Analysis of Corporate Governance Principles

This assignment provides a comprehensive analysis of corporate governance principles, codes, and strategies. It reviews existing literature on the topic, including research papers and articles from reputable sources such as academic journals and books. The analysis includes discussions on PESTLE analysis, SWOT analysis, Porter's Five Force Model, and Bowman's Strategy Clock. The assignment also touches on the relationship between corporate governance and firm performance, as well as the implementation of governance principles in state-owned enterprises and other businesses. Overall, this assignment offers a thorough understanding of corporate governance and its significance in business success.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Analysis of impact and influence of macro environment on an organisation..................1
TASK 2............................................................................................................................................3
P2: Internal Capabilities of an organisation...........................................................................3
TASK 3............................................................................................................................................6
P3: Applying Porter's Five Force Model to evaluate Competitive Forces.............................6
TASK 4............................................................................................................................................9
P4: Range of Theories, Concepts and Models to devise strategic planning...........................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business Strategy refers to any strategy implemented by an organisation in order to attain
a goal or an objective. Global organisations try to implement the best strategy in order to get
competitive advantage in the market. It is very crucial to implement the right strategy in order to
grow and develop in the market by maximising the profit and capturing major market share. The
Business Strategy is selected by top management of an organisation and is implemented by
managers and leaders (Akbar and et. al., 2016). For the context of this report, Cadbury is selected
to find out the influence of various micro, macro, internal and external analysis of business.
SWOT Analysis, PESTLE Analysis, Porter Five Force Model and Ansoff Matrix will be
prepared to establish the relation between various factors consisting in Cadbury and on its
performance.
TASK 1
P1: Analysis of impact and influence of macro environment on an organisation
Cadbury is a British multinational company who has mastered in selling in chocolates
and confectionery products all over the globe. It is owned by Mondelez International and is
second largest confectionery company around the world. It is headquartered in Uxbridge,
London and sell products in more than 50 countries. It was set up in 1824 by John Cadbury who
started selling chocolate milk along with tea and coffee and his small business experienced boom
in a short duration of time.
To implement the best strategy that can be incorporated by Cadbury in order to grow and
develop, it is crucial to understand the role performed by macro factors. It refers to factors that
are external and Cadbury does not have any control on these factors. The study of Macro Factors
can be done through PESTLE Analysis (Cuomo, Mallin and Zattoni, 2016).
PESTLE Analysis
PESTLE Analysis is well-known framework used to analyse the role and effect of macro
environmental factors in a business. These factors have a huge impact on the performance of
Cadbury. These factors cannot be positioned by the firm but need to study so that right strategy
can be selected. PESTLE consist of:
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(Source- PESTLE Analysis, 2019)
Political Factors: In United Kingdom, government change to Liberal Democrat from
Labour intensive played a huge role as more emphasis will be given to labour work forces
around the country. In Cadbury as around 8 factories of company is settled and established there,
giving employment to more than 3000 employees, thus, there will be support of Government to
company. Also, Government have started raising concern about obesity, which is resulting in
high sugar tax, which would direct impact Cadbury's operations as they are manufactures and
seller of sugar products, chocolates (DUMITRAŞCU, FELEAGĂ and FELEAGĂ, 2015).
Economical Factors: Due to economic recession, that took place in United Kingdom,
company experienced a dip in the market, but, soon, it recovered by capturing 30% increases in
sales by only sales in Dairy Milk and Trident which have a positive impact on the operations of
Cadbury. Also, changing of ownership played a significant role as recipes changed from
Mondelez to Kraft resulted in rising production and small size of chocolates, thus, worked as one
of the factor leading “shrinkflation”.
Social Factors: There are rising concern of people and government regarding to obesity,
thus, reducing in sales of Cadbury's products as many doctors and nutritionists suggested less
consumption of chocolates and candies (Gorondutse, Hilman and Nasidi, 2014). To meet with
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Illustration 1: PESTLE Analysis

this issue Cadbury has launched health bar chocolates including Wispa. Also, many a times,
Cadbury have fall in controversy regarding having harmful substances in products, thus,
decreasing sales.
Technological Factors: Cadbury has introduced new machines for brewing chocolates
and coffee, thus, meeting with the cost which has incurred due to high taxes and raw materials
(Kono, 2016). This will help them in bringing innovation in their operations as they have
recently introduces heat resistant chocolates, which will be suitable in hotter climates by
providing satisfaction to the customers. Also, Cadbury has launched a game name Creme egg
game for hooking customers with the brand at the time of London Olympics.
Legal Factors: Cadbury is a multinational company working in various countries, thus,
they have to keep an view on different patents and laws of various countries while entering into
it. They need to take care of environmental, employment and manufacturing rules of the country
while setting up the plan as it will give them an edge while entering into the new market, if they
would be aware of all the policies of the respective country and will make strategies accordingly.
Environmental Factors: People are leaning more towards the products which are more
environment friendly as it has become increasing need to take care of environment due to
hazardous substance present around us. Cadbury as well started using recycling and waste
management processes in their operations which is helping them fulfilling their duties towards
environment. To do that, Cadbury is working alongside farmers to grow cocoa beans sustainably
in order to increase productivity of land and products (Lehmann, 2016).
Through the PESTLE Analysis of Cadbury, it can be established that company deals
effectively with the external environmental factors in United Kingdom and other countries of
their operations as well. It helps them in getting a perspective of whole environment
simultaneously in order to grow and develop in the market.
TASK 2
P2: Internal Capabilities of an organisation
To know more about the internal skills and abilities of an organisation, it is important to
know more about the company's strengths as in what arena they are strong. While, learning the
strengths it is important to understand about the failures that an organisation consist of, thus,
studying about weaknesses as it helps in building a strong plan. These strengths and weaknesses
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are put into into use when a company needs to implement themselves through the various
opportunities that organisation encounter and various threats through which company can
encounter failure (Magnier, 2014).
Cadbury needs to analyse their strengths and weaknesses in order to establish a strategy
that will enhance their strengths and reduce the impact of their weaknesses. In order to do that
first Cadbury needs to know their strengths and weaknesses. Also, they need to see what are the
opportunities that are available to them and what are the threats that can hinder their growth. To
do that Cadbury needs to establish SWOT Analysis to do study the impact of their capabilities in
the business environment.
SWOT Analysis
It is a framework used used to analyse various internal elements and external elements. It
consist of:
(Source- Using SWOT Analysis to Plan, 2019)
This method helps an organisation in assessing Strengths, Weaknesses, Opportunities and
Threats (Marashdeh, 2014). This factors helps in developing a strategic plan for an organisation
in order to grow and develop. Strengths and Weaknesses are analysed through internal analysis
and Opportunities and Threats are analysed through external analysis of Environment. It shows:
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Illustration 2: SWOT Analysis

Strengths: It refers to the advantage that an organisation enjoys in the market that helps them in
getting a competitive advantage in the market. It can be anything regarding to brand name,
customer base, new technology, which is anything that separates a firm through their competitors
(Mayer, 2014). There are many strengths that Cadbury enjoys in the market, that separates them
from their competitors in order to establish themselves in the market. Some of them are: World Leader: Cadbury is a world leader and thus enjoys strong brand equity in the
market as the top most market leader in this industry. Cadbury's market presence is more
than 50 countries which gives them an edge in the market. Customer Loyalty: Cadbury enjoys strong support from their customers as the customers
intact with the brand from a very long time. Customers trust the company and use the
product for satisfying their needs.
 Wide Variety of Products: Cadbury showcase wide variety of products in their product
mix in order to target more segments in the market.
Weaknesses: It refers to the disadvantages that a company have that can hinder the growth and
development of an organisation. Company needs to evaluate their weakness effectively so that
they can use it to limit their effect on the business. Cadbury have several disadvantages that can
hinder their growth and development. Some of them are: Controversies: Cadbury was stuck in lots of controversies regarding some harmful
substances found in their products that are regarded as unsafe for the customers to use,
thus, loss of market share.
 Health Supplement: The main product of Cadbury involves Dairy Milk, which have high
calories due to use of high cocoa, which is not considered healthy and due to increasing
awareness of health and organic products, Cadbury may loose their share (Mishra and
Mohanty, 2014).
Opportunities: It refers to factors that can help the organisation in improving their market share
and increment in their profit maximisation. It serves as an advantage to the company. Some of
the opportunities enjoyed by Cadbury are: Diversification: It refers to diversifying the segments into more parts in order to capture
more market share. Cadbury can try to diversify themselves into market so that they can
maximise their profits.
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 Healthy Candies: Cadbury can try to introduce new products in health zone as people are
leaning more towards in this zone, so, company can introduce new products for this
segment as well (Mosunova, 2014).
Threats: It refers to the factors that have a potential to hinder the growth of any organisation.
Cadbury needs to keep a view on all the elements that can work as a threat to the company so
that they can form a strategy that will help them increasing their market share. Some of the
threats are: Increasing Cost Of Raw materials: It states that the cost of raw materials required to
manufacture chocolates is increasing, which is a threat to Cadbury.
 Taxes: Due to increasing awareness regarding obesity, government have incorporated
high taxes on sugar and sugar products which results in Cadbury to pay high taxes on
their products and increasing costs of the products which at the end customer have to pay.
TASK 3
P3: Applying Porter's Five Force Model to evaluate Competitive Forces
Cadbury will use Porter's Five Force Model in order to know the affect of various
competitive forces driving the company and the industry. This model will help in analysing the
micro environmental factors of the organisation. This framework will help in ensuring that
Cadbury need to implement a strategy that will help them in driving all the micro environmental
factors effectively (Oldman and Tomkins, 2018).
Porter's Five Force Model
Porter's Five Force Model is a tool used to analyse five forces of industry that helps in
analysing the competition that industry faces and how an organisation can derive profit out of it.
This model was given by Michel Porter in 1979, in order to understand all the competitive forces
driving an industry.
These factors consist of:
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(Source- Porter's Five Forces, 2018)
Threat of New Entry: It refers to easiness of a new firm in entering into the market. For
example, if there are few barriers for new firms to enter and major profitability, then, company
will face competition from new firms as they can take away the market share previously
captured.
Cadbury is a well established brand in confectionery industry as they are able to dominate
the market forces along with major market player. So, who so ever will enter into market will
have to face competition from all these major companies in the industry, unless they come up
with new product or technology. Also, to attract customers in this industry, lots of capital
investment is required by the firms which is not possible for new firms unless they do not come
up with huge support (Orna, 2017).
Threat of Substitutes: It is considered as a threat as if the customers are able to find
products which is able to quest with the needs of customers, then, it is a threat to the company.
For Example, a customer may switch from tea to coffee, but, not swift from car to cycle, thus,
threat of substitute is high in case of coffee.
Cadbury's main substitute is copied products created by supermarkets at cheap price in
order to attract customers. Chips, Fruits and Beverages are also confectionery products which
may work as a substitute for the Cadbury. Here, company needs to realise their substitutes power
as well to come up with a strategy that will be differentiated accordingly. Also, due to increasing
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Illustration 3: Porter's Five Force Model

awareness of health and organic products, people are using heath and proteins bars instead of
chocolates, that work as a substitute of products.
Bargaining Power of Buyers: It refers to the power of customers to demand high quality
products at lower price as if the power enjoyed by buyers is high, then, it results in low profit
margin of company and high productivity whereas if the bargaining power of customers is low,
then, company can demand higher prices and enjoy higher profits (Prickett, 2014).
Cadbury's customers are scattered all around the globe and because of that they enjoy
profits in billions. There are companies who meet up with the needs of customers in this area but
they are limited in number and because of that Cadbury enjoys major market share. Also, the
price of products of Cadbury varies from all types, thus, segmenting all the income groups at the
same time.
Bargaining Power of Suppliers: It refers to power of suppliers to sell high price raw
materials to organisation which is of less quality. If there are large number of suppliers available
in the market, then, it will give a choice to the company to choose, which will help them in
getting low cost raw materials which will be of better quality.
Cadbury is famous in the market because of maintaining a good equation with that of
their suppliers. There are large number of suppliers available to the Cadbury which gives them
freedom to choose from. The agricultural supplier of Cadbury works in providing unique and
sustainable products to the company which helps them in getting a competitive advantage in the
market.
Industry Rivalry: It refers to profitability and competitiveness in the industry. It
suggests whether the industry is profitable and have huge number of competitors as if the
competition is high in the industry, then, the firms will get small margin of profit, whereas, if the
competition is low, then, the firms will enjoy high market share.
Cadbury operates in Confectionery industry which have high number of competitors like,
Ferrero Rocher, hershey's, Nestle, Mars, etc. But still, Cadbury is able to generate high margin of
profit as they are capturing major market share after Mars. Rivalry is very strong as these firms
operate in same kind of products, thus, increasing competition.
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TASK 4
P4: Range of Theories, Concepts and Models to devise strategic planning
Strategic Management Plan is a document which showcases various organization's goals,
objectives priorities, focus energy, resources, operations and various other things in order to
make sure that all the stakeholders related to organisation possesses common goal and are
working efficiently towards it. This plan helps in comprising and evaluating various activities
that will help the firm in achieving their goals and objectives (Vom Brocke and Rosemann,
2014).
Cadbury in order to implement the best strategy needs to implement best strategic plan
which will be devise through Bowman's Strategic Clock.
Bowman's Strategic Clock
It is a frameworks used to analyse a marketing plan so that an organisation can derive a
competitive advantage in the market. It was developed by economists Cliff Bowman and David
Faulkner. There are two dimensions of this field, such as, Customer's Perceived Value and Price.
It can be analysed via a clock presented by them, which is:
(Source- The two dimensions of the Bowman’s Strategy Clock, 2019)
The eight dimensions of this framework suggests:
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Illustration 4: Bowman's Strategy Clock

 Low price and low added value: This is not considered as very preferred position by
organisation as in this the price is limited as well as the value added by organisation is
low as there is no differentiation of product in the market so customers does not value
product. Low Price: here, the quantity manufactured by firm is large in number and that is why
they are able to obtain less price for the product, thus, getting maximum profit. Hybrid: The product manufactured by company here is different from that of the
competitors, that is why, it gives customers an added value. It is considered as very
effective position as customers perceives the value of products. Differentiation: Here, organisation try to provide customers with better quality product at
lowest price possible so that it gives customers an added value of satisfaction. Customers
are picky and wants best products, thus, ended up selecting companies who provide
differentiated products in the market (Akbar and et. al., 2016). Focused Differentiation: This types of products are created by elite brands who provide
high quality products at high price. The products offered here is not purchased by
everybody as they are luxury products. Risky High Margins: Here, the product offered is of high quality, but, the satisfaction
derived from it is not that much. Customers after some time may end up leaving the
brand for something who provides more satisfaction at similar price range. Monopoly Pricing: Here, the product offered by company is only one in the product,
thus, manufacturer can demand whatever price it pleads.
 Loss of Market Share: here, company is not providing any product that will be of any
value to the customers as price is way too high.
Cadbury uses Differentiation technique in order to survive in the market.
CONCLUSION
From the above given information, it can be concluded that various tools are there such as
PESTLE and porter five forces that could be employed by organisations in order to identify and
study the various elements exist in environment and that affect the decision making process of
enterprise. Further, SWOT analysis can be used by companies as this highlight their strengths
and weakness which help managers in formulate better and effective business policies. It is
recommended to company to study the environment first so they can formulate strategic business
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plans and can easily achieve their business objectives. Further, managers should first examine
the resources available within the organisation so they can go for better direction and can
formulate more effective strategies.
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REFERENCES
Books and Journals
Akbar, S. and et. al., 2016. More on the relationship between corporate governance and firm
performance in the UK: Evidence from the application of generalized method of
moments estimation. Research in International Business and Finance. 38. pp.417-429.
Cuomo, F., Mallin, C. and Zattoni, A., 2016. Corporate governance codes: A review and
research agenda. Corporate governance: an international review. 24(3). pp.222-241.
DUMITRAŞCU, M., FELEAGĂ, L. and FELEAGĂ, N., 2015. The Practical Implementation of
Corporate Governance Principles for Romanian State Owned Enterprises. Audit
Financiar. 13(121).
Gorondutse, A. H., Hilman, H. and Nasidi, M., 2014. Relationship between corporate reputation
and customer loyalty on Nigerian food and beverages industry: PLS approach.
International Journal of Management and Business Research. 4(2). pp.125-136.
Kono, T., 2016. Strategy and structure of Japanese enterprises. Routledge.
Lehmann, C. F., 2016. Strategy and business process management: Techniques for improving
execution, adaptability, and consistency. Auerbach Publications.
Magnier, V., 2014. Harmonization process for effective corporate governance in the European
Union: from a historical perspective to future prospects. Journal of law and society.
41(1). pp.95-120.
Marashdeh, Z. M. S., 2014. The effect of corporate governance on firm performance in Jordan
(Doctoral dissertation, University of Central Lancashire).
Mayer, F., 2014. Leveraging private governance for public purpose: Business, civil society and
the state in labour regulation. Handbook of the international political economy of
governance, pp.344-360.
Mishra, S. and Mohanty, P., 2014. Corporate governance as a value driver for firm performance:
evidence from India. Corporate Governance. 14(2). pp.265-280.
Mosunova, N., 2014. The Content of Accountability in Corporate Governance. Russ. LJ. 2.
p.116.
Oldman, A. and Tomkins, C., 2018. Cost management and its interplay with business strategy
and context. Routledge.
Orna, E., 2017. Information strategy in practice. Routledge.
Prickett, R., 2014. Transforming corporate reporting: IIRC Chair Mervyn King discusses his
long involvement in corporate governance and his commitment to change the way we
understand companies. Internal Auditor. 71(2). pp.58-63.
Vom Brocke, J. and Rosemann, M. eds., 2014. Handbook on business process management 2:
strategic alignment, governance, people and culture. Springer.
Online
PESTLE Analysis, 2019. [Online]. Available Through: <http://www.mindmapsoft.com/pestle-
analysis-mindmap/>
What is Bowman’s Strategy Clock?, 2019. [Online]. Available Through
<https://www.marketing91.com/what-is-bowmans-strategy-clock/>
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