Business Strategy Report: Cadbury's Macro and Micro Analysis

This report provides a comprehensive analysis of Cadbury's business strategy. It begins with an introduction to business strategy and Cadbury, a subsidiary of Mondelez International. The report then delves into Task 1, evaluating the impact of the macro environment on Cadbury using PESTLE analysis, examining political, economic, socio-cultural, technological, environmental, and legal factors. Task 1 also includes an evaluation of the internal strengths and capabilities of Cadbury using SWOT analysis. Task 2 focuses on Porter's Five Forces model and the implementation of concepts, theories, and models to interpret and understand strategic plans. The report concludes with a summary of the key findings and recommendations for Cadbury, supported by references.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Evaluating the impact of macro environment on an business organization......................3
P2 Evaluation of internal strength and capabilities of organization.......................................7
TASK 2..........................................................................................................................................10
P3 Implementation of Porters Five Forces model ...............................................................10
P4 Implementing Concepts, Theories and Models to help with interpretation and
understanding of strategic plan.............................................................................................12
Conclusion.....................................................................................................................................15
REFERENCES..............................................................................................................................17

INTRODUCTION
Business strategy refers to a highly effective plan made to achieve specific goals and
objectives of a firm. These policies are formulated to gain growth of a business which may lead
them in attaining strong position in terms of competition. Along with this, it also helps in earning
more and more profitability by running operations in a legal manner. Therefore, it is essential for
enterprises to build strong policies and strategies in order to gain higher profitability in business.
Cadbury organisation is entirely owned by Mondelez International. Cadbury products are
Halloween, Bars, Multipacks, Deserts, Ice cream, Biscuits etc. in United Kingdom. Currently
near about 70,000 employees are working in this enterprise. This report has been made in order
to formulate some better strategies of present firm with the help of SWOT and PESTEL analysis.
In addition to this, some analysis of internal and external environment, Porters five forces model,
theories and more are also presented.
TASK 1
P1 Evaluating the impact of macro environment on an business organization
Business environment of a company consists various micro and macro factors which
impacted either internally or externally on operational activities, overall performance and
capabilities of working organisation. In this manner, Cadbury Company of UK has operated its
business in many countries so its natural that operational activities of this firm are affected by
many external factors of macro environment. Therefore, in this context, an analysis of these
factors on this enterprise are:-
PESTLE ANALYSIS
The factors which creates a great impact on business of Cadbury externally are discussed below: Political: All countries have different political rules and regulations made by
governmental bodies. So, it is necessary for Cadbury to follow all rules of countries
where it has operated business. Today, people are becoming more aware about their
health as consuming confectionery items impacts negatively on them. It creates various
issues like obesity as such products consumes much amount of sugar. So government has
put pressure of manufacturers to reduce amount of sugar from products. These political
rights impact on decisions which reduces profitability of association. In order to recover
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loss, this firm has decreases size of some products like chocolates which help in
maintaining current cost level. It will add value in expenses which will hamper
productivity and profitability in a higher manner.
◦ Strengths: By getting relaxations in tax policies made by regulatory bodies then it
will help in trading and earning more profitability. It will show the major benefit of
such political laws.
◦ Weaknesses: While in contrast, if political rules tighten up policies then it will
negatively impact on profitability. It assist Cadbury to formulate strong strategies and
policies as well as take appropriate decisions. Economic: From statistical point of view, it has observed that in the year 2010 among
other currencies, exchange rate of pound was found on least price. So, Kraft Company
has taken this as opportunity and purchased Cadbury in a lower price and low interest
rate was reason when Kraft company borrowed a loan from a British bank to secure their
sales volume in market. Currently, Cadbury Company has running its business in various
countries. But it still tries to expand business in more distinct areas. Effectiveness of
success of business strategies can be measured when this firm has found to gain
prominent number of demands as well as stability in economical rates and currency.
When a country is facing inflation then rates of all products get hike and on the other
hand if low inflation is found then value of items gets decreased so it is clear that best
sale of confectionery item (Verbeke, 2013). In addition to this, due to obesity problems
and much concern on health issues, people avoid to buy some confectionery products like
chocolates and cookies because these are not allowed by their income because population
is having low per capita income which is a negative factor of venture.
◦ Strengths: When demand of a particular product is rise then it will enhance sales
performance. It also reflects goodness of such products as it satisfies needs of people.
In this process, Cadbury use to determine desires of customers as well as trends of
marketplace before manufacturing goods.
◦ Weaknesses: When inflation rate becomes high then it would help in increasing price
rates of particular commodities. But it reducing sales performance as people avoid to
buy such products whose rates are increased in inflation time period.
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 Socio-Cultural: Cadbury always try to create modifications in production as per
requirement of customers at marketplace. This firm is dealing its business in partnership
with fair-trade in manufacturing of dairy milk chocolates. For taking care of society
association is trying to diminish sugar level from their products. Therefore, management
of this enterprise is needed to follow all rules and legislations which helps in making
ethical business as per current trends of society. In addition to this, they should consider
these factors and need to formulate affordable price strategy.
◦ Strengths: Customers having good taste and use to go with trends as well as have
sweet tooth then they would become consumer of Cadbury products. It will give
chance to this firm to enhance customers base and increases strengths.
◦ Weaknesses: Awareness of health forbade people to buy confectionery products but
goods of Cadbury because it contains high calories in the face of sugar which is not
good for health. This type of actions becomes threat for corporation. Technological: In manufacturing industries, technologies are used in wide manner.
Innovation in technologies gives various benefits on enhancing productivity of such
companies. In context with Cadbury, this firm is needed to adopt latest tools and
techniques in its production. It would help in manufacturing good quality of products as
well as in short period of interval. In addition to this, it also aid in promoting brands of a
company by various applications of internet services. Therefore, in this consent, Cadbury
used to advertise its products by using various promotional activities. It will help this
association in getting a large market share and stronger customer base. In addition to this,
in order to make increment in sales volume, introducing latest and updated tools of
promotions aid Cadbury in attaining minds of customers as well as generate higher
financial income.
◦ Strengths: Creating modifications in existing system and introducing new
technologies helps in grabbing more opportunities present at marketplace. It will aid
in producing high qualitative product which reduces extra expenditure and save cost
of manufacturing.
◦ Weaknesses: Using all techniques in organisational system impacts overall
performance of business. Such firms will fail in completing demand of customers on
time as per their expectation.
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 Environmental: In this factor, some problems which creates a negative impact on
environment for Cadbury is amount of packaging which not recyclable in atmosphere and
creates big problem for climate. On the other hand, company started paying attention of
using organic eggs instead of easter egg in manufacturing of green and black chocolate.
Fossil fuels are being used by company since many years and this factor is a reason of
increased cost. Therefore, manufacturing companies are required to concern more on
production and try to reduce wastages. In addition to this, chemicals used in their
manufacturing process should be disposed in an appropriate manner (Blackburn, Hart and
Wainwright, 2013).
◦ Strengths: If a company will not follow environmental law then it will help in running
business operations in a smooth manner as well as increasing profitability of
company.
◦ Weaknesses: Manufacturing products by concerning more on not harming
environmental factors increases costs. Along with this, it requires a tough procedure
and threat for marketing for Cadbury Company. Legal: Currently Cadbury runs its business in many countries and sell commodities in all
over the world. So, its needs to comply its operations with all legal formalities. These
type of laws are essential to follow by all enterprises especially those companies who are
running business at international level. In addition to this, Cadbury needs to follow
employment legislations also which includes Compensation Act, Employment Act,
Salary and Wage Act, Environmental Act, Anti-Discrimination Act and more. These laws
are strictly followed by enterprises which help employees to work in healthy and safe
manner. If companies like Cadbury do not follow such rules then they will be legally
penalised.
◦ Strengths: If associations will not makes its business structure in legal manner then it
will negatively impact on its brand image. In addition to this, they will loose
opportunities of market which help in expanding business on international level.
◦ Weaknesses: Fraudulent activities can be done by employees of a company just to get
compensation.
Thus, from above discussion, it has summarised that there are various factors present in
macro environment that somehow impact on profitability and operational activities of a
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company. In addition to this, these attributes affect overall performance of enterprise also either
in positive and negative manner. Therefore, it is essential for managers of Cadbury to analyse
importance and procedure of these factors while developing business strategies. If they will not
analyse this, it will hamper decision making of HR managers and functionality of employees.
P2 Evaluation of internal strength and capabilities of organization
Internal strengths, capabilities as well as overall performance of a company can be
evaluated by analysing SWOT techniques. These factors are generally present in micro
environment . Cadbury is one of a leading company in the world which sells confectionery
products in marketplace. Its products like Dairy Milk, Bournville, Temptation and more shows
major internal strength of this company. It helps in increasing growth and profitability of this
firm in marketplace in a higher manner.
SWOT ANALYSIS
This technique is used as a tool by managers of a firm in order to monitor and track performance
of business in a proper manner. It helps in gathering proper knowledge about internal strengths
and weaknesses as well as threats and opportunities present in external environment. It gives
more reliable result from any other method. Thus, SWOT analysis on Cadbury can be described
as:
 Strengths: Cadbury is world leader in confectionery industry because it is having a
successful product portfolio which includes items like dairy milk, Oreo, Bournvita, five
star and many others. These eatables are available in high qualitative manner which
enhances its brand image at marketplace. The another reason behind success of this
company is its large distribution channel. It helps in delivering products and services in
national and international marketplace in an efficient manner. Cadbury is having its
existence in approx 200 countries. Manufacturing function of association is quite good.
This firm positioned its products as gift and used prominent promotional tool to make
popular this thing. In addition to this, marketing department of Cadbury uses various
techniques to promote products or services in an appropriate manner which helps in
achieving good position at marketplace. Formula that Cadbury is using in its some
products like chocolates are very hygiene and unique and company already got patent
upon this and competitors could not imitate this formula so due this action association is
getting better competitive advantages in industry.
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(Source: SWOT Analysis. 2017) Weaknesses: In earlier times, many cockroaches and rodents are found in chocolates of
association and this event reduced sale of chocolates by larger amount and became a
major weakness of production function and Cadbury need to strengthen this for securing
previous place in industry. Firm is not having proper coverage in rural areas and there are
many country which is having wider geographical coverage by rural or semi-urban
population (Schrader, Freimann and Seuring, 2012). In context of some products,
Cadbury is in need of improving its promotion and placement of marketing mix so that
all items could get same level of hike and popularity as other products like dairy milk is
getting in marketplace.
 Opportunities: Rural markets which was a weakness in last point is now an opportunity
because these areas are yet to be covered by corporation for increasing sales volume and
profits in market.
New Tastes: There are so many customers who have sweet tooth and to fulfil this
requirements consumer eats small chocolates and bars. So there are various flavours in cookies
and chocolates and so many other variants are yet to be produced by Cadbury on regular basis.
 Threats: There are some factors which is comprised in this section and these are
described as follows:
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Illustration 1: SWOT Analysis

Cost and Price Increases: By noticing increment in fuel as well as transportation cost,
distribution cost has been increased and a hike in procurement and manufacturing cost also
noticed. Over the years, a regular rising in cost are been noticed.
Health Consciousness: This factor rises among clients and because of this sales of
products are reducing on continuous basis (Parnell and et. al., 2012).
The reason behind internal analysis are to find out status of following departments: Marketing: To formulate appropriate strategies by analysing strengths and weaknesses of
corporation that how much resources are available for operating marketing functions in
company. Finance: Internal analysis is done to find out financial status of corporation whether
association is generating prominent amount of profit or not or how much capital is
employed and how much profit is generating on that employed capital. Information Technology: Internal analysis is helpful in gaining knowledge about
capacity of firm that whether they are efficient in adopting latest tools and technologies
or venture has to improve their capabilities for accepting new techniques. Human-resources: Eligibility of manpower must be evaluated so that efficiency of task
accomplishment could be gained and further corrective action could be taken.
 Management Capabilities: Internal study provides information about overall
performance and if weaknesses are found then it should be removed by enhancing
abilities of employees.
BCG MATRIX
 Stars: These products that are covered in cash cow differ from stars on the basis of
growth potential. This point means product of Cadbury is having high market share in
respect to, growth of item itself. Company is growing very fat in industry and getting
covered larger market share by selling products multinationally. All kind of products of
association are having prominent growth in industry. As, management personnel knows
that their items are having fast growth and new product type like dairy milk lickables are
also shown success and by taking help of these accurate data in formulating strategies for
new product development and business expansion. There are various products of Cadbury
which are showing high demands in marketplace like dairy milk silk, Bournvita etc.
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(Source: BCG Matrix, 2010) Cash Cows: There are some products which tend to offer a deal of financial strengths to
association and called as Cash cows. These products that are comprised in this points
were a great player in market and have gained a broader market share over the years. Question Mark: This is a situation of when growth of a product is high but captured
market share is low. In this factor of BCG matrix, success of product is not sure because
small number of consumers are purchasing question mark items (Woerner and Wixom,
2015).
 Dogs: This is a last category of BCG matrix that comprises those products which are
having low market share along with least growth rate. This kind of items bring failure in
association. In context of Cadbury, Bubble Gum is a dog product. In brand portfolio of
company that have items other than chocolate products are belong to this category. For
instance, Trident gum is not sufficient in creating higher demand in market.
Above analysis shows that SWOT analysis and BCG matrix are both good tools that
provides their help in management in formulating strategies. TOWS study tells that what is the
capabilities of firm and how much efficiently, venture can grab all opportunities that are present
in marketplace.
TASK 2
P3 Implementation of Porters Five Forces model
Porter five models is taken as tool for developing strategy of a company. This model is
used to analyse threats of an enterprise present at marketplace as well as number of competitors
also. In addition to this, it also helps in evaluating the impact of bargaining power of
distributors, suppliers and consumers on profitability of an association. In context with Cadbury,
Five porter model is analysed as below:
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Illustration 2: BCG Matrix

Sources: Porters Five Forces model, 2010 Entry of competitors: New entry of competitors will be complex within a marketplace
due to there are already having organisation in a market such as Lindt, Hershey, Kraft,
Ferrero, Nestle, Mars etc. these firms influence the market of confectionery by their own
brands of specific kinds of chocolates (Iacob, Quartel and Jonkers, 2012). It makes a
barrier for new firms to entry within a market because it is very difficult for others
organisation to start their business. Competitors like as Cadbury is having a power to
influence as well as attract their buyers by providing them marketing strategies, cheaper
prices of their goods and various substitute. For example: knowing Indian customers,
building brand, strong distribution channel, establishing brand etc. Threats of substitutes: Main threat of substitutes which is many confectionery brand like
as Cadbury is a own brand of supermarket as it is due to they copy the famous chocolates
i.e. Nestle Kit Kat as well as give their products within a market at a lower rates.
Therefore, it is an only hindrance which might affect the manufacturing of Cadbury is to
gather the needs for easily entry, foreign policy which affect operations and identify good
location. For example: Cookies, sweets, carob confections, ice creams, pasteries and
cakes, fruits and many others natural goods. Bargaining power of buyers: Cadbury are having a numbers of purchasing power as it is
an one of an largest confectionery brand manufacturing within the world but it may be
threatened due to June 2006 as they recall that bars chocolate contains salmonella which
affect a Cadbury along with this they lose their purchasing power. Therefore,
organisation customers are distributed all over the world as they are in billions. As
products price subjective is not a question for customers but their competitors are also
giving same kind of goods at a cheaper rates which will might be a cause of buyers
loyalty alteration (Woodard and et. al., 2012). Hence, firm have to measure precautions
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Illustration 3: Porters Five

while deciding about cost as well as keep their buyers satisfied as well. For examples:
large volume buyers, psychology of customers, shifting cost low etc. Bargaining power of suppliers: Cadbury satisfied itself on maintaining as well as
creating positive relations among their suppliers within the world. It is having a huge
buying power along with its suppliers of agricultural goods which offer commodities
which is very faraway from unique. Thus, Cadbury is having a huge power of bargaining
then their suppliers as the business is difficult on Agro industry supply chain. Therefore,
there are already having competition of raw materials such as cocoa, milk, nuts and many
more special ingredients are sufficient for satisfying Cadbury manufacturing. They are
having their main power over their suppliers due to there are having so many various
companies supplying their enterprise requirements (Khalili Shavarini and et. al., 2013).
So, Cadbury can use economical scale as well as purchase their raw materials for less and
in higher quantity than a medium sized enterprises could. For example: Cocoa suppliers,
switching cost high, sugar industry, labour unions, quality standards etc.
 Rivalry among previous employees: various industry are beating competition against
Cadbury along with that they are plan to take their supremacy of the organisation for
many times. Various competitors are rapidly developing their goods and innovative as
well as ideas to make competitive even difficult. Organisation such as Ferrero, Hersheys,
Nestle etc. are main competitors due to having a long establishment of confectionery
brand such as Cadbury is developing a new product range by promoting with new
techniques. Competitors are always hard among organisations due to they are selling
same kinds of goods as well as their goods are same in such respects. For examples:
Nutrine & Parrys, Parle, Mars, Nestle, Amul, Perfetti, Ravalgaon etc.
P4 Implementing Concepts, Theories and Models to help with interpretation and understanding
of strategic plan
Strategic plan is an effective tool through which guidelines for whole business is made
well in advance and same are sued through out the life of project for which it was made.
Formulation of strategies is done with the help of distinct tools such as porters generic strategies
and like tools that can assist in business planning. Strategic planning is an main part of enterprise
which require to change as well as alter within a define span of time. It always support a plan in
deriving as well as gaining better results so that effectiveness can be manage and damage as
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well. In this context, strategic plan advantage is to get developed so that supportive as well as
better outcomes can be estimated. It is defined as a process which is unable to give direction to
entire workforce (Smith, 2013). As managers can think over contributing it in a positive way
while making a plan of strategic in a define as well as better way. It accomplished which is based
on forecasting uncertainty which are analysed in advance so that they can avoid the impact of
external which led down. Without making a strategic plan operations of enterprise help in taking
place on daily basis but it does not provide advantages to an company. It has various components
whom it is necessary to present within the firm so that effective as well as better work can be
encourage.
Cadbury need to make their own strategic plan so that they can work in a better way of
working can be done which enable in gathering higher profits. It will get done by analysing
PESTEL, value chain analysing etc. these models and theories reflect about an company power
to deal at micro as well as macro environment effectively and properly as well. Porters generic
strategies are the most effective medium through which planning for growth in business can be
made. According to this in order to expand and earn higher revenues the refereed enterprise has
to work on focus, differentiation and cost leadership. The following disscussion will show how
this model helps in growing:
Cost leadership – According to this in order to grow an enterprise need to be effective in
controlling its overall cost of operations in comparison to the dealing in same industry. For same
economies of scale can be adopted as it helps in saving much value.
Diffrensiation – Under this more revenues can be generated using the strategy of maintaining
unique products which has the capacity to attract more market share.
Focus – This type of generic strategy concerns more on choice of competitive scope present
within an organisation. In this process, managers used to select a small segment of targeted
group of customers and apply their new strategies on this segment. It would help in judging
effectiveness of such procedure.
Once the strategies to achieve the above factors is made it has to be given care that same
are followed throughout so that favourable results are achieved in long run.
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Bowman's Strategy Clock Model
Bowman-strategy-clock are mainly used by firms in order to analyse their competitive
position at market place. This model is helpful in order to analyse the strategies which are used
by the rivalry firms in order to achieve loyal customers who will enhance their sales and
profitability ratios. The different strategies linked with the model are evaluated below as:
Position 1: low price and low value added: This model state that firm is not having any
competitive advantage at market place as they are selling the products and services which are
not unique thus they are not able to gain attention of customers. Thus the products are sold at
economical prices.
Position 2: Low price: This strategy is related with selling the offered goods and services
at very economical; prices as it is valuable for firms in order to earn high profitability and market
shares. Nestle have attained strong position at market as compared to the rivalry firms thus they
are able to sell their quality products and services at economical cost.
Position 3: Hybrid: This factor include combining two business strategy that is linked
with selling the products at economical prices and also the services are effective. It is beneficial
in order to gain attention of customers so they will buy their products thus enhancing their
overall profitability ratios.
Position 4: Differentiation: This strategy is mostly used by organisation in order to
achieve higher competitive advantage so they will increase the number of loyal customers who
will buy their products and this on the other hand will also result in enhancing their sales ratios.
Position 5: Focused differentiation: This strategy is used by firm in order to offer goods
and services at increased cost. The customers prefer those products which are mainly dependent
on the perceived values. The products are not based on real values but they are always based on
perceived values.
Position 6: Risky high margins: This is risky strategy as innovative feature products are
manufactured by firms at higher prices. If clients have to use the products then they have to pay
higher prices for the goods. This is the most beneficial factor as it result in attracting large
number of customers who will buy their offered products.
Position 7: Monopoly pricing: This strategy is only applied at those areas which are
effective thus products and services can be easily implemented at these places. The business is
executed at those areas where goods are produced in large quantity.
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Position 8: Loss of market share: There are changes executed at market place so that
firms will enhance their overall sales and profitability ratios.
Conclusion
From this assignment it has summarised that formulating business strategies is the most
important activity of a company. The main purpose behind developing such strategies is to
execute all activities of business in a proper manner. In addition to this, associations are needed
to analyse latest trends of marketplace, demand of customers and more. It would help in building
such strategies in systematic and planned manner. Since, nature of business environment is
dynamic in nature so, it requires to implementation strict rules and policies within working
organisation. They should analyse impact of micro and macro environment also on business
operations.
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