- Published: August 31, 2022
- Updated: August 31, 2022
- Language: English
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Cadbury was formed by a merger in 1969 . Since then the business has expanded into a leading international confectionery and beverages company. Through an active programme of both acquisitions and disposals the company has created a strong portfolio of brands which are sold in almost every country in the world. Cadbury has nearly 54, 000 employees and produces Fast Moving Consumer Goods (FMCG).
Its products fall into two main categories:
Its portfolio of brands include leading regional and local brands such as Schweppes, Dr Pepper, Orangina, Halls, Trebor, Hollywood, Bournvita, and of course, the Cadbury masterbrand itself. These Products are sold in a range of countries depending on consumer preferences and tastes.
The core purpose of Cadbury is “ working together to create brands people love”. It aims to be judged as a company that is among the very best in the business world – successful, significant and admired. The company has set five goals to achieve this, one of which relates to Corporate Social Responsibility (CSR) – “ To be admired as a great company to work for and one that is socially responsible to its communities and consumers across the globe”
Cadbury plc is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. It has number one or number two positions in over 20 of the world’s 50 largest confectionery markets. Cadbury also has the largest and most broadly spread emerging markets business of any confectionery company. With origins stretching back nearly 200 years, Cadbury’s brands include many global, regional and local favourites including Cadbury, Creme Egg, Flake and Green & Black’s in chocolate; Trident, Clorets, Dentyne, Hollywood, Bubbaloo and Stimorol in gum; and Halls, Cadbury Eclairs and The Natural Confectionery Company in candy. (Cadbury, 2010).
Impact of social welfare and industrial policy initiatives on Cadbury’s and the wider community
The Cadbury Foundation, set up in 1935, is a corporate foundation working under charity commission guidelines, now funded by Kraft Foods. The Foundation believes, as the Cadbury Brothers did all those years ago, that making a positive difference in our local community is not only good news for the community but also good for business. They want The Cadbury Foundation to make the most impact possible in local communities. The Foundation therefore focuses its funding on the areas which we think are really important, they reflect the needs of everyday environment: employability, enterprise, the environment, London 2012, and health and welfare. Doing this means that we can focus our funding and help to make a bigger impact. The Foundation is managed by the Chair, Neil Makin, a retired Cadbury executive, and six trustees. They meet three times a year, in the Spring, Summer and Autumn to consider requests for funding .
The Cadbury’s group has a Corporate Community Investment strategy of ‘ Creating Value in the Community’. This focuses on creating community partnerships that generate real, sustainable added value in:
Education and enterprise
Health and welfare
EIRIS (Ethical Investment Research Service) survey 2002 commended the company for its carefully structured community involvement programme. CTB is also a member of the Business in the Community Percent Club; CTB’s community contribution was around two of its UK pre-tax profits.
In 2001 CTB launched its Community – “ You Can Make a Difference” programmes to maximise the impact of the business, its employees and community partners. Over 1, 500 of the company’s 7, 000 workforce have been involved so far. Stakeholder expectations Cadbury Schweppes’ core purpose is ‘ Working together to create brands people love’.
The success of the organisation in meeting this purpose can be measured in terms of the value created for shareholders. However, this success is achievable only if the company respects its commitment to every one of its stakeholders.
CTB believes in creating prosperous, educated and socially inclusive communities, not only because this is part of the company’s heritage but because it is the right thing to do and makes good business sense.
Corporate Community Investment has always been a core part of CTB’s business philosophy. It is also something that its stakeholders expect. Stakeholders are the groups and individuals that play a part in an organisation.
The external environment
Successful businesses seek to create a fit between their line of business, way of operating and external environment. In recent years, there have been attempts to make UK society more inclusive. Groups that used to be treated as ‘ outsiders’ (e. g. disabled people, single parent families, people living in areas of poverty and educational disadvantage) are being brought into the mainstream of social and economic activity.
The current UK government is promoting social inclusion and the part that businesses can play in bringing it about. For example, the government has encouraged businesses to work in partnership with government agencies and the local community to:
Improve education and training opportunities
Support small local businesses
Promote housing projects
Create employment opportunities through Welfare to Work programme.
In the modern world the obligations of business to society have broadened and companies like CTB are building on a heritage of good citizenship in a more strategic way.
CTB’s community contributions take many forms e. g. cash grants, sponsorship, donations in kind, as well as the time, effort and skills that CTB people put into the communities in which they live and work.
Impact of macro-economic policy and the influence of global economy on Cadbury’s.
Here is a terrific example of how a long established business sees an emerging economy not just opportunity for growing sales and profits but also as a centre for production.
MY evaluation of the impact of macro-economic policy is Spurred on by rising incomes and consumer demand, Cadburys is hoping to consolidate its dominant position in the Indian chocolate market by encouraging coconut plantations to switch production and establish a much bigger cocoa production capacity in India. The incentives to expand cocoa supply in India are strengthened by the 30% tariff imposed on imports of cocoa into India from countries such as Ghana and the Ivory Coast. The FT reports that Cadburys is hoping to source all of its cocoa beans domestically by 2015 and coconut farmers may hold the key as cocoa seedlings grow alongside coconut palms in southern India and therefore do not require fresh clearing of forests for plantations.
The FT article claims that Cadbury controls more than 70 per cent of the chocolate market in India with a presence in 1. 2m stores while Nestlé controls about 25 per cent. It enjoys a dominant position in a market where sales are rising by more than 20 per cent per year.
Reinforcing that market dominance is key for Cadburys – it has spent heavily on marketing revamped chocolate brands in the Indian market including heavy cricket-related sponsorship – but having a domestic supply chain will do more that pure marketing plays to keep their profits rising.
Embroiled in what looks likely to be a protracted takeover bid from Kraft, Cadbury’s has suffered a blow with the news that its share of the UK confectionery market has dipped below 30 per cent for the first time in a while. The Times reports that Cadbury’s chunk of the chocolate market by value slipped 1. 7 per cent to 29. 8 per cent last month, the first time that it has fallen below 30 per cent all year. Market share of Mars, its biggest rival, slipped 0. 6 per cent in the period. There are signs that aggressive pricing of basic chocolate bars by discount retailers such as Aldi and Lidl is having an effect; so too is the growth of sales for own-brand bars offered by Tesco, Sainsbury’s and the ongoing battle for customers between Waitrose and Marks and Spencer. Some customers have complained about a 75% rise in the price of a 230g bar of Dairy Milk in the last 12 months. High world cocoa prices have explained some of the price hike but Cadbury’s tactic of launching a new 100g bar priced at £1 had led some to claim that their are deliberately trying to anchor their prices at a higher level to raise profit margins as a defence against the takeover bid. The decline in market share suggests that chocoholics are more price sensitive than Cadburys might have forecast.
More than 3, 000 Cadbury employees face a three-year pay freeze unless they opt out of the confectioner’s final salary pension scheme.
New owners Kraft Foods, the US food group, has told 3, 600 staff that they must accept a pay cap after it discovered an obscure clause in Cadbury’s pension trust deed that makes it almost impossible to close the scheme.
Kraft did not know about the clause, which is at least 30 years old, until after it acquired Cadbury for £11. 6bn ($17. 6bn).
A person with knowledge of the Cadbury pension fund said he did not know why such an unusual clause existed, but it could be linked to Cadbury’s Quaker heritage and its doctrine of giving a fair deal to staff and suppliers. Kraft is forcing employees to accept a pay freeze because it believes this is the only way it can get its future retirement costs under control. “ The scheme is unaffordable going forward,” said one person involved
Kraft came under fire from British workers over its broken promise to save from closure the Somerdale factory in Keynsham, Bristol, thereby safeguarding 400 jobs
Reader M. P., a retired money manger who ran a top-rated fund noted:
So Kraft did not do due diligence and now it wants to play dirty. Is it any wonder that American finance is now despised everywhere, even in the U. K!
Yves here. So welcome to 21st century capitalism, where management never has to admit, much the less bear the consequences of its errors. Just take it out of the hide of the little guy.
My evaluation of the influence of the global economy isThe takeover battle for Cadbury is all but lost, but the political battle may have only just begun. The sight of one of the most famous names in British industry falling to a hostile foreign bid would be controversial at the best of times, yet just months before a general election, the triumph of City short-termism over the job prospects of thousands of manufacturing workers could prove even more toxic than the recent furore over bank bonuses.
To make matters worse, the government has already conceded there is little industrial logic behind Kraft’s bid: all about making “ a fast buck” is how Peter Mandelson dismissed the original approach. The public intervention of the trade secretary marked a major shift in New Labour thinking towards the openness of the British economy, which has hitherto been held up as one our strengths. But with unemployment rising, and British companies blocked from making foreign acquisitions, it has become harder and harder to defend the tendency of British institutional investors to cut and run at the first opportunity. The Tories, who have been suspiciously quiet on the subject, will find it difficult to sit on the fence during an election campaign fought across the dozens of marginal seats in Cadbury’s West Midlands heartland.
A chocolate manufacturer might seem an odd choice of battleground. Though it employs some 6, 000 people in the UK (45, 000 people globally and many more indirectly) this is no high-tech industry of the future. But politicians of all persuasions are beginning to question the cumulative affect of Britain’s relatively open market in corporate control. My own estimate is that around 50 leading companies (of a size to qualify for entry to the FTSE-100) have been swallowed up in recent years. In contrast, I can only think of handful of really large acquisitions made by British multinationals: BP’s takeovers of Amoco and Atlantic Richfield, Vodafone’s bids for Mannesman and Airtouch and the distastrous Royal Bank of Scotland purchase of ABN Amro.
By any international standards, the roll call of British names to lose their independence is stunning. In fact, it’s worth reading the rough and ready list I complied in full to see just how many household names have gone
The mission and values statement for Cadbury’s
Cadburys means quality, this is our promise . our reputation is built upon quality , our commitment to continual improvement will insure that our promise is delivered
A case could be made that shareholders will have a different view of social responsibility to employees in a business. The employees seek better pay and conditions, and opportunities for personal development and a career ladder. The shareholders seek increases in share prices and good levels of dividend. However, the two are really interlinked. A company that provides good working conditions and values its employees will benefit from committed, hard working employees who enhance long term profits.
Cadbury Schweppes takes its corporate social responsibility agenda seriously. As such it is a member of organisations like Business in the Community, International Business Leaders Forum and the Institute of Business Ethics. These organisations seek to improve the impact companies have on society. A key part of the Cadbury Schweppes approach to business lies in its ethical behaviour and close relationship with its stakeholder groups. As a company it believes that: “ Respecting human rights and trading ethically is fundamental to the way we work, not just within our owned and operated businesses but also in how we interact with our wider value chain.*”
In ‘ Our Business Principles’ Cadbury Schweppes continues: “ We believe that good ethics and good business go together naturally, to produce the best long term results for all our stakeholders.”
The original Cadbury company was heavily influenced by the Quaker values of the Cadbury family who started the chocolate business over 150 years ago. The Quakers promote justice, equality and social reform. The legacy of these ideals informs Cadburys’ culture today and unites its many businesses around the world who uphold this heritage and act in an ethical manner.
From the outset, Cadbury treated employees with respect and cared for their welfare. The company’s site at Bournville, near Birmingham, has always been more than just a factory having extensive amenities such as housing, sports facilities and parks all being part of the original complex
Kraft is the main shareholder of Cadbury,
U. S. food giant Kraft today won its five-month battle for control of Cadbury after shareholders backed its takeover offer.
The vote paves the way for Kraft to snap up Cadbury – ending its 186-year history as an independent company.
Kraft’s cash-and-shares deal, recommended by the Cadbury board two weeks ago, values the UK firm at around £11. 4billion.
Kraft’s announcement came after one of its key shareholders revealed it had voted against the firm’s plans to sell new shares to help fund the proposed Cadbury takeover
However, Hathaway, which owns 9. 4% of Kraft, said it might change its vote if the final bid “ does not destroy value for Kraft shareholders”.
BBC business editor Robert Peston said that, as a result, Kraft’s plans to buy Cadbury were now in jeopard
Cadbury Creme Egg Twisted Bar
Cadbury Double Decker
Cadbury Dairy Milk Freddo
Country Style (UK)
Creme Egg Mint (UK)
Dairy Milk Almond & Honey
Dairy Milk Orange Chips
Dairy Milk with Shortcake Biscuit
Dairy Milk with Creme Egg
Dairy Milk Crispies
Dairy Milk Wafer
Double Decker with Nuts
Dream with Strawberry
Chocolate Cream – dark chocolate with fondant centre
Five Centres (no longer in production)
Green & Black’s
Green & Black’s is range of upscale organic and Fair trade chocolate. The “ Maya Gold” variety was the first UK product to be awarded Fairtrade certification in 1994. Green & Black’s also produces a range of ice cream, biscuits, and hot chocolate.
Maya Gold – dark chocolate with orange and spices
Raisin & Hazelnut
Hazelnut & Currant
Hazelnut, Almond & Brazil
Espresso – dark chocolate with coffee flavour
Dark & Almond
Mints and chewing gum
Extra Strong Mints
Extra Cool Mints
Softmints Ice (Pakistan)
Strawberry and Lime
Vanilla and Mint
Raspberry and Peach
Apple and Apricot
Citrus and Blackberry
Trident Sweet Kicks
Mint with Chocolate
Hollywood Chewing Gum
Cadbury Adams products.
Orange Crush (Canada)
Cool Ridge – spring water (Australia)
Export Cola (Australia)
Highlights – low calorie hot chocolate
Highlights Dark Chocolate
Highlights Café Latte
Drinking Chocolate – hot chocolate powder
Instant Hot Chocolate
Spring Valley Juice (Australia)
Milk Cooking Chocolate
Dark Cooking Chocolate
Cadbury Dairy Milk Ice Cream – Chocolate chip ice cream
Cake Bars Milk Chocolate
Cake Bars Fruit & Nut
Cake Bars Caramel
Cake Bars Mint Crisp
Cake Bars Orange Crisp
Cake Bars Strawberry Jam
Milk Chocolate Spread (Produced under licence by Premier Foods)
Mini Rolls Milk Chocolate
Mini Rolls Caramel
Mini Rolls Strawberry
Vichy Pastilles (Cadbury France)
the last time this was recorded in 2008 it was 71, 657
Cadbury is more than a business, it is a British institution with worldwide reach and employees across 60 countries. So whilst the investors, shareholders and foreign competitors savour the chance to make a quick buck, spare a thought for the 45, 000 Cadbury employees who have many more months of uncertainty ahead of them.
Stakeholders analysis by Mendelow’s Matrix for Cadburys
Following categorisation of stakeholders in a manufacturing company:
Low + Low : Small customers, Small Shareholders
High + Low: Major Customers, Central Govt, Media
Low + High: Employees, Environmental Groups, Local Community
High + High: Institutional Investors, Local Planning Authority
A Stakeholder Analysis is an approach that is frequently used to identify and investigate the Force Field formed by any group or individual who can affect or is affected by the achievement of the objectives of an organization. Stakeholder Analysis identifies the ways in which stakeholders may influence the organization or may be influenced by its activities, as well as their attitude towards the organization
The power and influence of stakeholders:
The extent to which stakeholders affect the activities of an organisation depends on the relationship between the stakeholder and the organisation. Mendelow’s matrix provides a way of mapping stakeholders based on the power to affect the organisation and their interest in doing so. It identifies the responses which management needs to make to the stakeholders in the different
– Base business1 revenue up 7%; strong growth across emerging markets and focus brands
o Good growth across all categories; chocolate up 6%, gum up 10%, candy up 6%
o Emerging markets up 12%; five year compound average growth of 12%
o Focus brands up 8%; Cadbury Dairy Milk up 11%, Trident up 11%, and Halls up 9%
– Underlying margins up 150 bps driven by Vision into Action cost reduction initiatives
o Reported margins up 180 bps to 11. 9%
o Price realisation offset input cost increases
– Strong financial performance
o Proforma EPS up 16%; up 30% at reported currency
o Recommended final dividend of 11. 1p (2007: 10. 5p); full year dividend 16. 4p, up 6%
o Improved Return on Invested Capital, up 110 bps
o Secure financing – average maturity of long-term debt 6 years
– Transformation of the business into a category-led pure-play confectionery company
o Demerger of Dr Pepper Snapple Group completed in May
o Announced a conditional agreement to sell Australia Beverages for £550m
(Except where stated all movements use constant currency – see Basis of Preparation on page 3 for impact of exchange)
Todd Stitzer, Cadbury’s CEO said: “ In 2008, Cadbury completed its transformation into a pureplay
confectionery company. Our strong revenue growth and significant improvement in operating
margin demonstrate the relative resilience of our focused business model. Whilst we will not be
immune from the continued weak economic environment, at this early stage in 2009, we expect
to deliver revenue growth around the lower end of our 4-6% goal range and to make good
progress toward our goal of mid-teens margins by 2011.”
Results for the year 2008
The Financial Statements for the year ended 31 December 2008 are presented in the appropriate section of this Report.
The summary of performance is as follows:
The Group The Company
2008 2007 2008 2007
Nm Nm Nm Nm
Turnover 24, 298 19, 937 21, 729 18, 018
Loss before Tax (2, 848) (4, 198) (3, 087) (3, 987)
Group turnover grew 22% (2007: 4%) with Gross Margin at 27% (2007: 23%). Loss before taxation also improved
compared to the prior year with a reduction of N1. 4 billion or 32%. Loss after tax increased due to the decreased impact
of the deferred tax credit in the current year compared to the preceding year.
Investment in fixed assets was moderate at N0. 6 billion (2007: N0. 7 billion) for the year. As a result of the decrease in
operating cash flows, there was an increase in overdrafts and short term borrowings of N73. 5 million compared to a
reduction of N1. 5 billion in the prior year. Interest paid increased to N2. 1 billion (2007: N1. 9 billion) arising from
increased borrowings during the year as well as an increase in borrowing rates from an average of 13% in 2007 to an
average of 16. 5% in 2008. The cost of interest on bank borrowings makes equity re-financing necessary to accelerate
the ability to pay future dividends. These results show a good growth of the business in spite of the circumstance of
2006, and reflect the benefits of our strategic focus, which will see us advancing our competitive position even further in
Responsibilities of Cadbury’s to its stakeholders and the strategies
Any individual or group that has a legitimate interest in an organisation and what it does and capacity to effect the organisation
There are three type of stakeholders in an organisation
Intimately connected and lot of influence over how the organisation run
Outside the organisation but have a vested interest in the success of the organisation
Shareholders /owners return on inv is their prime interest, ethical performance can be important
Bankers security of loan
Customer -want the product or service , large customer have influence over price , quality and development
Suppliers receive payment
Diverse objective and a vary ability to influence the organisation
e. g central government
To stakeholders, key legal responsibilities eg consumer employment, disability discrimination and health and safety, diversity and equal
opportunities, stakeholder pensions; wider responsibilities including ethical, environmental and ethical practice. (HNC Business, 2010).
Cadbury Cocoa Partnership:
In 2008 Cadbury set up the Cadbury Cocoa Partnership to secure the economic, social and environmental sustainability of around a million cocoa farmers and their communities in Ghana, India, Indonesia and the Caribbean, through:
Improving cocoa farmer incomes: by helping farmers increase their yields and produce top quality beans
Introducing new sources of rural income: through microfinance and business support and introducing additional income streams
Investing in community led development: to improve life in cocoa communities
Working in partnership: Farmers, governments, NGOs, international agencies and local organisations will work together to decide how the funding is spent and turn plans into action
This ground-breaking initiative, which is carried out in partnership with the United Nations Development Programme (UNDP) and other partners, marked 100 years since the Cadbury brothers first began trading in Ghana and aims to holistically support the development of sustainable cocoa growing communities. Cadbury is investing £45 million over 10 years.
In June, 2009 Cadbury awarded Gold today for sustainable business practice by Business in the Community in their Corporate Responsibility Index, launches its Geography online educational resource this month. Skills Space supports the work of the Cadbury Cocoa Partnership and the Cadbury Dairy Milk Fairtrade certification.
Skills Space enables students to learn about Ghana, how cocoa is grown, the lives of cocoa farmers, the interdependence between Ghana and chocolate manufacturers, and discover more about sustainable farming.
Alex Cole, Global Director of Corporate Affairs at Cadbury said: “ As a global company, we have access to a huge amount of information and resources that can inspire and have real value to young people studying business and associated subjects.
“ We have always received a large number of enquiries from teachers and pupils looking for real-life case studies to support learning in the classroom. Skills Space has been developed in specific response to this demand, and we hope that this new online resource will prove to be a useful tool in their studies.”
Through Skill Space, Cadbury reflects that it is more important than ever for businesses to acknowledge the impact they have on society and the environment, and commit to tackling the issues, not just because they should, but because it’s good for business, as acknowledged in the BiTC CR Index.
Main Aspects of Porter’s Five Forces Analysis
The original competitive forces model, as proposed by Porter, identified five forces which would impact on an organization’s behaviour in a competitive market. These include the following:
– The rivalry between existing sellers in the market.
– The power exerted by the customers in the market.
– The impact of the suppliers on the sellers.
– The potential threat of new sellers entering the market.
– The threat of substitute products becoming available in the market.
Understanding the nature of each of these forces gives organizations the necessary insights to enable them to formulate the appropriate strategies to be successful in their market. (Thurlby, 1998).
The Degree of Rivalry:
The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the extent to which the value created by an industry will be dissipated through head-to-head competition. The most valuable contribution of Porter’s “ five forces” framework in this issue may be its suggestion that rivalry, while important, is only one of several forces that determine industry attractiveness.
– This force is located at the centre of the diagram;
– Is most likely to be high in those industries where there is a threat of substitute products; and existing power of suppliers and buyers in the market.
The Threat of Entry:
Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above zero. In contrast, entr
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