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- Cadbury
To make the right decisions and form effective strategies, a business needs to understand its strategic position. In doing so, one should do research and conduct analysis. Some useful tools to analyze the strategic position of a business are SWOT and PESTLE analysis. In this case study, we will analyze the strategic position of a famous British brand, Cadbury.
Introduction to Cadbury company
Cadbury is a British multinational confectionery company. It was founded in 1824 by John Cadbury who opened a grocery shop in Birmingham, England. Among other things in the shop, there was also cocoa and hot chocolate which were prepared by the founder himself, using a pestle and mortar. Currently, Cadbury offers many chocolates and drinks such as Cadbury Eggs, Cadbury Dairy Milk chocolates, Flake, Wispa, Twirl and Eclairs chocolates, and Cadbury Bournville drinking chocolate. Cadbury is now available in more than 30 countries and its top three markets are the United States, Australia, and India. It is fully owned by Mondelēz International which is one of the world's largest snack companies.
SWOT analysis of Cadbury
SWOT analysis is a tool that assists you in assessing the Strengths, Weaknesses, Opportunities, and Threats of an organization. It can aid you in obtaining insights based on the current position of the company and in figuring out possible outcomes to prevailing or potential problems.
Whereas strengths and weaknesses are internal factors, opportunities and threats are external.
Cadbury strengths
One of the company's biggest strengths is its strong brand. Despite numerous competitors such as Mars, Nestle, Kraft, Ferrero, Hershey and Lindt, Cadbury remains one of the world's leading confectionery brands and is recognizable all around the world. Having said that, consumers from countries from different parts of the world are familiar with Cadbury, its products and their taste.
Secondly, Cadbury has a global presence. Since Cadbury's products are available in many countries besides its home country of the United Kingdom, the company operates internationally. In doing so, Cadbury generates profit from numerous markets worldwide. Moreover, it is at low risk of failure as if it lost one of its markets, there would still be plenty to recover its losses from.
Lastly, Cadbury is owned by a wealthy parent company. It is fully owned by Mondelez International which is one of the world's largest snack companies. Besides generating high profits itself, in case of any adversity, Cadbury is additionally secured by Mondelez that gives it strong backing.
To sum up, Cadbury's strengths are:
- Strong brand
- Global presence
- Ownership by a wealthy family
Cadbury weaknesses
What makes Cadbury weak, from one aspect, is its limited product range. Although customers enjoy a variety of confectionery products, the company could expand its operations into developing and manufacturing other products, for example, food and beverages. Considering current food trends such as promoting a healthy diet and growing health awareness, the expansion could allow Cadbury to secure a stable position in the market.
Another aspect is that Cadbury tends to recall its products. There have been numerous cases when the company's products were recalled because of various reasons. For example, despite being labelled allergen-free, they contained nuts. Such issues can make consumers lose trust in the brand and negatively influence its reputation.
Finally, Cadbury does not have rights in the US. Cadbury chocolate in the United States is produced by the Hershey Company which acquired the right in 1988, which refrains the company from expanding in the American market. According to complaining customers, Cadbury chocolate produced by Hershey does not have the original Cadbury taste. This way Cadbury loses out on a big market, the US.
To sum up, Cadbury's weaknesses are:
- Limited product range
- Product recalls
- Lack of US rights
Cadbury opportunities
A significant opportunity for Cadbury is emerging markets. Whereas in the past, markets in regions such as East Asia and Africa did not play any role for big food brands like Cadbury, they are now becoming more and more attractive. As one of the effects of globalization and economic growth, the incomes of consumers from these regions are growing, which makes them able to afford Cadbury's products. Having said that, emerging markets encourage expansion which is associated with additional revenue streams.
As mentioned previously, one of Cadbury's weaknesses is its limited product range. Therefore, the confectionery company could expand its product range, which not only would solve the weakness but also allow further expansion. Introducing new products such as food and beverages would make Cadbury's offer more diverse and perhaps attract customers other than chocolate lovers. Not to mention additional revenue that would be a huge benefit of such an expansion.
To sum up, Cadbury's opportunities are:
- Emerging markets
- Product range expansion
Cadbury threats
Cadbury's biggest threat is probably the sugar tax. More and more governments propose to increase taxes on sugary products. Sugar taxes increase the costs of manufacturing and make Cadbury charge higher prices. This could discourage customers from purchasing its products and lead to a reduction in consumer demand, which would lower the company's profits.
Another threat to Cadbury is current food trends. Since Cadbury offers confectionery only, people who try to follow a healthy diet and who are aware of their health are unlikely to buy its products. Moreover, even if they do, it would not be happening on a daily basis. That is why current food trends could potentially reduce consumer demand for Cadbury's products.
To sum up, Cadbury's threats are:
SWOT analysis of Cadbury summary
SWOT analysis of Cadbury can be summarised in the table below:
Cadbury Strengths:- Strong brand
- Global presence
- Ownership by a wealthy family
| Cadbury Weaknesses:- Limited product range
- Product recalls
- Lack of US rights
|
Cadbury Opportunities:- Emerging markets
- Product range expansion
| Cadbury Threats: |
Cadbury Pestle analysis
PESTLE analysis is a strategic tool used to evaluate the external factors that may impact the business's operations. It includes six critical factors: political, economic, social, technological, legal, and environmental. By conducting this analysis, we can identify the opportunities and challenges that Cadbury might face due to external factors. We will examine each factor in detail and analyze how it can affect Cadbury's strategic position.
Since SWOT and PESTLE analysis both include the external impacts on a business, some factors mentioned in SWOT can be repeated in the PESTLE analysis.
Political environment of Cadbury
One of the political factors which could affect Cadbury is the already mentioned sugar tax. In general, any political changes and the implementation of any taxes, regulations and laws by governments in countries where Cadbury operates could have an impact on the company.
Because of Brexit a lot of the labor force from the European Union left the United Kingdom. As a result, Cadbury lost many employees.
Economic environment of Cadbury
As already mentioned, emerging markets are a great opportunity for Cadbury to expand. The economic growth of developing countries makes their citizens generate more income and consequently, customers being able to afford Cadbury's products.
Social environment of Cadbury
Drawing from the SWOT analysis, current food trends such as promoting a healthy diet and growing health awareness can increasingly affect Cadbury. If more and more people cut down on or even give up sweets, Cadbury's profits will slowly decrease. However, the brand can also adjust its products to fulfill customers' needs.
Cadbury has recently launched its vegan bar to supply the increasing consumer demand for plant-based products.
Technological environment of Cadbury
When it comes to technology and its development, this is a factor that has had and probably will continue to have a positive impact on the company. Technological developments such as the introduction of new machines and general automation has changed Cadbury's production and packing processes. It has not only made them quicker but also cheaper and more effective.
Legal environment of Cadbury
In general, legal factors are similar to political factors. For example, a legal factor affecting Cadbury is the sugar tax and any other taxes and regulations in the countries it operates in. Additionally, laws in some countries may require companies to keep certain standards of their products.
Foods produced in the United States are allowed to be more calorie-heavy than those in the UK.
Environment
The production of any good is associated with environmental pollution. Therefore, Cadbury has to pay attention to laws and policies in every country it operates in and adjust its processes to them.
The company might have to make its packaging recyclable to reduce waste or switch to renewable energy sources in its factories to reduce its carbon footprint.
Having analyzed Cadbury's strategic position, both SWOT and PESTLE analyzes identified some positives and negatives.
When it comes to SWOT analysis, there are many strengths and opportunities, and weaknesses and threats affecting the brand. Along with Oreo, Cadbury being a huge booster in Mondelez's revenue seems to be doing well. However, it is worth bearing in mind that some of the negatives are yet to come and can potentially pose a danger to the future existence of the company. Therefore, the company should use some of its strengths and take advantage of opportunities in order to reduce weaknesses and minimize threats.
Regarding PESTLE analysis, some of the external factors, especially the economy and technology, can have a positive impact on the company. Nevertheless, Cadbury should pay attention to any laws, taxes, regulations, political changes and social trends in order to keep prospering.
Cadbury Competitors
Cadbury faces competition in the global market from various well-known brands. Its competitors range from long-established companies to relatively new ones, all contending for a share of the market. Here are some of Cadbury's main competitors:
- Mars, a US-based multinational company that produces a wide range of confectionery products, including M&M's, Snickers, and Twix.
- Hershey's, an American chocolate and confectionery company that is renowned for its iconic Hershey's Milk Chocolate bars.
- Nestle, a Swiss multinational company that produces chocolate and other food and beverage products, including Kit Kat and Smarties.
- Ferrero Rocher, an Italian luxury chocolate brand that offers premium chocolates such as Ferrero Rocher and Kinder.
- Toblerone, a Swiss chocolate brand known for its distinctive triangular shape and unique combination of Swiss milk chocolate and nougat.
While each of these companies has its unique brand identity and product range, they all compete for a share of the global confectionery market, where Cadbury has maintained a strong presence for many years.
How Cadbury is different form its competitors?
Here are some ways in which Cadbury is different from its competitors:
- Unique Taste: Cadbury's unique taste has always been its selling point. The company has been known to use high-quality ingredients to create its signature rich and creamy chocolate taste.
- Product Range: Cadbury has a diverse range of products, from chocolate bars to candies, gummies, and baking chocolates. The company's broad product line allows it to cater to different customer needs and preferences.
- Company History: Cadbury has a rich history that sets it apart from its competitors. The company was established in 1824 and has been producing chocolate for almost two centuries. This longevity has helped Cadbury establish itself as a trusted brand in the market.
- Innovation: Cadbury is known for its innovative approach to product development. The company is continuously experimenting with new flavours and product variants, such as Dairy Milk with Oreo, to cater to the evolving tastes and preferences of its customers.
- Social Responsibility: Cadbury has a strong social responsibility agenda, including initiatives to reduce its environmental footprint, improve the lives of cocoa farmers, and promote sustainable sourcing practices.
SWOT Analysis of Cadbury - Key takeaways
- Cadbury is a British multinational confectionery company that offers many chocolates and drinks such as Cadbury Eggs, Cadbury Dairy Milk chocolates, Flake, Wispa, Twirl and Eclairs chocolates, and Cadbury Bournville drinking chocolate.
- SWOT analysis is a tool that assists you to assess the Strengths, Weaknesses, Opportunities, and Threats involved in any organization.
- Cadbury's strengths are its strong brand, global presence and ownership by a wealthy parent company, whereas weaknesses are limited product range, product recall and lack of US rights.
- Cadbury's opportunities are emerging markets and product range expansion, whereas its threats are sugar tax and new food trends.
- PESTLE analysis is used to examine the external environment that may have an impact on the business's operations. The analysis includes six factors: political, economic, social, technological, legal and environmental.
- Cadbury's main competitors are Mars, Hershey's, and Nestle,
- Cadbury's unique taste, diverse product range, innovative approach to product development, strong brand identity, social responsibility initiatives, and rich company history set it apart from its competitors.
Sources:
https://www.mondelezinternational.com/Our-Brands/Cadbury
https://www.cadbury.co.uk/
https://www.ft.com/content/1cb06d30-332f-11e1-a51e-00144feabdc0
https://www.marketingweek.com/kraft-completes-takeover-of-cadbury/
https://www.marketingweek.com/cadbury-ditches-free-the-joy-in-favor-of-tastes-like-this-feels-as-it-launches-new-brand-campaign/
https://www.food.gov.uk/news-alerts/alert/fsa-aa-95-2019#:~:text=Mondelez%20UK%20is%20recalling%20Cadbury,with%20an%20allergy%20to%20nuts .
https://www.businessinsider.com/cadbury-chocolate-different-in-us-vs-uk-evidence-2018-5?r=US&IR=T
https://www.kerry.com/insights/kerrydigest/2018/the-state-of-sugar-and-health-taxes-around-the-world
https://www.confectionerynews.com/Article/2021/04/28/Cadbury-and-Oreo-brands-boost-Mondelez-s-revenue-in-first-quarter#:~:text=With%20net%20revenue %20to%20%247.24,of%20Give%20%26%20Go%20and%20Hu.
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