SWOT Analysis and Report for Cadbury

Schweppes - Business Research Paper

SWOT Analysis and Report for Cadbury Schweppes - Business Research Paper
Cadbury Schweppes was founded in the year 1831 by John Cadbury. Its revolutionized
cocoa started processing from the year 1866 onwards. This company originally

merged with Schweppes in 1969. Currently, this successful company is employing

approximately about 43,000 people worldwide. Today, Cadbury Schweppes is the world's
fourth biggest supplier of chocolate and sugar confectionery.

One of its products, Dairy Milk was introduced in 1905, and has become the most
successful moulded chocolate in UK history and the basic ingredient for many other
Cadbury products. 95 years later, Dairy Milk is one of the world's most famous brand
names and the company's leading chocolate bar by revenue.
Sales from Cadbury's Dairy Milk alone are estimated at over £135 million for 1995.
Cadbury considers its success is based on three factors: quality, value for money and
good advertising.

Aim: Apply SWOT analysis to Cadbury’s current situation and its position to enter a
foreign market
It is important to investigate on the internal and external environmental forces for the
Dairy Milk in France. Relevant organizational and industrial information is required for
the development of a SWOT analysis. The analysis of the environment and the
consideration of the situational factors when designing marketing planning, is critical as
it would allow Dairy Milk to capitalize on organizational strengths, minimize any
weaknesses, exploit market opportunities and avoid any threats.
Strengths
Cadbury would realize several possible advantages in going abroad. By penetrating a
foreign market the company could:
• Maintain a stable growth of a company by maximizing the use of its production
capacity and thus increase economies of scale and scope.
• With its brand name, Cadbury could counterattack the competitors it faces in the
domestic market by attacking their domestic market.
• Keep up with the financial strength by increasing its sales and profit, indeed the foreign
market could present higher profit opportunities than the domestic products.
• Acquisition rules in UK, reduce its dependence on the UK market and therefore
diversify its market specific risks.
• Overall, Cadbury has been successful through the new products (development) it has to
offer.

Weaknesses
Generally, as Cadbury has a weak position in the US market, thus, need to change its
target to a different location. Besides its lack of distribution network, it also has a small
total of market share altogether. Therefore in order to market the product in France
successfully, Cadbury would have to find out on how it can improve in order to have
great performance. It is also good to find out what are the situations that they could avoid
in order to be successful. In order to market products the following issues should be
considered:
• Total French production of chocolate bars and confectionary, which has increased by
24.5 per cent between 1988 and 1991, has slowed down in more recent years, partly due
to the economic slump.
• Consumption of chocolate products, which has been growing until 1991, remained
fairly static in 1992, reflecting a fall in demand due to the gloomy economic situation.
• Sales of milk chocolate bars, which account for 24 per cent by volume of total sales of
chocolate bars, decreased by 3.7 per cent.

Opportunities
Through its confectionary product line, least to mention is to build viable positions in
prioritized markets through organic growth and acquisition. Besides what is mention
above, Cadbury has other opportunities to have market development in Russia and China.
The Timeout Candy Bar market is growing worldwide. This company is also at the same
time distributing its products via the internet – Develop Gourmet Line. Besides
developing the “Low Calorie” line of chocolates and sweets, they also offer the “Sugar
Free” sweets line. This has thus opened a completely Cadbury world in US.
Therefore in order to get the product into a new foreign market, France, Cadbury would
have good opportunities in store for them. Opportunities are as follows:
• In terms of political issues, France is an advanced parliamentary democracy and
politically is highly stable. The political power is centralized in the parliament, the Prime
Minister and the President. The country specific risk is negligible. France is a member of
the European Community and has excellent relations with the UK.
• Economically, France has the fourth largest Gross Domestic Product in the world. It is a
first-world advanced market based economy. Despite a recent recession, its economy is
very strong and also highly deregulated in line with European Union policies. France
represents a very large potential market with a high standard of living and purchasing
power. The economy is highly open internationally and conducts a high percentage of
trade within its European partners.
• With regards to its social situation, France has a broadly central/southern European
culture which has many similarities with the UK. However cultural differences do exist
and these must be considered when planning for the market.
• France has a high technological level and a lot of industries are based in the
technological sector. This technological base constitutes one of France’s competitive
advantages.

Threats

Due to its confectionary products, it is very important for Cadbury to be aware of any
present or upcoming threats. The company should take note of the changes in the
consumer’s buying trend. It is perceived that consumers might shift from chocolates to
“Healthy” snacks. If this were to happen, there might be a poor product development
which would tarnish the Cadbury’s name. Needless to say price wars would occur
between its competitors like Mars, Hershey and Nestle. Due to the abovementioned, there
would be seasonal sales slumps all year round which will reflect to an increase in cost of
the raw materials needed. Cadbury would then have to be prepared for growth of small
local gourmet chocolates and regional candy manufacturers.

However if Cadbury were to market its products in France, the company has to be aware
of the risks it could encounter. It might:

• Not understand foreign customer preferences and fail to offer a competitively attractive
product;
• Not understand the foreign country’s business culture or know how to deal effectively
with foreign nationals;
• Underestimate foreign regulations and incur unexpected costs.
• Threat of entry due to the competition growing through acquisition.

Obviously any foreign entry decision must take the abovementioned elements into
account.

The Ansoff matrix

Product

Present New

Market
Penetration

Product
Development

Market
Development
Diversification

Because Cadbury is introducing its brand name to a new region, in relate to the Ansoff
matrix above, it can be argued that it is under market development. Although the
company has come up with a few current products, it is targeting to a new market.
Despite the competition against the rest (Hershey’s, M&M Mars and Nestle), Cadbury
has to have the bargaining power of the buyers in order to be competitive in the market.
Although the company need to know that substitutes are not a major concern. Finally, to
conclude that Cadbury is in the Market Development, they would have to have the
bargaining power of suppliers as they are not in power position due to commodity like
nature. And also to be aware of the cost of packaging materials as it has increased over
time.
There are a few strategic recommendations that Cadbury could come up with in order to
market its products not only in the region of France, but also to market it products
successfully. After much discussion on the position of the product currently, the
following recommendations could be suggested:

• Increase Frances Involvement by implementing a pound campaign to Launch Timeout

in France which has already been done in America.
• Increase Marketing and Promotion globally by marketing products in emerging
markets.
• Focus on non-chocolate development/acquisitions by developing line of non-chocolate
candies.
• Develop Novelty/Specialty markets—Gourmet Line on Internet, by developing gourmet
line to be distributed via internet.
• Aggressive new product development—low calories, sugar free and sweets. This has to
be done by researching and developing new products/ joint venture.

Conclusion

In order for Cadbury to reach the peak of achievement, the company would have to stress
on the global growth of the product. It can be a risk to market it in the region France, but
with careful study of the target market segments and its economic position, it can be an
attainment. Cadbury should also look into other countries like the Asia Pacific in order to
market its products popular globally. But then again, careful considerations to look at its
major competitors and to obtain the rules and regulations of a certain country are equally
important.

Another strategic plan would be a joint venture. Since Cadbury Schweppes is a company
that produces not only chocolates but also drinks, it should market a new product and
maybe get into the product development or get into a total diversification. However, need
to bear in mind that it is not as easy as marketing Cadbury’s current products. It took
Cadbury almost 165 years to reach to its successful peak today.

Needless to say that in order for the company to market its products globally, it is
understood that heavy capital and marketing expenditures have to be sacrificed. Cadbury
has somehow gone through this process therefore throughout the past decade; it shouldn’t
be an issue that would raise a problem.

Last but not least not to forget that Cadbury should need to strengthen the brand name of
its products. This is important due to the fact that since it is popular in the UK and US,
the profile of the product should be maintained and not deteriorates.

References

Anonymous (2002), History of Cadbury, www.cadbury.com.au

Anonymous (2002), SWOT analysis – Understanding your Strengths, Weaknesses,
Opportunities and Threats, Mindtools website - www.mindtools.com
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Danca, C. A. ‘SWOT analysis’, website – www.stfrancis.edu

Developing your Strategic SWOT Analysis.” Austrainer. (1999) website -

www.austrainer.com

Ferell, O., Hartline, M., G., Luck, D. (1998) Marketing Strategy. Orlando, FL: Dryden
Press.

“Swoting Your Way to Success” BHC. (1999), website – www.bradhuckleco.com.au

Vrontis, D & Vignali, C (2001) ‘Dairy Milk in France – A marketing investigation of the
situational environment’, International Journal of Operations & Production Management,
Vol 103 No 4