STRATEGIC ANALYSIS OF CADBURY

1. BACK GROUND:
The history of Cadbury is almost 200 years young with a heritage tracing
right back to 1824. It's a fascinating story of industrial and social
development - the story of a small family business growing up, and joining
with others, to become an international world leader. A story of technical
invention and secret recipes, marketing savvy and the creation of great
brands. A story of people who are passionate, principled, pioneering and
just love confectionery.
It was John Cadbury, a young Quaker, who first set things in motion when
he opened a shop in Birmingham, UK in 1824. His original focus was the
trade of tea and coffee, but he soon spotted a new opportunity in cocoa
beverages and laid the foundations for Cadbury's move into chocolate and
then confectionery.
Cadbury was started from a grocery shop in Birmingham. This changed in
1831 when John Cadbury went into manufacturing drinking chocolate and
cocoa. In 1847 a large factory was rented in Bridge Street Birmingham.
Around the same time John Cadbury was joined by his brother Benjamin
and the name of the business became Cadbury Brothers of Birmingham.
The turning point of the business was in 1866 when the brothers
introduced the process of pressing the cocoa butter out of the cocoa
beans. The benefits for the Cadbury brothers was that they could use
the butter to make different types of eating chocolate the first of which was
the Cadburys dairy milk.

After this time the brothers moved to the now famous Bournville site
where Cadbury world is situated today. The Cadbury brothers changed
the employer to employee relations for the better by having the
Bournville site as a 'factory in a garden'. Also the brothers
introduced better employee welfare with joint consultation and other
innovations in this area.
In 2007, the decision was made to separate the Beverage and
Confectionery businesses. The demerger of the Americas Beverages
Business on 7 May 2008, marked the beginning of a new era for Cadbury
plc with its vision to be the world’s biggest and best confectionery
company. Today, Cadbury continues to be as a leader and is one of the
largest chocolate producers in the world.
The evolution of cadbury was on a strong value and a sense of social
responsibility. As Quakers, the Cadbury family believed tea, coffee
and cocoa beverages could serve as an alternative to alcohol, seen to be
a cause of poverty and deprivation amongst the working classes. More
broadly, they were active across other Quaker campaigns for 'justice,
equality and social reform, putting an end to poverty and deprivation.' For
example, Cadbury were involved in the early anti-slavery movement, calls
for better housing and sanitation, and inner city smoke abatement.
Across the UK society, Quakers were excluded from universities (which
were closely tied to the established church) and therefore entry into the
professions. They were also unwilling to enter the military due to their
pacifist principles, so turned their energies and talents towards business
and social reform. So starting with cocoa, hand-ground with a mortar and
pestle in the back room of his shop, John Cadbury laid the foundations of
today’s Cadbury.

From 2003 to 2008 the confectionery business was run using a regional
structure, with strong leadership to drive strategic change and build strong
commercial functions. Since the introduction of global categories in 2006
for Chocolate, Gum and Candy, Cadbury team is increasingly managing
commercial strategies on a global basis and driving in-market execution at
a business unit level. Reflecting these operational developments, and with
the established strategic programme firmly embedded in the business
units, Cadbury management has taken the decision to remove the
regional level from 2009 onwards and directly manage the seven
underlying business units.

The product range of Cadbury over time have owned different brands
which have produced different products, but today concentrating only on
confectionery that are Chocolate, Candy and Gum. It has developed a
global portfolio of brands which have improved in value over time through
innovative product extensions and introductions into new markets. The
Group’s brands include many global, regional and local favourites.
Cadbury’s chocolate business is built on regional strengths, including
strong market positions in the UK, Ireland, Australia, New Zealand, South
Africa and India. The company is engaged in the manufacture and sale of
confectioneries such as cocoa powder, candy, cough drop, chewing gum,
milk chocolate bar, sugar-coated gum, and breath freshener. These are
marketed under Cadbury, Creme Egg, Green and Black's, Trident,
Dentyne, Hollywood, Bubbaloo, Halls, Cadbury Eclairs, Bassett’s, and the
Natural Confectionery Company brand names. Cadbury has a wide range
of branded products, Trident being the largest one in chocolates. The
company’s other chocolate brands include Hollywood, Stimorol, Dentyne,
Clorets and Bubbaloo. In Candy, Halls is the largest brand followed by
Bassetts, Maynards, the Natural Confectionery Company and Cadbury
Eclairs. Confectionery is the largest revenue generating business and is
considered to be the core competence of the company. Confectionery is
organized under three categories namely, chocolate, gum and candy.

Cadbury has a no. 2 position in gum, Trident being the largest brand in the
portfolio as well as the largest gum brand in the world. This position is built
on strong market shares in the Americas, in Europe (including France,
Spain and Turkey) and in Japan, Thailand and South Africa. Other major
brands include Hollywood, Stimorol, Dentyne, Clorets and Bubbaloo. Halls
is the largest candy brand in the world, and accounts for approximately
one-third of Cadbury’s candy revenues.

The market, in 2008, with over $150 billion of retail sales globally
confectionery is a large market. It is in fact the fourth largest segment in
packaged foods – a global market worth an estimated $1,800 billion. The
confectionery market has grown steadily over the past five years at a rate
of 5% (compound annual growth rate). Established brands play an
important part in the world of confectionery, with a relatively low
penetration of private label.

In the last five years, Cadbury’s emerging markets confectionery

businesses grew on average by 12% p.a. on a like-for-like basis.
Emerging markets continue to be a key point of focus for the company due
to the expectation of higher product growth rates than the developed
markets as living standards continue to rise in emerging markets. Gum is
the fastest growing category within confectionery with a 7% p.a. value
growth rate over the last four years. Gum accounts for 33% of Cadbury’s
revenues, a relatively high ratio compared to gum’s share in the global
market of 14%. ‘Better-for-you’ confectionery, including products such as
fortified/ functional confectionery, and reduced-sugar confectionery grew
by 11% p.a. from 2002–2007, compared with 5% growth for confectionery
as a whole. Cadbury’s ‘wellness’ sub-category accounts for around 30% of
revenue which compares favourably with 17% for the market. ‘Wellness’ is
a focus for company as increased consumer attention on diet, health and
fitness is expected to drive above average growth for ‘wellness’ products.

The function of Cadbury with over 45,000 employees working across 60

countries, is large and complex. In 2008, the Group was organised into
six global functions, as well as the four confectionery regions and the two
discontinued beverage businesses. As set out opposite, from 2009
onwards, Cadbury has made changes to this structure. These changes do
not alter the general responsibilities of the functions except for the
strengthened categories which will have wider responsibility to develop
commercial strategy and influence local execution.
Operations of Cadbury are split into seven business units during 2009:
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 category and corporate led functional
units. In conjunction with the seven business units described above, it has
seven global functions also. The category-led functions are Commercial,
Science & Technology and Supply Chain; the corporate led functions are
Human Resources and Corporate Affairs, Finance and Information
Technology, Legal and Secretariat and 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 strategies and processes towards best in class performance,
while remaining closely aligned to the regions' commercial interests.

The organization structure of Cadbury is heavily dependant on its vast

employee base. The Cadbury plc Board of Directors is responsible for the
overall management and performance of the Company, and the approval
of the long-term objectives and commercial strategy. The Cadbury plc
Board of Directors delegates operational management to the Chief
Executive’s Committee. The Chief Executive’s Committee (CEC),
presently comprises the Chief Executive Officer, leaders of each business
unit and function and category representatives. The CEC reports to the
Board and is accountable for the management of the Company’s
operations and the implementation of strategy. The CEC is also
responsible to the Board for driving high level performance of the growth,
efficiency, capability and sustainability programmes as well as for resource
allocation.

The CEC develops Cadbury’s global business strategy, embracing major

commercial decisions, supply chain developments and other major
operating issues arising in the normal course of business. This includes
reviewing the business units’ and functions’ performance contracts, and
determining necessary action relating to financial policy, targets, results
and forecasts. It approves some capital and development expenditures
according to authorities delegated by the Board, reports to the Board on
the sources and uses of funds, cash position and capital structure, and
reviews the structure and policy of the Group’s borrowings. The CEC also
evaluates foreign exchange, interest rate and other risk management
policies and submits an annual risk management report to the Board. It
also reviews proposed acquisitions and disposals, joint ventures and
partnerships before submission to the Board, and reviews and approves
legal and human resources matters.
 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.
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. Candy is the also 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, have been drivers of market growth.

depends The culture of Cadburys started out being paternalistic as the

company
was devoted to making its employees feel welcome and valued within the
company. Cadburys relied on its staff very heavily as without a vast
employee base the company would not be the big corporation it is
today.

To entice employees to the company Cadburys built their famous

Bournville site along with accommodation so the workforce would be
close to their place of business. Along with this the factory was
built in the middle of a garden so when employees had finished work or
were on a break they had somewhere to relax as well as socialise with
other colleges on a Sunday as the factory was closed.

Today Cadburys have become a company who has a culture, which is

interested in keeping its stakeholders happy. Along with this and the
advancement in technology Cadburys have now lost its extensive
employee range and replaced it with machines and now only employ
enough staff to keep the machines going. By being stakeholder driven
the company has now become controlled by shareholders who are mainly
interested in the company making a profit.

Our Global Functions and Categories

In 2008, the Group was organised into six global functions

Categories
Within confectionery there are three categories: Chocolate, Candy and Gum. We
have a total confectionery model with strong positions in all three categories.
Our Categories

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 rationalisation.
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, have been drivers of market growth.
Company Overview
Cadbury is a leading global confectionery company with an outstanding portfolio
of chocolate, gum and candy brands. We create brands people love - brands like
Cadbury, Trident and Halls.
Our heritage starts back in 1824 when John Cadbury opened a shop in
Birmingham selling cocoa and chocolate. Since then we have expanded our
business throughout the world by a programme of organic and acquisition led
growth. On 7 May 2008, the separation of our 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

• We make and sell three kinds of confectionery: chocolate, gum and candy
• We operate in over 60 countries
• John Cadbury opened for business in 1824 - making us nearly 200 years
young
• We work with around 35,000 direct and indirect suppliers
• We employ around 50,000 people
• Every day millions of people around the world enjoy our brands

How did Cadburys get started?

2.2.2 Where are Cadburys today?

Today Cadburys are the UK's market leader and are one of the largest
chocolate producers in the world and have opened new business
opportunities by producing chocolate within other countries like
Ireland, India and Pakistan. Cadburys is the confectionery division of
Cadbury Schweppes Plc, which has other big named brands within the
soft drinks market such as Dr Pepper.

Compared to when Cadburys began, the business is now known for the
chocolate bars that it produces and is, now and then, a favourite
amongst children and adults.

2.2.3 Cadburys current organisational structure

Like Tesco, Cadbury Schweppes also have two different structures. The
structure that they use for their board of directors has been
re-designed to "clarify accountability and enable swifter
diction-making." (Quote taken from www.cadburyschweppes.com)

Looking at the improved organisation structure it is clear to see who

is in charge of which departments within the business.

(The company structure can be found under appendix 2.0)

3.0 Tesco's and Cadburys Company Structure

3.1 Tesco company structure

Tesco is a company that has also delayered the amount of employees

used through out the company. Reasons for Tesco delayering are:

· The company have found more efficient ways of completing a task or

business activity.

· The advancement in technology has allowed the company to take some

of the more demanding tasks away from employees to minimise human
error E.G stock ordering, delivery schedules, etc…

· The company giving general staff more responsibility within stores

and allowing them to use their own initiative when helping or serving
a customer.

The managers within each store have now been given a much broader span
of control with their workforce. This means that each manager will
have more employees to communicate with, but each employee has been
trained to a set standard, which allows the manager to trust them to
get on with the job with little guidance from him or her.

Looking at the Tesco Company the report can see that all of the key
decisions for each region of the country are made by the board of
directors based in Cheshunt, which makes the company centralised in
its diction making.

As the company is run centrally it allows Tesco to minimise the cost

of having big finance, general office departments in each of its
stores as well as minimise the amount of work each store has and
allows them to concentrate on selling the businesses products to the
customers.

3.2 Cadburys company structure

Looking at Cadburys it is clear to see that the company, over time,

has delayered the amount of:

· Workforce it employees and replaced them with more efficient

machines.

· Outsourcing areas of the company like maintenance and market

research.

With the introduction of delayering Cadburys have seen advantages such

as:

· It is able to guarantee its products will be of satisfactory

quality.

· Employees are now multi skilled, thus able to work in more than one
area of the business.

· The company has increased its production and profitability or the

restructuring.

These advantages can pose some problems as each manager will have more
employees to look after as well as have a much broader span of
control, which can cause confusion between the managers and the
workforce.

The Cadbury factories all work independently and the company as a hole
is decentralised as each factory uses the resources (E.g. milk) of the
country they are in. The same cannot be said when looking at the board
of directors for the Cadbury Schweppes Company, which portrays the
company as being more of centralised enterprise as all the major
decisions regarding a factory are made at board level.

4.0 The HR department within Tesco and Cadburys.

4.1 Tesco's HR department

Within Tesco the HR departments are within all of their stores as well
as in the regional and head offices. By having a HR department in each
store it allows the HR team to see how the store is doing as well as
see clearly where the company needs new staff. Also the HR department
helps the company by:

· Devising techniques to measure and reduce labour turnover.

· Planning ahead to make sure that every department has enough staff.

· HR planners operate a flexible workforce, which has numerical,

financial and functional flexibility.

· Train new employees to be able to work within their designated

department correctly and safely.

The main problems of a HR department to deal with are the chances of:

· Having a skills shortage within new staff.

· Having to entice new employees to join as the competition for new

staff becomes stronger.

· The sudden increase in labour turnover.

By achieving their main objectives and attempting to avoid the main

problem areas the HR department can help the store to meet customer
demands as well as achieve the stores aims regarding staff
availability.

In an attempt to minimise the level of staff turnover the HR

department offer each member of staff the opportunity to increase
their flexibility within the business by way of training. Another way
in which Tesco's HR department try to keep staff within the company is
by way of reward/incentive. These incentives are things like:

· Staff discount after a years service to the company.

· Increase of pay after 6 months on the job.

· Paid holiday after 6 months.

Tesco also have a reward system, which recognises when an employee has
performed excellent customer service towards a customer and the store
then rewards the member of staff with a token of their appreciation
(e.g. £10 gift voucher).

4.2 Cadburys HR department

Each of Cadburys factories have a HR department, which deal with the

factories demand for:

· New staff with a good skill level or possible past factory

experience.

· Train new/current staff to be able to use new equipment correctly

and efficiently.

· Help current employees with any problems they may have in their work
place.

As with any HR department the main problem areas that the HR

department in Cadburys faces are:

· Skill gaps in new potential employees

· Competition from other factories meaning less new staff available.

· High staff turnover affecting production.

To try and combat this problem Cadburys offers its staff an incentive
and rewards program. This program consists of:

· Increase in pay

· The chance of internal promotion

· Paid holiday

· Discounted company shires

Also the company offers the chance for employees to go on days out to
places like Alton Towersor to London with their colleagues and family.

5.0 The culture of Tesco and Cadburys

5.1 Tesco's culture

When Tesco started out the business had a culture of being a company
of cheep affordable products. The reason for this was due to Sir Jack
Cohen (the founder of Tesco) as he would always buy products in bulk
as well as tins that Sainsbury's had discarded because it was his
vision to be able to 'pile it high and sell it cheep'.

In Tesco today the company is still recognised by the motto of 'pile

it high and sell it cheep', but the company has introduced quality
into its products by offering three different key areas of products.
The first area consists of very high quality products such as organic
and these products are usually the most expensive. The middle group of
products are usually a collection of Tesco and company branded
products and covers a wide price bracket. The third group of products
are Tesco's value range, which consists of the cheapest products such
as toilet rolls, bin liners and ready meals. These types of products
are all about value for money and are not priced by the level of
quality.

As well as offer their customers more choice, in the way of groceries,

Tesco now offer their customers the opportunity to purchase clothes,
electrical goods, DVD's CD's, etc…

By offering their customers these other products Tesco are changing

their culture into becoming a 'one stop shop', which offers customers
the chance to purchase almost anything they need at the same time.

A danger for Tesco is the threat of ASDA overtaking them in

affordability along with viability and becoming the new store that
'piles it high and sells it cheap'.

5.2 Cadburys culture

The culture of Cadburys started out being paternalistic as the company

was devoted to making its employees feel welcome and valued within the
company. Cadburys relied on its staff very heavily as without a vast
employee base the company would not be the big corporation it is
today.

To entice employees to the company Cadburys built their famous

Bournville site along with accommodation so the workforce would be
close to their place of business. Along with this the factory was
built in the middle of a garden so when employees had finished work or
were on a break they had somewhere to relax as well as socialise with
other colleges on a Sunday as the factory was closed.

Today Cadburys have become a company who have a culture, which is

interested in keeping its stakeholders happy. Along with this and the
advancement in technology Cadburys have now lost its extensive
employee range and replaced it with machines and now only employ
enough staff to keep the machines going. By being stakeholder driven
the company has now become controlled by shareholders who are mainly
interested in the company making a profit.

6.0 How advancing technology has affected Tesco and Cadburys.

6.1 Tesco

Tesco has seen technology help their business by allowing them to take
some jobs away from employees, which could have big affects on the
company's profit, product availability and product waste if not done
properly.

The key areas that Tesco have handed over to technology to complete
are:

· The control of stock that each store holds as this will help the
company to minimise the chance of running out on key products and
disappointing customers.

· The tills have been changed over the years and are now linked with
the main computer. This allows the correct price to be charged to the
customer as well as tell the main computer how much of each product
has been sold and how much to order next time.

Along with technology the range of products has also advanced

considerably. These changes are things like:

* Ready meals, which would normally take time and effort to put
together.

* Different tastes from other countries like Chinese or Indian.

* The appeal of celebrity chefs with their endorsement of a line of

products (e.g. Jamie Oliver for Sainsbury's).

The advancements in grocery market and their products have, in recent

times, hit a peak. This has meant that Tesco and other grocers have
now increased their product range to include new items such as music,
films, cloths and some electrical appliances. This has allowed Tesco
to keep the company at the top of its market place as well as start to
rival some of the cloth retailers.

6.2 Cadburys

Over time Cadburys have owned different brands which have produced
different products, but today only produce chocolate and associated
products.

Product changes for Cadburys have not been as advanced as Tesco as

Cadburys dairy milk chocolate has been around for over 100 years with
little or no changes. Cadburys have released new products such as
Boost as well as dairy milk chocolate with caramel.

The reason that Cadburys have not released many new products in resent
years is that the market place is one of little change where as with
Tesco the market place is very volatile with the never ending price
wars and innovations.

7.0 Where should Tesco and Cadburys go now?

7.1 Tesco

Looking at Tesco it seams that they have hit a peak in what they can
do as they have achieved the view of becoming a 'one stop shop'. The
down side to some of the electrical goods that Tesco offer is that
they are not of a brand that some customers would usually associate
with quality or reliability like Sony, JVC, Phillips and LG.

When it comes to clothes customers like to be able to brows other

shops before they make their final purchase. This can be a problem for
Tesco as most of the stores that stock clothes are out side the
shopping centres of the cities or towns where they are situated. To
combat this Tesco could open specific stores that only sell clothes or
electrical goods and these stores could be situated within the
shopping centres along with all of the big clothing shops such as Top
Man/Shop, BHS, Debenhams and Marks and Spencers. The advantage for
Tesco could be to compete directly against the main clothing companies
and consumers would start to benefit with a new type of price war.

7.2 Cadburys

One down side for Cadburys is that it is hard for a consumer to define
which product is produced by which company and with such a large
choice in the market place it is hard for a consumer to stay loyal to
one brand. To combat this Cadburys have started to have their company
name on the front of the product. E.g. Cadburys dairy milk with
caramel, etc…

With consumers becoming even more concerned with healthy eating

Cadburys would be wise to look into producing a low fat or fat free
chocolate range. The advantages of this, as well as the British
market, could open a potential US market where people are becoming
more aware of healthy eating such as the Atkins diet.

Cadbury Reports Good Third Quarter Performance

14 Oct 2008
Cadbury is today releasing its Interim Management Statement covering trading
for the third quarter ending 30 September 2008, organisation changes and an
update on cost reduction programmes.
HIGHLIGHTS

• Good third quarter revenue performance: +6% despite cycling strong prior
year
• Continued double digit growth in emerging markets: +13%
• Streamlined organisation to accelerate decision making and improve
execution
• New Vision into Action cost reduction initiatives announced
• Outlook for the year unchanged from guidance in July

Note: All comments on revenue growth are on a like-for-like basis at constant

exchange rates.
Todd Stitzer, Chief Executive Officer, said: “The good third quarter performance
was in line with our expectations. Our new streamlined organisation, together
with additional cost reduction initiatives, will increase the focus on implementing
our strategic plans and underpin delivery of our margin targets. Despite weaker
economic conditions, we expect strong profit growth for the year and reconfirm
the revenue and margin guidance we gave in July.”
ORGANISATION CHANGES
We are today announcing important changes to our organisation and
management structure which will strengthen our focus on globally led categories
and further streamline the organisation. Our four region operational structure will
be eliminated, leaving seven business units (listed in Appendix A) which will
report directly to Todd Stitzer, CEO. At the same time, we are strengthening our
global chocolate, gum and candy category structure, further increasing our focus
on category development.
Overall, these changes remove our current regional structure, de-layer the
organisation and further reduce SG&A costs. They will enable faster decision
making, improve in-market execution and ensure a stronger alignment of
category strategies and commercial programmes.
As a result of these and related changes, approximately 250 people will leave the
business including a number of senior managers. We expect these changes to
underpin delivery of our Vision into Action margin goal. The cost of this
programme will be funded from the total restructuring programme announced in
June 2007.
VISION INTO ACTION COST REDUCTION INITIATIVES
In June 2007, we presented the Group’s VIA strategy which included a significant
increase in our margins to mid-teens by 2011. Part of achieving this goal included
investing around £650m, including £200m of capital expenditure, to drive a major
reduction in SG&A and supply chain costs, the benefits of which would be
progressively realised over the period to 2011.
As part of this continuing programme of management action, we are today
announcing three further restructuring measures within our operations:
Reconfiguration of chocolate manufacturing in Australia and New Zealand

• Following a review of the confectionery supply chains in Australia and New

Zealand, we have started a major programme of plant optimisation and
supply chain reconfiguration to simplify our manufacturing activities,
creating centres focusing on key technologies. As part of the programme,
we expect to reduce SKUs by around 30% and see an incremental
improvement in customer service. Around 330 positions will be removed
over the next two years.

Further centralisation of European operations

• We are proposing to establish a single, state-of-the-art science &

technology centre of excellence in Europe focusing on gum and candy.
Based in Switzerland, it would consolidate three separate facilities and
builds on the centralisation of commercial and supply chain management
for Europe in Switzerland which has been largely put in place during 2008.

Outsourcing of global facilities management

• We have reached agreement with a global partner to progressively

provide facilities management and related services to Cadbury. Subject to
consultation, this will likely result in the transfer of a significant number of
existing roles and third party contracts over the coming years.

These initiatives are within the scope of the VIA programme already announced
and are part of the performance improvement targets set out in 2007. Taken
together, projects which will deliver around 60% of the total planned cost savings
have been announced to date.
THIRD QUARTER TRADING UPDATE
In line with the new organisation set out above, a new reporting structure will be
introduced in 2009. A re-presentation to the new reporting units will be provided
at the time of the 2008 final results. All comments on revenue growth are on a
like-for-like basis at constant exchange rates.
Overall, the Group delivered a good performance in the third quarter following a
strong first half. Revenue growth in the quarter was 6%, bringing year-to-date
growth in revenues to 7%. Performance benefited from an excellent quarter in
our business in Britain and continued double-digit growth in emerging markets.
All categories made good progress supported by sustained marketing and
promotional investments.
In Britain, Ireland, the Middle East and Africa (BIMA), revenues grew by 10%
despite lapping strong prior year comparatives. This reflected strong
performances from both our developed market operations in Britain and
emerging markets, particularly in South Africa where revenue growth was 22%.
In Britain, growth of 11% benefited from a significant recovery in candy, which in
the same quarter last year was adversely impacted by floods at our factory in
Sheffield, a strong innovation programme supported by further increases in
marketing and a focus on strengthening our core products. Key product launches
included the new range of Cadbury Dairy Milk bars - Cranberry & Granola and
Apricot Crumble - and the re-launch of Wispa.
In Europe, revenues were 4% ahead in the quarter. Overall, our gum portfolio
performed well in difficult market conditions, driven by market share gains in
France, Northern Europe and Russia. Integration of the recent Intergum
acquisition in Turkey has progressed well with major changes in route to market
activities now starting to benefit market share and revenue trends. The overall
rate of growth in Europe was held back by the market slow-down in France,
Spain and Northern Europe and the near term impact of route to market changes
in Russia.
In the Americas, revenues were ahead 7% in the quarter, reflecting good growth
in South America and the US, partly offset by a weaker performance in Canada.
In the US, our candy business, driven by Swedish Fish and Sour Patch Kids,
performed well. Compared to recent trends, the US gum market grew more
slowly in the quarter. We sustained a strong market share and in late September
we announced an 8% increase in US gum prices, which will be implemented
through the fourth quarter. Growth in our emerging market businesses in Latin
and South America remained strong, particularly in Brazil where the business
delivered strong revenue growth in good market conditions.
In Asia Pacific, revenues were 2% ahead in the quarter, with continued growth
in confectionery, up 5%, partly offset by a weaker quarter in our Australian
beverage business where revenues were 5% lower. Confectionery growth was
very good across our key Asian emerging market businesses which had a strong
quarter, with revenues up 19%. In particular, India and South East Asia delivered
strong double-digit increases in revenues on the back of continued market
growth, new product launches, including new variants of Bubbaloo, and
promotional activities. In Australia, confectionery revenue was impacted by year-
on-year changes in promotional phasing and frequency and some trade de-
stocking.
Update on Financial Position
Over 80% of our revenues and underlying profit from operations are generated
outside the United Kingdom. In 2008, movements in exchange rates, and in
particular the weakening of the pound versus the US dollar, Australian dollar and
the euro, are expected to increase revenues by around 7% and underlying profit
from operations by around 12%.
Our projected interest rate for the year as a whole is unchanged at around 6%.
In July, we completed a successful 10 year sterling bond issue (£350m at 7.25%)
and in early October, we redeemed a 5 year US dollar bond ($1bn at 3.875%)
issued at the time of the Adams acquisition. At this time, around 65% of our
borrowings are at fixed rates, reflecting recent issuances and redemptions.
Other than as disclosed in this release, there have been no other material
changes to the financial position of the Group.
SUMMARY
During 2008, considerable progress has already been made implementing the
VIA programme. The further restructuring activities and organisation changes
announced today underpin Cadbury’s focus on organic growth and margin
improvement.
Commodity prices remain in line with our expectations. Overall commodity cost
inflation during 2008 is expected to remain between 5-6%. So far in 2008, price
realisation has remained strong and is expected to recover overall input cost
increases for the year despite higher inflation in the second half.
We continue to expect further cost pressures in 2009, particularly in respect of
cocoa costs. At this early stage, our 2009 commodity and input costs are
expected to be in the range of 6 to 8% higher than 2008. Consequently, we are in
the process of implementing price increases in most of our major markets to
cover the impact of these future cost rises.
We are in a period of unprecedented global financial turmoil and it is not possible
to gauge with certainty what effect the most recent market turbulence may have
on both trade customer and consumer behaviour. However, despite these
increased headwinds we participate in a resilient category with a strong business
model and continue to expect a successful outcome for the year with guidance
on revenue and margin unchanged from the Interim Results in July.

We will provide a further update on trading at our customary pre-close update on

16 December.
APPENDIX A – REPORTING STRUCTURE 2009 ONWARDS
In line with the new structure set out in today’s statement, a new reporting
structure will be introduced in 2009. A re-presentation to the new reporting units
will be provided at the time of the 2008 final results.
From 2009 the Group will report its results across seven Business Units:
2008 Regions 2009 Business Units

B&I (Britain and Ireland)

BIMA
MEA (Middle East and Africa)

NA (North America inc Mexico)

AMERICAS
SA (South America)

EUROPE EUROPE (including Russia and Turkey)

ASIA (China, India, Pakistan and South East Asia)

ASIA PACIFIC
PACIFIC (Australia, NZ and Japan)
merged with Schweppes in 1969. Currently, this successful company is
employing approximately about 43,000 people worldwide. Today, Cadbury
Schweppes is the world's fourth biggest supplier of chocolate and sugar
confectionery.

One of its products, Dairy Milk was introduced in 1905, and has become the
most successful moulded chocolate in UK history and the basic ingredient for
many other Cadbury products. 95 years later, Dairy Milk is one of the world's
most famous brand names and the company's leading chocolate bar by revenue.
Sales from Cadbury's Dairy Milk alone are estimated at over £135 million for
1995. Cadbury considers its success is based on three factors: quality, value for
money and good advertising.
Aim: Apply SWOT analysis to Cadbury’s current situation and its position to enter
a foreign market
It is important to investigate on the internal and external environmental forces for
the Dairy Milk in France. Relevant organizational and industrial information is
required for the development of a SWOT analysis. The analysis of the
environment and the consideration of the situational factors when designing
marketing planning, is critical as it would allow Dairy Milk to capitalize on
organizational strengths, minimize any weaknesses, exploit market opportunities
and avoid any threats.
Strengths
Cadbury would realize several possible advantages in going abroad. By
penetrating a foreign market the company could:
• Maintain a stable growth of a company by maximizing the use of its production
capacity and thus increase economies of scale and scope.
• With its brand name, Cadbury could counterattack the competitors it faces in
the domestic market by attacking their domestic market.
• Keep up with the financial strength by increasing its sales and profit, indeed the
foreign market could present higher profit opportunities than the domestic
products.
• Acquisition rules in UK, reduce its dependence on the UK market and therefore
diversify its market specific risks.
• Overall, Cadbury has been successful through the new products (development)
it has to offer.
Weaknesses
Generally, as Cadbury has a weak position in the US market, thus, need to
change its target to a different location. Besides its lack of distribution network, it
also has a small total of market share altogether. Therefore in order to market
the product in France successfully, Cadbury would have to find out on how it can
improve in order to have great performance. It is also good to find out what are
the situations that they could avoid in order to be successful. In order to market
products the following issues should be considered:
• Total French production of chocolate bars and confectionary, which has
increased by 24.5 per cent between 1988 and 1991, has slowed down in more
recent years, partly due to the economic slump.
• Consumption of chocolate products, which has been growing until 1991,
remained fairly static in 1992, reflecting a fall in demand due to the gloomy
economic situation.
• Sales of milk chocolate bars, which account for 24 per cent by volume of total
sales of chocolate bars, decreased by 3.7 per cent.
Opportunities
Through its confectionary product line, least to mention is to build viable
positions in prioritized markets through organic growth and acquisition. Besides
what is mention above, Cadbury has other opportunities to have market
development in Russia and China. The Timeout Candy Bar market is growing
worldwide. This company is also at the same time distributing its products via the
internet – Develop Gourmet Line. Besides developing the “Low Calorie” line of
chocolates and sweets, they also offer the “Sugar Free” sweets line. This has
thus opened a completely Cadbury world in US.
Therefore in order to get the product into a new foreign market, France, Cadbury
would have good opportunities in store for them. Opportunities are as follows:
• In terms of political issues, France is an advanced parliamentary democracy
and politically is highly stable. The political power is centralized in the parliament,
the Prime Minister and the President. The country specific risk is negligible.
France is a member of the European Community and has excellent relations with
the UK.
• Economically, France has the fourth largest Gross Domestic Product in the
world. It is a first-world advanced market based economy. Despite a recent
recession, its economy is very strong and also highly deregulated in line with
European Union policies. France represents a very large potential market with a
high standard of living and purchasing power. The economy is highly open
internationally and conducts a high percentage of trade within its European
partners.
• With regards to its social situation, France has a broadly central/southern
European culture which has many similarities with the UK. However cultural
differences do exist and these must be considered when planning for the market.
• France has a high technological level and a lot of industries are based in the
technological sector. This technological base constitutes one of France’s
competitive advantages.
Threats
Due to its confectionary products, it is very important for Cadbury to be aware of
any present or upcoming threats. The company should take note of the changes
in the consumer’s buying trend. It is perceived that consumers might shift from
chocolates to “Healthy” snacks. If this were to happen, there might be a poor
product development which would tarnish the Cadbury’s name. Needless to say
price wars would occur between its competitors like Mars, Hershey and Nestle.
Due to the abovementioned, there would be seasonal sales slumps all year
round which will reflect to an increase in cost of the raw materials needed.
Cadbury would then have to be prepared for growth of small local gourmet
chocolates and regional candy manufacturers.
However if Cadbury were to market its products in France, the company has to
be aware of the risks it could encounter. It might:
• Not understand foreign customer preferences and fail to offer a competitively
attractive product;
• Not understand the foreign country’s business culture or know how to deal
effectively with foreign nationals;
• Underestimate foreign regulations and incur unexpected costs.
• Threat of entry due to the competition growing through acquisition.
Obviously any foreign entry decision must take the abovementioned elements
into account.
The Ansoff matrix
Product
Present New
Market
Penetration
Product
Development
Market
Development
Diversification
Because Cadbury is introducing its brand name to a new region, in relate to the
Ansoff matrix above, it can be argued that it is under market development.
Although the company has come up with a few current products, it is targeting to
a new market. Despite the competition against the rest (Hershey’s, M&M Mars
and Nestle), Cadbury has to have the bargaining power of the buyers in order to
be competitive in the market. Although the company need to know that
substitutes are not a major concern. Finally, to conclude that Cadbury is in the
Market Development, they would have to have the bargaining power of suppliers
as they are not in power position due to commodity like nature. And also to be
aware of the cost of packaging materials as it has increased over time.
There are a few strategic recommendations that Cadbury could come up with in
order to market its products not only in the region of France, but also to market it
products successfully. After much discussion on the position of the product
currently, the following recommendations could be suggested:
• Increase Frances Involvement by implementing a pound campaign to Launch
Timeout in France which has already been done in America.
• Increase Marketing and Promotion globally by marketing products in emerging
markets.
• Focus on non-chocolate development/acquisitions by developing line of non-
chocolate candies.
• Develop Novelty/Specialty markets—Gourmet Line on Internet, by developing
gourmet line to be distributed via internet.
• Aggressive new product development—low calories, sugar free and sweets.
This has to be done by researching and developing new products/ joint venture.
Conclusion
In order for Cadbury to reach the peak of achievement, the company would have
to stress on the global growth of the product. It can be a risk to market it in the
region France, but with careful study of the target market segments and its
economic position, it can be an attainment. Cadbury should also look into other
countries like the Asia Pacific in order to market its products popular globally. But
then again, careful considerations to look at its major competitors and to obtain
the rules and regulations of a certain country are equally important.
Another strategic plan would be a joint venture. Since Cadbury Schweppes is a
company that produces not only chocolates but also drinks, it should market a
new product and maybe get into the product development or get into a total
diversification. However, need to bear in mind that it is not as easy as marketing
Cadbury’s current products. It took Cadbury almost 165 years to reach to its
successful peak today.
Needless to say that in order for the company to market its products globally, it is
understood that heavy capital and marketing expenditures have to be sacrificed.
Cadbury has somehow gone through this process therefore throughout the past
decade; it shouldn’t be an issue that would raise a problem.
Last but not least not to forget that Cadbury should need to strengthen the brand
name of its products. This is important due to the fact that since it is popular in
the UK and US, the profile of the product should be maintained and not
deteriorates.
You have make SWOT for Cadbury NZ, whereas you take Cadbury a gobal
producer of Chocolates having global competitors.
SWOT analyses

Strengths

1. Long history up to 200 years

2. Cadbury and Schweppes have been awarded Royalty.

3. The third largest beverage company in the world

4. The fourth largest confectionary companies in the world

5. Products are sold over 200 countries.

6. Profits are increasing year by year.

Weakness

1. Very few new products are created by own group.

2. Small range of products.

Opportunities

1. Expand into new markets

2. Produce new products

3. Try different types of businesses.

Threat

1. Coca-cola.

2. Nestle.

3. Supermarket own brands

Strengths
- high barriers to entry due to level of investment
required
- exposed to a strong domestic economy
- good location (in an area that enjoys both high
population and high economic growth)
- strong brand value in domestic market
Weaknesses
- highly weather dependant
- single asset company
- ongoing investment in new attractions required
Opportunities
- expansion of the non core activity (eg food, retail,
functions)
- other tourism/leisure activities
Threats
- rationale for being listed questionable (small market
cap and one major shareholder)
- exposed to tight labour market and wage inflation
There are many more exotic and unique chocolates around, so what makes
Roses a favourite of so many?.

Roses were launched in 1938 and currently are the fastest selling boxed
chocolates worldwide, with sales in excess of £85 million a year. Within one year
of launch Roses milk and plain chocolate assortments have become one of
Cadbury's most important confectionery lines.

These chocolates have typically been purchased to be given as gifts. Today the
customer base is more universal but previously the targetted base was the young
and middle aged. Typical gifts to give have always been roses and chocolates
and Cadbury's took the initiative by naming a sekection of boxed chocolates as
Roses and using the symbol as a predominant feature in the packing.

Today the customer base is more universal and several flavours have been
changed to accomodate the older generation. Some even refer to them as
"Granny" chocolates.

In any case Roses make an ideal gift for all occasions. Roses are a favourite gift
during Christmas and my family must have received at least seven boxes in the
last festive season. Not that we fancied eating them then due to the abundance
of Christmas goodies around, but eventually they were all consumed by me and
my family.

Cadbury's Roses are available in several pack sizes to suit all occasions and
pockets. Pack sizes availabe are 300gms, 500gms, 680gms, 875gms, 1.3kg and
2 kgs.

The most common pack size is the 500gms boxes and these are available at
supermarkets like Tesco, Safeway, Sainsbury's etc. Tesco's sell them the
cheapest at £3.26 a box.

Cadbury's Roses consist of an assortment of twelve different flavours. As

mentioned earlier several flavours have been changed to suit a broader customer
base and present flavours/types are:

Fudge
Truffle Chunk
Brazilnut Caramel
Nutty Truffle Log
Chocolate Bite
Caramel Truffle
Cadbury's Mini chocolate
Caramel
Caramel Keg
Noisette Moment
Hazel Whirl
Hazel in Caramel

Overall it is a great assortment but personally I feel that there are just to many
Caramel based varieties. Also it is lacking some fruit based flavours like
strawberry or orange, which I know they used to have previously.

All the chocolates are wrapped in lovely shiny wrappers with each flavour having
it's own unique colour and shape. This makes it relatively easy to identify your
favourite ones, especially if you've been through seven boxes over a short period
of time.

Frankly speaking I don't think I would buy these for myself but would certainly
consider purchasing them to give away as gifts. There are many other types of
chocolates that would be more suitable for my "self indulgence".

So are they "grannys" chocolates? Certainly not. These are for all and sundry to
enjoy and great as giving out as an accompaniment to presents or as an
individual present to suit many occasions.

The fact that they also come in a wide range of pack sizes help tremendously
aswell as them being having the usual Cadbury's mark of quality and excellence.

In the case of Cadbury, alongside with the integration of the company’s HR policies and

practices with the overall business goals was the major restructuring of the company. This

restructuring entailed a restructuring of the organizational culture. In order to achieve its

goal, Cadbury Schweppes integrate every HR objectives to that of the company’s. The

company has undergone major restructuring and a lot of new HR programmes has been

introduced. Let us look at the different strategies that the company employs to achieve its

goal while giving importance to its HR.

Lets look at how the company has reshaped its culture in order to accommodate

the changes that are required to achieve success. The company is openly looking for
leaders that are aggressive. Someone who is results focused. The company actively seeks

for potential leaders who will promote the organization’s goal. According to the article,

Aggression is among Cadbury Schweppes’ core leadership value. In 1977, , former chief

executive (now chairman) introduced “Managing for Value”, a leadership program that

aimed to increase employees’ understanding of how the company could be more

profitable.

Three As

• Accountable – owning rather than saying “it’s not mine, it’s someone else’s”

• Adaptable – coping with the changing world and changing your skills as required

• Aggressive – being results focused and firm

The company promotes a culture built on the above mentioned behaviours. The

management believes that in order to lead, the organization as a whole must drive results,

be commercially focused on growth and be aggressive. Cadbury Schweppes is a listed

company with a set of financial goals. The “Managing for Value” program is geared

toward educating employees about the goals of the company and its business context.

Employees attended a five-day seminar that linked their work to organizational goals.

According to Gibson, the HR department makes sure that people understand the context

the business is operating in. To reinforce that message, the company has two shares. One

of them is “ShareSave”, which has been in operation since 1974.

Along with the company’s goal of delivering superior shareholder performance,

came its acquisition strategies. One of its biggest acquisition moves was the acquisition
of confectioner Adams in 2003. The company has also undergone a major reorganization,

moving to a more decentralised way of operating business units within a new structure

based on five global regions. In all these, the HR played an important role. Adams and

Cadbury Schweppes have different cultures. The HR needed to bring the two businesses

together. In order to create a winning organizational culture, the two management teams

collaborated. It was a move that made people feel that they own the company. It made the

employees more engaged with the organization’s goals. Out of this strategy came

“Working Better Together”, a program that provided more than 50 online tools for people

to undertake in order to work together. The program made the company realized that in

order to sustain its business, people, and brand advantage, the employees must be

motivated. Another program – “Growing our People” came from the realization that the

company could get more from its staff. The program is a three-day workshop that

mangers are taking focuses on behaviours and unlocking the potential of people at

different levels of the business