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The Morning Ledger: Is Zero-Based Budgeting to Blame for Kraft Heinz’s Woes?
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Kraft Heinz’s new CEO said he sees potential to boost sales of Planters nuts, Heinz products and Philadelphia cream cheese. PHOTO: TIFFANY HAGLER-GEARD/BLOOMBERG NEWS
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Good morning. As Kraft Heinz Co.’s new Chief Executive Miguel Patricio prepares to take over, he should ponder whether being better known for cost-cutting than for your ketchup or mac ‘n’ cheese is a recipe for failure, The Wall Street Journal’s John D. Stoll writes.
Many point to zero-based budgeting as a primary source of Kraft’s headaches, including a $15 billion writedown earlier this year. Zero-based budgeting calls on managers to begin each fiscal year with a clean-sheet approach to expenses and financial targets. Under this system, a quirky marketing campaign or a whizzbang invention that made so much sense last year can be killed because it doesn’t square with this year’s financial goals.
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Many companies have instituted zero-based budgeting in recent years. Walgreens Boots Alliance Inc. has adopted it as a way to achieve better transparency and slash $1 billion in costs. Tobacco giant Philip Morris International Inc. will also plan each year’s budget from scratch to free up capital for new tobacco alternatives.
But it has its limitations. “If you are so rigidly focused on what is directly in front of you you’ll miss a lot,” said Brian Wieser, head of business intelligence at GroupM, WPP PLC’s ad-buying agency. “It’s critical to optimize against forests rather than trees.”
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AT&T Inc., Nasdaq Inc., Boeing Co., Caterpillar Inc., T. Rowe Price Group Inc., Microsoft Corp., Facebook Inc., Visa Inc., Chipotle Mexican Grill Inc., Paypal Holdings Inc. and Raymond James Financial Inc. are among the companies scheduled to report earnings today.
The WSJ's Jeff Horwitz has three things to watch in Facebook's results. And here's what to expect in Microsoft's and Tesla's results.
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Deutsche Bank’s Supervisory Board Chairman Paul Achleitner at the bank's annual meeting in Frankfurt, Germany, on May 24, 2018. PHOTO: KAI PFAFFENBACH/REUTERS
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Deutsche Bank AG executives have discussed creating a new unit to house unwanted assets and businesses that could be earmarked for closure, part of contingency planning under way should a possible merger with German rival Commerzbank AG fall through, according to people familiar with the matter.
A change atop Morgan Stanley’s retail brokerage holds clues for the race to succeed Chief Executive James Gorman and shows the firm leaning into the type of plain-vanilla banking activities it once avoided.
SoftBank Group Corp. plans to invest about $1 billion in Wirecard AG, a move that comes after a 30% decline in the German payments company's share price and an investigation into alleged accounting misconduct in Asia.
Since Lululemon Athletica Inc. helped turn yoga pants into a $100 item, getting a nearly identical pair has gotten a lot easier. But the apparel company’s new Chief Executive Calvin McDonald says there’s no need to discount.
Anadarko Petroleum Corp., a day before announcing its sale for $33 billion, sweetened the payout its top executives can reap in the event of a deal by millions of dollars, according to a compensation firm’s analysis of the company’s changes.
Airbnb Inc. has made strides against travel-industry incumbents, but is now facing its own competition from an emerging group of startups.
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A crash-test dummy and deployed air bags in a test conducted for the Korean insurance industry in 2016. PHOTO: SEONGJOON CHO/BLOOMBERG NEWS
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U.S. federal safety regulators are expanding an investigation into faulty air bags to encompass 12.3 million vehicles on concerns that an electrical-system issue may prevent them from deploying in a crash.
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The U.S. Federal Reserve moved to make it easier for private-equity funds and other investors to own large stakes in banks without triggering its oversight, in a plan that could also make it easier for financial technology startups to obtain investment cash.
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Alphabet Inc.’s Wing Aviation unit has received the first U.S. authorization to operate a fleet of unmanned aircraft for consumer-goods deliveries, a move that could jump-start various companies’ commercial drone services nationwide.
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Lawyers for Theranos Inc. founder Elizabeth Holmes on Monday fought off efforts by the U.S. government to set a trial date as the two sides argued over the enormity of evidence involved in the case and the difficulty in lining up high-profile witnesses.
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A U.S. financial regulator charged three foreign-exchange trading businesses and five executives with operating a $75 million scheme that used investor funds for fraudulent payments and the purchase of private-plane charters, exotic vacations and other big-ticket items.
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The U.K. government has approved the use of Huawei Technologies Co. equipment for the country's new 5G data network despite warnings of a security risk posed by the Chinese telecommunications firm, the BBC reports.
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New homes in Lindon, Utah, shown in March. PHOTO: GEORGE FREY/BLOOMBERG NEWS
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Purchases of new homes in the U.S. increased in March, driven by sales gains in most parts of the nation.
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The British government is considering giving lawmakers a vote on a critical piece of Brexit legislation as early as next week, a change of tack as it tries to kick-start the country’s stuttering exit from the European Union.
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Unisys Corp., the Blue Bell, Pa.-based computer-services company, named Michael Thomson as interim CFO, effective April 26. He succeeds Inder Singh, who earlier this month announced plans to resign.
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Mr. Thomson is currently vice president and corporate controller, a role he has held since 2015. Before that, he was controller of Towers Watson & Co. from 2010 to 2015.
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