Case 21 Teaching Note Mondelēz International
8
The 9-cell GE-style matrix analysis (Figure 1) indicates that Mondelēz International’s all compete in mature
industries and require modest reinvestments in the form of capital expenditures for new plant capacity.
However, the company’s Biscuits and Chocolate, Gum & Candy businesses are market leaders and continue
to be “grow and build” businesses that should be given a priority for investment. The Philadelphia cheese
businesses.
FIGURE 1. Sample Industry Attractiveness/Competitive Strength Matrix of Mondelēz
International’s Businesses
Beverages
Low
Business Strength
High
High
Low
Cheese
&
Grocery
Chocolate
Gum & Candy
Biscuits
5. Does Mondelēz International’s portfolio exhibit good strategic fit? What value-chain match-
ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you
see?
Students may initially suggest that substantial cost sharing opportunities exist between Mondelēz
International’s various businesses, but as was pointed out in the discussion to question 1 few such
opportunities exist beyond cross-selling and joint promotional activities. The purchasing and manufacture
of cheese, cookies, beverages, and gum are very different. The dissimilarity even limits cost sharing of
distribution of many of the brands produced by Mondelēz International.
Case 21 Teaching Note Mondelēz International
9
Perhaps the strongest strategic fit between businesses in Mondelēz International’s stable existed by geographic
distribution rather than business type. For the most part, Mondelēz International could distribute its products
Figure 2 provides a list of cost sharing, skills transfer, and brand sharing opportunities along the value chains
of Mondelēz International’s business units.
FIGURE 2. Assessment of Strategic Fit Potentials Between Mondelēz International’s Business
Units
CS = cost sharing benefits ST = skills transfer opportunities
Value Chain Activities
Business Unit Purchasing Operations Distribution Sales & Marketing Advertising/
Promotion
Gum & Candy on
sugar substitutes
& convenience
stores; Cross
selling with
activities.
packaging
distribution
sales force for all
between Biscuits
Grocery
activities.
packaging
distribution
centers
sales force for all
products sold in
Gum & Candy
on sugar. ST with
packaging
Biscuits
sales force for all
stores
between Biscuits
6. What is your overall evaluation of Mondelēz International’s corporate strategy and
restructuring since 2012? What evidence and/or reasons support a conclusion that
Mondelēz International’s shareholders have benefitted from the spino of the company’s
North American grocery business?
Students may be divided over the effectiveness of Mondelēz International’s corporate strategy with those
who are more enthusiastic pointing to the company’s 7 $1 billion brands. Students point out that it seems
hard to fault businesses that are number 1 in their respective markets just because the industries they are
mature.
Case 21 Teaching Note Mondelēz International
10
A review of the company’s financial performance since the spinoff of Kraft Foods slower growth businesses
should lead students to the conclusion that the focus on snack brands has done little to bring about sustained
growth in shareholder value.
Table 4 below shows that while of Mondelēz International management has been effective in boosting gross
Students should conclude that the general direction of the company’s profitability ratios signals a weak or
awed corporate level strategy.
TABLE 4. Select Financial Ratios for Mondelēz International, 2013-2015
2015 2015* 2014 2013
Gross profit margin 38.8% 38.8% 36.8% 37.1%
2015* Excluding extraordinary items
n.a. Not available
Calculated from case Exhibits 5 and 6.
A review of operating profit margins by geographic region should allow students to recognize that the
company’s North American and European operations comprise a sizeable portion of the company’s operating
income, even though sales in other international markets are increasing. Case Exhibit 3 and Table 5 indicates
that the company’s operations outside North America and Europe are struggling and contribute little to
shareholder value. Some students may recognize that price increases bore by consumers in North America
and Europe are critical to any stability in profitability at the company. Eventual resistance to price increases
by North American and European consumers will threaten of Mondelēz International’s margins.
A review of the company’s revenue contribution by product category and geographic region should allow
students to develop a keener understanding of the drivers of shareholder value at of Mondelēz International.
Table 6 indicates that chocolate sales in Europe and snack or biscuit sales in North America are the major
Case 21 Teaching Note Mondelēz International
11
TABLE 5. Operating Margins by Mondelēz International Geographic Segment, 2013 – 2015
2015 2014 2013
Latin America 9.7% 9.2% 10.6%
Asia Pacific 6.1% 8.4% 10.3%
North America 15.8% 13.3% 12.7%
Calculated from case Exhibit 3.
TABLE 6. Revenue Contribution by Mondelēz International Product Category and Geographic
Region, 2013 – 2015
2015
Latin
America
Asia
Pacific EEMEA Europe
North
America Total
2014
Latin
America
Asia
Pacific EEMEA Europe
North
America Total
2013
Latin
America
Asia
Pacific EEMEA Europe
North
America Total
Case 21 Teaching Note Mondelēz International
12
TABLE 7. Estimated Cash Flow by Mondelēz International Geographic Region, 2013 – 2015
Estimated Cash Flow
Companywide 2015 2014 2013
Earnings from continuing operations before income taxes $7,884 $2,554 $2,392
Estimated cash flow from continuing operations $26 $1,077 $51
Latin America
Earnings from continuing operations before income taxes $485 $475 $570
+ Depreciation 94 118 107
– Capital Expenditures 354 460 412
Estimated cash flow before interest expense $71 $141 $351
EEMEA
Earnings from continuing operations before income taxes $194 $327 $379
+ Depreciation 66 90 88
– Capital Expenditures 197 219 254
Estimated cash flow before interest expense $1,161 $1,700 $1,580
North America
Earnings from continuing operations before income taxes $1,105 $922 $889
+ Depreciation 165 174 199
– Capital Expenditures 262 178 210
Case 21 Teaching Note Mondelēz International
13
7. What actions do you recommend that Mondelēz International management take to improve
the company’s performance and boost shareholder value? Your recommended actions must
be supported with convincing, analysis-based arguments.
Students should identify the following challenges to increasing shareholder value at Mondelēz International.
Business lineup overreliance on slow growth product categories
Declining sales in core chocolate business
Student recommendations to improve the company’s performance should address the strategic issues listed
above and may include some of the following points.
Mondelēz International faces threats from industry maturity which may be linked to health concerns
(obesity) for many of its brands. Students are likely to suggest that the company develop healthier
formulations of its products and seek out acquisitions in healthy snack categories. The company’s
restructuring and continued focus on snack foods and chocolates has failed to bring about increases in
shareholder value. Mondelēz International must move into star product categories that offer stronger
grow and build opportunities that line extensions of its well-known snack brands.
Actions must be taken to reverse the company’s decline in chocolate sales in North America and Europe.
Students are also likely to suggest that the company must discontinue its reliance on price increases paid
The company’s “venerable brands” are dear to aging baby boomers and the company can utilize its
marketing expertise to make these products appealing to younger generations. Similarly, students may
Students are also likely to recommend that the company develop new strategic approaches in developing
As was discussed in the answers to Question 5 above, the key to unlocking value in mature markets is
finding synergies across the various holdings of the company. Otherwise, the parent company is just a
Case 21 Teaching Note Mondelēz International
14
Epilogue
Mondelēz International’s poor financial performance continued through year-end 2016 with revenues declining
by 12.5 percent from year-end 2015 and gross profit declining by 12 percent between 2015 and 2016. The
company’s operating profit margin and EPS declined by 20.1 percent and 76 percent, respectively, between 2015
and 2016. Much of the decreases in profit indicators was a result of the effect of extraordinary items in 2016, but
the company’s organic net revenues declined overall with the greatest declines occurring in Latin America. The
company reported that adjusted operating income and net income increased by 13.3 percent and 14.9 percent,
respectively between 2015 and 2016. A summary of the company’s 2016 financial performance is presented
Net Earnings $1,659 (77.2)% $3,046 14.9% 19.0%
Diluted EPS $1.05 (76.4)% $1.94 19.8% 24.1%
Source: “Mondelēz International Reports 2016 Results,” Global Newswire, February 7, 2017.