Benefits and Drawbacks of Cadbury Shifting Production Overseas

This report provides a detailed analysis of the benefits and drawbacks associated with Cadbury, a multinational confectionery company, shifting its production operations to a developing country. The introduction highlights the company's goal of global market expansion. The report explores v...Read More

BENEFITS AND DRAWBACKS OF A COMPANY MOVING ITS PRODUCTION OPERATIONS TO A DEVELOPING
COMPANY
In modern scenario, every kind of company mainly aims for having global market and attain international
position effectively. While moving the production sector and its operations in developing sector, there are
various kind of challenges which company will mainly face and those will be discussed below in brief
manner. Company chosen is the Cadbury which is a multi-national company and mainly deals in
confectionery items.
Political Factors: This kind of factor mainly helps out in determining the extent to which the Govt. will
mainly influence the economy and Cadbury as well. Example can be taken up of Govt. mainly imposing the
new tax policy where the Cadbury is mainly shifting its production sector and thus due to that structure of
company can might change. There are many factors which are being included like fiscal policy, tax policies,
trade tariffs and many more which can make impact upon the working environment of the company specially
to the country they are mainly moving in. When the production sector is being transferred, there are some
political benefits and drawbacks which will be seen like at the point when another administration assumes
control, it may make it harder to work together in that nation. This can run from forcing new directions on
organizations or raising utility costs or duties to nationalizing creation offices.
Economical Factors: There are various kind of factors which helps out in determining the performance of an
economy and thus have long term impacts. Example can be taken up of rise within the inflation rate of any
kind of economy will make direct impact upon the price of product which is sold by company. Along with
this, purchasing power of the customer will get affected. Cadbury is basically involve with these factors like
inflation rate, interest rate and many more. There are mainly various kind of benefits and drawbacks from the
aspect of economical factors while transferring the production sector from one place to another foreign
country. Advantages can be like Opening an abroad office enables an organization to achieve a pristine market
where interest for its items and administrations is high and introductory rivalry is negligible. It likewise
enables the organization to expand its image acknowledgement all through the world. In an inexorably
worldwide economy, more prominent brand mindfulness might be important for organizations that need to
keep on expanding, particularly if their present markets have achieved their immersion point while drawback
can be currency risk which can bought up the from the abroad to sell within the local kind of market which in
turn will expose to currency fluctuations.
Social Factors: In this kind of factor, social environment is mainly being scrutinized and are being gauged
with determinants like cultural trends, demographics, population and many more. Example can mainly be
taken up of buying trends for the Western Countries like the US where there is high level of demand during
occasions or any kind of festival. In aspect of moving the production sector of Cadbury to the foreign
developing country, it is highly essential to look out for the social factors as there is high need of human force
to create the environment in effectual manner. Major benefit which company will get is lower labour cost
within the foreign developing country which in turn will mainly offer the benefits of operating overseas and
reduced labour costs. There are some of the companies who have saved the money about 50% within salary
payments alone. This will allow the Cadbury to have more amount of profit and they will get employees at low
rates who will help in attaining objectives. Drawback of this kind of factor is that it mainly involves the local
labour market within the country which can take notice and wages which began to climb.
Technological Factors: In this kind of factor, innovation is being pertained within j technological sector
which in turn can put an impact upon the operations of the industry along with the market in favourable or
unfavourable manner. Mainly this sector is about automation, research and development department along
with technological awareness which market mainly possess. Cadbury company has been mainly focusing upon
this kind of factor as there is high need of adopting latest technology and ease up the process of production and
other processes. In aspect of moving the production sector to the foreign country, technology will play
essential role as there are numerous kind of factors which has the potential of making impact upon the
productivity of the company in foreign country. Advantage of this kind of factor is that technology will help
out in bringing sustainability within the new kind of market and thus with help of new kind of tools and
techniques, company will be able to reach untapped markets and technology will help out in reaching out to
the brand new market where the desire and demand of products and services will be much more high and thus
the initial competition will be very low. Along with this, it may help in increasing the recognisation of brand
across the globe.
INTRODUCTION
VARIOUS FACTORS
There are various kind of factors which company mainly has to look out upon the tran sferring the production
sector to another developing country. In UK, there are various kind of developed economies in which the
labour cost is very high. Hence, many of the companies with multiple facilities can mainly find it beneficial
and thus can move up the production factories to many of the developing countries like India and China where
the labour cost along with cost of raw materials are much more reasonable and cheaper. Cadbury being a
multi-national company has their main production sector in various countries. Along with this, there are some
of the significant drawbacks which are being carried and thus they are needed to be considered in careful
manner.
In order to move the production sector into different region, there are some of the factors on which
analysis has to be made in order to reduce the chances of error. There are many of the benefits which will be
attached with transferring and along with that there are some of the drawbacks which needs to be kept in mind
as well. There will PEST Analysis which will be done on the company and the foreign region they are
transferring into. PEST mainly stands for political, economical, social and technological. These are the factors
which will help out in determining the necessary factors which company like Cadbury has to draw their
attention upon.