PROJECT REPORT OF CORPORATE STRATEGY

CASE STUDY : CADBURY

CORPORATE STRATEGY:-

There are four key aspects of corporate strategy.

The first has to do with the strategic management of the current set of businesses in

the company’s portfolio and the allocation of resources among them. The second

related aspect is the creation of shareholder value through corporate strategy.

These first two aspects—portfolio techniques and value-based planning—will be

covered in this part. The third aspect has to do with the realization of synergies

across businesses and the identification and management of direct linkages

between businesses. The fourth aspect is the strategy of diversification, whether

through acquisition or internal development.

SIGNIFICANCE:-

Roman philosopher Seneca is quoted as saying: "If a man does not know

what port he is steering for, no wind is favorable." The same applies to

organizations and corporations. The best product, services, goals and management

teams are of little use without a corporate strategy. Without a corporate strategy it

is impossible for a corporation to have long term plan or method to achieve

objectives or goals, which are key to any type of strategic planning.

CORPORATE STRATEGY IDENTIFICATION:-

        When firms expand into a variety of businesses, they frequently transfer

successes in the initial business to the subsequent businesses. For example, when

Bic Pen Corporation expanded beyond ballpoint pen production into disposable

cigarette lighters, it used the same plastic-injection molding technology and similar

distribution channels to sell what was essentially another mass-marketed,

disposable consumer item. The additional learning required to design and produce

this new product was relatively low, given that the same technology was employed

in the factory: plastic was injected into a mold to form a casing, into which

dispensable liquid was poured, and metal parts were attached to dispense the fluid.

        When firms adopt similar business strategies in different lines of business,

they have adopted what we might term a generic business strategy across all their

businesses. Hewlett-Packard and Texas Instruments are two firms that compete in

various segments of the electronics industry, that employ generic strategies in

many of their product lines, and whose generic strategies are quite distinct

        Using generic strategies to build a corporation from a variety of businesses

implies the cloning of an original strategy onto new businesses. This, of course, is

only one means of extending the boundaries of the corporation into new domains.

To the extent that a corporation expands by building upon a core business and the

set of skills embodied in that business, we can say that it is realizing synergies

across its businesses.

        At the other extreme are pure conglomerates, which are built through the

acquisition of unrelated business. It was not unusual during the 1960s and the early

1980s for corporations to build conglomerates based on the theory that the

acquisition of unrelated businesses in countercyclical industries would smooth out

the cash flows for the whole corporation. This led to the development of a variety

of portfolio planning techniques for managing corporate strategy by such firms as

the Boston Consulting Group and McKinsey and Company. These techniques

typically plotted the variety of businesses on a two-dimensional grid, with market

position or market share on one dimension and industry growth or attractiveness on

the other. The theory was that high-market-share businesses were likely to be

lower-cost manufacturers than smaller-share businesses, simply as a result of

volume or scale economies, which allowed those businesses to realize higher profit

margins and greater cash throw-off per dollar of sales. With a portfolio of

businesses, the cash throw-off from the better-positioned firms could be used to

fund the growth of more promising—perhaps smaller-market-share—businesses in

the portfolio.

PLANNING OF CORPORATE STRATEGY:-

Systematic process of determining goals to be achieved in the for eseeable

future. It consists of:

(1) Management's fundamental assumptions about the future economic,

technological, and competitive environments.

(2) Setting of goals to be achieved within a specified timeframe.

(3) Performance of SWOT analysis.

(4) Selecting main and alternative strategies to achieve the goals.

(5) Formulating, implementing, and monitoring the operational or tactical

plans to achieve interim objectives.

BENEFITS:-

A corporate plan is created to help reach a desired

result in a pre-determined period of time. Business owners can sometimes feel that

corporate strategy is not necessary in order to achieve their corporate goals.

Understanding the benefits of using a corporate strategy will help business owners

and managers appreciate the value of the invested time and money into a

comprehensive plan.

BAD BUSINESS STRATEGIES :-

Not all corporate strategies are effective. Some strategies can even hurt a business

if done the wrong way. For example, a well-known corporate strategy is to

promote your business by taking advantage of social networks, such as Facebook

and Twitter. However, this strategy is not effective if the business owner chooses

to spam social networks when attempting to promote the business, since this will

harm the business' reputation and the business will not receive many customers.

TYPES OF CORPORATE STRATEGY :-

The three main types of corporate strategies are growth, stability, and renewal.

a. Growth - A growth strategy is when an organization expands the number of

markets served or products offered, either through its current business(es) or

through new business(es). Because of its growth strategy, an organization may

increase revenues, number of employees, or market share. Organizations grow by

using concentration, vertical integration, horizontal integration, or diversification.

b. Stability - A stability strategy is a corporate strategy in which an organization

continues to do what it is currently doing. Examples of this strategy include

continuing to serve the same clients by offering the same product or service,

maintaining market share, and sustaining the organization's current business

operations. The organization does not grow, but does not fall behind, either.

c. Renewal - When an organization is in trouble, something needs to be done.

Managers need to develop strategies, called renewal strategies, that address

declining performance. The two main types of renewal strategies are retrenchment

and turnaround strategies.

HISTORY (CADBURY)

In 1824, John Cadbury opened a shop in

Birmingham. This one-man business, trading

mainly in Tea & Coffee was to be the

foundation of Cadbury Limited. For over 100

years Cadbury was a family business. In 1943

non family directors were appointed. In 1847,

the enterprise had prospered to a large factory

in Bridge Street, Birmingham. John Cadbury took his brother Benjamin into

partnership and the family business became Cadbury Brothers Birmingham. The

business moved to Bourneville after outgrowing the Bridge Street Factory. The

Workforce had risen up to 200 after 32 years at Bridge Street. After the death of

two brothers in 1899, the company was privatized. It entered the era of scientific

management; it introduced new ideas for their department like: Advertisement &

Cost Analytical Laboratories & sales department

Education & Training for Works Committee Medical Department employees

On 2nd February, Kraft Foods took over 71% shares of Cadbury. They acquired it

totally. But still Cadbury was on top in the market. This acquisition did not

changed people’s mind and their craze for Cadbury Dairy Milk.

Cadbury began its operation in 1948 by importing chocolates and then re-packing

them before distributing it in the Indian market. After 62 years, it is having five

companies at Thane, Induri (Pune),

Malanpur (Gwalior), Bangalore, Baddi

(Himachal Pradesh) and 4 sales offices

in (New Delhi, Mumbai, Kolkata and

Chennai). The corporate office is in

Mumbai.

The company’s main purpose is “Working together to create brands people love"

capture the spirit of what we are trying to achieve as a business. We collaborate

and work as team to convert products into brand.

Simply, “we spread happiness”!

Currently Cadbury India operates in three sectors viz. Chocolate Confectionery,

Milk Food Drinks and in the Candy category.

In the Chocolate Confectionery business, Cadbury has maintained its undisputed

leadership over the years. Some of the key brands are Cadbury Dairy Milk, 5 Star,

Perk, Éclairs and Celebrations. Cadbury enjoys a value market share of over 70%

- the highest Cadbury brand share in the world! Cadbury is the "gold standard" for

chocolates in India. The pure taste of CDM defines the chocolate taste for the

Indian consumer.

In the Milk Food drinks segment our main

product is Bourn vita - the leading Malted

Food Drink (MFD) in the country. Similarly

in the medicated candy category Halls is the

undisputed leader.

The Cadbury India Brand Strategy has

received consistent support through simple but imaginative extensions to product

categories and distribution. A good example of this is the development of Bytes.

Crispy wafers filled with coca cream in the form of a bagged snack, Bytes is

positioned as "The new concept of sweet snacking". It delivers the taste of

chocolate in the form of a light snack, and thus heralds the entry of Cadbury India

into the growing bagged Snack Market, which has been dominated until now by

Salted Bagged Snack Brands. Byte was first launched in South India in 2003.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation in

India. For over two decades, we have worked with the Kerala Agriculture

University to undertake cocoa research and released clones, hybrids that improve

the cocoa yield. Our Cocoa team visits farmers and advises them on the cultivation

aspects from planting to harvesting. We also conduct farmers meetings & seminars

to educate them on Cocoa cultivation aspects. Our efforts have increased cocoa

productivity and touched the lives of thousands of farmers.

Cadbury Milestones

The Cadbury story is a fascinating study of industrial and social developments.

From a one man business in 1824, Cadbury has grown to be one of the world's

largest producers of chocolate. A small family business developed into an

international company and the high standards of the Cadbury brothers were

combined with the most sophisticated technology, skills and innovation

Vision

The governing objective for Cadbury India is to deliver Superior

Shareholder value.

Cadbury in every pocket.

Sustain growth of Cadbury’s market through aggressive product

development.

Focusing on cost competitiveness & productivity in operations and

innovative utilization of assets.

Investing to develop people.

Mission

“To provide customers with a tempting and exquisite taste” as enticing treats

means a mouth watering treat which is simply irresistible.

“Cadbury means quality” this is the promise of Cadbury. Its reputation is to

built upon quality. Its commitment to continuous improvement will ensure

that promise.

CADBURY PRODUCTS:-

Chocolate

Cadbury Dairy Milk

Cadbury Celebrations

Bournville

5 Star

Perk

Gems

Toblerone

BRAND ELEMENTS:-

Dairy Milk has been meticulously built around the world by Cadbury. It has been

able to sustain a strong position in the market. There are many branding elements

which have resulted into consistent result of its success. In India and across the

world, the only chocolate wrapped in Purple with the logo of Cadbury written on

it. Color of all other products of Cadbury like Gems which is so colorful.

Packaging which introduces slight of milk splash shows the relation of milk with

Cadbury. Insignia Logo which comes on the packaging in bold vintage Dairy font

in white which also shows the relation of milk with the product. Logo Not only the

above three, But there are many more elements due to which the consistent

Branding of Dairy Milk is so very popular. Its different Advertisements, its punch

lines etc… It has always kept a strong association with Milk, with slogans such as

“a glass and half of full cream milk in every half pound.” And also advertisement

which featured a glass of milk pouring out and forming the Dairy Milk bar. Also

the ad campaigns are also the important element of Dairy Milk. It made chocolate

an eating habit among the consumers, especially the adults. Long back it was a

belief that chocolate is only for kids. But Dairy Milk changed this belief. Also they

changed the trend of Sweets (Mithai) during the occasions like Diwali, New Year

etc… Dairy Milk brought a new trend that whether any occasion, Dairy Milk is

best for all. Tolani

It also gave some famous dialogues from the ads which people remember always.

They were also the core brand elements of Dairy Milk. Let us see them below: The

Real Taste of Life- A girl Dancing on Cricket Field

• Khane walo ko Khane ka Bahana Chahiye

• Kuch Meetha Ho Jaye

• Pappu Paas ho Gaya

• Aaj Pehli Tareekh Hai

• Shubh Aarambh

All these above dialogues were form the very famous and popular ad’s of Dairy

Milk.By this ad they wanted to covey to the people that for eating Dairy Milk they

do not haveto wait for any occasion. They can just have it. Whether they are happy

or Sad, But Dairy Milk can be taken in any of the mood.

SOME INTERESTING FACTS

Cadbury Dairy Milk emerged as the No. 1 most trusted brand in Mumbai for the

2005 edition of Brand Equity's Most Trusted Brands survey. Cadbury Dairy Milk

& Bournvita have been declared a "Consumer Superbrand" for 2006-7 by

Superbrands India.

During the First World War, Cadbury Dairy Milk supported the war effort. Over

2,000 male employees joined the armed forces and Cadbury sent books, warm

clothes and chocolates to the front.

MARKET SHARE

Cadbury Dairy Milk has launched some very creative advertisements in India over

the years. More than innovative, the ads have been very relevant to the Indian

ethos. The ‘shubh aarambh’ ads which captured the Indian tradition of having

something sweet before an important occasion or ‘kuch meetha ho jaye’ which

associated Cadbury Dairy Milk with celebratory occasions. Recently, Cadbury

Dairy Milk has been airing the ‘meethe mein kuch meetha ho jaye’ campaigns

which have found a lot of favour with the audience. The ads, in typical Cadbury

style, are very heartwarming and creative.

If we look through the years, we

can clearly see that Cadbury is

doing everything possible to

maintain a strong hold on the

Indian chocolate market. While it

remains a dominant leader with

over 70% of the market share, this

has eroded over the years as

competitors like Nestle, Amul and CAMPCO have made strong forays. There was

a time before and during the early 90s when Cadbury’s enjoyed an even higher

market share. This was the time when chocolates were very clearly positioned for

children. However, with the entry of global giant Nestle, two things happened.

Firstly, there was a sudden spurt of competition for Cadbury. But more

importantly, the market began to grow at a faster pace. Cadbury seized this

opportunity and started creating advertisements that were targeted towards the

‘kids in all of us’. This was a very smart move as they already had the children’s

segment all tied up. Moreover, the children of the 90s have now grown up, and

Cadbury still offers them reasons to eat Dairy Milk.

Hence, while their market share has eroded by a few points, Cadbury has

significantly improved its revenues in absolute terms by evolving a long term

advertising plan and one that is very relevant to the Indian context. With

predominantly Indian themes, special moments (remember the girl dancing on the

cricket field) and soulful music, Cadbury has really managed to connect with the

audience. The recent ‘meethe mein kuch meetha ho jaye’ campaign is simply a

continuation of this strategy to expand the market. In conclusion, Cadbury Dairy

Milk has managed to take a simple chocolate bar and create numerous associations

with it over the years. It has built up different audiences over the years, and to

every audience it offers a different meaning but one that is very relevant.

COMPETITOR’S ANALYSIS

In Indian Market, the main players in the confectionery market are Cadbury,

Nestle, Candico, ITC and Parle. Let us see the competitors of Cadbury Dairy Milk

in detail below Company Founded in Brand Portfolio Kraft Foods 1903 Cadbury

Dairy Milk & Variants, Éclairs, Bourn vita etc…Nestle 1860 Kitkat, Smarties

Ferrero 1940 Rocher, Raffaelo, Nutella Amul 1945 Milk Chocolate, Fruit and Nut

chocolate Candico 1997 Loco Poco Gum, Big Bubble ITC 2002(Confectionery

Minto and Candy man Segment)Parle 1929 Melody, Mango Bite, Poppins, Kismi,

Orange Candy.

CUSTOMER-BASED BRAND EQUITY PYRAMID

Acquisition of Cadbury by kraft:-

Reasons for kraft acquisition of cadbury:

Cadbury offered kraft greater access to sharp growth in emerging markets

making it world’s leading chopclate sweet and chewing gum brand,

Kraft expected a better return

Knowledge sharing.

Increase it economic scale and scope.

It wants to be the leader in confectionery items.

Cost optimization

Increase its distribution channels.

Improve its portfolio mix.

Timeline of the Takeover:-

AUG-28-Initial bid at 75 pence per Cadbury share. The kraft bid was 300p

in cash and 0.2589 new kraft shares for each Cadbury share.

SEP 07- Kraft goes public with bid. , but its value has slipped to 745p per

cadbury share or 10.2 billion pounds. Cadbury rejects it as undervaluing the

group and its prospects.

Sep 16- Warren Buffet, the worls’s second richest man and a leading share

holder in kraft with a 10 percent stake, warned the US food group not to

overpay for Cadbury. As iin had the disadvantage of using an undervalued

stock.

Sep 21-Cadbury asks the UK takeover Panel to make a “put up or shut up”

request to kraft, giving it a a timeframe top come up with a formal bid or

walk from the Cadbury for six months.

Sep 23-Cadbury CEO Todd Stitzer is reported as a Bank of America/Merill

lynch conference as saying he was potential benefits from a kraft deal and

diacussed valuations with investors,according to tha Bank of America/Marril

Lynch note from the conference.

Sep 25-cadbury stizer says does not believe kraft’s offer for his company

made strategies or financial sense.

Sep 30-UK takeover or panel rules kraft has until 1700local time on Nov 9

to make a formal offer or walk away for six months.cadbury repeats its

rejection of the approach.

Oct 21: Cadbury posts upbeat third-quarter trading with underlying sales Up

to 7 percent as it raises its 2009 target for sales and profit margin growth.The

shares fail to react as a counter bidder is seen increasingly unlikely.

Oct 22: Nestle and Hershey report third-quarter results but neither mention

any bid for Cadbury, with Nestlé’s focus on increasing its share buyback

programme.

NOV 03 – Kraft third-quarter results disappoint investors with weaker-than-

expected revenue and as it cut its 2009 sales forecast. CEO Rosenfeld says

she will not overpay for Cadbury.

NOV 09 – Kraft formalizes its bid at the same terms as the original

approach -- 300p in cash and 0.2589 new Kraft share for each Cadbury share

-- valued at 717p, but further falls in Kraft shares and the dollar made it

worth around 708p

NOV 23 – Cadbury shares hits all-time high of 812-1/2 pence on speculation

of a battle between Kraft and rivals for the British chocolate maker.

DEC 04 – Kraft posts its offer document to Cadbury shareholders starting

off a two- month fight for the British group UK takeover rules. Kraft says its

bid is now worth 713 pence a share or 10.1 billion pounds.

Dec 14-cadbury publishes its defence document ,urging its shareholder to

reject the kraft’s offer.

Jan 05- kraft sweetens bid with 60p more cash but cuts shares offer to keep

price unchanged.

Jan 12-cadbury gives is final official defense against kraft bid reporting

robust trading and rejecting the bid on valuation .ferrero pulls out,say source

close to close the deal.

Jan 15-Decline for Cadbury to issue trading update.

Jan 19-cadbury excepts kraft’s offer of GB £ 11.7 Billion ending months of

corporate battle valuing each Cadbury share at 840 pence.

Feb 05-kraft had secured over 75% of the shares thus finalizing the deal.

Mar 08-cadbury shares was de-listed.

RECOMMENDATIONS

Maintain dominance in chocolate segment.

Many new players are trying to enter Indian market so it should formulate

new strategies so as not to lose market share.

New channels such as gifting, child connectivity and value for money

offering to be the key growth drives.

Grow volume sales at least 20% p.a. over the next years.

One new major product launch every year.

FDI will bring in many new products and competitors so Cadbury will have

to maintain there strong market distribution channel so as not to lose market

share.

They need to maintain high standards and should be careful that there

product remains sterile. And is not effected by insects.

They should change packaging of Dairy Milk.

Conclusion

Will lose market share with globalization (a la Maruti) but will remain brand

leader.

Pest Analysis

P: since the budget range is decontrolled, no political effects are envisaged.

E: 1) increasing per capita income resulting in higher

Disposable income

2) Growing middle class/urban population – increase in Demand

3) Low cost of production – better penetration

S: 1) Per capita consumption expected to increase – fashion

2) Increasing gifts culture – increase in demand

3) Lower cholesterol than “mithais” (sweet meat) – Substitute demand

T: Will have to reinforce technology to international levels once India is a “free”

economy.

BIBLIOGRAPHY

www.google.com

www.wikipedia.com

www.cadburyindia.com

www.asnwers.com

www.youtube.com