Table of Contents

CHAPTER ONE: CASE PROFILE ....................................................................................................... 3

1.1 History of Cadbury ........................................................................................................................ 3
1.1.1 Mission ................................................................................................................................... 5
1.1.2 Vision...................................................................................................................................... 5
1.1.3 Objectives............................................................................................................................... 5
1.2 Technological Advancement ......................................................................................................... 6
1.3 Cadbury Brothers Ltd .................................................................................................................... 7
CHAPTER TWO: SITUATIONAL ANALYSIS ....................................................................................... 8
2.1 Political .......................................................................................................................................... 8
2.2 Socio-cultural ................................................................................................................................ 8
2.3 Technological ................................................................................................................................ 9
2.4 Demographics ............................................................................................................................... 9
2.5 Economic ....................................................................................................................................... 9
CHAPTER THREE: INDUSTRY ANALYSIS ........................................................................................ 10
3.1 Threat of New Entrants and Barriers to Entry ............................................................................ 10
3.2 Product Substitutes ..................................................................................................................... 11
3.3 Power Suppliers .......................................................................................................................... 12
3.4 Power of Buyer............................................................................................................................ 13
3.5 Intensity of Rivalry Among Competitors ..................................................................................... 14
CHAPTER FOUR: COMPETITIVE ENVIRONTMENT ANALYSIS ......................................................... 15
4.1 Cadbury company strength against Nestle ................................................................................. 15
4.2 Cadbury company weakness against Nestle ............................................................................... 15
4.3 Opportunities of Cadbury and Nestle ......................................................................................... 15
4.4 Threat of Cadbury and Nestle ..................................................................................................... 16
CHAPTER FIVE: ENVIRONTMENTAL TRENDS ................................................................................ 18
5.1 Miniaturisation of Chocolate Bars .............................................................................................. 18
5.2 Premiumisation ........................................................................................................................... 19
5.3 Clean Label .................................................................................................................................. 19
5.4 Healthy ........................................................................................................................................ 19
5.5 Personalisation............................................................................................................................ 20
5.6 New Flavours and Textures ......................................................................................................... 20
5.7 Rare Flavours............................................................................................................................... 20

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CHAPTER SIX: ATTRACTIVENESS OF EXTERNAL ENVIRONTMENT .................................................. 21
CHAPTER SEVEN: STRATEGIC ANALYSIS....................................................................................... 21
7.1 Key Success Factors..................................................................................................................... 21
7.1.1 Extensive Distribution Network ........................................................................................... 22
7.1.2 Sustained Key Product ......................................................................................................... 23
7.1.3 Customization of Products ................................................................................................... 24
7.2 Strategies- Business Level; Competitive Strategy; Corporate Level ........................................... 25
7.3 Core Competencies - Resources ................................................................................................. 26
7.3.1 Tangible Resources .............................................................................................................. 26
7.3.2 Intangible Resources ............................................................................................................ 28
7.4 Value Chain ................................................................................................................................. 30
7.4.1 Inbound Logistics & Suppliers .............................................................................................. 30
7.4.2 Operations ........................................................................................................................... 31
7.4.3 Outbound Logistics & Distribution ....................................................................................... 32
7.4.4 Sales & Marketing ................................................................................................................ 32
7.5 Summary: Sustainable Competitive Advantage.......................................................................... 33
CHAPTER EIGHT: SWOT ANALYSIS TABLE .................................................................................... 35
8.1 Definition of SWOT analysis ........................................................................................................ 35
8.2 SWOT Analysis of Cadbury company .......................................................................................... 36
CHAPTER NINE: STRATEGY FORMULATION AND RECOMMENDATION .......................................... 37
REFERENCES .............................................................................................................................. 38
APPENDICES .............................................................................................................................. 40

Page 2 of 40
 CHAPTER ONE: CASE PROFILE

1.1 History of Cadbury

John Cadbury was one of ten children of Richard Tapper Cadbury, a prominent
Quaker who had moved to Birmingham, England from the West Country in 1794. In
1824, 22-year-old John Cadbury opened his first shop at 93 Bull Street, next to his
father's drapery and silk business in the then fashionable part of Birmingham. As a
young Quaker, he was against alcohol and so instead sold tea and coffee, he also sold
hops, mustard and a new side-line which is cocoa and drinking chocolate that he
prepared using a mortar and pestle. Cocoa and drinking chocolate had been introduced
into England in the 1650s but remained a luxury enjoyed by the elite of English
society. Customers at John Cadbury's shop were amongst the most prosperous
Birmingham families, the only ones who could afford the delicacy. Cocoa beans were
imported from South and Central America and the West Indies

In 1831, John Cadbury became a manufacturer, renting a warehouse in

Crooked Lane, close to his shop. Here he began producing cocoa and chocolate.
Experimenting with his mortar and pestle, John Cadbury produced a range of cocoa
and chocolate drinks, the latter with added sugar. The products were sold in blocks
which customers need to scrape a little off into a cup or saucepan and added hot milk
or water. These early cocoa and drinking chocolates were balanced with potato starch
and sago flour to counter the high cocoa butter content, while other ingredients were
added to give healthy properties. According of figure 1.1.1 portrayed of Cadbury
Company logo that had establish since 1824.

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 Figure 1.1.1: Logo of Cadbury company

In 1840s, his brother Benjamin joined the company to form Cadbury Brothers.
The firm began renting a factory in Bridge Street in 1947. Then, the brothers opened
an office in London and received a Royal Warrant as manufacturers of chocolate and
cocoa to Queen Victoria.

John Cadbury retired due to failing health in 1861 and the business was taken
over by his sons Richard and George. They were aged 25 and 21. In 1866, the brothers
launched a new product, Cadbury Cocoa Essence. John Cadbury devoted the rest of
his life to civic and social work in Birmingham until his death in 1889.

Although they had worked in their father's business for some years, the
prospects for Richard, 25, and George, 21, were daunting. Their first five years were
a period of unremitting toil with few customers, long hours and very frugal living.
Both seriously considered taking up other vocations where Richard as a surveyor in
England and George as a tea planter in India.

George was focused on manufacturing, and Richard with sales, but in the early
days both brothers went out and promoted their goods. Due to their dedication, sheer
hard work and improvements in the quality of Cadbury cocoa products, the business
survived and prospered.

By the 1870s, Cadbury had outgrown the Birmingham factory and began
looking for land outside the city to build its new premises. Keen to move away from
the dirty conditions of the city, the brothers set about building their "factory in a
garden" to provide a clean and healthy working environment for employees. They
chose land four miles outside of Birmingham, which they later named Bournville. The
factory opened in 1879.

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 By the late 1880s, the workforce had increased five-fold and 10 years later, the
factory was expanded. During 1983, George Cadbury bought more land in Bournville
and began building the village which surrounds the factory and launched its first milk
chocolate bar in 1897. Eight years later, they come out with new product known as
Cadbury Dairy Milk which is chocolate.

In 1921, the firm opened its first overseas factory in Tasmania. They had
become the 24th largest manufacturing firm in Britain. The original 14-acre site at
Bournville had increased to 81 acres. More than 100 acres was devoted to recreation,
including dressing areas, rest rooms and a concert hall featured on site. The well-being
of the workforce was important to the Cadbury family. The firm merged with
Schweppes and became Cadbury Schweppes during 1969. Then, Cadbury and
Schweppes demerged, separating its confectionary and drinks business during 2008.

1.1.1 Mission

‘’Cadbury means quality’: This is our promise. Our reputation is built

upon quality; our commitment to continuous improvement will ensure that
our promise is delivered’

1.1.2 Vision

‘The Barrow Cadbury Trust’s vision of a peaceful, equitable society, free

room discrimination and based on the principle of social justice for all’

1.1.3 Objectives

‘To develop differentiated product, while exploiting a smart variety, to

achieve their profitable growth in confectionery and beverages.’

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 1.2 Technological Advancement

Dissatisfied with the quality of cocoa products, including their own, the
Cadbury brothers took a momentous step in 1866 that not only had a bearing on their
business but revolutionised the whole of the British cocoa business.

Until that time English cocoa had been heavily adulterated with starch
substances like potato flour or sago to mask the excess cocoa butter. The cocoa drink,
as described by George Cadbury himself, was a "comforting gruel".

Following a visit to the Van Houten factory in Holland to see their new cocoa
press, the brothers introduced this new process to their Bridge Street factory. The press
removed some of the cocoa butter from the beans, producing a less rich and more
palatable cocoa essence - the forerunner of the cocoa we know today.

There was no need to add flour and Cadbury's new cocoa essence was advertised
as 'Absolutely pure...therefore Best'

At that time there was much concern in Parliament about the adulteration of
food, including cocoa. The new unadulterated Cadbury's cocoa essence was heralded
as a major breakthrough and resulted in the passing of the Adulteration of Food Acts
in 1872 and 1875. Cadbury received a remarkable amount of free publicity during this
period and sales increased dramatically. The marketing of this cocoa essence helped
turn a small business into a vast worldwide company.

The introduction of cocoa essence was not the only innovation that improved
the Cadbury Brothers' trade. The plentiful supply of cocoa butter remaining after the
cocoa was pressed made it possible to produce a wide variety of new kinds of 'eating
chocolate,' leading to the development of the smooth creamy chocolate produced
today.

The quality of the chocolates made by the company following the introduction
of the cocoa press was such that in the 1870s, Cadbury broke the monopoly which
French producers had previously enjoyed in the British Market.

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 1.3 Cadbury Brothers Ltd

The business became a private limited company - Cadbury Brothers Limited -

in 1899 following Richard Cadbury's sudden death at the age of 63.

George Cadbury became chairman of the new board and his fellow directors
were Barrow and William A. Cadbury, sons of Richard and two of his own sons,
Edward and George Cadbury Junior.

By 1899, the Bournville factory had trebled in size with more than 2,600
employees. With the formation of the limited company, Bournville entered a new era
as the younger members of the Board introduced new ideas - analytical laboratories,
advertising and cost offices, a sales department, works committee, medical
department, pension funds, education and training for employees.

The Bournville factory site became a series of factories within a factory, as

everything needed for the business was produced on site, including tin box pressing
plants, carton making units, a design studio and printing plant.

This policy continued until well after the Second World War when the
rationalisation of the business to mainstream activity - production and marketing of
chocolate confectionery- led to the use of outside specialised suppliers for ancillary
items.

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 CHAPTER TWO: SITUATIONAL ANALYSIS

2.1 Political

The government change from Labour party to a Liberal Democrat one affected
Cadbury’s operations. In the UK, 8 Cadbury factories hired 3000 workers but many
restrictions that are imposed could lead to the company having difficulty in skilled
employees later. Many taxes imposed are also another factor to study how the
company is managing its payments and investments. In 2010, the Value-added Tax
that was imposed led to the rise in prices of chocolate which ultimately brought a
decline to sales. Also, earlier in 2007, the owner of Cadbury chose to outsource
majority of his business to an Indian firm due to expenses. This was a risk to be taken
as it could lead to loss of employment worldwide; however, it could also provide more
opportunities for job in countries such as India. Cadbury is one of those recognized
brands in the world that do not require anything to protect its property and brand.
There are a number of products in the market as its substitute but Cadbury is very
strong to be ahead in this competition. However, confectionary products have an
uncertain future due to risks of obesity and health care as chocolates are not very
healthy

2.2 Socio-cultural

Cadbury was initially run by the Quaker company hence, they were strictly
against alcohol to be added to tea, cocoa, coffee, or liquid chocolate. However,
chocolate and similar products that are sold by the company are accepted in the whole
world, Cadbury has been facing a lot of arguments especially related to its products
not being certified Halal to serve Muslim markets in the world. Moreover, there are
problems arising in the west too, such as rising cases of obesity in children and adults.
A lot of nutritionists advise people to reduce their intake of chocolates and candies
which ultimately will affect the Cadbury industry.

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 2.3 Technological

Technology has altered Cadbury’s packing and production in the past years. An
increase capital investment such as in buying modern technology that use pathogen
systems and filing patents for heat-resistant chocolates to keep themselves at par with
competitors.

2.4 Demographics

Cadbury is equal to consumption of chocolate all over the world. The brand was
established in the early 19th century and has offices and factories in the United
Kingdom and North America as well as Asia and Africa. Kraft foods in the United
States purchased Cadbury in 2010. Thus, Cadbury products are now under the
ownership of the American confectionary giant. As the Cadbury's official web site
suggests, its journey in India has been an eventful one. In the early 1990s, it tried to
cater to the sweet tooth of the children. Those days they steered the market and took
control over the company's major market share. However, the strategy changed by
letting out the secret that "Everyone has a child inside "and thus everyone craves for
the taste of chocolate. Cadbury strategies went through a considerable change. It now
catered from children to adults. There is some differentiation targeting as a variety of
Cadbury products are available to cater for the individual needs of different groups of
customers. But nowadays the people are suffering with diabetes. So the diabetic
segment people started use of less chocolate or sugar free thing.

2.5 Economic

An interest has an effect on buying behaviour as interest increases, people tend

to save more and spend less and as income decreases consumer are likely to pay on
their craving for chocolate. The worldwide economic decline affected Cadbury’s
extension plans quite greatly; however, it did not affect the sales much. Later, Cadbury
was successful in business by gaining a 30% rise in its yearly profits. The products
that were most sold are Dairy Milk and Trident. Still, after this, the company’s revenue
came to a downfall in 2009.
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 CHAPTER THREE: INDUSTRY ANALYSIS

3.1 Threat of New Entrants and Barriers to Entry

Figure 3.1.1: Position Cadbury company in emerging markets

According figure 3.1.1 in global market share for confectionery industry,

Cadbury has been placed their company as the largest and most spreading emerging
markets business among its rivals. The entry of new competitors will be difficult
because Cadbury are already well established companies within this market place.
Moreover, it makes the barrier for entry very hard for another new company to start
in this food industry and they may require high initial capital or investment for build
their own company. Based on this statistic data, we can see it would be difficult for
new competitors to place their company position in market place and influence the
customers to buy their products Since the company is widely well-known all over the
world in many countries that believe have faith in Cadbury, the only obstacle that
might come in the way for Cadbury is finding suitable location. They need to ensure
that they comply with the laws of every nation and keep in mind the foreign policies
for smooth functioning.

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 3.2 Product Substitutes

There are numerous substitutes to chocolate product that transcend by consumer

categories. Based on these result, it can be determined that the threat of substitutes in
confectionery industry for chocolate products is high. Furthermore, other product
substitutes that can be threatening the chocolate industry including non-chocolate
snacks such as biscuits, crisps, frozen dairy products, savoury snacks. These snacks
pose a threat as indulgent foods are based purely on consumer preference. Frequently,
customer purchase substitutes product to seek alternatives from obesity due the
chocolate products. For example, for those customers with a sweet tooth taste are
prefer to purchase both fresh products such as dried fruit and yoghurt and who favour
savoury snacks they like to eat popcorn, nuts, rice cakes and seeds. Moreover, as we
know chocolate also have advantages for our health with supply energy in body. In
this context, competitors can implement new product that provide energy by
increasing insulin level with water such as energy drinks also can be considered
substitutes as they have similar affects as chocolate.

As market rising for Cadbury chocolate, the main threat of substitutes of this
company is there any other confectionery brand is the supermarket own brands tend
to copycat popular chocolates for example Nestle Kit Kat which provide their own
brand on the shelves at a cheaper price. Moreover, the only hindrance that might affect
the production of Cadbury is to find a good location and gather the requirements for
the smooth entry and the foreign policy that might affect its operation. Based on these
findings, it can be determined that the threat of product substitutes in relation to the
confectionery industry is high apart still chocolates scores higher than the substitutes
as they are easy to preserve.

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 3.3 Power Suppliers

Suppliers can exert power by increasing prices or reducing the quality of

chocolate company. By working well with suppliers, businesses can encourage
suppliers to deliver services and products on time and be as efficient as possible.
Cadbury prides their own products by creating and maintaining good relationship with
its suppliers all over the world. It has a large purchasing power and the suppliers of
agricultural commodities offer a product that is far from unique and hence Cadbury
has higher bargaining power than its suppliers as the industry relies heavily on a
complex agro business supply chain.

Cadbury company states that the raw material that have been using in their
product such as milk that comes from the British Isles, for sugar supplier, Cadbury
company require from two suppliers which is United Kingdom and imported
exclusively by Tate and Lyle from less developed countries such as Mauritius and
Belize. For cocoa production, Cadbury launched the Cadbury Cocoa partnership were
involved Ghana, Indonesia, India and the Caribbean country in January 2008.
According figure 3.3.1 that show cocoa import from Ghana country. Although there
is an existing competition, raw materials like nuts, milk, cocoa or special ingredients
are sufficient enough to satisfy Cadbury’s production but they can empower suppliers
due Cadbury are large companies that also help their business by purchase rawer
materials in bulk and cheaper than a medium sized business could.

Figure 3.3.1: Cocoa from Ghana country

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 3.4 Power of Buyer

Nowadays, consumer have many choices to satisfy their opinion and needs due
to the intense of rivalry in the confectionery industry. For Cadbury’s they have huge
buying power which buyers are scattered all around the world and they are in billions
and made this company one of the largest confectionery producers in the world. In
June 2006, recall of the cases relates with Cadbury chocolate production, chocolate
bars contained salmonella bacteria that can harm people and animal against can affects
Cadbury’s product also lose some of their buying power. However, Cadbury has a
number of established brands which command a relatively stronger pull, hence the
bargaining power of buyer such as wholesalers and supermarket is low but the
bargaining power of the consumer is moderately high.

Based on figure 3.4.1 shows various type of Cadbury chocolates. The price
subjectivity of the products is not a question for the people but the increasing number
of competitors that offers the same type of products at a lower cost on the shelves
might cause of customer loyalty alteration. Thus, Cadbury must to very precautions
in deciding about prices and keep the customer satisfied with their own brand.

Figure 3.4.1: Various type of Cadbury chocolates

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 3.5 Intensity of Rivalry Among Competitors

The confectionery industry is crowded with many players although has partially
differentiated products. Some are well established players such as Nestle and Mars,
who have equally strong brands as Cadbury’s. According figure 3.5.1 shows main
competitors of Cadbury company. These company are Cadbury’s main rivals due they
are also long established confectionery brands like Cadbury are developing new
ranges of products, new promotion. Rivalry will always be strong among these
companies because they sell from the same types of stores and their products are
similar in some respects. Some have carved out their own brands such as in house
brands of Tesco. The intensity of rivalry among competitors is high. This industry has
numerous, equally balances competitors, slowing growth, has high storage and fixed
costs also high exit barriers. All of these conditions create price wars, advertising
battles, new product lines and higher quality of customer service in the confectionery
industry. Many businesses are competing against Cadbury to take over the supremacy
the company has several years. However, Cadbury’s well established brands do
provide some level of edge in the industry

Figure 3.5.1: Main competitors of Cadbury Company

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 CHAPTER FOUR: COMPETITIVE ENVIRONTMENT ANALYSIS

4.1 Cadbury company strength against Nestle

Cadbury is a brand that is a leader in innovation of products, that focuses on

candy, chocolate, that fulfils the various taste of consumers whereas Nestle has a wide
range of portfolio of products that exceeded the management skill and man power to
manage a smooth and effective management of product. The advantage of Cadbury in
the market share has given them the priority and many advantages in determining the
price of their products, whereas the price of Nestle product is depending on the market
that they venture and they cannot set price of product that is too high that is not the
interest of consumer. Nestle has also problem in locating and distributing the product
due to developing countries that has poor communication and network skill between
the people.

4.2 Cadbury company weakness against Nestle

Cadbury's primary weakness is its international inexperience in distributing and

extending its product, whereas Nestle has the most experience in distributing and
extending of their product due to the coverage of its product is over the world. Other
Cadbury's weakness will be the dependant of the company organization on too little
product line which is beverages and candy. Unlike Nestle which having lots of the
product line like drinks, snack and food that can generate the profit made.

4.3 Opportunities of Cadbury and Nestle

Cadbury can venture into new market to diversify and broaden their products
into various sector is snack food. Nestle has also look into opening new Nestle café
that specialize in selling Nestle products and also promoting new products. Cadbury
has to come up with more creative chocolate products to maintain its competitiveness
in the market. Nestle should also reduce the portfolio of brands that cost losses to the
company and focuses the skilled managers on brands that are generating sales.

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 4.4 Threat of Cadbury and Nestle

Manufacturing of Nestle product has produce wastage of energy, Nestle needs

to improve their innovation in reducing the pollution to the environment. Cadbury is
also widely exposure to competition from other brands of chocolate such as Hershey's
because of new product that is more innovative. Chocolate ingredients increase in
price will also cost Cadbury in expenditure to purchase the product. Nestle has to
improve their brand in the breakfast cereal market because it has been claim to be
containing fake health benefits, more cash has to be waste to reposition their product.

COMPANY/
SWOT CADBURY NESTLE

 
ANALYSIS
STRENGTH The largest global Globally recognized as
confectionery supplier, with one of the largest and
9.9% of global market powerful food


share. producer, covering

 
High financial strength almost every country.
Strong manufacturing Quality is a vital
competence, established element regarding


brand name and leader in nestle products.


innovation. Strong internal growth
Advantage that it is totally and emphasis on


focused on chocolate, innovation internally.
candy, chewing gum, Powerful brand
unique understanding of positioning in the
consumers’ mind.
 
consumer in these segment.
Successfully grown through The decentralized
its acquisition strategy. culture in the
organization
encourages employees.

WEAKNESS  The company is dependent  The immense

on the confectionery and diversification


beverage market. portfolio of the firm
Other competitors have makes it impossible to
greater international run every division


experience. smoothly.
Retailers do not get set
high margin to


increase more in sales.
Transportation as well
as storage problem

Page 16 of 40
 OPPURTUNITY  Expand into new  Invest in snacks that


markets. would further


Increase share through diversify its product.


targeted acquisitions. Provide incentives to
Key to survival within the retailers to


the FMCG market is increase sales volume.
increasing efficiency and Middle class share in


reducing costs. most of the economies
Innovation is key driver are growing much


larger.
Open café that would
exclusively provide
Nestle products.

THREATS  Worldwide, there is an  Pollution of product

increasingly demanding should be regarded


cost environment, strictly.
particularly for energy, The company has not
transport, packaging and so pretty history with

 
sugar. the FDA.
Competitive pressure Tough market with a
from other branded tougher competitor for

 
suppliers. gaining market share.
Social changes. Market is quite mature
and the competitors
specialize in a certain
product that can hit
hard on Nestle.

Table 4.4.1: SWOT analysis comparison between Cadbury and Nestle

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 CHAPTER FIVE: ENVIRONTMENTAL TRENDS

Chocolate is an emotive product. It is a true feel-good food, associated with

relieving sadness, combating bad moods and generally making people happier. But
despite this constant, the world of chocolate is never the same from one year to the
next. It is true that the nation’s favourite chocolate bars are very familiar faces, but the
tide is changing.

New challenges and exciting trends are emerging all the time. In previous posts
we’ve looked at major shifts in the dairy and alcohol categories, and how brands are
adapting to weather new developments.

Premium and dark chocolate are the strongest segments of the market in terms
of percentages growth but not yet in market share. These are the few more trends that
emerging in 2017:

Premium, healthy, sustainable, miniaturisation and clean are some of the key
trends driving chocolate in 2017 but the overall market for confectionery is having a
tough time with margins in decline along with slowing demand in Europe and other
export markets.

5.1 Miniaturisation of Chocolate Bars

Industrial and craft chocolate companies are now moving forwards in making
miniature bars. “Fast and busy lifestyles” and “Time is precious” are new trend in
2017. Consumers are looking for food on-the-go to satisfy their snacking needs.
Chocolate is no exception to this trend. These new sizes range from 15g to 35g Easy
to carry in a hand bag. Miniature bars perfectly meet the demand for practicality.

Craft chocolate companies are taking advantage of this trend by introducing

smaller sizes of their bestselling bars or using it as a method of trialling new variants.
With this in mind many of the main stream confectionary companies have reduced the
size of their bars which has cause suspicion among some consumers with recent
research saying consumers do not want their favourite bar to shrink threatening to
change brands.

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 5.2 Premiumisation

Demand for premium chocolate is at an all-time high with provenance and origin
being the main key amongst the cocoa and chocolate products. The lasting trend of
single origin is still prevalent as it is not enough to just offer ‘salted caramel truffles’,
the salt also needs provenance, a story; think Himalayan sea salt or Kalahari Desert
salt smoked over French oak. Nowadays, the third wave in artisan chocolate
production with new bean to bar makers starting every week pushing the quality
further upward towards the bean to bar pioneers like Duffy Sheardown.

5.3 Clean Label

Sustainable and clean certified chocolate is now spreading to new countries and
categories. It is important to know where food comes from and how it is produced.
True ethical and environmental costs really matter to today’s consumer. Examples of
this trend can be seen as Ferrero announced in July it will increase the Blitzer trade
source. In February 2017, The Co-Op announced that all cocoa used in own-brand
products will be Fairtrade certified, signalling a clear CSR agenda but also the
currency that it feels this provides for its members.

5.4 Healthy

Along with the trend for sugar reduction, gluten-free and lactose-free claims are
increasingly being seen in cocoa and chocolate with milk alternatives such as almond
or coconut milk appearing on the label. Ingredients such as turmeric and other Indian
spices are now taking over not only kitchens but also chocolatiers laboratories.
Moreover, chocolate bars that include superfoods grow in popularity every day. Given
its beneficial properties, it is no big surprise that turmeric is becoming the favourite
ingredient for many health-oriented brands.

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 5.5 Personalisation

Every bean-to-bar producer would like to have a unique mould to create that
special experience and identity. Sensory tasting stick is used to demonstrate how all
of consumers senses when they taste chocolate. It may not be practical to have a
bespoke mould but it is important to create a sense of brand identity. The chocolate
market is busy, noisy and confusing for a shopper and producers must find new ways
to be memorable.

5.6 New Flavours and Textures

Many chocolatiers using more exotic and unique flavours in chocolate. Herbs
like fennel and basil, fruits like yuzu, sour cherries and even vegetables like kale,
beetroot piccalilli are also being used inside the chocolate. The savoury trend, which
started some years ago, with salted caramel, continues and more activity every year
with flavours like bacon be paired with chocolate. Chocolate based BBQ rubs and
crusts are young and emerging trends. Asian ingredients exotic, intriguing, mostly
sour, like miso, wasabi and soy sauce into truffles and pralines. Caramel is often used
as the sweet to their sour. Matcha green tea is also another popular flavour.

5.7 Rare Flavours

After vanilla and saffron, cardamom is the world’s third most expensive spice.
However, its price has not stopped chocolate professionals from turning it into a
trending inclusion. Black figs chewy, sweet, this sweet fruit pairs perfectly well with
dark chocolate. Rare and single malts paired with bean to bar chocolate continue to
excite and impress.

In summary, the chocolate world continues to be fast changing and exciting.

Chocolatiers are responding to consumers that are demanding more from their sweet,
or savoury, treat. The key trends that have been highlighted are around size,
premiumisation, clean credentials, personalisation, health and exotic flavours.

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 CHAPTER SIX: ATTRACTIVENESS OF EXTERNAL ENVIRONTMENT

A company’s strategic decisions can be subjective to many factors. To analyse external

environment, the company should keep knowledge about the technological development
and political changes that can affect strategic plan. By doing this, the company also get to
know better about the company through political, socio-cultural, technological,
demographics and economic. Analysing external environment helps us to generate profits
and cut down the costs. Besides that, the company can plan a better strategy and implement
he existed strategy to be a better chocolate manufacturer internationally compare to other
brands such as Nestle, Toblerone and Hershey’s.

CHAPTER SEVEN: STRATEGIC ANALYSIS

7.1 Key Success Factors

Cadbury is a UK company with almost 200 years of heritage was founded in

1824 and one of the world’s largest confectionery businesses with number one or
number two positions in over 20 of the world’s 50 biggest confectionery markets.
Cadbury has maintained a disciplined approach to their business and remained in the
realm of their core market. This focus on their core product market chocolate and
confectionary, has enabled them to refine their business practices in order to produce
a consistently high quality product, in a highly efficient and cost effective manner. As
a result, this gave them the ability to penetrate emerging markets effectively and 44%
of Cadbury’s revenue came from emerging markets. There are several key success
factor which contributes to the success of the Cadbury company.

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 7.1.1 Extensive Distribution Network

Cadbury’s brands are available in over a million outlets across the country
covered Australia, United Kingdom, China and India. The distribution
network directly covers almost the entire urban population. The company has
invested significantly in building such an extensive network.

Cadbury is using multi-channel distribution strategy. It uses indirect

marketing channel of level 3 in which Cadbury have intermediaries of
distributors and retailers. This level distribution channel is being used by the
whole chocolate industry. Distributors and retailers act as sources of
information; they help company in promotion of their product. They enhance
company easy to communicates with their perspective buyers.

Forward with technology growth, Cadbury company use information

technology to improve their logistics and distribution area. It will affect
performance of company like good production system for specified time and
efficient in distribution management. Cadbury also improved the distribution
quality of its products with the installation of refrigerators at several outlets.
This helps in maintaining product quality in summer when sales usually dip
due the fact the heat affects product quality and thereby consumption.

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 7.1.2 Sustained Key Product

c. They work with around 35,000 direct and indirect suppliers. Cadbury
company focus on raw material where they’re sustain cocoa source to
produce chocolates with good quality and ensure the production of
chocolates still inline. Based on figure 7.1.2.1 shows verified program for
community cocoa, Cadbury company entered the new partnership between
Cocoa Life and Fairtrade in 2009, with Fairtrade becoming partner for the
Cocoa Life program. Cocoa life is an industry- leading also independently
verified program that will ensure the future of Cadbury chocolates for
generations to come. Through a US$400 million investment, Cadbury is
working with Fairtrade to secure a positive future for 200,000 farmers and
one million community members in six key cocoa growing countries by
2022. Cadbury company believe by creating cocoa communities as the
essential foundation for sustainable cocoa. This means, it makes Cadbury
product has a different taste than other brands whenever customer buy of
plain Cadbury Dairy Milk chocolate products.

Figure 7.1.2.1: Verified program for community of cocoa

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 7.1.3 Customization of Products

Cadbury is well established company with many achievements and loved

by millions of people in over 30 countries around the world. To maintain
loyalty of customer to their products, Cadbury had customized some products
against chocolates production. They are investing in their most advantaged
brands, generate approximately half of total revenue and significantly higher
profitability by being globally strong across three confectionery categories
which is chocolate, gum and candy.

Cadbury company have a natural growth path based on making the most
of total confectionery business and specific strategy for each category. So, in
the UK, Cadbury company strength in chocolate and candy has enabled them
to launch successfully into gum. The refreshing gum brands is the fastest
growing item of confectionery in the marketplace. Its popularity is on the up
and up by all generation especially kids and teenager. In the USA, Cadbury
company have added chocolate with gum and candy business. According
figure 7.3.1.1 shows refreshing gum that produce by Cadbury company.

Figure 7.1.3.1: Refreshing gum

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 7.2 Strategies- Business Level; Competitive Strategy; Corporate Level

According to Cadbury Malaysia Annual Report 2015, Cadbury Strategy is to

become the world largest, biggest and best confectionery company. The company core
strategies are to achieve these aims such as to develop differentiated product, while
exploiting a smart variety, to achieve their profitable growth in confectionery and
beverages.

Another objective is to further c. By working together with global supply

chain, Cadbury have a competitive advantage while attaining their ethical and cost-
reduction goals. By competing on quality this gives Cadburys a USP that allows them
to lay an emphasis on total consumer and customer perceived value. As Cadbury have
a highly motivated Global Science & Technology Team that is admired internally and
externally for delivering superior results.

This kind of strategy helps to unlock the full potential of Cadbury Company
as integrated entity whilst responding to the market challenges ahead. In 2016,
Cadbury Malaysia strategic priorities were to maintain their stronghold as the leading
brand of chocolate and confectionery Ready-to-Eat category and strengthen their
market leadership in Growing up Chocolate category for children. The Cadbury
Malaysia Company must be focus on these core behaviour: Cadbury core Behaviours:

 We promote partnership, networking and cooperation.

 We are leaders and business partners.

 We are champions of our products, consistently finding ways to achieve and

maintain competitive superiority. We live with our Values and Principles.

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 7.3 Core Competencies - Resources

7.3.1 Tangible Resources

A tangible resource is an asset that has a physical form. Tangible resource

represents an opportunity to earn an economic benefit through the production
of distribution of goods or the provision of services. Tangible resource
includes both fixed and current asset such as machinery, buildings, land and
inventory. In addition, because tangible assets are often purchased, they can
be valued at cost. Some tangible assets, such as buildings and machines,
depreciate over time and receive special treatment from an accounting
perspective to best match the cost of the asset to the revenues generated by
the asset.

Human Resource  Cadbury has a varied range of workers

around 50,000 people. Decision making
is highly decentralized. Several
facilities are given to workers such as
summer hours’ scheme, cafeteria and
transportation facilities and flexibility
of time. Some specific employees are
also allowed for international


assignments.
The employees are rewarded for their
effort. Cadbury is offering cash for their
employees that can help them in all their
need. If the employees working hard the
profit will be increased and Cadbury can
enlarge their brand in different
companies. If employee satisfied with
the benefits they are getting, they
automatically work hard for company’s
growth.

Financial Resources  Cadbury have wide range of products;

such as, various type of chocolate,
refreshing gum, candy and others. Every
day, millions of people around the world
enjoy their brands. They have
capitalized premium as well as low cost
market


.
In Australia, Cadbury invested a huge
amount of $3 million for three years’
partnership with Football Federation
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 Australia to create the country’s healthy
lifestyles program for kids. By having a
focused approach, Cadbury company
believed by having this contribution can
make a greater impact for organizational
finance performance.

Organizational  Cadbury follows a matrix of global

Resources function and number of business unit.
Management structure is being divided
into 3 executive directors and 5 non-
executive directors who plan strategy
and take decision for the company on
long term basic. The concerns are
mostly from the shareholders. The key
success factor of Cadbury emphasizes is
growth, efficiency and capabilities

Physical Resources  Cadbury emphasizes production of

product ethically and environmentally
by stores and operates in almost 60
countries and sell nearly everywhere.
Cadbury head production unit is located
at Bourneville in Birmingham. Cadbury
asset are worth 3.2 billion by 70% of its
market share is in India country.

Technology Resources  Cadbury use new technology to test for

potentially harmful food borne bacteria
over the past year, after salmonella
contamination forces the company to
carry out a 50 million chocolate bar


recall in 2006.
Cadbury choose Pathatrix system
because it allows food manufactures to
increase the number of food samples
tested for pathogens in a shorter amount


of time.
The Pathatrix system provides Cadbury
with a validated, science-based solution
to the rigorous demands of a highly
interdependent and time critical supply
chain.

Table 7.3.1.1 Tangible Resources of Cadbury

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 7.3.2 Intangible Resources

An intangible asset is an asset that is not physical in nature.

Corporate intellectual property, including items such as
patents, trademarks, copyrights and business methodologies, are intangible
assets, as are goodwill and brand recognition. Intangible assets exist in
opposition to tangible assets which include land, vehicles, equipment,
inventory, stocks, bonds and cash. An intangible asset can be classified as
either indefinite or definite. A company brand name is an indefinite asset, as
it stays with the company as long as the company continues operations.

Reputational Resources  They have maintained active

worker villages and R&D facilities
since the time they first opened.
Work-life balance has been a key
tenant of the Cadbury HR
philosophy since the 1800's
Cadbury concentrates on social
responsibility towards various
communities. They give a lot of
preferences to stakeholders,
focusing on their employees,
suppliers and buyers well-being.
They have constantly striven put
their employee first.

 The world’s second largest

confectionery is also great when it
comes to dealing with many people.
The quality and loyalty of Cadbury
had made it a common man’s
brand. It has become a brand and
has found to have no adulteration.
Cadbury also concentrates on
environment by reducing waste in
form of plastics.

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 Innovation Resources
 There is various type of chocolate,
beverages that come out by
Cadbury brands. As we know, it
may contain high amount of sugar
and other substance that can affect
customer health. Due to health
consciousness among people,
Cadbury come out with new
products which contain no sugar
added in it, natural colours and with
low calorie. Various portion sizes
of the entire product were also been
developed.

Table 7.3.2.2: Intangible Resources of Cadbury

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 7.4 Value Chain

Value chain is a high-level model used to describe the process by which

businesses receive raw materials, add value to the raw materials through various
processes to create a finished product, and then sell that end product to customers.
Companies conduct value-chain analysis by looking at every production step required
to create a product and identifying ways to increase the efficiency of the chain. The
overall goal is to deliver maximum value for the least possible total cost and create
a competitive advantage.

Table 7.3.2.2: Intangible Resources of Cadbury

7.4.1 Inbound Logistics & Suppliers

According figure 7.3.3.1. Each company needs to have raw materials and
the importing of raw material is known as Inbound logistics. In the process
of inbound logistics, company relations with suppliers play a crucial role
towards adding value to end product. Supply chain for Cadbury Australia
Dairy Milk, they sourcing milk from South Australia where the climate is
temperate while the sugar is sourced from suppliers within Australia. The
production of Cadbury delicious Dairy Milk begins with the cocoa tree.
Cadbury uses cocoa beans sourced from Ghana in West Africa, Malaysia and
Indonesia in Asia. The cocoa beans are then packed into sacks for
transportation. After quality inspection, they are shipped to the processing
factory “Claremont” in Singapore which produces “The Cocoa Mass”.

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 7.4.2 Operations

After being exported by sea to the cocoa factory in Singapore the beans re
processed to produce cocoa mass. The process of cocoa mass may involve a
few step which started with winnowing, roasting, grinding and pressing to
produce good quality of cocoa. The process has been show in figure 7.4.2.1.
The cocoa mass and cocoa butter are produced. Inspected and shipped to
Cadbury factories in Tasmania (Australia) whom will produce the dairy milk
chocolate.

Figure 7.4.2.1: The Process of cocoa mass

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 7.4.3 Outbound Logistics & Distribution

The wrapped chocolate bars are packed and transported in refrigerated

containers from the factory to the manufactures’ Kraft distribution centre in
Melbourne (Victoria). Cadbury’s central distribution centre is where orders
are assembled (inventory) for customers throughout Australia and forwarded
to destinations. Cadbury Australia exports confectionery products to a
number of countries in the Asia-Pacific region such as New Zealand,
Indonesia and Malaysia. Through transport companies like ships, delivery
trucks, Cadbury’s Central Distributions Centre distribute their chocolates bar
via direct store delivery. It can illustrate by Figure 7.4.3.1.

Figure 7.4.3.1: The Process of Chocolates Distribution

7.4.4 Sales & Marketing

Cadbury run their product sale by advertising. Cadbury employs all types
of different advertising media for a regular demand. One of the method, they
using digital advertising media to communicate new promotions, also to
drive new campaign and interact with loyal customers. Cadbury also use
traditional advertising media such as billboards, TV station, radio, cinema
and print media like newspaper and magazines.

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 7.5 Summary: Sustainable Competitive Advantage

As stated in Cadbury Malaysia annual report, sustainability means carrying

out their business in a socially responsible and holistic manner to ensure continued
growth and success for the benefit of both present and future generation. As one of
the leading Chocolate Company in the world, Cadbury use Corporate Social
Responsibility as their key factor in business strategy. Cadbury intend to show their
strategic initiatives according to four priority area

 Balanced nutrition and healthy

 Social taste and desire

 Social Trust

 New flavours and textures

For balanced nutrition, as the number of world population enlarged, Cadbury

also has to maintain a consistent and sustainable supply of quality nutrition for the
social welfare. Locally, Cadbury Malaysia objective is to keep the magic of Cadbury
alive so that the social continue to believe it and buy the chocolate in vast quantities.
The efforts in supplying enough nutrient to the consumer is by ensuring that Cadbury
products are responsibly manufactured, healthy and available in diverse option and
portion sizes for consumer that have different preferences. Cadbury Malaysia also
regularly monitoring their way in leading consumers to healthy lifestyle.

Along with the trend for sugar reduction, gluten-free and lactose-free claims are
increasingly being seen in cocoa and chocolate with milk alternatives such as almond
or coconut milk appearing on the label.

Ingredients such as turmeric and other Indian spices are now taking over not
only kitchens but also chocolatiers laboratories. Moreover, chocolate bars that include
superfoods grow in popularity every day. Given its beneficial properties, it is no big
surprise that turmeric is becoming the favourite ingredient for many health-oriented
brands.
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 Next, on May 2014, pork DNA was found inside the Cadbury chocolate. Due
to the pork DNA issue that are found inside the ‘Halal’ Cadbury chocolate, Cadbury
Malaysia and all their employees are responsible towards their marketing as they are
so committed in providing Halal products to consumers. This steps are very important
to Cadbury Malaysia as they set up a Halal policy which is will be in line with Halal
requirement that has being sets out by JAKIM with the highest standards of hygiene,
quality, safety and sanitary condition throughout the manufacturing and distribution
process.

Last but not least, Cadbury Company now are using more exotic and unique
flavours in chocolate. Many different kind of ingredients are also been used inside the
chocolate. This is one of the best strategies that was being implemented by the
Cadbury Company to satisfy the social taste and desire.

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CHAPTER EIGHT: SWOT ANALYSIS TABLE

8.1 Definition of SWOT analysis

SWOT analysis is a procedure that distinguishes an association's qualities,

shortcomings, openings and dangers. In particular, SWOT is a fundamental,
expository structure that evaluates what a substance for the most part a business,
however it can be utilized for a place, industry or item can and can't do, for factors
both inward (the qualities and shortcomings) and in addition outer (the potential open
doors and dangers). Utilizing ecological information to assess the position of an
organization, a SWOT investigation figures out what helps the firm in finishing its
destinations, and what snags must be overcome or limited to accomplish wanted
outcomes: where the association is today, and where it might be situated later on.

A SWOT investigation is typically exhibited as a square with each of the four

zones making up one quadrant. This visual game plan of the data gives a brisk review
of the organization's position. Albeit every one of the focuses under a specific heading
may not be of equivalent significance, there are a few experiences to be had in
perceiving how the quantity of chances measures up to the quantity of dangers.
Components of swots consist to four elements which is strengths, weakness,
opportunities and threats.

Strengths describe what an organization excels at and separates it from the

competition: things like a strong brand, loyal customer base, strong balance sheet,
unique technology and so on. For example, a hedge fund may have developed a
proprietary trading strategy that returns market-beating results; it must then decide
how to use those results to attract new investors.

Weaknesses stop an organization from performing at its optimum level. They

are areas where the business needs to improve to remain competitive: things like
higher-than-industry average turnover, high levels of debt, an inadequate supply
chain or lack of capital.

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 Opportunities refer to favorable external factors that an organization can use
to give it a competitive advantage. For example, a car manufacturer may be able to
export its cars into a new market, increasing sales and market share, if tariffs in a
country are substantially reduced – the "opportunity" in this case.

Threats refers to factors that have the potential to harm an organization. For
example, a drought is a threat to a wheat-producing company, as it may destroy or
reduce the yield of the crop. Other common threats include things like rising costs for
inputs, increasing competition, tight labour supply and so on.

8.2 SWOT Analysis of Cadbury company

STRENGTHS
1.World leader.
-Cadbury is the world's pioneer in chocolates.
Known to have the best assembling and a wide
circulation channel, Cadbury has a nearness in at
least 200 nations.
2.Powerhouse brands and product
-Cadbury has numerous solid brands in its item
portfolio, for example, dairy drain, Bournvita, oreo,
five star and others. The item are superb items and
some of them are money dairy animals for Cadbury.
WEAKNESSESS
1.Give impact to health problems
-As chocolate contain a high level of fat and
sugar,this may lead to high population suffers from
diabetes,cholesterol etc.
2.Quality of the product
-cockroaches or other rodents were found in the
chocolate.It is inexcusable for a brand like Cadbury
to show such ignorance because such infected
chocolates should not leave quality control at all.

SWOT ANALYSIS

OPPURTUNITY
1.Rural markets
-Entering provincial markets and conveyance in
country markets can be an extensive open door for
Cadbury.
2.New taste
-Generally, consumer have a sweet tooth and they
every now and again get a kick out of the chance to
eat chocolates and in addition chocolate bars.Along
these lines, new tastes and new flavors are an open
door to cadbury.
THREATS
1.Cost and price increase
-as the price of fuel and other expenses
increase,distribution cost has gone up.Same goes to
procurement& manufacturing cost.Thus,this give
threat to Cadbury as it creates a gap for other
companies to enter.
2.Decreasing importance of festivals.
-Cadbury has been a trademark of a gift during
festival or occasions.When these festivals drop,the
buying of chocolate also drop.

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CHAPTER NINE: STRATEGY FORMULATION AND RECOMMENDATION

As the pattern these days, a great many people are wellbeing cognizant, accentuation
on regular sustenance and incline toward nourishment with less sugar, less salt, less oil, low
fat, low calories, and others. Nourishment with bring down sugar content is most favoured
because of weight and wellbeing concern. Cadbury items are for the most part sweet and
therefore many individuals can't make the most of Cadbury's items because of its sweetness.

Cadbury should turn out with some sugar free or low sugar chocolate items so as to
cook for those purchasers who expend low sugar or sugar free item because of the different
reasons. It can bring the joy and delight for these shoppers as they can expend the chocolate.
What's more, it can likewise convey a wellbeing cognizant message to the general population
that Cadbury items are solid and safe to be expended.

The company is also recommended to continue investing in the innovation of the

product since it is providing a competitive advantage for Cadbury. It must come up with more
innovative and interesting strategies and promotion tactics to uphold the sturdy brand
awareness so as to decrease the competitive rivalry.

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 APPENDICES

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