Strategic Analysis of Mondelez International

by Sunday Adeniran, Carla Carstens, André Corona, Jeremy Piacente, and Judith Pramsohler

Mondelez is a leading snacking company, with presence in 165 countries. A total of 85% of the company's $26 billion in annual revenue is derived from snacks, which range from brands such as Oreo (U.S.), Cadbury Dairy Milk (England), Milka (Austria/Germany), Lacta (Brazil), Hall's (England), Toblerone (Switzerland), and LU (France). 

We discovered three critical issues that Mondelez must address. Firstly, they’re not keeping up with changing market conditions and trends. For example, health and diet trends are encouraging people to eat home-cooked meals and avoid industrially processed food, and due to the pandemic, consumers have become used to convenience at the touch of a button, by way of e-commerce (State of the Snack Industry 2021). Mondelez’s portfolio and omnichannel offerings are not aligned with these changing consumer behaviors and trends and they can address this by pushing product innovation and doubling down on their alliances with incubators, looking into potential acquisitions in the snack and baby food segment that suit these consumer trends. They should also look to reformulate recipes with less sugar, real vanilla, organic wheat, no artificial flavors etc.

Secondly, their pursuit of a global strategy is limiting their international growth. While they should focus company growth in emerging markets such as Japan, Nigeria, China, and the UAE, given that over 34% of its sales come from emerging markets that have higher-than-average growth prospects longer term (Fitch Ratings), they must take time to do additional market research in these regions - thinking and acting local - and pay attention to regional consumers’ tastes and preferences, similar to one of its main competitors, Nestlé, who takes a multidomestic approach, rather than global. Nestlé uses a unique marketing and sales approach for each of the markets in which it operates and adapts its products to local tastes by offering different products in different markets (Business2You). The main difference between multidomestic versus global is strategic. Multidomestic companies change some aspects of what they do in each country, whereas global companies maintain the same business approach in each market they expand into. Mondelez should also continue to use, but also diversify their existing supply chain so it includes more varied sources, taking target emerging markets into consideration, as well as supporting local farmers in those target regions to gain support from local communities prior to launching. 

Lastly, massive improvement must be made on the company’s social and environmental impact. In 2019, the company’s suppliers were responsible for e.g. 460,110 acres burned rainforest in Indonesia/Malaysia, 123,552 acres of burned rainforest in West Africa, and cocoa farmers got a $0.5-0.8 daily wage in West Africa. Because European countries are currently debating, or have already enforced supply chain laws that will hold companies accountable for human rights and environmental violations, we recommend increasing prices by 2-5% per product, so farmers can make a living wage and refrain from child labor and salvery. Moreover, we suggest continuing to invest in local infrastructures and reforestation efforts to “make up” for the damages caused over the years. They also must review existing suppliers to ensure compliance with human rights laws. Mondelez themselves noted that rising inequalities and poverty are underlying drivers of other human rights risks. While they endorsed IDH’s call to action to advance living wages in global supply chains, as means to further demonstrate their continuation of paying employees around the globe a living wage, they must move forward with this sooner rather than later (Global Newswire).