KALEV

ANNOUNCEMENT



COMPANY'S STRATEGIC DEVELOPMENT PLAN 2000 - 2002



On 21.06.2000 the development council presented AS Kalev efficiency-

aimed strategic development plan.



The company's development council presented Kalev's strategic 

development plan for years 2000 - 2002 and a new management by 

objectives -based structure. The council also presented the company's 

new budget for the current year, which reflects over EEK 10 million 

decrease in expenses in H2. 



The results of development council's work show possibilities to 

enhance the company's efficiency, through results-based reallocation 

of resources, and also through direct cut in costs (over EEK 10 

million) on the account of production, administrative, personnel and 

unreasonable marketing expenses. Personnel expenses will be reduced 

through consolidation of overlapping functions and application of 

principles of management by objectives (MBO), whereby the number of 

company's employees will be reduced by about 25%. However, the main 

effect of strategy-related efficiency will show in the economic and 

financial indicators in a longer perspective.



The general purpose of the strategic development plan is to bring the 

company to profit through enhancing the organization's efficiency. 

The key-points of the development plan are:



1) Transition to result-oriented management, operating under the 

principles of profit centers. Based on these principles the company 

will establish a production team, sales team, a separate resource 

team and support functions. The structure will be re-organized after 

the company's collective vacation in July. In accordance with the 

principles of management by objectives, the company will continue to 

develop the corporate motivation system, and to gather and develop 

the intellectual capital in the company.



2) Marketing and trademark-oriented development. Expansion of product 

line through acquisition of sufficient market share with profitable 

brands. Kalev as a confectionery with long-term traditions will 

surely achieve a leading role in the Estonian market in all sweets 

groups. The development plan sets priority on the domestic market and 

Latvian and Lithuanian markets. According to possibilities the 

company also plans to operate on other markets; however, no 

respective marketing activities are planned.



3) Efficient management of resources and cash flow. Kalev may compete 

on the European confectionery market by indicators of application of 

efficient production. Organization must focus on creation of value in 

production as well as management of its assets.



Directions of strategic development are based on the company's 

current situation and key activities analysis, as surveyed by the 

development council. In the next stage the profit centers will work 

out in co-operation with the development council the strategies for 

structural units, which are then to be added to the company's 

activity plans after approval. 

The company's general strategic development plan with budget changes 

was presented for approval to AS Kalev Supervisory Board.



AS Kalev development council was established by the company's 

Supervisory Board in February this year; the development council's 

activities were launched this March, due to changes in the company's 

executive management. The goal is to develop efficiency-aimed 

strategic development plan in accordance with the changed economic 

environment. The development council consists of several Estonian and 

foreign experts, and company's own employees.





Kristina Seimann

PR manager

+372 62 83 858