Strategic Management
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Agenda 01 Company Overview
This overviews the company background , deliverables , vision
mission and company position in the market
Style 02 Strategic Analysis
This analyze the business and operational strategies at Cadbury
03 Strategic Models
This take outs the analysis of strategic models such as Porters
five, SWOT, PESTEL analysis at Cadbury
04 Evaluation of new Option
This evaluates the new option for the Cadbury company
Company Overview
Cadbury Background
• Before it was an international corporation, Cadbury got
its start as a humble grocery store.
• In 1824, John Cadbury opened a shop in Birmingham,
England where he sold, among other goods, cocoa and
drinking chocolate he ground by hand.
• The beverage was initially marketed as a health drink,
and it was often served with lentils or barley mixed in.
• He opened up a full-fledged chocolate factory in 1841,
and by the following year he was selling 11 types of
cocoa and 16 varieties of drinking chocolate.
• Solid "eating chocolate" only came about years later as
a way for the company to utilize the cocoa butter left
over from the cocoa-making process.
Cadbury Vision & Mission
Mission Statement
'Cadbury means quality: this is our promise. Our reputation is built upon quality: Our commitment to continuous
improvement will ensure that our promise is delivered‘
Vision Statement
"Working better together to create brands
people love"
Cadbury Slogan
• The original slogan, 'A glass and a half of full cream milk in every
half-pound', was introduced in 1928 to show the bars were better
than those of their rivals. This was one of the most successful ad
slogans ever.
• Another slogan 'Kuch Meetha Hojaye' is used in Pakistan.
Cadbury’s strategic success is due to three core pillars
High quality Sound advertising Value for money
Business Strategy at Cadbury
Enhance chocolate spread, through low price point
packaging and the concentration on distribution.
Increase consumption depth, targeting customers of
regular chocolate by building momentum and the
dominant presence in the point of sale.
Be an important gift player with occasional gift packages.
Construct critical mass in the sugar company by offering
value-added sugar pastries.
Maintain image lead via an advanced marketing mix.
Company Strategy
1. Growth
• "Fewer, Faster, Bigger, Better Category focus for scale and simplicity
• Drive advantaged, consumer preferred brands and products Accelerate white space market via 'Smart Variety
• Create advantaged customer partnerships via total confectionery solutions
• Expand product platforms and strengthen route to market through partnership and acquisition
2. Efficiency
• 'Relentless focus on cost & efficiency
• Realise price and optimise customer investment
• Reduce SG&A cost base
• Deliver supply chain cost reduction and reconfiguration initiatives Rationalise portfolio
• Optimise capital management
3. Capabilities
• Ensure world-class quality
• Operate a category-led business enabled through consistent commercial capabilities Invest in science, technology &
Innovation to deliver preferred products at competitive cost
• Drive focused decision making and speed of execution
• Sharpen talent, diversity and inclusiveness agenda
• Leverage partnerships to streamline processes and reduce costs
Product
Life Cycle
Market Positioning
Product Mix
Bars Boxes & candies Beverages Biscuits
Strategic Analysis
Operational Strategy
• Quality and Maintenance
• Just IN Time
• Location
• Supply Chain Management
• Inventory Management
• Process and Capacity Design
SUPPLY CHAIN
MANAGEMENT
•70%Imported from Ghana 30% from
UK
•Raw materials supplied from Bournvile
•Reachs customers through wholesalers
•Supplied mostly from Cadbury self
owned shops
PROCESS &
CAPACITY DESIGN
•Cadbury's production-cum-marketing
formula formed the basis of its success
within a confectionery market.
•From a production-to a marketing-
orientated firm.
•Involving systems, consumption, and
advertising techniques.
•Product Development majorly concerning
with the idea of a new product, its
business analysis, its design, packaging,
quality management, testing and finally
launching the brand.
•Brand development through packaging.
Problem!
• The Realignment from supply-led to consumer-led and Production to Marketing oriented.
• The focus on profit that came from Schweppes merger.
• Reprioritization of the Moulded category and the Dairy Milk brand.
• Addressing of the Bournville cost base by
• Re-launching of Bournville worldwide was another successful strategy that Cadbury applied in order to extend
its Product life cycle.
• Finding new channels of distribution; acquisition of new brands; efficiency saving (profit only) as aging
products are produced at a lower cost.
Solution :)
• Changes in the market, incoming of new products, hyperinflation in cocoa prices and lack of brand
management.
• Sidelining of the brand Dairy Milk.
• The imbalance in the quality and taste and price of the products.
• No focus on the profit
• Stagnant sales as most of the products of Cadbury reached the stage of maturity in their product life cycle.
INVENTORY
MANAGEMENT
•Cadbury introduced Service Level
Optimizer 99+
•Easily integrated into the SAP APO
system that Cadbury was already using.
•After implementing this inventory buffer
variability and demand control had less
human intervention, safety stocks
determination was highly automated
•The inventory management of Cadbury
was stable.
•This step towards an effective inventory
management helped them satisfy the
customer needs at reduced costs
LOCATION
•Located in well connected areas
•Headquarters in London
Advantages Disadvantages
•Largest City •Requires large revenue
•Well Connected •Shipment cots increase
•Good Wages •Could not maintain its green brand
SOLUTION
Cadbury’s efforts to low costs
• Energy efficiency plan
• Revolution in supply chain
• Moving to emerged markets such as India, Australia, and Mexico.
The new scenario
• Move to India/Eastern Europe
• This reduces revenue and labour charges
JUST IN TIME
•JIT creates a more flexible business that has better
communication with customers and suppliers, and can
react more quickly to market demands, which bring
more competitive advantages for Cadbury Improve job
•Reduced costs
•By using JIT product line, the inventory cost reduced
from $670,000 to $200,000
•Cadbury was able to cut the assembly time by over
95%
•Improve the competitive advantage
•JIT demands active participation in the production
process from employees.
•It increases their skills, gives them greater
responsibility and fosters an interest in the performance
of the whole company
QUALITY
•In 2006, Cadbury detected significant amounts of
salmonella bacteria in seven of its products.
•This outbreak led to the poisoning of 37 people
•They found waste water from a plant had dripped
down from a pipe into a mix of milk chocolate
crumb was used of their products
•SOLUTION
•Implementation of Six Sigma policy
•Acquired a Pathogen Testing mechanism
•This system helps the food manufacturers to
increase the number of food samples to be tested
for pathogens
Corporate
Strategy
1. Skimming Price 1. Competitive
2. Cost Plus Pricing Pricing
3. Positioning 2. Demand Pricing
Pricing 3. Different Pricing
4. Demand Pricing
Cadbury focuses on cost plus pricing which helps
the company to maximize it profits. While
accurately accounting all its costs, Cadbury
reaches optimal supply and demand balance and
well-balanced positioning on the market compared
to its competitors.
1. Skimming
With skimming pricing, these prices are set very high to
take advantage of some peoples desire for a new
product or design at any price. Skimming is most
effective if demand is inelastic. For e.g. Cadbury put
their prices at the same as most of their competitors
and at the price their customers are able to pay.
2. Cost Plus Pricing
Pricing methods which are based on the cost structure
of Cadbury that are favoured by accountants because
they are supposedly more accurate and reliable.
Cadbury is trying to maximise it profits.
This method works successfully because all costs need
to be accurately accounted. In many firms this is a very
difficult process which is why the simpler mark-up
procedure is used. Cost plus pricing tends to ignore the
demand for the product and the competition.
3. Positioning Pricing
Cadbury uses this method to position prices that are set which
reflect the consumers view of the chocolate bean
4. Demand Based Pricing
Cadbury set their prices based on what they think the consumer
is prepared to pay. If they don’t then they wont sell as good as
they thought. If they do sell at the customer’s price they will
have a good reputation and an output of more customers.
5. Competitive Pricing
In this situation Cadbury set a price roughly in line with their
competitors. This will depend on the type of competition that
exists for the chocolate bean. It is particularly the number of
seller and the number of buyers.This process works reasonably
well if the cost structures of the companies are roughly similar.
6. Discount Pricing
Cadbury is a competitive market which buyers should be able to
obtain goods for less than the advertised price. Many firms can
be forced into price-cutting if they are short of cash or need to
increase sales quickly.
7. Different Pricing
Cadbury may change different prices sometimes for the same
product at different times. Its prices will be based on the
elasticity of demand for the chocolate bean
Strategic Models
SWOT Analysis
Strengths:
Weaknesses:
1- Number 1 chocolate brand in the
1- Lack of penetration in rural markets
world with lots of variants
2- People avoid it for health reasons
2- Consumers having positive
3- Food products have a limited shelf
perception about product.
life
3- Good product distribution and
4- Relatively high priced brand
availability
5- Marred by a scandal few years back
4- Excellent promotion
5- Well known brand
Opportunities: Threats:
1- Because of the strong brand name, 1- Competitors.
new chocolate variants can be 2- Rising prices of major raw materials
introduced 3- No brand loyalty in chocolate market
2- There is a lot of potential for growth 4- New brands are coming and existing
3- Recent increase in the chocolate brands are introducing new variants
market 5- Social changes - Nutrition and
5- Technological advancements to healthier lifestyles affecting demand for
reduce packaging & shipping costs the product
PESTEL Analysis
A type of situation analysis in which
political-legal (government stability,
spending, taxation), economic
(inflation, interest rates,
unemployment), socio-cultural
(demographics, education, income
distribution), and technological
(knowledge generation, conversion of
discoveries into products, rates of
obsolescence) factors are examined
to chart an organization's long-term
plans.
Political
•Political decisions can
affect Cadbury’s,
•these can be either
advantages or
disadvantages
•if taxes increase, therefore
consumers decrease and
sales of stock decrease.
•However if taxes decrease
the likelihood is consumers
will buy more.
Economical
• The interest rates can have an affect on
Cadbury’s.
• If the interest rates were high then Cadbury would
notwant to borrow as much money for expansion.
• Also if consumers themselves were under
pressure due to their loans they would again have
less disposable income to buy luxury items.
• If the minimum wage was brought down, this would
mean more money for Cadbury’s but would also
result in low sales from the consumers.
Social
• Trend in snacking –
increase in people eating
on the ‘go’ (Vending
machines)
• Local residents with small
businesses near Cadbury’s
World would benefit from
the money that is being
brought in by visitors.
• More people are health
conscious – will read
ingredient content
Technological
• An increase in capital expenditure
e.g. more up to date equipment
would mean that the goods where
produced quicker and cheaper but
would also result in job loses.
• Research and development- keep
developing new products to keep
up with competition and customer
needs.
Environmental
Cadburys is built on a river which at
one time they would have been able
to dispose waste in, but now that
they can't, it's expensive to dispose
of waste properly
Legal
• More legislation in
place to make sure that
the workplace is safe
and the worker is better
protected.
• Expensive costs to
Cadburys to implement.
Competitor’s map (chocolate)
High Quality
Dairy milk
Bounty chocolate
Nestle
Kitkat
Sonnet
Lower price High price
Jubilee
Low Quality
Competitor’s map (cookies)
High Quality
Dairy milk
cookies
Rio
Lower price High price
Chocolate Prince
Sandwich biscuit
biscuits
Low Quality
BCG
matrix
Product/m
arket
expansion
grid
Grand
matrix
Space
matrix
Evaluation of new
Option
Introduce
Vegan And Health-conscious
Products
For Cadbury UK, a SWOT analysis provides
a "foundation to create strategies" based on
a "systematic connection between strengths,
weaknesses, opportunities, and threats".
Change via learning and continual
adaptation are key components of
sustainable development strategies
(Cadbury UK).
Strengths Weakness
Opportunitie New Product Strategy Market Penatration
SWOT
s
Design 100% reusable Announce a new,
materials for traditional affordable vegan
packaging with the chocolate product
Threats
supply chain
Market Penatration Development
market
of the Matrix
Compete vegan brands
in the UK to debut into To encourage an
vegan brands increasing consumer
base, provide innovative
decreased sugar goods
UK Snack Bar
Market
Revenue
•The UK Snack Market is
quickest in Europe and
Cadbury isn't a big market
participant, with trends
developing for diverse
snacks (e.g. gluten free,
milk-free bars).
Global Market Share for healthy snacks
The figure shows the main
market share of 44.91% for
nuts, dried fruits, etc.
• SWOT analysis has chosen the Strategy to combine or
acquire brand name and well-being snacks in the UK to
introduce vegan and health-conscious sectors of customers.'
• In 2019, the worldwide snacks market was estimated to be USD
78.13 billion and planned to reach USB 108.11 billion by 2027' '.
• Strategy allows companies to develop into larger, fast-
growing sectors of well-being.
Vision, Mission, Challenges
Vision, Mission and Purpose Challenges
Keep dominance over proven goods in Preserve the leading position of the
the UK markets. market.
Provide a wide choice of consumer Expanding to sectors of well-being.
snacking alternatives. Digital marketing improvement.
Keep new and existing items high- Expand to internet trading/trading.
quality. Sustainability practices.
Strategy addresses challenge of maintain market leadership
& position and entry into well-being segments.
Mitigates the weakness of strong snack chocolate to match its
rivals and enable customer rethink about master branding.
Suitability Opportunity to utilize M&A knowledge to own R&D
improvements for existing products with vegan options.
Manages threats of competitive advantage in UK with snack
industry and increasing segments with health-conscious
preferences.
As vegan and well-being segment is weak competitive
position and in growth industry life cycle it supports proposed
strategy.
Acceptability
Risk and stakeholder reaction strategy evaluated.
The approach poses a little financial risk in investing in the well-established UK brand inside the well-
being segment, since a health-conscious and plant-based snacks market is projected to develop after
2027 .
Fosters social responsibility of consumers with greater plant goods and beneficial impact on
customers, parties in favor of climate change.
This promotes social responsibility.
Long-term earnings beyond the UK since demand for snacks is on the rise between Europe and the
US.
Feasibility
Feasibility 'is focused about the The growing phase of the life cycle for
capacity of the organization to food and vegan segments in allows
implement plan' . for dividends to be made available
through Cadbury financial stability
Any Questions???
