Viewing page 294 of 356

This transcription has been completed. Contact us with corrections.

(Continued from page 290)

result, the bank is generating fee income and deposits while providing us with a very necessary service.

Each company has its own unique way of handling bank relationships and each has a different set of bank service needs. No two are alike. This diversity is the reason why potential banking relationships must be developed on a company-by-company basis. Let me say that again - - on a company-by-company basis. There is no overall, magic formula. One firm may utilize regional bank deposit systems while another requires national disbursement programs. Your major correspondent banks should be urged to help you do the necessary market research. They have the resources and the staff to provide further guidance and information about serving both national and regional companies --- and how to serve them best with what they need and what they want.

Admittedly, the burden is on you. A successful company always has many bankers competing for its business. The more successful you are and the less you may need banking services, the more bankers will pursue you. This is an old story that I am sure you all know too well. Some of these same companies may want to develop minority-owned bank relationships but lack the direct contacts with you and your peers to do so. The burden of responsibility for developing those contacts does fall on your shoulders.

In building these business relationships, your institutions must act not only as conduits for capital but also as channels of information and understanding that link sources of capital on the one hand to minority markets that need it so badly on the other. This communications responsibility can have many facets. For example, I sincerely hope you and your fellow bankers will take an active role in providing input to the President's Task Force Committee on Urban Policy as it formulates plans for redeveloping the nation's inner cities. It seems to me that any effective conceptualization of urban policy should include direction from your institutions, for you will be the instruments of the capital infusion and development process. Also, your guidance will benefit industry by helping it allocate its assistance most effectively in this task.

The diversity of the corporate market and other markets should not be minimized. However, there is an overriding principle common to most industrial companies and financial institutions, that can be of great assistance in building these relationships. That principle is one of quality: quality of products as well as quality of service.

As chief executive officer of Kraft, I know whereof I speak in terms of quality and its benefits. If you were to ask an individual to express in a single word how he or she characterizes Kraft, that word, in most instances, would be "quality." The company has an unbroken history of offering quality products. Kraft is known for its diligence in maintaining the quality of its raw materials, the quality of its ingredients and of the supplies it uses. That quality has been a key element of the company's growth and our success. 

Any financial institution seeking growth ought to maintain the same commitment to quality in the services it offers. This commitment is sometimes difficult and often costly to sustain. Again, speaking from experience, I can tell that we found this to be so.

Some of you may recall that four years ago Kraft was forced to allocate cheese among its customers. That was a costly procedure. The action resulted from several factors, including price controls and shortages of raw materials. We could have met demand in the marketplace by blending inferior and under-aged cheeses into our process cheese products. We could have maintained volume, but we would have been forced to cut quality. We chose not to violate our standards of quality. The relationship of trust with the consumer, that we had spent 75 years in building, simply is not negotiable, in our opinion. We decided on the allocation program to maintain products worthy of the Kraft label. The action temporarily cost us dearly in market share and in other areas. But, painful as the decision was in 1973, I know it was the right one. In 1975 and 1976, and thus far in 1977, we recorded the best years in operating results

[[advertisement]]

[[image - picture of small child]]

WAY TO GO

[[/advertisement]]

Transcription Notes:
[[image: background, color photograph of toddler]]