Macro Environmental Analysis for Cadbury's International Expansion

The assignment discusses the opening of a multinational company in a new country, focusing on Cadbury's potential expansion into Mexico. It analyzes the macro environment using PESTLE and identifies the strengths, weaknesses, opportunities, and threats (SWOT) that will influence decision-making for the company. The report concludes that operating in Mexico will be beneficial for Cadbury, increasing its customer base and market share, but it must adapt to local market conditions and provide high-quality products at reasonable prices to compete with existing rivals.

New opening for multinational
company in new country

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 2............................................................................................................................................1
M3. Supporting detailed analysis of macro environment with Cadbury by applying PESTLE..1
M4. Justifying the way in which SWOT analysis influences decision making...........................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
In today’s era, with increasing rate of competition, companies are becoming globalised
and operating in different nations so that scope of business can be increased. For every
organisation in each industry, it is significant to run business at the international level so as to
sustain and survive for longer duration of time. It helps in grabbing a larger market area and thus,
customer base gets increased which helps the firm to gain a competitive edge over other rivalry
organisations present in the market (Zhang and Huang, 2012). In the present report, there will be
discussion on identifying the positive and negative impacts that macro environment has upon
business operations along with conducting internal and external analysis of organisation in order
to identify its strengths and weaknesses. Apart from that, the way in which strengths and
weaknesses are interrelated with external factors will be explained in the report. All concepts
will be studied with reference to the firm, Cadbury, UK.
TASK 2
M3. Supporting detailed analysis of macro environment with Cadbury by applying PESTLE
In order to support the detailed analysis of macro environment within Cadbury, PESTLE
analysis for the same is shown as below.
 Political Factors: Political analysis plays a significant role in helping the firm to identify
political interference which regulatory authorities create in the chocolate business
industry. Under the same, government policy as well as political stability are included
that can affect functioning of Cadbury in Mexico in accordance with the national and
overseas market as well as foreign trade policy (Menipaz and Menipaz, 2011).
 Economic Factors: Profits of company gets highly affected through economic factors
which consist of economic growth and rates with respect to interest, exchange and
inflation along with disposal income of consumers. Cadbury needs to perform its
operations and set the prices of products by keeping in mind all these factors (PESTLE
Analysis of Mexico 2016, 2017).
 Social Factors: Social factors can be taken as culture, values, beliefs and attitudes of
customers of target market. If there is a change in these factors like when firm will
operate in Mexico instead of UK or South Africa, there will be change in customer’s
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tastes and preferences as well as in production policies and demand/supply of products
(Terra, 2010). Accordingly, Cadbury would have to perform its functions
 Technological Factors: Technological factors play a significant role in affecting
marketing and management of Cadbury in different ways. Under the same, new and
advanced techniques for producing goods and providing services are involved along with
new ways of distribution channels that will help organization to have smoothness in
operations and earn higher profits.
 Environmental Factors: It is important for every firm and so as for Cadbury for
considering the protection of environment due to increase scarcity of natural resources
(Zhang and Huang, 2012).
 Legal Factors: Health and safety of employees as well as of customers, providing equal
opportunities to the workforce, advertisements standards as well as consumer rights and
laws are important to be complied by Cadbury so as to run business in an ethical and fair
manner. It will help in gaining support of government with high goodwill in the market.
M4. Justifying the way in which SWOT analysis influences decision making
Manner in which SWOT analysis will influence the decision making process of Cadbury
with regard to whether operating in Mexico will be beneficial for organization or not. The
justification for same is stated as below:
 Strengths: With having skilled workforce and available resources of company, Cadbury
will be able to create its economic value and gain competitive advantage in the market
over other rivalry companies.
 Weaknesses: Main weakness of firm is that it has high priced products and so, people of
lower class cannot afford the same. Therefore, in Mexico, to grab the customers at each
level (high, middle and lower), products will be needed to offer at reasonable price
(Berman and et.al., 2010).
 Opportunities: By offering eggless chocolates, attention of people who avoid egg in
their diet can be grabbed. Also, through providing sugar free chocolates, those who avoid
sugar can also be attracted towards the product (Cadbury's Dairy Milk SWOT Analysis,
USP & Competitors, 2017).
 Threats: Presence of intense competition reduces company’s performance and its
economic value as well. Therefore, it is important to provide differentiation and
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innovation with high quality in products to beat existing competition in market (Ahmad
and et.al., 2010).
With the justification, it can be said that operating business in new market area, that is,
Mexico will be highly beneficial for firm to increase the scope of business in terms of increased
customer base and profits along with rise in market share as well as goodwill.
CONCLUSION
From the above report, it can be assessed that Cadbury can effectually operate in Mexico
with its product, dairy milk chocolates. It is because; this nation is not yet captured by the firm
and thus, entering there will help in grabbing large customer base as well as higher market share.
However, it has been assessed that major weakness with the firm is that its products are highly
priced and thus, grabbing the attention of price conscious customers is very difficult. Also, it has
been inferred that company is facing intense competition from other rivalry firms like Nestle.
But, it can be said that if proper use of appropriate promotional tools will be made by Cadbury
along with providing high quality products at reasonable rates, company can attain a huge
success and competitive edge in the market.
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REFERENCES
Books and Journals
Ahmad, H. N. and et.al., 2010. Is entrepreneurial competency and business success relationship
contingent upon business environment?: A study of Malaysian SMEs. International
Journal of Entrepreneurial Behaviour & Research. 16(3). pp.182–203.
Berman, S. and et.al., 2010. Succeeding in the new economic environment – three targets for
leaders. Strategy and Leadership. 37(4). pp.13-22.
Menipaz, E. and Menipaz, A., 2011. International Business: Theory and Practice. SAGE.
Terra, A. L., 2010. European information users: Topics from a comparative analysis within the
European Union. New Library World. 111(5). pp. 189–202.
Zhang, A. and Huang, Q. G., 2012. Impacts of business environment changes on global
manufacturing outsourcing in China. Supply Chain Management: An International
Journal. 17(2). pp.138 – 151.
Online
Cadbury's Dairy Milk SWOT Analysis, USP & Competitors. 2017. [Online]. Available through:
<http://www.mbaskool.com/brandguide/food-and-beverages/430-cadburys-dairy-
milk.html>. [Accessed on 2nd May 2017].
PESTLE Analysis of Mexico 2016. 2017. [Online]. Available through:
<http://www.researchandmarkets.com/reports/3981738/pestle-analysis-of-mexico-2016>.
[Accessed on 2nd May 2017].
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