The Acquisition of Cadbury by Kraft - Research Proposal Example

Research Brief Introduction and Background research Strategic alliances are strategies used by modern businesses to strategically position themselves in the business environment. Although strategic alliances are usually embraced by all stakeholders since they generate insurmountable benefits, there are instances when the shareholders among other stakeholders in the target company may reject proposals for acquisitions and in response, the acquiring firm launches a hostile acquisition strategy (Lee & McKenzie 2006). Such a hostile bid and acquisition is the acquisition of Cadbury by Kraft. Subsequent to the acquisition, Kraft acquired Cadbury at 8.40 pounds per Cadbury share, which valued the company at 11.5 billion pounds (Hunt, 2009). Overall, Kraft’s shareholders parted with billion of dollars which included more than eleven billion dollars in cash, more than eight billion dollars worth of Kraft stock, 1.3 billion dollars in streamlining and reorganizing Cadbury, despite the fact that Cadbury had only registered underlying profit from operations of only one billion dollars in the year 2008 (Farrell, 2010). Additionally, a 19% premium to the price of 840 pence per share fair value estimate, which was more than thirteen times the ETDA, that is, earnings before interest, taxes, depreciation, and amortization (Benoliel, 2011). With such kind of money changing hands, it is fundamentally crucial to analyze if the deal was worth it for both companies by examining if the change of ownership of Cadbury to an American company Kraft would affect customer perceptions and sales, and what will be the future performance of Cadbury. For this reason, this research brief seeks to find out if the change of ownership of Cadbury to an American company Kraft would affect customer perceptions and sales, and analyze what will be the future performance of Cadbury. Research Questions The main research questions are 1. What are the customer perceptions about Kraft prior to and after acquiring Cadbury? 2. What are the customer perceptions about Cadbury following the company’s hostile acquisition by Kraft? 3. Does the acquisition of Cadbury by an American company, Kraft, affects in any way the customer perceptions about the company? 4. What are the customer’s insights in regards to the future performance of Cadbury following the hostile acquisition by Kraft? Aims and Objectives The main aims and objectives of the research are 1. To establish what the perceptions of customers are following the hostile acquisition of Cadbury by Kraft 2. To find out if the acquisition of Cadbury by an American company influences positively on Cadbury’s current and future performance 3. To find out if the acquisition of Cadbury by an American company influences negatively on Cadbury’s current and future performance 4. To determine whether the volume of sales are going to increase or decrease following Kraft’s hostile acquisition of Cadbury Proposed Research Methods In order to analyze if the change of ownership of Cadbury to an American company Kraft would affect customer perceptions and sales. To examine the research questions in breadth and in depth and in order to meet the set research aims and objectives, the most suitable research methodology for data collection is a combination of both qualitative and quantitative research methodologies. Qualitative research methodology The main reasons for using qualitative research methodology is the ability for qualitative research instrument to determine the attitudes, viewpoints and perceptions of participants, which generates broad insights into the research problem as supported by Thomas, (2003). Through qualitative research methodology, the researcher will be able to acquire specific answers to specific questions that are crucial in responding to the research questions and more importantly in helping achieve the research aims and objectives (Wengraf, 2001). Quantitative Research methodology On the other hand, quantitative research methodology will be suitable for this research owing to the capacity of quantitative research instruments to cover a large population sample needed for this research to gather adequate amount of data that are fundamental in validating the established hypothesis as echoed by Saris & Gallhofer (2007). As argued by Thomas (2003), by relying on quantitative research methodology, it will enhance the validity, reliability of the data gathered and help ensure that the large population sample is adequately reached and the required data is collected (Thomas, 2003). However, it is important to mention that quantitative research methodology has specific limitations that might impact on the research outcomes, which are that the quantitative research tools such as questionnaires are very rigid, it is difficult to introduce changes to the tool during the research process, and often this methodology primarily uses theoretical information. Be it as it may, these limitations are adequately addressed and resolved by using qualitative methodology. For this reason, combination of the two research methods will ensure the limitations of either are countered by each strengths which will ensured the gathered, analyzed, processed and presented data are not only relevant, valid and accurate but also credible and are free of errors. The semi structured interviews and questionnaires are the two research techniques used to collect primary data. 1. Semi structured interviews The most suitable qualitative research instrument for this research is use of semi-structured interviews. According to Connaway & Powell (2010), semi structured interviews generates qualitative data and are essential in taking into account the non-verbal element of communication which are essential in determining the accuracy and credibility of information. The use of semi structured interviews will allow the researcher to seek clarifications on information given by participants and the researcher will have the opportunity to develop new questions based on emerging themes, which will help enrich the research protract as supported by Saris & Gallhofer (2007). This research method enhances the element of relevance since the researcher is able to ask specific questions and obtain responses in real time (Thomas, 2003). Nevertheless, semi structured interviews are prone to researcher and respondent bias, they consume significant amount of resources in terms of money, time and energy and often, there is the risk the respondent may not have sufficient time needed to respond to all questions which can impact on the overall results (Wengraf, 2001). As it may, the benefits of this research method override its limitations thus justifying its suitability and use in this specific research. Among core issues addressed by the semi-structured interviews includes overall perceptions of consumers about Kraft and Cadbury, specific attitude and perceptions of customers about Cadbury following the hostile acquisition, the likelihood of shifting to substitute products, the level of brand loyalty and the possible future performance of Cadbury. 2. Questionnaires The quantitative research technique selected for this specific study is the use of questionnaires, which are meant to collect primary data to help examine the effect on customer perceptions and sales of the change of ownership of Cadbury to an American company Kraft. Despite the fact questionnaires are susceptible to respondent bias when respondents are responding to the instrument, the use of questionnaire generate varied advantages that are deficient in other quantitative research methods such as telephone interviews (Foddy, 1993). The main reason questionnaires are the most suitable instrument in collecting data in this study is the quality of data it obtains since respondents have sufficient time to evaluate the questions and answers carefully, thus improving data reliability and accuracy as noted by Connaway & Powell (2010). Oppenheim (1992) notes that questionnaires allow uniformity through the employment of standard questions while the use of closed questions and codes increases effectiveness during the process of data entry that considerably save time and lessen data entry errors which can affect the research findings and conclusions. Other than that, questionnaires are easy in administering, they are relatively cost effective, and they can be employed on a large sample such as required for this study. More importantly, they can be used to collect data from people hard to reach such as those in marginalized areas or those in far off areas through the use online questionnaires and mail questionnaires (Saris & Gallhofer, 2007). Wengraf (2001) argues that, questionnaires are effective in analyzing perceptions and attitudes of respondents and they allow their anonymity. Project Plan, Budget and Timeline The research process is expected to take approximately five months commencing June 2012. During the month of June and July, the researcher will deal with research sampling, designing and structuring of the semi structured interviews and questionnaires. In August and September 2012, the process of data collection will take place and in the month of October, the gathered data shall be cleaned, processed, analyzed and eventually presented to relevant parties. In regards to the Budget, the main issues and materials that shall be accounted for in the budget includes printing materials, field researchers, transport, computer systems, data entry agents and an additional finances as contingency fund. Particulars Months (Period) June July August September October Research sampling, design, and structuring Data collection Analysing of available data Issues to be considered In order to ensure ethical considerations are taken into account, the researcher shall avail participants with confidentiality forms which are intended to assure the participants that the information collected are purely for the specific research purposed and the information shall safely be disposed after usage (Foddy, 1993). Participants shall be given consent forms to establish that their participation is out of their own free will and they shall be given the freedom to withdraw their participation, if they so wish. Authorization forms shall also be acquired from relevant boards and stakeholders in order to validate the credibility of the study. Potential use of the research Findings The study on if the change of ownership of Cadbury to an American company Kraft can affect customer perceptions and sales is crucial for the management of the Company. In informing their current and future decisions and strategies on how best to retain the positive perceptions and attitudes the customers have and ameliorating the existing negative perceptions and attitudes, in order to ensure sustainable competitiveness of the company. For the investors, the research findings will generate sufficient information on whether to invest in the company or not and for other companies that seek to enhance their competitive advantage through hostile acquisitions, the research outcomes will help them in deciding whether a hostile acquisition strategy is the best move or alternative strategies are more suitable. Conclusions and Recommendations Strategic alliances have their own advantages and limitations to both the acquiring and the target company. In case of hostile takeovers, the stakes are even high since the strategy has the potential to backfire on both parties. In regards to the hostile acquisition of Cadbury and Kraft, it generated a lot of controversy and oppositions from the UK public, the union, and other corporations and even from the government. Therefore, it is crucial to examine and research on the effect the hostile acquisition has had on the perceptions and sales of customers in order to ensure investors make informed decisions. For this reason, the research design developed above has been proposed. The main recommendation is that the findings of this study will generate information on the strengths, weaknesses, opportunities and threats of the company, which the company should use as a baseline for developing suitable, effective and efficient strategies that capitalize on its strengths, ameliorate its weaknesses, avert risks and more importantly capture available opportunities. References Benoliel, .M. 2011. Negotiation Excellence: Successful Deal Making. London: World Scientific. Connaway, L.S. & Powell, R.R. 2010. Basic Research Methods for Librarians. New York: ABC-CLIO. Farrell, G. 2010. “Chief cheers Kraft - Cadbury blend.” Financial Times - Thursday, September 16, 2010. Foddy, W. 1993. Constructing questions for interviews and questionnaires. Cambridge: Cambridge University Press. Hunt, P.A. 2009. Structuring Mergers & Acquisitions: A Guide to Creating Shareholder Value. Sidney: Aspen Publishers Online. Lee, D.R. & McKenzie, R. B. 2006. Microeconomics for MBAs. New York: Cambridge University Press Oppenheim, A.N. 1992. Questionnaire design, interviewing and attitude measurement. London: Pinter Publishers Limited. Saris, W.E. & Gallhofer, I.N. 2007. Design, Evaluation, and Analysis of Questionnaires for Survey Research. Sidney: Wiley-Inter science. Thomas, R.M. 2003. Blending qualitative & quantitative research methods in theses and dissertations. London: Corwin Press. Wengraf, T. 2001. Qualitative research interviewing: biographic narrative and semi-structured methods. London: SAGE. Read More