Cadbury SWOT Analysis

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Cadbury Plc

Strengths

  • Cadbury is the largest global confectionery supplier, with 9.9% of global market share.
  • High financial strength (Sales turnover 1997, £7971.4 million and 9.4%)[1]
  • Strong manufacturing competence, established brand name and leader in innovation.
  • Advantage that it is totally focused on chocolate, candy, chewing gum, unique understanding of consumer in these segments.
  • Successfully grown through its acquisition strategy. Recent acquisitions, including Adams, 2003, enabled it to expand into important markets like the US market.

Weaknesses

  • The company is dependent on the confectionery and beverage market, whereas other competitors e.g. Nestle[2] have a more diverse product portfolio, where profits can be used to invest in other areas of the business and R&D.
  • Other competitors have greater international experience - Cadbury has traditionally been strong in Europe. New to the US, possible lack of understanding of the new emerging markets compared to competitors[3].

Threats

  • Worldwide - there is an increasingly demanding cost environment, particularly for energy, transport, packaging and sugar. Global supply chain in low cost locations[4].
  • Competitive pressures from other branded suppliers (national and global). Aggressive price and promotion activity by competitors - possible price wars in developed markets.
  • Social changes - Rising obesity and consumers obsession with calories counting. Nutrition and healthier lifestyles affecting demand for core Cadbury products.[5]

Opportunities

  • New markets. Significant opportunities exist to expand into the emerging markets of China, Russia, India, where populations are growing, consumer wealth is increasing and demand for confectionery products is increasing.
  • The confectionery market is characterized by a high degree of merger and acquisition activity in recent years. Opportunities exist to increase share through targeted acquisitions[6].
  • Key to survival within the FMCG market is increasing efficiency and reducing costs. Cadbury Fuel for Growth[7] and cost efficiency programmes seek to bring cost savings by: 1) Moving production to low cost countries, where raw materials and labour is cheaper ii) reduce internal costs - supply chain efficiency, global sourcing and procurement, and wise investment in R&D.
  • Innovation is key driver. To respond to changes in consumer tastes and preferences - healthier snacks with lower calories need to be developed. R&D and product launches have led to sugar-free & center filled chewing gum varieties and Cadbury premium indulgence treat. Low-fat, organic and natural confectionery demand appears strong.

[1] http://www.hoovers.com/cadbury/–ID__41767–/freeuk-co-factsheet.xhtml

[2] Nestle Annual Report, 2007

[3] Cadbury Annual Report, 2007

[4] International Business 6e by Charles W. L. Hill, Mcgraw Hill

[5] Department of Health, 2005

[6] Jobber, (2006), Principles and Practices of Marketing, 3rd Edition

[7] Cadbury Annual Report, 2007

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