Swot Analysis Of Cadbury By Uma Ganesh

SWOT ANALYSIS OF Presented to: prof. Sugandha Subject : Managerial Economics Submitted by: A. Uma Ganesh Roll no: 09M053 Section: A

Cadbury swot CONTENTS 1. Company overview 3 2. Vision of Cadbury 8 3. Values of Cadbury 9 4. Research & Development 11 5. SWOT on R & D 13 6. Marketing Strategy 15 7. Marketing SWOT 17 8. Conclusion 19 9. References 19 Managerial Economics Page 2

Cadbury swot Company Overview Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. They create brands people love - brands like Cadbury, Trident and Halls. Their heritage starts back in 1824 when John Cadbury opened a shop in Birmingham selling cocoa and chocolate. Since then they have expanded their business throughout the world by a programme of organic and acquisition led growth. On 7 May 2008, the separation of their confectionery and Americas Beverages businesses was completed creating Cadbury plc with a vision to be the world's BIGGEST and BEST confectionery company. A few facts and figures ♣ They make and sell three kinds of confectionery: chocolate, gum and candy. ♣ They operate in over 60 countries. ♣ John Cadbury opened for business in 1824 - making us nearly 200 years young. ♣ They work with around 35,000 direct and indirect suppliers. ♣ They employ around 50,000 people. ♣ Every day millions of people around the world enjoy their brands. Their Business ♣ With over 45,000 employees working across their business in over 60 countries, Cadbury is a large and complex organization. ♣ From 2003 to 2008 the confectionery business was led through a strong regional model to ensure their top-down strategy was consistently implemented around the world. In 2006, they introduced a strong category-led commercial organization which has progressively been developing its role and impact since. ♣ At the beginning of 2009, they eliminated the regional structure to operate as seven business units and leverage the strengthened category leadership across their markets. In this section, you can find a description of their business units and functions. Managerial Economics Page 3

Cadbury swot Business units Their operations are split into seven business units: ♣ Britain and Ireland, ♣ Middle East and Africa (MEA), ♣ North America, ♣ South America, ♣ Europe, ♣ Asia, and ♣ Pacific While each unit’s management focuses on commercial operations in their geographical area, the unit also maintains teams from each of the functions below. Functions In conjunction with the seven business units described above, they have seven global functions. Category-led functions: ♣ Commercial ♣ Science & Technology ♣ Supply Chain Corporate functions: ♣ Human Resources and Corporate Affairs ♣ Finance and Information Technology ♣ Legal and Secretariat ♣ Strategy This structure enables the business units to focus on delivering the Group’s commercial agenda and top-line growth, and allows the functions and categories to develop and drive global Managerial Economics Page 4

Cadbury swot strategies and processes towards best in class performance, while remaining closely aligned to the regions' commercial interests. Their Marketplace Cadbury operates in the global confectionery market. The market is large, growing and has attractive dynamics. The global confectionery market is the world’s four largest packaged food markets. It represents 9% of that market, and has a value at retail of US$141 billion. Chocolate is the largest category, accounting for over half of the global confectionery market by value. Gum is the fastest growing confectionery category. Globally, confectionery is growing at around 5% p.a., faster than many other packaged food markets. Developed markets, which account for around 67% of the global market, grew 3% p.a. between 2001 and 2006. Focus Brands They are investing in their most advantaged brands. Together, they generate approximately half their total revenue and have significantly higher profitability than their confectionery portfolio as a whole. They are Cadbury Dairy Milk, Trident, Halls, Green & Black’s, The Natural Confectionery Co., Creme Egg, Eclairs, Flake, Dentyne, Clorets, Hollywood, Stimorol and Bubbaloo. By being globally strong across all three confectionery categories, they are building competitive advantage – creating the right range, to be available everywhere, and for everyone. They have a natural growth path based on making the most of their total confectionery business and specific strategies for each category. In many markets they are already leaders in one or two categories and can expand into a second or third by making the most of their global capabilities. So in the UK their strength in chocolate and candy has enabled us to launch successfully into gum. Similarly in India, they’ve expanded into the bubblegum business. And in the USA, they’ve added chocolate to their gum and candy business. Categories Managerial Economics Page 5

Cadbury swot Within confectionery there are three categories: Chocolate, Candy and Gum. We have a total confectionery model with strong positions in all three categories. For more information on our categories and brands please see Categories and Our Brands. Category dynamics vary Overall, the confectionery market is relatively fragmented. Even after the merger of Mars and Wrigley, the top five players account for only 42% of the market. Chocolate: Represents the biggest segment in the category with a 55% share in value and has been growing at a rate of 6% in the last four years. Chocolate is mainly a regional business where consumers seek a particular taste in each market. This brings about fragmentation in the market as well as complexities in production. The top five producers account for 50% of the global market, and there is scope for rationalization. Gum: With a 14% share in confectionery sales, is the fastest growing segment at 7%, led by innovation and marketing. This is the most consolidated segment with the top two players, Wrigley and Cadbury, accounting for over 60% of the market. Gum ‘travels well’ and well-run global businesses can generate good economies of scale. Innovation and formulation are also important barriers to entry to new competition. Candy: Is the most fragmented confectionery segment with a proliferation of local brands and growth around 4%. The top five players represent only a quarter of global confectionery sales. Functional candy such as cough drops, indulgent candy such as premium toffees and natural products without artificial colours or sweeteners, has been drivers of market growth. Managerial Economics Page 6

Cadbury swot VISION & VALUES OF CADBURY VISION OF CADBURY ♣ Be the world’s BIGGEST and BEST confectionery company. Purpose: Creating brands people love. Managerial Economics Page 7

Cadbury swot Their vision in to action a) Governing objective: To deliver superior shareowner returns. b) Priorities: Growth, efficiency capability  Growth: Their growth priority is represented by the mantra – Fewer, Faster, Bigger, Better. They focus on a number of advantaged global and regional brands, invest in getting their new product developments into more markets faster, use joined up commercial and marketing programmes to have a bigger impact and underpin the whole plan by executing their initiatives better.  Efficiency: Their efficiency priority recognizes that it is not enough to grow; they must also be more profitable. They maintain a relentless focus on cost and efficiency by reducing central functions and costs; consolidating their businesses and reconfiguring their manufacturing and distribution. Their vision in to action will help increase their margins to mid-teens by 2011 with the aim of delivering mid-term margins by 2011.  Capability: Their capability priority ensures they continue to invest in the right organization and skills to win. They have simplified and strengthened their organization to a pure-play confectionery business. They manage their commercial strategies on a global basis through their three categories of chocolate, gum and candy and strong functional leadership. Values of Cadbury They are performance driven, values led. Throughout changing times, their constant values have inspired us to be pioneers in business and in corporate responsibility. They help ensure they are proud of their company and are critical to their core purpose of creating brands people love. Managerial Economics Page 8

Cadbury swot Their values are: ♣ Performance: They are passionate about winning. They compete in a tough but fair way. They are ambitious, hardworking and make the most of their abilities. They are prepared to take risks and act with speed. ♣ Quality: They put quality and safety at the heart of all of their activities – their products, their people, their partnerships and their performance. ♣ Respect: They genuinely care for their business and their colleagues. They listen, understand and respond. They are open, friendly and they coming. They embrace new ideas and diverse customs and cultures. ♣ Integrity: They always strive to do the right thing. Honesty, openness and being straightforward characterize the way they do business. They have clear principles and do what they say they will do. ♣ Responsibility: They take accountability for their social, economic and environmental impact. In this way they aim to make their business, their partners and their communities better for the future. Their Business Principles are their code of conduct and also take account of global and local cultural and legal standards. They confirm their commitment to the highest standards of ethics and business conduct. Their Leadership Imperatives Their leadership imperatives are the behaviors that they need to be performance driven and values led. Managerial Economics Page 9

Cadbury swot Aggressive: Working at pace. Competing to win and be first in the marketplace.Passionate about being the best. Growing their people: Making the most of both your own capabilities and those of others around you. Accountable: Delivering on your role and responsibilities. Making and honoring decisions. Living their values: Actively looking to promote and advance their values. Adaptable: Being innovative and resilient. Taking on change and new ideas. Forward thinking: Making sound decisions with speed and the longer term in mind. Motivating: Inspiring each other to achieve great things. Collaborative: Delivering with others across teams and countries. REASEARCH & DEVELOPMENT Managerial Economics Page 10

Cadbury swot ♣ R & D deals with innovation. Innovation is right at the heart of creating brands people love. Not just new products and improved recipes, but also innovative packaging formats and world-class brand communication. ♣ R & D of Cadbury plays a role in knowing about the following  Customer insights,  Trends, and  Foresights. ♣ They’ve made a science out of knowing what people want now – and in the future. It might be as simple as just responding to gum chewers who want the flavour to last longer. Or as sophisticated as putting consumer insights together to spot trends and generate foresights – projecting forward to anticipate and meet the changing needs of tomorrow’s consumers. Their Path To Growth: Over the past few years we’ve interviewed over a quarter of a million people in 47 markets and developed a unique consumer framework, called Pathfinder, offering a map of confectionery lovers around the world. We’ve been struck by the commonalities across different markets – people are more alike than you might imagine. And this helps us know how to share their innovations with consumers around the world – finding the right path to grow from country to country. In Innovation They Follow Centred In Science: Take centre-filled gum. Developed centrally and rolled out under global and local brands in over 80 markets around the world, it has been a great success – now generating revenue of nearly £300 million a year. Its success is in large part due to the winning combination of great taste – knockout flavour combinations that also last due to patented flavour encapsulation technology – and remarkable texture – a crunchy shell, bigger and more chewably soft gum, and a delicious liquid centre. It’s the result of years of development, not just in discovering the winning recipe but also how best to make and transport it. Managerial Economics Page 11

Cadbury swot Doubling Their Development: Their investment in the technology of taste, flavour, packaging, process development and nutrition has never been greater. They have doubled our innovation rate, creating new global centres of excellence for chocolate, gum and candy and establishing new expert partnerships to help speed up and enhance our innovation. Investing in science and technology and concentrating on developing a smaller number of innovations that will have a bigger impact on their business around the world is paying off. Brand New-Brand Communication: The world of brand building is undergoing a revolution and they are right on the frontline – online and everywhere. Today’s brands are built in places beyond your TV screen and they are leading the way in opening more doors for consumers to interact with the brands they love. Putting It All Together: They Stride brand with its ‘ridiculously long lasting flavour is an example of innovation right across the spectrum: great insight creating a new brand in a new format, using new recipe technology, and new packing, all communicated in a new way. Our innovative communication campaigns include an annual Summer Solstice party and sponsorship of the online sensation Dancing Matt. SWOT Analysis of R&D in Cadbury: Strengths: Managerial Economics Page 12

Cadbury swot ♣ Cadbury is the largest global confectionery supplier, with 9.9% of global market share. ♣ High financial strength (Sales turnover 1997, £7971.4 million and 9.4%) ♣ Strong manufacturing competence, established brand name and leader in innovation. ♣ Advantage that it is totally focused on chocolate, candy, chewing gum, unique understanding of consumer in these segments. ♣ Successfully grown through its acquisition strategy. Recent acquisitions, including Adams, 2003, enabled it to expand into important markets like the US market. . Weaknesses: ♣ The company is dependent on the confectionery and beverage market, whereas other competitors e.g. Nestle have a more diverse product portfolio, where profits can be used to invest in other areas of the business and R&D. ♣ Other competitors have greater international experience - Cadbury has traditionally been strong in Europe. New to the US, possible lack of understanding of the new emerging markets compared to competitors. Opportunities: ♣ New markets. Significant opportunities exist to expand into the emerging markets of China, Russia, India, where populations are growing, consumer wealth is increasing and demand for confectionery products is increasing. ♣ The confectionery market is characterized by a high degree of merger and acquisition activity in recent years. Opportunities exist to increase share through targeted acquisitions. ♣ Key to survival within the FMCG market is increasing efficiency and reducing costs. Cadbury Fuel for Growth and cost efficiency programmes seek to bring cost savings by: 1. Moving production to low cost countries, where raw materials and labour is cheaper. 2. Reduce internal costs - supply chain efficiency, global sourcing and procurement, and wise investment in R&D. Managerial Economics Page 13

Cadbury swot ♣ Innovation is key driver. To respond to changes in consumer tastes and preferences - healthier snacks with lower calories need to be developed. R&D and product launches have led to sugar-free & center filled chewing gum varieties and Cadbury premium indulgence treat. Low-fat, organic and natural confectionery demand appears strong. Threats: ♣ Worldwide - there is an increasingly demanding cost environment, particularly for energy, transport, packaging and sugar. Global supply chain in low cost locations. ♣ Competitive pressures from other branded suppliers (national and global). Aggressive price and promotion activity by competitors - possible price wars in developed markets. ♣ Social changes - Rising obesity and consumers obsession with calories counting. Nutrition and healthier lifestyles affecting demand for core Cadbury products. MARKETING STRATEGY OF CADBURY Attracting Shoppers Attention: Managerial Economics Page 14

Cadbury swot Standing their from the crowd in-store is key to winning at the point of buying. So investing in our product displays is also investing in our shopping experience and in helping our retail customers ensure they serve you right. On Every Hand Everywhere: Busy shoppers want brands to be close to hand. Their retail customers demand flawless service. And it is our business to deliver. They have been selling gum in Brazil for over 60 years, since the launch of Chiclets in 1944. With the addition of Halls, Trident and Bubbaloo, today Cadbury is the No. 1 player in what is one of the world’s largest confectionery markets. Their sales force has played a critical role in our success. Our 1,200-strong sales force visits a staggering 200,000 customers in more than 2,500 cities. Making an average of 360,000 individual calls every year, in vans, motorised tricycles, bicycles and even on foot, our sales team not only deliver, collect and merchandise our products and brands but also advise customers on merchandising and selling techniques. Growing with Emerging Markets: Emerging markets currently account for more than a third of their revenues – a percentage that is growing year after year. They are the confectionery leader in these exciting and dynamic parts of the world. Their business in India is a great example of their approach and has grown by over 20% annually for the last three years. A strong foundation They have been in India for 60 years and have a strong heritage and leadership position with a 30% confectionery market share. We’re the No 1 chocolate brand with a chocolate market share of over 70%. In fact, we’re so closely associated with chocolate that cocoa trees are often called Cadbury trees. Even so, only around a third of the population currently buys chocolate. That’s 700 million people still to introduce to the delights of Cadbury. Growing with the market Managerial Economics Page 15

Cadbury swot Appealing to a broader range of consumers is at the heart of their plan. So they have created a base range of their popular chocolate brands at more affordable price points. But we also know that, as incomes rise, the demand for more premium gifts grow. their Diwali gifting range has enjoyed notable success. Functional advantage: Cadbury Bournvita was launched here in 1948 and throughout its history has always sought to provide nutrition that aids growth and all-round development today, the natural goodness of malt, chocolate and milk is fortified with vitamins A, B1, B3, B6, B12 and C, plus iron, protein, calcium, zinc, manganese and folic acid. No wonder it’s ‘a cup of confidence’. Affordable indulgence: They have increased their presence in the candy category through Halls and Cadbury Dairy Milk clairs. As in other emerging markets with hot climates, Eclairs are proving popular as an indulgent affordable treat. With delicious Cadbury chocolate in the middle, they melt in the mouth, not in the heat. A new Eclairs Crunch format, with a crispy caramel shell, is just as affordable and even more at home in hot weather. Importing success True to their total confectionery plan, they are also entering new categories, applying their know- how from their success in other markets. They have already gained over 9% of the Indian bubblegum market with the launch of Bubbaloo – a Latin American import that’s off to a great start. Cadbury Marketing SWOT Analysis: Strengths: Managerial Economics Page 16

Cadbury swot ♣ Key US soft drinks player – the Dr Pepper Snapple Group has inherited a position as a leading soft drinks player in the US, boasting high-profile brands such as those which comprise its name and the likes of 7-Up and Schweppes. ♣ Independent drinks business – following the demerger from Cadbury Schweppes, the sole focus of the new Dr Pepper Snapple Group is soft drinks, a status that should allow it to better target growth in the sector. ♣ Strong distribution system – the Dr Pepper Snapple Group has inherited the largest independent distribution network in the US and a reduced reliance on Coca-Cola Enterprises and Pepsi Bottling Group for securing access to the market for its brands. Weaknesses: ♣ Overexposed to US carbonates – despite its emphasis on expanding its non-carbonates presence, the Dr Pepper Snapple Group remains over-reliant on the floundering US carbonates market. As such, it is exposed to fluctuations in this marketplace. ♣ Weaker financial position – following the demerger, the Dr Pepper Snapple Group finds itself operating without financial backing of what was the much larger Cadbury Schweppes group, which could also rely on confectionery revenues. ♣ Limited product portfolio – the Dr Pepper Snapple Group has a smaller product portfolio than its competitors, in particular The Coca-Cola Company and PepsiCo, which provides a smaller base from which to rapidly expand and diversify its product offer. ♣ Geographic constraints – owing to the multiple franchisee ownership of core brands such as Schweppes, Dr Pepper and 7-Up, the Dr Pepper Snapple Group is restricted in terms of international expansion, which given its reliance on the US, is a definite weakness. ♣ Cadbury role shrinks – in its new guise, Cadbury Plc became a smaller-scale, regional soft drinks player and hence, cannot rely on the same level of financial backing and brand exposure to generate revenues as was available before. Opportunities: Managerial Economics Page 17

Cadbury swot ♣ RTD tea potential – the Dr Pepper Snapple Group is in a good position to exploit growth in RTD tea in the US in the short term as consumers continue to abandon carbonates in search of better for you non-carbonated beverages. ♣ Functional fillip – functional bottled water and other functional drinks in the US are growth opportunities for the Dr Pepper Snapple Group, with the shift away from unhealthily perceived carbonates benefiting better for you beverages. ♣ Bolder market segmentation – the Dr Pepper Snapple Group has the ability to benefit from a bolder approach to its functional drinks portfolio. Beverages which claim to lower blood pressure levels, make the skin beautiful and increase fat burning are among the latest to emerge on the market. ♣ Non-carbonates in Australia – Cadbury Plc is in a position to benefit from marked growth in a number of non-carbonates categories in Australia, in particular bottled water, functional drinks and RTD tea, with all three set to outperform overall soft drinks. Threats: ♣ Key market maturity – the Dr Pepper Snapple Group’s key US carbonates market is set to contract in the short term, as consumers continue to switch to healthier soft drinks. This malaise will put pressure on margins at the company. ♣ High level of industry consolidation – the global soft drinks market is characterised by a high level of consolidation, with the top rankings held by the major companies The Coca- Cola Company, PepsiCo and Danone. As these companies are stretching their operations globally, this will pose challenges for the Dr Pepper Snapple Group in terms of entering new markets and building out its core sector presence. ♣ Rising raw material costs – the price of raw materials such as packaging, fruit and fuels are expected to continue to rise in the short term, a development which is certain to place greater downward pressure on the company’s profit margins and threaten development plans. Conclusion: Managerial Economics Page 18

Cadbury swot Although other chocolate firms like NESTLE are giving good completion to CADBURY, it stood in a no1 position. The CADBURY success is because of their big vision i.e., “Be the worlds BIGGEST and BEST Confectionery Company” and their purpose i.e., “Creating brands people love”. REFERENCES: 1. www.cadbury.com 2. www.cadbury.co.uk 3. Wikipedia 4. www.businessteacher.org.uk Managerial Economics Page 19

Swot Analysis Of Cadbury By Uma Ganesh

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