbury’s acquisition (Kraft Foods Inc, 2011).
  • Unique combination of foods products: The firm should provide the unique combination of snacks and heritage brands, which would be effective to increase the customer base and market share of the firm and consequently organizational profitability (Crosson & Needles, 2007).

Conclusion It could be inferred from the analysis of cost structure of Kraft foods that it has an effective cost structure, which is beneficial for it to increase its profitability ad market leadership.   References Crosson, S.V. & Needles, B.E. (2007). Managerial Accounting (8th ed.). USA: Cengage Learning. Hill, C.W.L. & Jones, G.R. (2007). Strategic Management: An Integrated Approach (8th ed.). USA: Cengage Learning. Kraft Foods Inc. (2011). 10-K. Retrieved From Kraft Foods Lays Out Its New Global Growth Strategy. (2010). Retrieved From Kraft Foods. (2011). 2011 Fact Sheet. Retrieved From Needles, B.E., Powers, M. & Crosson, S.V. (2008). Principles of Accounting (10th ed.). USA: Cengage Learning. Now you can get cost structure business assignment help services from qualified and experienced assignment writers of US, UK and Australia. Students who need any topic case study assignment help can touch with our 24X7 live support system or can send e-mail at