Introduction of the Business

Cadbury is one of the largest confectionary brands in the world. It offers a wide
number of products across the globe. Major chocolate brands produced by
Cadbury include the bars Dairy Milk, Crunchie, Caramel, Wispa, Boost,
Picnic, Flake, Curly wurly etc

1. What is the structure of the industry in which the firm is located?

The structure of the industry is Machine Bureaucracy. Machine Bureaucracy is

large bureaucracy in a slowly changing environment, producing standard
products. It is dominated by a centralized management team and centralized
decision making.

1.1 What are some of the competitive forces at work in the industry? Are
there new entrants to the industry? What is the relative power of suppliers,
customers, and substitute products and services over prices?

There exist a plenty of competitive forces at work in the industry like threat of
new entrants, bargaining powers of the buyers, bargaining buyers of the
suppliers, threat of substitute products in the market, and majorly rivalry among
the existing competitors.

Existing Competitors: Mars Ferrero

Hershey’s M&M

Nestle

Threat of new entrants: The entry to the market is difficult in a confectionary

industry because of already established brands. A new brand required huge
capital to establish itself in this type of industry.

The relative power of suppliers is low because of the presence of large number of
suppliers. For example: Cadbury has higher buying power than its suppliers.
 Bargaining powers of the buyer: The bargaining power of buyers in a cognitive
industry is moderate to high since the people are distributed all around the globe.
The increased number of competitors that provides similar products at a lower
cost can be a main reason for customer loyalty alteration.

Threat of substitutes: Threat of substitutes is moderate in such industry.

Confectionary is used to serve as snacks and gifts. A large number of substitute
are present like chips, fruits and beverages but chocolates keep and upper hand
over these because of its tendency to be preserved.

1.2. Is the basis of competition quality, brand or price?

The basis for competition in a confectionary industry is a mix of the three-quality,

brand and price.

Quality- The main purpose “make today delicious” captures the main essence
that the brand focuses to deliver quality to the consumers. Cadbury’s mission
statement simply says “Cadbury means quality”

Brand-In 90% of the time, it’s not a brand of chocolate or chocolates a consumer
ask from a retailer but a chocolate or candy, says Piyush Sinha, professor of IIM-A.
Due to strong barriers for the entry in the market, Cadbury has maintained 70%
share in the confectionary industry. Cadbury has positioned its brand and its
attributes as innovative ingredient and good taste.

Price- Due to perfect competition, price is decided by the industry and not the
firm and a slight change in price not only effects the company’s value but also
effects the value of other firms dealing in the same industry. This happens
because of the close substitutes and heavy competition that is available in the
market. The firm’s in a perfect competition is a price taker and not the price
maker. The pricing strategy for Cadbury is simple. It mostly consists of products
which are economical like Dairy Milk, Five Star etc.
1.3 What are the direction and nature of change within the industry? From
where are the momentum and change coming?

With changing lifestyle, people are becoming more conscious about their health
and how healthy these products are. To deal with such changes Cadbury has
modified its products.

For example: It added Dairy Milk Fruit and Nut to its Dairy Milk label to ensure
presence of healthy components in the making of its product. Just

Also, technological changes also made Cadbury to shift its presence from only
advertising on TV to digital marketing where it can reach its target customer more
easily. This change has led Cadbury to ensure it reaches the audience it targets at
the right time.

1.3. How is the industry currently using Information technology? Is the

organization behind or ahead of the industry in its application of information
technology?

The Internet increases the accessibility, storage and distribution of information

and knowledge for organizations. Cadbury uses information technology to know
the changing trend in the market and to know more about its consumers.

Also information technology helps them to keep a track of the inventory system,
keep a check on its retailers and helps them to know about the prevailing
competition in the market.

Most importantly, information technology helps Cadbury to connect with its

customers and modify their products according to the changing needs of the
customer.
2. What are the business, firm, and industry value chains for this particular firm?
The value chain of the firm has various primary and support activities. The
primary activities of the firm are Inbound Logistics (e.g. raw material handling),
Operations (e.g. quality control), and Outbound Logistics (e.g. sale of products)
and services.

2.1. How is the company creating value for the customer-through lower prices
and transaction costs or higher quality? Is there any place in the value chain
where the business could create more value for the customer and additional
profit for the company?
The company is creating value for the customer through higher quality for the
products offered.
The company believes in providing the best of quality of its products to the
customers and this has lead to a large base for customer loyalty towards the
brand.
Cadbury can increase the value offered to the customers by modifying its
products according to the needs of the customers and diversifying their products.
Also, improving the outbound logistics (distribution channels) and making the
products easily available to the customers can increase value to the customer as
well as help the brand to increase its profit too.

2.2. Does the firm understands and manages its business processes using the
best practices available? Is it taking the maximum advantage of supply chain
management, customer relationship management, and enterprise systems?
Yes the firm understands and manages its business processes using the best
practices available. The firm is able to procure its raw materials at low cost
because of optimum utilization of its supply chain management system. It is able
to keep its price consistent and has earned huge profit margin and hence has
maintained its brand image from so many years.
Supply Chain Management- Cadbury is able to generate highest level of customer
satisfaction at the lower cost. Supply Chain management has three levels of
activities: strategic, tactical and operational. At this level, the company takes high
level decisions such as the size and location of manufacturing sites, partnership
with suppliers, products to be manufactured and sales market.
Tactical decisions involve cost benefit decisions like using the industry’s best
practices. These decisions help the company to be cost effective in its operations.
Operational decisions are the routine decisions related with how the products
move in the supply chain. These decisions include making schedule changes to
production, purchasing agreement with suppliers, taking orders from customers
and moving products from the warehouse.
Customer Relationship Management-Cadbury has developed and advanced
mobile field marketing solution that aims to empower its mobile workforce with
Customer Relationship Management (CRM). It is provided by Just Enough Mobile
and is expected to give managers the ability to use handheld devices to direct in
field operations to enable the workforce to process orders in a closed loop. This
will provide a competitive advantage in field marketing by providing customer
services, boosting revenues and reducing costs.

2.3. Does the firm leverage its core competencies?

Yes, Cadbury leverage its core competencies. It aims at providing the best quality
products and achieves this objective by using the finest possible ingredients and
the creaminess of the milk chocolate yet maintains its profit margin.

2.4. Is the industry supply chain and customer base changing in ways that
benefit or harm the firm?
Due to inclination of the people towards a healthy lifestyle, the industry has
created a niche market for healthy chocolates that contains nuts, almonds etc.
This has led to the creation of such chocolates (eg: Dairy Milk Fruit and Nut, Silk
etc) which is priced a little high but is able to generate revenue and profit to
Cadbury due to increased awareness of people for such type of chocolates.

2.5. Can the firm benefit from Strategic Partnerships, value webs, ecosystems,
or platforms?
Yes, the firm can benefit from Strategic Partnerships. The foremost reason to
form strategic alliance is to gain access to another company’s knowledge or
 resources. Other reasons for forming strategic alliance can be dividing risks,
entertaining new markets, overcoming competition in the market, setting new
standards for the technology, forming economies of scale, enhancing
competitiveness etc.
Cadbury announced a partnership with blockbuster Logie Award winning reality
talent show in Australia for its upcoming season, aiming to free the joy through
music.
Cadbury also extended its partnership with the English Premier League to
Malaysia. This is done to extend its reach to the football fans in the country to
deliver a unique experience.

2.6. Where in the value chain will information systems provide the greatest
value to the firm?
The information system will provide the greatest value to the firm in sales and
marketing. It already exercises a greater control over the production through its
strict control channel. However, it uses its information system the most for its
marketing and sales purposes. It is important for the product to be available to
the consumer whenever he intends to buy it. The information system helps the
company is designing and implementing the distribution and other marketing
plans in such a way that all the consumer needs are satisfied. Information system
helps in knowing the customer deeply, monitor various distribution strategies and
helps in creating a greater control on the retailers and other intermediaries in the
market.

3. Have we aligned IT with our business strategy and goals?

The success of any company depends on how the internal structure of any
company is designed. So, in order to achieve the aim and the objectives of the
company effectively and efficiently, division of work into the various functional
areas is important. Cadbury has successfully aligned with IT with their business
strategy and goals.
Information Technology has helped Cadbury to achieve its goal to reach to the
farthest of the consumers.
3.1. Have we correctly articulated our business strategy and goals?
Cadbury mission says, “Cadbury means quality”. Its reputation is built on quality.
The primary function for Cadbury is internal, i.e., to measure the organizations
success and its prime listeners is the leadership team and stockholders. Cadbury
has successfully articulated its business strategy and goals. It followed product
differentiation strategy for meeting the different and changing customer
demands. The company has been successful in expanding its customer base
because of this strategy.

3.2. Is IT improving the right business processes and activities to promote this
strategy?
Cadbury uses Product Differentiation strategy to achieve its goal to reach the
maximum consumers. IT helps Cadbury to know its customer base, segmenting
the customers, matching with the changing needs of the customer, knowing the
competencies of the other substitutes in the market and taking the right action
plan for achieving its goal. Also, it helps in getting feedback from the various
intermediaries involved in the distribution channels which help them improve
their products.

3.3. Are we using right metrics to measure progress towards those goals?
Yes, we at Cadbury are using the right kind of metrics. Product differentiation
helps in to achieve competitive advantage by offering better products or services
at the same price or enhancing margins by pricing slightly higher. This leads to
huge profit generation for the company and also helps the company in being
better than its competitors. Also, it helps the company in dealing with the
changing needs of the customers more accurately.
 MANAGEMENT
INFORMATION SYSTEM