Cadbury Schweppes - Case Study Example

STRATEGIC MANAGEMENT Internal Analysis: Strengths and Weaknesses STRENGTHS WEAKNESSES Cadbury Schweppes is by far one of the world’s largest confectionery and beverage companies in the world with a global market share of 14% for its gum and confectionery sector1. Restricted financial resources: Compared to its rivals and close competitors such as Nestle, Cadbury wholly focuses on the confectionery business. This limits its financial strength whereas its competitors successfully pool in the profits from other branches. Strong Financial Position: The company posted an impressive growth rate of 14%2 in the year 2007 to become one of the fastest growing companies in the world. U.S. is one of the largest markets for confectionery and candies with a strong presence of local companies. Cadbury has a strong brand recognition in European countries and lack adequate expertise for marketing its products in American markets Strong and efficient expansion strategies: The company’s robust expansion strategies including mergers and acquisitions have enabled it to maintain a stronghold in the market as well as expand its reach in newer markets such as North America and Asia. While competing into newer markets Cadbury shall have to compete with not only the established brand names but also with a host of other miscellaneous local manufacturers who have a significant market share. This might include indulging in price to establish a strong foothold in the relatively new market place. Owing to its long and impressive market standing Cadbury and experience in the confectionery business for over 200 years it has successfully established itself as a strong brand name with a strong hold over the customer’s tastes and preferences across the globe. Value Chain Analysis Research & Development: Considering the on going gum war between the two rivals Cadbury and the U.S. based firm Wrigley; it is inevitable for the company to develop new and innovative methods of targeting new audience and capturing a sizeable portion of market share. In a bid to out run its competitor in the gum war Cadbury has come up with the country’s first and only mint flavored gum with a chocolate flavored liquid center – The Trident Sweet Kicks3. The company seeks to target the women consumers who seek to indulge in low calorie sugar free candies and at the same time increase its market share. The company has also recently invested substantially to set up plants in the growing South East Asian markets4. Product Design & Packaging Cadbury’s main motive behind designing its products was to achieve two clearly set objectives that of increasing the market share for confectionery and increasing the market share of Cadbury’s in the snacking category. With this objective in mind Cadbury launched its Fuse concept that helped the company fill a wide gap that existed in the market for a chocolaty snack. Thus the product design for Cadbury’s mainly stems from its need to cater to the market needs and wants. The product packaging on the other hand, is intended to use as an efficient tool to market the product’s inherent attributes as well as signify its potential and market standing. The brand is recognized world wide as a unique, exiting and delicious chocolate snack which is different from its competitors in more than one way. The use of bright color was purposely used to signify the company’s long standing heritage in the confectionery market and the design was used to suggest an explosive taste which worked strongly in its favor as is apparent from its wide scale popularity and acceptance amongst the consumers. Production Cadbury uses various types of production techniques to manufacture and market the finest quality chocolates the world over such as flow production, batch production and job production. The Cadbury Crème Eggs for instance are produced through the automated flow production at its state of the art production facility which works round the clock in shifts which helps the company in offering a world class product and retain its market leadership. Marketing & Sales Cadbury uses all forms of marketing for promoting its products including television advertisements, Billboards, press coverage etc. Another more popular method used by companies’ world wide includes attractive packaging of its products which plays a significant role in differentiating its products from those of its competitors. Distribution Cadbury distributes its products through several channels both direct channels which includes online sales, mail order catalogues, and factory outlets as well as indirect channels such as retail outlets – shops, supermarkets, vending machines, restaurants, cafes, movie halls, theme parks, airlines, trains etc. Customer Service The customer service department at Cadbury’s takes great care of involving constant interaction with its consumers on a regular basis. The customer care unit set up by the company is aimed at dealing with the complaints and grievances of the customers as well as feedbacks received from them. Telephonic conversations form an essential part of interacting with the customers however correspondence through emails, fax and letters are also quite common. For internal communication of the staff, intranet is used as the most common and reliable medium (Seliet, 2005, Pp.74). Key issues affecting the firm in the coming years As Cadbury enter into newer markets there is a high risk of probable price wars with local as well as national level suppliers for instance Wrigley in the United States, and Amul in South East Asia (India). There is an increasing pressure on companies these days towards their policies on environmental issues, and global warming which should be given due significance while charting out its future policies. Moreover, people the world over are increasingly becoming health conscious with the government issuing health warnings and raising concerns over the health and nutrition aspect of such confectionery products. Such a trend would prove to be disastrous for the confectionery brands especially Cadbury whose main business is chocolates and chocolate products. Innovation shall be a key driver in the coming years and the companies which respond to the changing tastes and preferences of the consumers and cater to their health related needs through their products as the same time shall stand to gain immensely. References: Reuters, (2008). Cadbury grabs U.S. gum share from Wrigley, viewed: November 28, 2008, from: Euromonitor, (2008). Cadbury Weighs up Options against Industry Consolidation, viewed: November 28, 2008, from: Confectionery news, (2008). Cadbury targets indulgence with U.K.’s first chocolate flavored gum, viewed: November 28, 2008, from: Patton, D. (2008). AP Food Technology: Cadbury invests in R&D to grow Asia Sales, viewed: November 28, 2008, from: Seliet, H. (2005). Business: BTEC Introduction, Heinemann, Pp.74 Read More