Rosenfeld and the Chocolate factory - Essay Example

?Case Study: Rosenfeld and the Chocolate factory Introduction Mergers and acquisitions are often used as tool by entrepreneurs to achieve rapid growth and a short cut to diversification (Burns, 2009). During recession, many companies in the confectionery industry believed that a merger or acquisition would lead to a rapid growth. Cadbury had been performing well even amidst recession. Kraft Foods believed that an acquisition of a strong competitor would increase the sales of their company. This led to Kraft Foods proposal to Cadbury for a takeover. After several bids by Kraft Foods, it had finally acquired Cadbury by ?11.5 billion in the year 2010. Answer 1 Employment Values of Cadbury During the period 1969 to 2008, the company Cadbury was formally known as Cadbury Schweppes plc. This company was one of the finest confectioneries of UK and other countries. The company’s approach in managing the human resources and business strategy was very systematic and unique. The company followed the traditional human resource management principles and approaches. Most of the traditional human resource approaches use the external factors to determine the Human Resource (HR) policy of the company and resource utilization factors. Cadbury had always maintained a congenial and pleasant working atmosphere. Most of the industries during the period 1879 to 1899 in UK lacked trade unions. Cadbury was incurring meagre amount of losses during this period but still the management gave incentives to the workers. The company had become popular because of its employee friendly nature and the workforce increased from 230 to 2685 during the period 1879 to 1899. Traditionally it was believed that labour was a cheap source of capital but Cadbury believed that economizing on labour was unethical and the workers should be regarded as invaluable asset of the company (Price, 2007). Till now Cadbury has taken certain human resource initiatives like sharpening of employee learning skills by imparting extensive training program and conducting managing by value programs (Kozami, 2002). The program focused on interacting and understanding the values of the employees. The company was a member of organizations like Business in the Community and Institute of Business Ethics (Simms, 2005). Cadbury Schweppes believed that for a successful company a set of business ethics is very important because it improves the productivity of the workers and employees. Cadbury Schweppes was taken over by Kraft Foods Group Inc in the year 2010 by ?11.5 billion (House of Commons, 2011). Employment Values of Kraft Food Group Inc The takeover of Cadbury over Kraft Foods was disapproved largely by the employees of Cadbury and the Britishers. The employees of Cadbury were unsure about the security of their jobs. The management of Kraft had claimed that after the acquisition they would not shut down any of the Cadbury’s plants and had made some commitments to employees. Kraft had failed to keep its commitment by closing down the Somerdale factory which was one of the major chocolate manufacturing industries of Cadbury (House of Commons, 2010). Some economist believed that the management of Kraft lacked sufficient knowledge and expertise to operate the Somerdale Factory. The management of the Kraft Foods stated that it would honour the terms and condition given to workforce of Somerdale factory after the closure of the factory. The HR director of Kraft, Mr. Richard Doyle claimed that along with severance packages, a job centre facility was available to the workforce of Somerdale factory (House of Commons, 2010). The CEO of Kraft foods Ms. Irene Rosenfeld did not give any specific job guarantees to the workforce of Cadbury. Kraft Foods is preparing to close the salary pension scheme that was provided to the workforce of Cadbury and cut up to 150 jobs. Moreover, the former employees of Cadbury have not been feeling safe and secure about their future. This can hamper the productivity of Kraft Foods. Answer 2 Organizational change of values and relationships Leadership and change are both interlinked with each other. The purpose of a leader is to bring about a successful change in the work culture and ethical behaviour of the employees. There are two kinds of change in a company positive and negative. A systematic and planned approach to change leads to positive outcomes in a company. An emergent change will lead to negative outcomes. A managerial culture change program will integrate employees into the company, align their performances with the company objectives and improve competitiveness (Hassard, Burnes and Boje, 2012). Prior to the acquisition, Cadbury itself had practiced certain changes in the approaches of Strategic Human Resource Management (SHRM). The first change took place when the company had merged with Schweppes in the year 1969. The company had changed the Quaker traditional beliefs to a result oriented approach. They had implemented a program called Managing for Value which lay emphasis on employees understanding towards company objectives (Child, 1990). The second change occurred when Cadbury acquired Trebor Bassett and Adams in the year 2003. They had implemented programmes like ‘Growing our People’ and ‘Passion for People’ programmes for the betterment of the employees. These changes had brought about positive changes in the company (Zaman, 2011). The hostile takeover of Kraft Foods over Cadbury has sparked controversies in UK. Kraft Foods has been criticized of not being able to manage the operations and workforce of Cadbury. As mentioned before it has been accused of failing to keep the commitments towards the employees and workers of Cadbury. The workforce who had worked for Cadbury lacked enthusiasm and were sceptical about their future. The employers of Kraft were unable to provide specific guarantees about the job security of the employees. This had severed the relationship of employers and former employees of Cadbury and has also hampered the working atmosphere of the company. In the year 2012, Kraft Foods provided a progression report to the House of Commons however the details in the report deviated from topics like headquarter relocation, employee benefits and salary and the working condition being provided to them. The management of Kraft Foods do not understand the gravity of the situation. Kraft foods had promised to manage most of the operations of Cadbury brands in the UK itself however, most of the strategic decisions of the company are being made in the Zurich headquarter of Kraft Foods. Ms. Irene Rosenfeld has stated that it would implement a harmonization programme which focuses on improving the relationship between employer and employees (House of Commons, 2011). Due to repeated protests of the former employees of Cadbury in front of the British parliament in the year 2011 the government has decided to conduct a review of takeover and corporate social responsibility. This attitude of the management team of Kraft reflects that they are very much profit oriented and are conducting the harmonization programme to remain in the good books of the public. The management team of Kraft Foods should realize that these kinds of programmes are just attempt to create an emotional attachment with the employees till a limit (Hassard, Burnes and Boje, 2012). The feeble attempt to plan cultural changes can lead to unexpected consequences. The former workforce of Cadbury was very dedicated and felt comfortable with the management policies of the company. The management of Kraft Foods should identify their problems and implement programs which can facilitate communication between the employers and employees. They should clearly communicate the company objectives and goals to the employees. The productive value and the reputation of Kraft Foods have been decreasing gradually. This is because whenever a new company tries to enforce its new rules and regulations, failure is some form or other always follows the way. Kraft Foods should try to manage the two important drivers: Models and Organizational drivers. Organizational drivers include mission, vision, policy and the workforce strategies of The Company and Models reflect the behaviour of the employees, subordinates and colleagues. The most powerful models reflect the behaviours of both the company’s leadership and peer groups. Currently, Kraft Foods lacks a strong policy framework which would enable them to establish a strong relationship with their employees. Answer 3 Impact of change of culture of the employees in Kraft Foods The acquisition of Cadbury may have been done with the best intentions however, the outcome has been negative. The companies have originated from different countries with a major difference in the culture. The former employees of Cadbury are taking time to accept the cultural change within the company. A total of 120 out of 170 managers have quit the company since the acquisition. Employees from the creative, design and marketing department have quit the company in the year 2011 (Bridge, 2010). This is due to the fact that Kraft Foods has started to take strategic decisions which have hurt the sentiments of the employees and the Britishers. The management team of Kraft foods have using powdered Milka chocolate from Germany in some of the chocolates and reducing the size of the famous Dairymilk chocolate bar. They have also started taking strategic decisions regarding the chocolates Buttons, Creme Eggs, Milk Tray and Crunchie chocolate bars (Bridge, 2010). This piece of news has disturbed the former employees of Cadbury and the Britishers. Britishers have a soft corner towards Cadbury since it is a 200 year old company which has originated from UK. The former employees of Cadbury feel that the new management team of Kraft Foods is stiff and bureaucratic. One of the major reasons can be the major difference in the culture of both the companies. Both companies are originating from different countries which have different cultures. Post acquisition, the major portion of Kraft Foods revenue emerges from the Cadbury DairyMilk chocolates (Kraft Foods, 2011 Answer 4 Work Ethics of the employees Ethics are a set of moral values and principles which differ from person to person. Theorists believed that business ethics help a company to distinguish between right and wrong. There are no moral set of guidelines that would help an individual or a company to tread on the correct path. Managing a culture change in a new company is not an easy task and needs a lot of systematic planning and approach. As mentioned before, most of the former employees of Cadbury have quit the company because of their reluctance in accepting the new culture. The work ethics of the employees might be affected if the managers of Kraft Foods do not take an urgent initiative. The managers need to study and analyze the culture and business ethics of Cadbury and try to adopt one or two policies. Sudden changes in a company may have a negative impact on the employees and this might hamper the efficiency of the employees. Kraft Foods value multi-culturism whereas Cadbury cherish the value of British heritage. In terms of the working atmosphere, Cadbury gives a more family feel than Kraft. References Bridge, S., 2010. Milka Creme Eggs' and smaller bars? Exodus from Cadbury as fears grow over break from tradition. Daily Mail [online] 25 July. Available at: < http://www.dailymail.co.uk/news/article-1297380/Exodus-Cadbury-fears-grow-march-Milka.html > [Accessed 22 March 2005]. Burns, P., 2009. Entrepreneurship and small business. [pdf] Available at: http://www.up.edu.ps/upinar/moodledata/2359/Entrepreneurship_and_Small_Business-Paperbook.pdf> [Accessed 23 March 2013]. Child, J., 1990. Reshaping work: The Cadbury experience. Cambridge: Cambridge University Press. Hassard, J., Burnes, B. and Boje, D., 2012. The Routledge companion to organizational change. London: Routledge. House of Commons, 2010. Mergers, acquisitions and takeovers: The takeover of Cadbury by Kraft. London: The Stationery Office. House of Commons, 2011. Is Kraft working for Cadbury: Sixth report of session 2010-12, report? London: The Stationery Office. Kozami, A., 2002. Business policy and strategic management. 2nd ed. Noida: Tata McGraw-Hill Education. Kraft Foods, 2011. Update on progress made since Kraft Foods acquired Cadbury. [pdf] Available at: http://www.kraftfoodscompany.com/SiteCollectionDocuments/pdf/Kraft_Cadbury_Progress_Update.pdf> [Accessed 23 March 2013]. Price, A., 2007. Human resource management in a business context. 3rd ed. London: Cengage Learning. Simms, H., 2005. Organisational behaviour and change management. Hertfordshire: Select Knowledge Limited. Zaman, N.U., 2011. Cadbury's employee relationship management. Berlin: GRIN Verlag. Read More