Prior to
launching a $16.7 billion bid for Cadbury plc (NYSE:CBY) in early September, one of CEO Irene Rosenfeld's biggest initiatives at Kraft Foods Inc. (NYSE:KFT) has been an ambitious restructuring of the company calls Organizing for Growth, launched in 2007 and now mostly complete.
Meanwhile, in 2008 Cadbury CEO Todd Stitzer began a corporate realignment Cadbury calls Vision Into Action.
As is ever the case with such initiatives, there's plenty of complexity behind the banners. No pretense here of understanding either effort in depth. But it is fair to say that both have been necessitated partly by previous acquisitions, and that each is trying to strike a balance between centralization -- and the efficiencies in manufacturing, supply chain and other functions that come with scale -- and the business unit autonomy needed to compete in different markets and geographies.
Rosenfeld and other top Kraft execs discussed their reorg at some length in a recent
article in Strategy + Business, and it makes interesting reading as we try to get a bead on how the two companies would integrate. OFG, as it's (inevitably) known, has a strong decentralization flavor, a result, Rosenfeld says, of the pendulum having swung too far toward central control. In her own words:
Rewiring our organization was one of the four key strategies of our
three-year turnaround plan to restore the company to sustainable,
long-term growth. To achieve this, we had to essentially dismantle the
existing organizational matrix and replace it with a decentralized
structure that gave our newly reorganized business units more direct
lines of responsibility.
VIA, meanwhile, has at least some elements of centralization. Stitzer, on the company's
Web site, says it entails: "A major group-wide cost and efficiency program across all
aspects of our business - in sales and administration, in the
supply chain, in the regions and at the group centre. We are aiming
to reduce the complexity in our business and minimize duplicated
activities."
Now, this isn't to say the efforts are at odds. Perhaps they're even complementary in places. For example, Kraft, too, is doing
supply chain rationalization. The Kraft
release announcing its bid also takes note of the VIA program, if only to argue that its potential benefits are already reflected in Cadbury's share price.
But it is a reminder of the thousands of details and decisions in the integration ahead if Kraft does succeed in acquiring Cadbury. Rosenfeld has vowed a "best of both" approach, which implies a willingness to make tough choices on both sides. She'd need to follow through on that, because "OFGVIA" is probably not a banner that anyone will want to rally behind. -
Kenneth Klee
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