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Marketing Strategy And Plan Of Cadbury Add in library

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Question:

Analysing External and internal environment of cadbury, their CSR using CSR stance model and the last section will be their overseas opportunity in one country except UK using that countries PESTEL analysis and CAGE framework between UK and the other country.
 
 

Answer:

1.0 Introduction

A company can be assessed by its strategic position in the market with respect to its competitors. This paper consists of a n extended research analysis on the biggest confectionary organization in the world, Cadbury. It will assess the critical aspects of the strategic selections which are availed to Cadbury. The paper will give the reader a significant knowledge about the various tools of research and also their importance in analysing and evaluating the markets for a business entity. The core purpose of this project is to support Cadbury to expand in its home country and also internationally with the proper use of accurate modes, theories and concepts. The strategies of marketing model will be applied and analysed in this report to indicate the competitive and market position of Cadbury. Recommendations are also given to measure the perspective of the company on the growth of the profits and revenue along with the share of market. However the planned segmentation is also evaluated critically on the foundation of the multiple procedures to categorize the financially attractive fragment for Cadbury. The available position in the industry is also identified with the help of strategic framework. The reaction of the competitors offers a detailed assessment of the probable reaction of the competitors along with the options to the strategic plans of Cadbury which are counteractive. The paper finally ends with the justification of the most possible strategic location for further operations of the business (Agudo-Valiente, Garcés-Ayerbe and Salvador-Figueras, 2013).

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2.0 Background of the Company

John Cadbury founded this company in the year 1831 which was covered successfully and also revolutionized the processing of cocoa in the market from the year 1866. Cadbury then merged successfully with Schweppes in the year 1969. The company is now internationally acknowledged as the most reputed organisation with the acclamation of an international status, Cadbury Schweppes PLC (referred to as Cadbury hereinafter). The company also successfully employs more than 45,000 employees in around 60 countries worldwide. The company is positioned strategically as the fourth highest supplier of the chocolate and sugar confectionary all over the world. The supreme successful product that was promoted by Cadbury since the year 1905 is “Dairy Milk”, the product has become very popular melted chocolate in UK along with the other chocolate bars internationally in the terms of revenue. The company’s three major pillars in its strategic success are top notch quality, money value and sound advertisement (Ajibola and Njogo, 2012).

3.0 Research Design

Research design which is used in this paper focuses mainly on the accurate tools of research like PESTEL Analysis, Porters Five Forces Model to assess the external environment of Cadbury so as to recognize the probable opportunities and threats. To evaluate the internal environment the resources and capabilities framework is used in the report. To equalize with the opportunities and the external threats with the internal weakness and strengths TOWS matrix have been applied here. The corporate social responsibility of the company is also analysed clearly with the support of Carroll’s Pyramid of CSR and CSR stance. To assist in the growth of Cadbury in the international market UAE PESTEL Analysis and the CAGE framework is considered to identify and point the profitability of the markets (Appleton, McKeown and Woodside, 2011).

3.1 Consequence and Outcomes

With the involvement of these tools to the Cadbury Company it will help us to recognize the probable opportunities in expanding the business and also assist it forecasting the threats which cannot be anticipated now. The market of UK confectionery is very much established market having a high demand and also levels of penetration. Additionally, the market is very much controlled and is also influenced by the big players like Mars and Nestle. Thus it becomes very essential for Cadbury to be pre-emptive in implementing the different strategies of business which are effective after considering the various factors and also to construct an effective strategy of corporate social responsibility to achieve the competitive advantage (Appleton et al., 2011).

4.0 External Analysis

The first and foremost fundamental step of strategic management is to analyse the current factors of the environment within which the operations of the company will be executed. The environmental factors consist of both internal and external factors. PESTLE framework is used to evaluate the external environment. There are two aspects of this analysis. The first aspect is to identify the environment in which the operations of the company take place and secondly, it gives valuable data to the company which helps in predicting the circumstances and situations of the future (Assessing the industry using Porter's five forces, 2014). Furthermore the PESTLE framework also gives a certain amount of essential fundamental knowledge to examine the macro environment; it has some constraints in measurements terms. They are:

  • The first setback which was seen that the PESTLE analysis does not adopt the quantitative measurement method. It was majorly concentrated on the qualitative approach if measurement.

  • The autonomous assessment of the each factor of the PSTLE model may not replicate the exact situation.
  • According to (Beneke et al., 2015) the PESTLE analysis must adopt the approach which is based on the inter dependence of the aspects of the model.

However with these restrictions the PESTLE framework is very used by the companies to examine the external environment and the impact of the same on the objectives and targets of the organization.

 

4.1 PESTLE Analysis- UK Confectionery Industry

The factors of the framework of PESTLE have a possible influence on the company, Cadbury. Thus the analysis that is mentioned below is of high importance for Cadbury if they want to successfully execute its operations of the business.

Political Factors

The political factors very much scrutinize the industry of the UK confectionery. It has both positive and negative impact on the company. It is very much essential for Cadbury to make themselves aware of the different political factors which are mentioned below:

  • The government has initiated campaigns to advertise the healthier way of living among every citizen. It is also additionally, pushing the drink and the food companies to manufacture all healthy products with a clear labelling (BOYLE, 2012).

  • Argument on Fat Tax- The first country to initiate the “fat tax” on food which contains 2.2% of saturated fat was Denmark. This also included confectioneries. Later it was obliterated because the food price was inflated after this. The medical experts however seemed to believe that the fat tax was an efficient way to decrease the obesity that was prevailing in UK. Thus as that fat tax can increment the unhealthy food price, it might be implemented in near future (Bray, 2015).

Economic Factors

Cadbury’s margin of profit is affected by the economic factors. It is necessary for an organization to know the factors so that they can take steps which are important to lessen the impact of this factor.

  • Being responsive to the campaigns on obesity the companies manufacturing chocolates are now downsizing the bars of the chocolates before the VAT rise.

  • The changes in climate are also affecting the yields of the crops. The prices and the trade balance are being affected in this return.

  • The crisis in the economy y might also affect the spending of the consumers and also the chocolates which are premium will be considered as unaffordable luxury for at least some months (Bugge and Lavik, 2012).

Social Factors

The consumers of a company are the most essential assets for a company. Thus it is significant for Cadbury to comprehend the alterations in the needs of the consumers and also the social trends so as to manufacture value products.

  • To deal with the downfall in the economy the consumers always prefer to save money by staying home, however to have a sweetening experience and for the guests they have started purchasing the chocolate bags.

  • As we know that the chocolate is a versatile gift in every occasion; boxed and seasonal chocolates have experienced a very high demand thereby giving rise to the sales which have been forecasted to rise by 12.5%.

  • In the present economic and social surrounding it has been seen that the sale of dark chocolates have increased dramatically (Collier, 2010).

Technological Factors

To attain a competitive advantage over the competitors Cadbury should be updated technologically and should also make use of the best and the latest technology that is present in the market.

  • In the current world the researchers and analysts are working with the growers of cocoa by the assistance of the satellite; internet connections so that it can improve the evenness and quality of their beans.

  • The companies are now opting for the advanced methods to examine and also rank the cocoa beans. In addition they are also taking the help of six division flavour wheel to fetch out natural aroma and the essence.

  • The change in the shape of the chocolate is a surprising trend which is ruling the market for a decade. The chocolate today are prepared very creatively in various combinations and shapes like for example Oreo biscuits having chocolates combined with it (Dulčić, Gnjidić and Alfirević, 2012).

Environmental Factors

The key element of Cadbury to execute its business is Cocoa. Cadbury should be responsive to the fact that there are certain effects of the environment on the production of the cocoa beans. Cadbury can design its own strategies to make sustainable cocoa.

  • The changes in the climate are estimated to affect the cocoa farms of West Africa. By some years, more than half of the countries producing cocoa might be too hot to help in the growth of the cocoa.

  • There is a huge decrement in the production of the cocoa because of the plant disease like black pot. The disease is a very serious problem which is destroying more than 85% of the cocoa crop. This disease is significantly severe in Central and West Africa.

  • With the outburst of Ebola the production of cocoa beans and its trade have been affected adversely (George, Owoyemi and Onakala, 2012).

Legal Factors

Cadbury should be responsive enough towards the alterations in the legal regulations and law to produce their products in a legally acknowledged manner. It is very much essential for the global players in manufacturing chocolates to be upgraded with the latest changes in the law or else it might affect the reputation of the company. The current legal laws are mentioned below:

  • The chocolate and the cocoa products must follow up with the reserved details that are formed by the Coca and Chocolate Products Regulations Act.
  • The members of CAOBISCO should abide by with the food and safety policy laid down by EU so that the companies execute practises of fair trade and also give sales and superior products to its consumers (Jerzewska-Zychowicz, Jeznach and Kosicka-GÄ™bska, 2012).
  • The government of UK have enacted the imposition of penalties which is worth £4500 for any company who fails to comply with the description and labelling requirements.

4.2 Porters Five Forces Model

To improve the effectiveness of a business plan, there is a necessity to evaluate the present situation. The best approach in this process is using the framework of Porter’s Five Forces Model. This model assists to recognize the competitive force of an industry and also give an indication of the industry’s attractiveness. The following diagram will show the determinants of the model (Ketola, 2013).

Figure 1: Porter’s Five Forces Model

New entrants

The confectionery market in UK is very much established and reputed in the market with top demand and also increased penetration level. There are around 274 producers of confectioneries in UK. The market is highly influenced and controlled by the major players like Nestle, Mondelez International and Mars. The company Cadbury is deemed to be an essential barrier for the new entrants because the company has a strong recognition of brand and also the threat of new firms is considerably less on Cadbury. Until and lest the product is innovative enough associated healthy style of living it cannot connect with the market to make its presence because already the market is captured by Cadbury (Kozelová et al., 2014).

Threat of Substitutes

The threat from substitution is very les on Cadbury because the brand equity is the key competitive edge of the company. Furthermore for the last few decades there is an increasing apprehension on the healthy life style. Thus there has been a huge increase in the sales of the products which are sugar free, products having reduced aft and cereal bars and calories providers. As per a survey recently it has been seen that the demand for the dark chocolates have also increased since it is deemed to be healthier than the other chocolates (New Partnership launched, 2010).

Buyer Power

There are two types of buyers in the confectionery markets; majorly the retailers and the ultimate consumers. There are also five super markets who dominate the confectionery retail markets in UK. These players are ASDA, TESCO, ALDI, SAINSBURY’S and MORRISON’S. These stores force more power of negotiation than the regular customers. The customers also purchase confectionary from the retailers in the local areas which are purchase on compulsion, for getting daily essentials. The confectionery products are broadly appreciated by every person in UK and they think it to luxury which is affordable (Pai and Subramanian, 2014). 

 

Supplier Power

The industry dealing in confectionery works primarily with merchants of food ingredients who supply the products like sugar, cocoa and gelatine. The key producers of cocoa are in Latin America, West Africa and South East Asia. In accordance with a recent study it was founded that Mars, Mondelez and Nestle controls 38.5% of the entire global supply. The Cadbury-cocoa partnership have kept the supplier power ti a low state because the funds in the partnership are invested in cocoa farms located in India, Ghana, Caribbean and Indonesia so as to determine a long term supply of cocoa (Parasramka and Dufresne, 2012).

Competitive Rivalry

It has been seen that there exists an aggressive competition in the confectionery industry due to the existence of multiple manufacturers. The big players like Nestle, Ferrero, Mondelez and Mars are indeed very robust brands which will give a very hard competition to Cadbury. These companies are striving for high presence in market by the implementation of multiple marketing strategies.

4.3 Recommendations

It is essential for the company Cadbury to ponder over all the external factors and taking them into consideration and turn them into opportunities and plan an effective strategy to execute a successful business. The company is recommended to continue investing in the innovation of the product since it is providing a competitive advantage for Cadbury. It must come up with more innovative and interesting strategies and promotion tactics to uphold the sturdy brand awareness so as to decrease the competitive rivalry. Cadbury should also focus on producing low-calorie and healthy confectionery to address the customers’ high concerns for healthy life style (Petrone, Gaziano and Djoussé, 2013).

5.0 Internal Analysis

Resource and Capabilities

According to (Sager, 2012), the resources and the capabilities of a market play a major role in constructing a top quality value for the consumers and also in achieving the competitive edge. In the year 1980 there was a shift from the industrial framework to the resource based view (RBV); this highlights the significance of the external environment. The major purpose for this shift is inability of industrial structure to rationalize that why certain firms in the similar industry vary in the internal performance.

Resources

The resources can be differentiated into intangible and tangible resources. As per (Salabun, 2014) the tangible resources can be physical, financial and human resources while the intangible resources are the skills and also the corporate culture, knowledge of the employees and the company policies. It is very much essential to convert the resources to valuable yield. The capabilities are things which are more than the resources; it comprises, constructs and also transforms te resources so as to create value for the products (Salabun, 2014).

Financial Resources

·         Bank overdraft of Cadbury has reduced compared to 2012

·         Increment of 29.5% in the cash balance

·         Increment in the working capital and also in shareholders capital.

Physical Resources

·         The core production unit of Cadbury is located at Bourneville. Mondelez is investing £75 million in the plant of Bourneville Cadbury to create it a world class one.

·         Cadbury also has their own online and physical stores to transact their products. Other than this the company also have teamed up with various retail stores on a huge scale.

Technological Resources

·         Cadbury has the right to approach the top notch facilities.

·         The company has started the “Chocolate Centre of Excellence” in 2012 for the purpose of research and development. 

·         Cadbury has adopted ERP system and SAP so as to cope with the merger

Human Resource Management

·         There are over 150,000 employees in Cadbury who are very much dedicated and well trained.

·         Cadbury follows a decentralized system of organizational structure.

·         The employee opportunities and benefits such as wellness of the employees, good salary package, pension schemes and insurance plan.

Innovation

·         Cadbury have innovated a new range of snacks like dairy milk LU & Ritz recently, bringing in together two brands by investing around 7.3m in the process of marketing.

·         Cadbury also industrialized the chocolates which are temperature tolerant.

Reputation

·         Cadbury is well known for its quality and purity.

·         Cadbury is positioned as te world class brand in confectionery.

·         The practise of fair trade in Cadbury made a vast difference in the reputation of the company.


Table 1: Tangible and Intangible Resources

Capabilities

The different capabilities of Cadbury which adds to their core competencies are mentioned below:

  • Having a strong experience in the industry of confectionery
  • Pure and high quality
  • Development of new product
  • Advertising strategies
  • Strong image of the brand
  • Unique resources of the world
  • Global strategy of marketing
 

5.1 Recommendations

Cadbury should do a critical analysis of its business environment so as to categorize the strengths and weakness of the company. The acquisition has led to the loss of job for many employees. Cadbury should try to sustainits human resources and integrate the corporatecultures of both Cadbury itself and Kraft for accomplishing better performance and making optimum use of the resources and also the capabilities to stay one step ahead of the competitors in the confectionery market (Saltini and Akkerman, 2012).

5.2 TOWS Framework

The TOWS structure is a sequential analysis of the organization which will tally the external opportunities and threats of the organization with the internal strengths and weakness.

Internal Factors

 

External Factors

 Strength

·         Cadbury is the market in manufacturing chocolate in over 200 countries.

·         Cadbury has brands which are strong enough to compete with the different manufacturers of chocolate.

·         The company has strong brand loyalty.

·         With the acquisition of Kraft, Cadbury has high access to the resources and the capabilities.

Weakness

·         Mondalez has a difficult task to sustain the emotional bond with the consumers of UK same as Cadbury.

·         Problem to incorporate two different corporate cultures of Mondalez and Cadbury.

·         Very high impact often competitors.

·         There were arguments on the quality control of Cadbury’s products globally.

Opportunities

·         The leading manufacturers of chocolate are working with the Ghana Government towards the sustainability of cocoa.

·         Technological alterations in the confectionery industry.

             SO

·         Campaigns of sustainability will create goodwill and a good brand image of Cadbury among the consumers.

·         Introduction of the new technologies in manufacturing chocolates to fetch more exotic flavours.

               WO

·         Brand image will be hampered with the increment in the lines of product.

·         Cadbury must balance the product lines to uphold the stability in the market growth.

Threats

·         Introduction of different laws and policies

·         Changes in climate and outburst of dangerous disease.

·         Substitute product threats.

              ST

·         Cadbury should invest in multiple initiatives to support the farmers in sustainable farming of cocoa

·         Manufacturing healthier products

                WT

·         Threat are uncontrolled like incurable disease impacting on coca plantation

·         Price wars might be triggered by the aggressive competition.


Table 2: TOWS Framework

6.0 Corporate Social Responsibility

The framework of CSR is a very vital framework for any company which are trying to donate some of its profit to the betterment of the society. It means the spectrum of benefits for the society as a whole with the activities of the business (Srdjevic, Bajcetic and Srdjevic, 2012).

6.1 Pyramid of Corporate of Social Responsibility

There are four aspects of CSR which comprises of legal, economic, philanthropic and ethical. According to the current trends philanthropic and ethical functions are very essential in the corporate world. The following diagram shows the layers of the pyramid (Tokede, Gaziano and Djoussé, 2011).

Figure 2: Pyramid of CSR

There are multiple initiatives which were undertaken by Cadbury on CSR. The following are some of the activities listed.

  • $500 million USD was invested in coffee and cocoa origins.
  • The company aimed at cutting down 14% of the usage of water and energy for the sustainable environment.
  • Cadbury provided employment to the young people to motivate them.
  • Educational projects were supported to develop their skills.
  • Balanced and physical lifestyle initiatives were undertaken.
  • Homeless and Vulnerable people were taken care of (Toledo, 2013).
  • The Purple goes Green campaigns were initiated to decrease the plastic waste and encourage recycling.

6.2 Application of CSR Stances

Forum of the interaction of the stakeholders

Since Cadbury takes the consideration of multiple stakeholders in implementing strategies so it comes under this forum. Cadbury considers all its stakeholders to conduct its business (VanÄ›k, Mikoláš and Žváková, 2012).

Triple Bottom Line and Systems

The company measures their growth on the foundation of their financial growth along with the environmental growth. Cadbury aims to manufacture their products in a sustainable manner by maintaining ethical codes of standard (Viveros, 2014).

Proactive

Cadbury is proactive in the society’s betterment and donates a lot to it by initiating a number of SCR strategies like, health and welfare, etc.

Good Practice ensured by System

Cadbury started the initiative named “the call for well being” an approach for high well being of the people (Wilkins, 2010).

7.0 Other International Opportunities

The suitable country in which Cadbury can diversify its business is UAE, which is very perfect for the market en try of Cadbury. The market of UAE chocolate confectionery is forecasted to flourish at a CAGR of 7.01% around 2014-2019 (Widmer, Lerman and Lerman, 2012).

 

7.1 CAGE Framework

 

United Kingdom

 UAE

 

Cultural Distance

·         Native language is English, others being Irish, Welsh, etc.

·         Social Norms- Meeting and greeting, punctuality and giving gifts.

·         Religion- Christian 72%, Hindu- 1.5% and Muslim 2.5%

·         Arabic is the main language other immigrant languages being English, Hindi, Urdu, etc.

·         Social Norms- Ethnically different from UK, Islamic greeting

·         Islam dominated religion

Political Distance

·         Monarchy – Constitutional

·         Perception of corruption index- 7.6

·         Federal government of UAE with many organs

·         CPI- 5.8

Geographical Distance

·         UK comprises four countries

·         Population- 7,420,220

·         Comprises seven emirates

·         Population- 1,138,351

Economical Distance

·         7 times more economical than UAE

·         After Germany, second largest economy in Europe

·         High standard of living.

·         Open economy with huge per capita income.

·         Three times industry establishments than UK.


Table 3: Cage Framework

7.2 Rationale of the entry in the market of UAE.

There are highly favourable conditions of tax in UAE with less barriers of trade which actively attract the investors from the international market. The tourism sector is the major reason to enter the market. UAE invites around 12 billion tourists every year which is a high potency for entering the market. The company can also establish “Cadbury world” for the tourists’ attraction in UAE. The company can also manufacture chocolate dates” according to the taste and preferences of the localities in UAE. Cadbury has to initiate various marketing strategies to promote its market presence in the confectionery market of UAE (Wright, 2014).

7.3 Market Entry Strategy

It is strongly recommended to the company for an alliance and joint venture strategy for entering the UAE market to set up the business. The perfect strategy is joint venture because the risk of the investment is shared among the partners and it also gives a huge access to the resources. Executing an alliance with a partner in UAE will help Cadbury to identify the market in detail and the localities can also be targeted. The quality of the product can also be efficiently monitored and Cadbury will also be to come up with innovative products with joined strategies (Yüksel, 2012).

8.0 Conclusion

The world’ biggest confectionery company is Cadbury for its strong brand image. Thus it is very vital for the company to analyse its internal and external environmental factors to be well aware of the alteration to attain a competitive edge. Research tools like Porters’ Five Forces, PESTLE, TOWS, etc give the company the effective information for designing its business plan with the changing preferences of the consumers. Besides this Cadbury should continue working for the society as well to protect the brand equity and goodwill. Whilst expanding in other international markets, Cadbury should analyse all the factors to understand the markets (Zarantonello and Luomala, 2011).

 

References

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