Business Strategy of Cadbury: A Comprehensive Analysis

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BUSINESS STRATEGY
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Table of Contents
Introduction....................................................................................................................................3
LO1 analyzing the impact and influence of Macro-environment on Cadbury.....................3
P1 Application of the appropriate framework........................................................................3
M1 Critical analysis of the macro environment....................................................................5
LO2 Assessment of the internal environment on Cadbury.....................................................5
P2 an appropriate framework for analyzing the internal environment........................................6
M2 critical analysis of the internal environment to assess the strength and weakness 7
LO3 Evaluation and application the outcome of Porter's five force......................................7
P3 Porter’s Five Forces of Cadbury.......................................................................................8
M3 Appropriate strategies to improve competition edge....................................................9
LO4 Theories and Concept..............................................................................................................9
P4 Application of theories, concepts, and models.......................................................................9
M4 Strategic Management Plan:...............................................................................................11
D1 Critical interpretation of information and data....................................................................12
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................14
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Introduction
With rapid globalization, it has become essential for the business industry to implement
strategic management so that they can gain a competitive advantage. With the
implementation of timely strategic management, the organization is able to review their
current framework of the business and its gaps that will need the attention of the
management of the company. Strategic planning is formulated based on macro
environment analysis along with the evaluation of internal environment and capabilities.
With the help of SWOT, analysis organizations are able to get a better understanding of
their strength and weakness based on which strategic management is drafted. The
company that has been chosen for this purpose is Cadbury the UK based world-
renowned company.
Strategic management plans have been discussed after critically discussing the internal
factors and the macro environment of the company. Competitive analysis has also been
done by recognizing its strong competitors. The current study has also mentioned the
mission, vision, and objective of the company. The main rivals of the companies on the
international platform have been identified and discussed. Theories and models have
also been used to formulate effective strategic planning that will help the company to
flourish in the long run. With the help of this, the company will also be able to increase
its profit margin and sales revenue.
LO1 analyzing the impact and influence of Macro-environment on Cadbury
Here the external environment or macro environment affecting the business of the
environment has been determined with the application of PESTE analysis that has
provided a clear view of the macro environment impacting the business of Cadbury.
Before conduction, its mission, vision, and objective of the company have been
illustrated.
Mission: The vision of Cadbury is to provide good quality products so that it can
become synonymous to quality
Vision: The mission statement of the company explains that the company is working
hand-in-hand to create a brand that will be immensely loved by people
Objective: The objective of the company is to become the world's no 1 and
confectionary
P1 Application of the appropriate framework
The framework that has been applied to analyze the macro environment in this study
with reference to Cadbury is PEST analysis
PEST Analysis
Political  Imposition of heavy taxes
 Rigorous restrictions on the entry
of skilled labors from other
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European countries
 Change of the government and its
trade policies
 Implementation of sugar tax due to
the concern of government
towards increasing adiposity
 There have been changes in the
political scenario of the company
after the company has been taken
over by Kraft
Economic  Recession
 Increase in the annual profit of the
company
 Global economic downturn
affecting the business
 Stable sales of the company after
the recession hitting the economy
Social  Rising competition from other rival
companies
 Rising health concern all across
the world has affected the
business
Technological  Changing trends in the packaging
system
 Advancement in the innovation of
technology
 Introduction of new brew
machinery
 Heavy use of social media for
brand promotion
Table 1: PEST analysis of Cadbury
(Source: Created by author)
The PEST analysis framework has been chosen to determine the macro environment
based on which strategic planning has been formulated. As opined by (Sharland, 2019),
the analysis has provided a detailed analysis of political, economic and social scenario
that has helped the readers to have a clear view in which the company is thriving. It has
been observed that even the recession and economic downturn has not hampered the
business. As stated by Jha, Saini and Kaur (2017), the technological factor has clearly
stated that innovation in technology has become more prominent that has helped the
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company to reach the customers at mass. The company has also heavily recruited
social media for brand promotion. The company has fully exploited all social media
platforms to promote its innovative products and services. As opined by Morden (2016),
the political aspect has made it evident that the government has imposed sugar tax and
other value added tax with an aim to restore the health conditions of the population. It
has also observed that due to change in government the trade policies of the
government have also changed. As stated by Djohanputro (2015), even the company
has restricted the entry of skilled labors from other European countries. Recently the
entire world has become more health conscious and has incorporated exercises which
have compelled the company to bring innovations in their products that will meet the
requirements of customers Fincham, 2019).
M1 Critical analysis of the macro environment
With the help of the PEST analysis, all the macro environmental factors affecting the
business have been analyzing. This analysis will help to draft strategic planning that will
help the company to increase its customer base along with the profit margin of the
company. The study has reflected all the factors that impact the business of the
company. Here it has been observed that with rising innovation in technology the
company is required to introduce innovation in terms of packaging of its products so that
it can attract more customers. As opined by Kamasak (2015), from the analysis, it has
been observed that increasing adiposity has become the major concerned that has
compelled to charge sugar tax on the company. Apart from that health issues have
affected the customer base. As stated by (Kamasak (2017), in order to increase the
profit margin and sales revenue along with the customer base, the company is required
to introduce some products that will consider the health-related issues and satisfy the
needs of the customer.
The strategic planning should be formed based on the PEST analysis that will help the
company to achieve the aim and objective. As opined by Khan et al. (2015), the main
objective of the company was to become another name for quality. For this purpose, the
company is required to introduce innovation in technology that will help the company to
achieve its aim successfully. As opined by Fincham (2019), political scenario has left a
hind f slightly instability due to the change of the government. With respect to this, the
company is required to review its policies and procedure to comply with the trade
policies of the country. This will help the company to run its business smoothly without
facing any barrier. The analysis has also reflected the economic scenario of the
company. It has been observed that with the changing trend innovation in technology
plays an integral part. As opined by Giroux, Pons and Maltese (2017), the strategic
management includes innovation in a brand promotion that will help the country to reach
out to the customers at mass. A chief competitor has been recognized in the market that
again pushes the company towards strategic management that will help the company to
undertake appropriate and effective steps that will help the company to achieve the
objective of the company. With the implementation of PEST analysis, the company has
carefully studied the political, economic, social and technological factors.
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LO2 Assessment of the internal environment on Cadbury
In order to identify the internal environment and capabilities of Cadbury the research
work has administered SWOT analysis that will give a clear view of the internal and
external factors influencing the performance of the company. With respect to this SWOT
analysis has been viewed as the most appropriate framework that will successfully
identify the internal potentials of Cadbury (Johnson, 2015).
P2 an appropriate framework for analyzing the internal environment
SWOT analysis
Strength Weakness
Robust brand in its product portfolio
Strong branding over the years that
have earned Cadbury fantastic brand
loyalty
Has strong promotional activities in
FMCG that leave a long-lasting impact
in customers
Have excellent distribution strategy
Largest international confectionery
supplier
Qualities have been compromised in rural
areas
Lack of understanding of the new rising
market
Opportunity Threat
Changing demands of customers
The rise in demand for confectionary
market
Innovation
The high rate of merger
Limited promotional activities
People becoming health conscious
Rising competition from robust
competitors such as Mars, Nestle and
more
Table 2: SWOT analysis of Cadbury
(Source: Created by author)
It has been observed that with the help of SWOT analysis the internal and external
factors influencing the performance of the company has identified. It has been seen that
the company has a high share in the global market that has served as the biggest
strength of the company making it a mammoth in the confectionary sector. As opined by
Fernandes et al. (2016), Cadbury has strong promotional activities that leave a long-
lasting effect in the minds of customers. However, this factor again acts as a weakness
of the company as the promotional activities are limited in comparison to its rival
companies. The rising competition and increasing demand of the customers have
served as the opportunity for the company where it can introduce innovation and
creativity both in their products and packaging. As opined by Ali, Asim and Siddiqui
(2017), changing demands of the customers also act as an opportunity for the company
where they can bring a change in the designing of their products and services.
It has been seen observed that since the company has been functioning for more than a
decade, the qualities of their products are compromised in a few developing countries.
This can be underlined as the weakness of the company which needs immediate
attention to the quality management department of the company. This can hamper the
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vision of the company as they want to become another name of quality. As stated by
Hackley and Hackley (2017), delivering low quality products can affect its brand name
and reputation. It can get it involved in many legal conflicts caused due to the
consumption of unhealthy goods produced by Cadbury. It is known that children are too
much into the consumption of Cadbury products, failing to provide superior quality of
products will decrease its market share in the global market. The company needs to
have a piece of better knowledge regarding the emergence of a new market in order to
gain a competitive advantage. For this, the company requires continuous improvement
which needs to be considered while drafting a strategic management plan for the
company (Johnson, 2015)..
M2 critical analysis of the internal environment to assess the strength and
weakness
After conducting the SWOT analysis, the strength and weakness of the company have
been determined which needs immediate attention of the management of the company.
The strategic plan is required in terms of the quality of the products it produces and
delivers to the customers. While recognizing the strength and weakness of the company
it has been observed that the company has a strong brand name. So, in this case, if the
quality of its products is comprised, then it will squarely hamper its brand name and
global market share. As opined by Ali, Asim and Siddiqui (2017), the SWOT analysis
has highlighted the fact that the company lacks the understanding of emerging new
market that can act as a negative point while trying to attain a competitive advantage in
the global market. While determining the strength and weakness of the company it has
also been observed that there is lack of promotional activities which needs special
attention. The strategic management plan needs to formed while considering this fact so
that the company can undertake more promotional activities so that it can approach
customers more effectively Hackley and Hackley, 2017).
LO3 Evaluation and application the outcome of Porter's five force
In order to analyze the competitive advantage of the company, the research work has
implemented porters five force that will provide a clear view of the competitors, buyers,
and sellers that will help the manager of the company to draft effective strategic plan
that will help them to gain a competitive edge. Various approaches have been
discussed to enhance the competitive edge of the company.
P3 Porter’s Five Forces of Cadbury
Porters five forces model is a strategic tool that is applied to make an analysis of the
attractiveness of the structure of the industry.
Entry of competitors
It has already been observed that the company is facing rising competition from its rival
companies. However, the entry of competitors will not be easy because there are
already well-established companies within the current market such as Nestle, Mars,
Hershey. The above- mentioned companies dominate the confectionery market and
their particular types of chocolates. As opined by Giroux, Pons and Maltese (2017), this
acts as the strongest barrier for the entry of new companies to start the competition with
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Cadbury. Since it is an old company with a huge brand name so it will become difficult
for new companies to enter the market and give competition.
Threat of substitute
The main threat to the substitutes of the products of Cadbury and any other
confectionary brand is the own brand of the supermarkets functioning in various parts of
the country. Moreover, the only hindrance that has the potential to affect the production
of Cadbury is to find a more attractive and preferable location and collect the
requirements for the smooth entry and the international policy that might hamper its
operation.
Bargaining power of buyers
Being one of the largest confectionaries' producers in the world the company has large
bargaining power. It has been observed that the buyers of the company scattered all
across the world and they are in billions. As opined by Giroux, Pons and Maltese
(2017), the price subjectivity of the products is not a big deal, but the availability of an
increasing number of competitors and substitute can relatively impact on the number of
buyers of the company. The main reason behind this is that the rival company can offer
products at relatively less price then Cadbury which has a tendency in retention of
buyers.
Bargaining power of the suppliers
Cadbury boasts itself on maintaining and creating positive and effective relationships
with its suppliers all over the world. It has a huge purchasing power, and the suppliers of
agricultural products provide a product that is far away from its specialty. It has been
observed that the company has a high bargaining power in comparison to its suppliers
as the organization heavily relies on a complex agro supply chain. It has been noted
that Cadbury has the major power over its suppliers as they the companies that supply
Cadbury need the company in the long-term in terms of business. Thus, Cadbury uses
economies of scale and purchase raw material from them at a less expensive rate and
more in bulk.
Rivalry among the existing players
Many companies are competing with Cadbury and planning to take over the supremacy
of the company for many decades. It has been observed in order to give tough
competition to the company its rivals are coming up with various innovation in terms of
product and packaging so that it attracts more customers than Cadbury. The main rival
of the company is Mars, Nestle, Hershey, Ferro and many more. However, to sustain
this rising competition the company has implemented strong innovation and developed
new ranges of products.
M3 Appropriate strategies to improve competition edge
From porters five forces the main rivals of the company have been recognized and the
amount of influence they can exercise on the international market. With the help of this
analysis, the purchasing and supplier power of the company has also been estimated. It
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has become evident that to give the tough competition the company is required to adopt
effective approaches to improve the competitive edge. The company can adopt an
innovation strategy that will help Cadbury to introduce a new range of products in the
market with innovative packaging. Branding is the most important aspect of any
company that enables to gain competitive advantage. It has been observed that the
company lacks in promotional activities and hence need a review of branding and
promotional activities of the company. By this, the company can increase its visibility in
the international market. With the rising globalization, innovation has become the main
player to gain competitive advantage in the market. As opined by Giroux, Pons and
Maltese (2017), by introducing innovation in technology, the company will be able to
introduce a wide range of new products that will take the rivals some time to come up
with substitutes.
LO4 Theories and Concept
P4 Application of theories, concepts, and models
Strategic management is a process of an organization that mainly means continuous
planning, monitoring, analysis, and assessment process that is necessary to run a
company. The strategic management helps to divide the problems and find out every
possible way to resolve the issue. Two theories regarding strategic management help to
run the business of Cadbury more efficiently.
Porter’s Model of Generic Strategy: Porter took the management strategy as in
generic form to maintain the approach more effective. He mainly divided the
management strategy into two parts like a broad and narrow path. The different
business proposals manage a different aspect of the organization. As opined by Giroux,
Pons and Maltese (2017), this process helps to achieve the ultimate sustained
advantage of competitive, which helps to maintain a competitive atmosphere in the
market and thus ensures the growth of the company. Porter's Generic Strategy mainly
falls into four-part like two for the narrow path and two for the broadway. In the general
section, there is Cost Leadership and differentiation leadership. And on the other track
of narrow the two central part is Cost Focus and Differentiation Focus. These are the
primary source of strategic management market, where the specific business competes.
The broad section of cost leadership and differentiation leadership works on the
advantage of competitive of the market section. Also, with the contrast Focus Cost and
Focus Differentiation work on the narrow market. The cost leadership generic section of
the company mainly works on the profit cost of the company, like, the selling of any
goods or price in an average rate in favor of the company, in comparison with its fellow
company rivals and thus gains profit. Organizations that are getting success in the cost
leadership, often have the high skill in the designs of the product, the manufacturing
section is also top in contrast with the rival companies. Differentiation Strategy deals
with the highly skilled methods of production and access to the leading research on
science. Moreover, the low-cost focus strategy aims in the smaller section where the
possible change can happen in the way of target marketing.
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Bowman’s extended strategy of Strategy: Bowman's strategy mainly known as the
Clock Model. It focuses on the strategic position of the approach of the market, where to
products needs to position in the way of achieving a stable and robust demand, like
where placing one product will deal with the two parts of price and perceived value. His
theory is mainly divided into eight sections, following, low cost and low added value, low
price, hybrid, differentiation, focus differentiation, risky high margins, monopoly pricing
and final chapter of the cycle is a loss of market share.
Image 1: Bowman’s Strategic Cycle
(Source: As opined by Giroux, Pons and Maltese, 2017)
The following cycle describes the perceived value market of the consumer and the
price; it represents the relationship between them. This theory mainly explains how the
market value of any customer towards any product can change the rate and the market
strategy helps to decide the amount and the strategic planning.
The Cadbury is an US-based company, the Cadbury has a global market around every
corner in the world, and being the most acceptable and anticipated company it needs to
follow the right and prominent strategic marketing value of the company as it implies the
Bowman’s theory, where the importance of cost Leadership and differentiation
Leadership helps to evaluate the market value and the price of a product and also uses
the innovative scientific process to make that product more efficient. To run a business
like Cadbury, one needs to have a substantial marketing segment for the future of the
company.
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M4 Strategic Management Plan:
Cadbury has a global market, and that means it needs to have a proper strategic plan to
run the show. As opined by Kamasak (2017), Cadbury applies the marketing
approaches as a plan to deliver the activities to transfer the product to its consumer.
Cadbury has a vast range of products, that has a significant market in the business, and
to arrange these broad products Cadbury needs a strong marketing value. Cadbury's
Strategic plans revolve around some following plans,
 Maintaining the connection between the Cadbury and its customers;
 Raising sales through the proper marketing advertisement;
 Cadbury's pricing strategy keep to impacting on the more significant market;
 Calculating the profits and further influences the product strategy;
In the basis of most the aims, the marketing plan that Cadbury needs to imply, which
covers the exact procedure that helps to grow the company more. Like where the
proper planning is helping to reach the audience, through maintaining the price in the
market. For example, the global market needs a long-term policy, which concerns the
production of the Cadbury and promoting it around the world. For example, Cadbury
launching a new cereal bar, and new products need new promotion skills and
techniques and will help to gather the market.
In terms of the future rise of Cadbury's growth, Cadbury should apply the theory of
Porter's and in some other aspect the method of Bowman's. as stated by Morden,
(2016), both the strategies mainly focus on the marketing strategy of new products in
the long term. The innovation of new products and for those specific scientific resources
provide, then make the exact and straightforward marketing plans that consumers can
easily find the product helpful and grabs the opportunity to catch that.
In Porter's theory, the central segment is Cost Leadership and the Differentiation
Leadership that deals with the broad path of the Cadbury Company. Like, the
differentiation leadership checks on the portion where the new resources of science are
helping to produce new Cadbury product like a cereal bar. As stated by Jha, Saini and
Kaur (2017), on the other hand, the new product needs a stable price in the market in
comparison with the rival companies, and this section model decides the price gain
profit and decides the marketing promotions to make the product more reachable.
The Bowman’s Theory has an eight-stage cycle as discussed earlier. As opined by
Chari et al. (2019), this section of the company acts on the part of deciding the prices in
comparison with the consumer’s value about the product. Like Cadbury has a range of
products and sometimes some products differ on the price range due to the market, and
this theory helps to provide the procedure of setting the range n order to achieve the
profit in global demand. There are so many companies that compete with the Cadbury's
market by providing more offers, making the rise in the quality of the product, updating
the price with the market, the flexibility of the market in relation with the production
capacity.
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Cadbury's marketing department has a primary aim to connect the business with the
consumer. The company is focusing on the needs of the consumer; and what to deliver
them in general. Moreover, this plan helps to develop the campaign strategies of
Cadbury, like which product needs more focus on production and marketing, what new
resources are required to install to get the work done. As opined by Chari et al. (2019),
all over marketing strategy is the whole plan of how to form the marketing approach of
any company about the customer relationship to provide growth. This purpose of the
strategy-marketing can be achieved through social media, television, radio, internet,
newspaper, etc. All these improvements in the marketing policy lead to the broader
concept of increasing the sales of Cadbury.
D1 Critical interpretation of information and data
Applying the strategies of marketing in the global market of Cadbury gives a high
chance to grow, but on the other hand, using the particular theory of marketing
strategies like Porter's Theory and Bowman's argument has some drawbacks. Like the
theory of Porter have several questions in case of applying it on the Cadbury. The main
problem is the lack of specificity and limited flexibility of the generic model of the theory.
Any company who is implying the strategy in their company, like, if Cadbury is adapting
the plan, then it can consist only one aspect of the theory like if Cost Leadership or
differentiation Leadership, and sometimes modifying any one approach can create a
middle ground of the problem. It does not raise the market of the company somewhat
confuses the whole method of the marketing policy. If Cadbury is choosing Cost
Leadership to achieve the marketing policy, but instead faces the difficulties of not
differentiate the resources for long term thus creates a middle ground in the company.
On the other hand, Bowman's extended model of the strategic plan has so many
loopholes, Cadbury implies theory in their company, but the Bowman himself
problematically states the method. The stage of hybrid section sometimes rise, and the
rise can create confusion in the part of deciding the market price and the price value,
that is getting selected based on the consumer's choice can also create a problem in
the long-term option of the Cadbury. The marketing strategy is all about setting the goal
of marketing value to achieve stability. But the clock of Bowman is sometimes biased
towards the side of consumer thus cannot never create a middle ground of the price.
Conclusion
The study has underlined the importance of strategic management of Cadbury a UK
based company. The study has also analyzed the macro environment and internal
capabilities of the company. The current research work has implemented PEST analysis
to understand the macro environment influencing the structure of the company. To
understand the internal capabilities and potential of the company the assignment has
exercised SWOT analysis that has provided a clear view of the internal and external
factors that impacts the performance of the company. Here the mission, vision, and
objective of the company have been discussed based on which the strategic
management has been planned. After analyzing the macro environmental factors along
with the internal and external factors of the company the strategic management plan
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