Business improvement and change for Cadbury plc UK - Essay Example

Business improvement and change for Cadbury plc UK Introduction: About the company Cadbury plc, which was previously known as Cadbury Schweppes plc is a sweetshop company. The Company is occupied in the confectionery trade, with contribution across the three classes of chocolate, gum and candy (http://www.cadbury.com/Pages/Home.aspx, accessed 2 March, 2010). The Company has seven business divisions and they are Britain and Ireland, Middle East and Africa, North America, South America, Europe, Asia, and Pacific. The company has been able to develop a global collection of brands (Thomson Reuters, http://uk.reuters.com /business/quotes/company Profile? Symbol= CBRY.L, accessed on March 2nd 2010). Aim of the Assignment The aim of this assignment is to apply Porter’s Five Forces of Analysis to Cadbury’s situation and its ability to enter a foreign market that is France. So it has become all the more crucial to examine the internal and external ecological drives for Cadbury plc in France. Applicable organisational and industrial data is needed for the growth of a Porter’s Five Forces of Analysis. The study of the surroundings and the reflection of the situational elements when planning the market design are vital. This will allow the company to exploit on the organisational strengths, reduce any weaknesses, tap market opportunities and fend off any threats. Internal and external analysis (Appendix 1) The main aim of conducting an external analysis of a company is to recognize the environment in which the organisation functions and appraise the organisation’s placement in that environment. Internal analysis is carried out to find out what additional measures can be taken to bring the company out of any problems which it might face then. These measures are first compared to the present existing plans and outlays and later on the implement process takes place. Back ground of Cadbury plc Cadbury was instituted in the year 1831 by John Cadbury. Its inspired cocoa began processing from the year 1866. This company in the beginning blended with Schweppes in 1969. Presently, this productive company is employing more or less about 43,000 people worldwide. Now, Cadbury Schweppes is the worlds fourth major seller of chocolate and sugar confectionery (Anonymous, 2002). It is headquartered at London in the UK and employs around 46,517 people. The company earned revenues of £5,384 million (about $9,988.3 million) during the financial year ended December 2008, an increment of 14.6% over FY2007. The operating profit was £388 million (about $719.8 million) during FY2008 which is again an increment of 39.6% over FY2007. The net profit was £364 million which is a decrease of 10.1% over FY2007 (source: Datamonitor). Cadbury Schweppes had plans to break up its business into two separate entities out of which one would focus on its key chocolate and confectionery market while the other on its US drinks business (Cadbury plans to split business" – BBC News, 14 March 2007). Porter’s Five Forces of Analysis for Cadbury Plc UK Michael Porter introduced the Five Forces of Analysis which is conceived as the structural assessment of an industry. The five forces are: competitive rivalry, barriers of entry, threats of substitutes, power of buyers, and power of suppliers (2004). Competitive Rivalry (Appendix 2) The chocolate market is without any doubt competitive and the existing as well new companies are seeking to create strategies which prove to be a more intensified competition. Marketing strategy will have to be taken up severely by Cadbury in order to capture the chocolate markets of France. The company can go in for product differentiation and branding as they are good marketing strategies. The company will have to position its products in such segments of the market where it will be difficult for other firms to enter or even attract buyers successfully (2002). Barriers of Entry The entry to the new markets in a new country has many obstructions and the first one is that a new market will require a lot of investment for its stylish factors and brand development will take years to establish. Also the company will have to take into consideration the increase in the cost environment especially for transport, energy, sugar and packaging. Threats of Substitutes The only threat that the Cadbury Company may find in the new market is the presence of other chocolate companies within their area. Therefore, Cadbury has to think all the potentialities in advance or forecast what might happen to keep away from additional terms it might bring. Also the low cost in the global supply chain including the competitive pressure from other branded suppliers both at the national and international level may be a cause of concern for Cadbury plc (Charles W. L. Hill, 2007). The weakness of the company is mainly due to its dependence on the confectionery and beverage market, while other challengers like Nestle (Nestle Annual Report, 2007) have a more varied product portfolio. Cadbury has conventionally strengthened in Europe but as it is new to the US it lacks understanding of the new and up coming markets when compared to its competitors (Cadbury Annual Report, 2007). Power of Buyers Buyers will also have the power in lifting up a company as there might already be existing competitors producing the same products. Also price of the products will have a say when the consumer decides which company products he/she wants to buy. Stressing the consumers’ contentment by rendering fantabulous services is the best way to attract more or maintain the present customers. In addition the increasing obesity and the awareness of the consumers to calorie intake affecting their lifestyles might affect demand for core Cadbury products (Department of Health, 2005). Supplier Power Different suppliers try to establish relationships with different companies producing the same products. But the problem is likely to arise only when the products are not sold. Cadbury should try to strengthen its supplier force and try to make the most of the new market. Marketing Strategy After examining the five forces that strikes the performance of the Cadbury plc, the approach of the company must be stepped up so that it can sell its products in a new market and at the same time function well. By increasing the efficiency and reducing costs Cadbury can survive in any markets whether national or international. This can be achieved by moving to low cost countries where labour and raw materials might be cheap and by reducing internal costs. Also the company must achieve global sourcing and procurement along with wise investment in R&D (Vrontis, D & Vignali, C, 2001). R&D and product establishments have resulted in inventing sugar-free & center filled chewing gum assortments and Cadbury premium indulgence treat. Demand for low-fat, natural and organic confectionery demand seems strong (Cadbury Annual Report, 2007). Also the strength of the company lies in its manufacturing capability which is very strong, its brand name is well established and it is a leader in the field of innovation. One of the advantages of the company is that it focuses on chocolate, chewing gum, candy and has a unique way of understanding the requirements of its consumers (Source: Datamonitor). This will help the company to establish its markets in a new country without any issues. Marketing schemes have a tendency to highlight quality for one of the three reasons. One is to separate the products, especially at the consumer goods markets, so that the product operates principally as a symbol of social importance. Second the company might have to respond to marketing crises or may have to plan as corrective marketing. Third, if the company wants to compete on the quality of the product then financial risk would be lesser than price competition. This stands good for Cadbury as it is a company with narrow profit margins especially during the time of inflation. Conclusion Needless to say if the company wants to market its products internationally then it has to sacrifice heavy capital and marketing expenditures. But as a matter of fact since Cadbury has one way or another gone through this procedure right through the past decade; it will not be a problem that would advance an issue. Another important fact is that as Cadbury is popular in the UK and US, this profile has to be maintained when it enters new markets. Its profile or brand name must remain as it is and not deteriorate. Also Cadbury can go in for joint venture which would help the company to either market a new product or may be even diversify. The company has to bear in mind that it is not very easy to market its present products. Recommendations As Cadbury has plans to introduce its brand name to a new region, it can be indicated that it is under market development. Even though the company has a few current products, it is directing to a new market. In spite of the local market Cadbury must seek bargaining power of the purchasers so that it can be competitive in the market. The company must also bear in mind that substitutes are not its major concern. It would be in the best interest of the company to follow certain strategic recommendations so that it can market its products in France. The company will have to try to increase marketing promotions all over the world, concentrate on the development of non-chocolate growth or acquisitions, develop novelty markets, and get into aggressive developments of new products (“Swoting Your Way to Success” BHC. (1999), website–www.bradhuckleco. com.au). It would also be able to strengthen its financial position as the new market will help in making higher profits than in its domestic market (Ferell. O., et all 1998). Consequently if the company has to market the product in France productively then Cadbury would have to discover how it can get better in order to perform significantly. Also the company will have to find out the situations which might turn up against it so that it can be successful. Cadbury would be in a position to maintain a steady growth of a company by maximising the usage of its production capability and thus increment economies of scale and range. Due to its brand name it will be in a position to retaliate the competitors it encounters in the domestic market by setting on their domestic market (Boone, L., Kurtz, D. 1992). Bibliography 1. Anonymous, 2002. History of Cadbury, www.cadbury.com.au 2. Boone, L., Kurtz, D., 1992. Contemporary Marketing, Fort Worth, TX: Dryden Press. 3. Cadbury Annual Report, 2007. 4. Charles W. L. Hill, 2007. International Business 6e, Mcgraw Hill 5. Cadbury plans to split business" – BBC News, 14 March 2007. 6. Department of Health, 2005. 7. Ferell, O., Hartline, M., G., Luck, D., 1998. Marketing Strategy. Orlando, FL: Dryden Press. 8. http://www.cadbury.com/Pages/Home.aspx, accessed 2 March, 2010 9. Jobber, 2006. Principles and Practices of Marketing, 3rd Edition 10. Nestle Annual Report, 2007. 11. Swoting Your Way to Success” BHC., 1999. website – www.bradhuckleco.com.au 12. Thomson Reuters, http://uk.reuters.com/ business/quotes/company Profile? Symbol= CBRY.L, (accessed on March 2nd 2010). 13. Vrontis, D & Vignali, C., 2001. ‘Dairy Milk in France – A marketing investigation of the situational environment’, International Journal of Operations & Production Management, Vol 103 (4). 14. Porter, M. E., 1980. Competitive Strategy. Free Press. Appendices: 1. 2. Porter, M, Competitive Strategy, Free Press, 1980 Read More