Cadbury's External Environment Analysis: Opportunities and Threats

This report provides a comprehensive external environment analysis of Cadbury, a leading global confectionary company. It examines eight key domains: technological, economic, competitive, labor, resource, customer, legal/regulatory, and global environments. The analysis delves into how these factors impact Cadbury's operations, market position, and strategic decision-making. The report identifies major opportunities, such as expanding into emerging markets and diversifying the product range, and highlights significant threats, including rising sugar taxes and evolving consumer health consciousness. The conclusion summarizes the main external issues, offering insights into their implications for Cadbury's survival, competitive advantage, and growth potential, aiming to provide valuable information for the company's senior management.

Running head: CADBURY
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Name of the Student
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Executive summary
One of the largest and leading confectionary across the globe is Cadbury. The company is
able to provide a very deep assortments to its customers present across the world and are
served with products like chocolates, gums and candies all catering the needs of different
segments of the market. This assignment is about the various external environment that effect
the business in some or the other way and there are certain recommendations like expanding
the business and going international will help the business in many ways.

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Table of Contents
Introduction................................................................................................................................3
External environment analysis...................................................................................................3
Technological environment....................................................................................................3
Economic environment..........................................................................................................3
Competitive environment.......................................................................................................3
Labor environment.................................................................................................................3
Resource environment............................................................................................................3
Customer environment...........................................................................................................3
Legal and Regulatory environment........................................................................................3
Global environment................................................................................................................3
Interpretation and discussion......................................................................................................3
Main opportunities.................................................................................................................3
Main threats............................................................................................................................3
Conclusion..................................................................................................................................3
References..................................................................................................................................3

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Introduction
One of the largest and leading confectionary across the globe is Cadbury. The
company is able to provide a very deep assortments to its customers present across the world
and are served with products like chocolates, gums and candies all catering the needs of
different segments of the market. There are around 46,000 employees in the company and the
company has its presence over 60 countries or nations in the world, which is huge ("Cadbury
Chocolate | Cadbury.co.uk", 2020).
In early days, the company was owned by a British company and the company
Cadbury was later founded by John Cadbury in Birmingham in the year 1824. This was the
first outlet of the company that was opened by him. In the year 1842, John’s brother
collaborated with John to form a company named Cadburys Brothers of Birmingham. In spite
of a number of protest the company was acquired by the American Kraft company in the year
2010. It is been believed that the success of the company lies in the management of Cadbury
("Cadbury Chocolate | Cadbury.co.uk", 2020). There is not much layer in the flat
organizational structure of Cadbury which helps in making decision quick and correct.
This report will discusses about the external environmental analysis of Cadbury and
its eight segments. Besides, an interpretation of the main threats and opportunities faced by
the company in near future is also being discussed in this report.
External environment analysis
Technological environment
Technology helps in the up gradation of functioning of any organization. It is
important to have a lead in the market against the competitors. If a change occurs in any

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particular department of the organization, each and every function of the organization gets
effected.
The advancements are done in manufacturing of the product through technology and
this helps the company to address the cost rising for the ingredients require for the
manufacturing of the chocolate and making innovations such as a chocolate that is heat
resistant and is suitable for the markets that have a hotter climate.
The company uses the digital platform and the social media marketing to reach out to
the customers and keep the updated (Smith, Child & Rowlinson, 1990). This helps in
building a string relationship between the company and the customers and helps them
keeping engaged.
Economic environment
If there is a change in the economy of any country, it has an equal and adverse effect
on the business running in that particular country and there is an effect on the hiring process
of the company during this time (Mangena, Tauringana & Chamisa, 2012). The job security
of people comes at stake as well as their salaries also gets effected due to any problem in the
economy of the country. The share of Cadbury in the UK confectionary has reduced below
than 30 percent for the first time and there were discount retailers like the Aldi and Lidl have
used aggressive pricing strategy of keeping the price low. There were reports of Cadbury’s
market slipping to about 1.7 percent to 29.8 percent in the last few months (Mangena,
Tauringana & Chamisa, 2012). It was later suggested after the observations made that the
chocoholics were more price sensitive than brand and Cadbury might have forecasted.
Competitive environment
Mars, Nestle and Hershey are considered as the main competitors of Cadbury. Mars is
a privately owned business and has a very conspicuous name. Some of the commonly known

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brands are Snickers, Starburst, Twix and Skittles. There are six segments that this company
serves namely chocolate, pet-care, nourishment, drinks, symbioscience and Wrigley’s (gum).
However, Cadbury also manufactured gums that incorporated Dentyne, Stride and Trident.
Nestle is known for being the biggest nourishment organization having multiple
subsectors of the market ad serving them all. It has developed several acquisitions that
probably has given brands which incorporates Kit-Kat, Smarty’s and Gerber infant
nourishment.
In the potential developing markets like India, Cadbury has expanded to more than
about 75 percent as calculated in the year 2006. Most of the Dairy Milk assortments are still
fabricated at France and sold in UK (Yang & Zhao, 2014).
Labor environment
The labor environment of any industry includes a number of factors which are the
scarcity of skilled labours, employees who are mobile and agile at the same time, cost of
benefits to the employees is higher and many others (Mayer, 2009). It has been observed that
there is a scarcity of labour that are skilled and in this business it is very important that the
people who are selected must match the standards set.
Most of the raw materials required for the preparation of the chocolate is labor
intensive in nature. The chocolates requires cocoa beans that are generally harvested in
Ghana, West Africa. Most of these beans need to be dries and requires about long hours per
day for better results (Cadbury, 2020).

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Resource environment
Cadbury has a wide reach to the financial resources because of the type of assortments
the company has, this helps in having a premium that is capitalized and a market that is low
(Child & Smith, 1987). A very large number of stores are under this company helping in
rising the market shares of the company around the globe.
The human resource of Cadbury includes a huge range of employees, therefore, the
decision making that takes place in the company is highly decentralized and the employees
working there are provided with many perks and perils.
Cadbury has positioned its product quite well in the market and it has now become a
common man’s brad because of this very reason (Child & Smith, 1987). Besides, the quality
of the product delivered in the market to the customers and the loyalty it has maintained has
helped the brand to sustain and lead the market for years after years.
Cadbury has always been able to bring something unique and innovative for its
customers. Now a days, people are being more health conscious therefore, Cadbury came up
with its sugar free chocolate with low calories to cater the need of the people.
Customer environment
The Cadbury confectionary is now a leading player in New Zealand as far as making
of chocolates is concerned. The Cadbury product that is the Dairy Milk uses a little amount of
cocoa as compared to the other range of Cadbury chocolates (Cadbury, 2020). Hence, it
attracts a large segments of customers that are young and are mostly kids. The marketing
budget increased from $87m last year to $120m, which is up 10.8% in respect to sales.
Marketing indeed has helped the confectionary company gross a good deal of profit in this
global economic storm (Cadbury, 2020).

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Legal and Regulatory environment
The legal or the regulatory framework is defined at three levels: local, regional and
national. These are the standards that are included and are responsible for effecting the
principles of law (Dewing & Russell, 2000). The laws that incorporate governance in
business, taxation and responsibilities of producers come under this segment or factor.
There have been several legal issues that has a huge impact on the company. This
legal issues may include the requirement for providing correct details of the ingredients used
and the details of the calories that is used while manufacturing of the product that is based on
the choices on content of fats in the product. Other issues may include the possibility of
having a regulatory framework surrounding the legal issues facilitating future business
activities of the company (Dewing & Russell, 2000). Many of the requirements that have a
legal base are now increasing in UK and the most common is the tax imposed on sugar. This
is creating a lot of problem for the company to bear.
Global environment
There are several advantages if the company goes abroad and expand its reach. The
global market of Cadbury is still dominated by the Western Europe and emerging markets in
future. If Cadbury is able to penetrate a market that is foreign then it will help in increasing
the production of the company which would in turn help in increasing the economies of scale
of the company (Vrontis & Vignali, 2001).
Doing this will help in giving a counter back to the competitors present in the
domestic as well as international market. If the company goes out and expands its reach it
will help in increasing the sales and profit of the organization which will enable in making
higher profits for the opportunities in the international market rather than the domestic one
(Vrontis & Vignali, 2001).

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This will also help in help in reducing the dependence of the company on the markets
of UK and therefore, this technique will help in diversifying the market risks that are specific.
Cadbury however should understand the foreign market culture and proceed accordingly. The
unexpected costs of the market and the underestimated foreign regulations must always be
kept in mind.
Interpretation and discussion
Main opportunities
There are many opportunities associated with the brand because of its emerging
markets and the expansion in the range of products. These are the opportunities that will help
Cadbury to sustain and be the market leader for long and sustain the market needs.
The biggest opportunity that Cadbury has is the emerging markets and Cadbury can
expand its reach to the untapped and untouched markets of the western regions of Asia and
Africa. Most of the significant consumers of the western confectionary has not been offered
by Cadbury till date (Helms & Nixon, 2010). This could help the company to expand with the
help of globalization and the growing range of income of the customers in the market. This
will also help the company to generate an addition revenue stream and earn profits for the
company.
There is a lot of scope for the company to expand its product range as this will help
the company to be more lucrative in the field of multinational confectionaries present.
Experimenting with other products with a new market will help Cadbury in diversifying the
market standing that the company currently follows and this will also help in preventing a
number of threats coming around (Helms & Nixon, 2010).

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Main threats
However, there are some threats that Cadbury needs to take care of at the time of
implementing any strategy or plans associated with the products and the company. There are
some potential threats that are associated with the company and these could give a setback in
future. Some of the major threats to Cadbury are the rising tax for sugar and the customers
being more conscious about their health. There are the threats that are going to effect the
business in the long run and the performance of the business as well as its revenue structure
will also be hampered.
The rising tax of sugar has caused potential threat to Cadbury. Most of the countries
has implemented a high sugar tax for many chocolate factories and there is also an additional
charge on the products that are sugary and are designed for curbing consumption (Rowlinson,
2002). This idea of sugar tax has made a significant traction in most of the European
countries and if this is implemented in most of the areas this will have a direct effect on the
cost of the confectionary for the customers effecting the sales volume of the company.
Another threat arising for the company is due to the people being more health
conscious presently. There are a number of studies that have proved the ill or bad effect that
sweets has on the body of a human and also the bad effects of processed foods in which
chocolate comes. Therefore, a customer who is very serious about his health would not buy
these and drastically the sales of the company will go down. Therefore, these threats should
always be kept in mind as it could result in the declining revenue for Cadbury in the coming
years. Consequently, proper measures are to be taken by the company to have a hold of this
threat.

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Conclusion
Therefore, from the above discussion it can be concluded that Cadbury being the
biggest company across the globe need to focus more on increasing he global reach and try a
different segment and a market with a different product. At present, kids are the biggest
influencers of making any decisions for thee family therefore, Cadbury must tap this
untapped segment of catering the wants of the kids as this segment will provide a vast market
coverage to the company and will help in increasing profits and revenues. It is very well
known that the reach out to the customers of this particular industry is huge.
As a result, the company mist look in details about the opportunities and threats
coming its way and balance these accordingly. Since, the biggest limitation of Cadbury is its
limited range of products; therefore, Cadbury must find out ways of coming out of this with
some innovativeness that will help the company to maintain its margin in the market and will
also have a upper hand in maintaining a strong position in the market and will continue to
drive the sales and profits simultaneously.

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References
Child, J., & Smith, C. (1987). The Context and Process of Organizational transformation‐
Cadbury limited in its Sector. Journal of Management Studies, 24(6), 565-593.
Dewing, I. P., & Russell, P. O. (2000). Cadbury and beyond: perceptions on establishing a
permanent body for corporate governance regulation. The British Accounting
Review, 32(4), 355-374.
Helms, M. M., & Nixon, J. (2010). Exploring SWOT analysis–where are we now?. Journal of
strategy and management.
Mangena, M., Tauringana, V., & Chamisa, E. (2012). Corporate boards, ownership structure
and firm performance in an environment of severe political and economic
crisis. British Journal of Management, 23, S23-S41.
Rowlinson, M. (2002). Public history review essay cadbury world. Labour History
Review, 67(1), 101-119.
Smith, C., Child, J., & Rowlinson, M. (1990). Reshaping work: the Cadbury experience (Vol.
16). Cambridge University Press.
Vrontis, D., & Vignali, C. (2001). Dairy Milk in France‐A marketing investigation of the
situational environment. British Food Journal.
Yang, T., & Zhao, S. (2014). CEO duality and firm performance: Evidence from an
exogenous shock to the competitive environment. Journal of Banking & Finance, 49,
534-552.