CADBURY

Cadbury

Cadbury's Exit from the Soft Drinks Market - A strategic move?

Introduction

I am going to investigate the current marketing mix and the strategies used by Cadbury's.

This paper discusses Cadbury's Exit from the Soft Drinks Market, as a strategic move. This paper will answer the folowing questions; Q1 Discuss the role of Ansoff's directional policy matrix and the BCG matrix (Boston box) in assessing mergers, acquisitions and divestments.

Q2 Evaluate Cadbury Schweppes 2003 corporate decision to demerge its confectionary and drinks businesses, taking account of the main factors. (environmental , internal capabilities, stakeholders views) which contributed to the decision?

Q3 Evaluate the Schweppes Australia disposal from the both Cadbury's and Asahi's points of view. Make sure you consider strategic suitability, acceptablility and feasilibity.

Q.1 Boston Consulting Group Matrix (BCG)

This technique is particularly useful for multi-divisional or multi- product companies. The divisions or products compromise the organisations business portfolio. The composition of the portfolio can be critical to the growth and success of the company. The BCG matrix considers two variables namely. N MARKET GROWTH RATE N RELATIVE MARKET SHARE The market growth rate is shown on the vertical (y) axis and is expressed as a %. The range is set somewhat arbitrarily. The overhead shows a range of 0 to 20% with division between low and high growth at 10% (the original work by B Headley Strategy and thebusiness portfolio Long Range Planning Feb 1977 used these criteria). Inflation and/or Gross National Product have some impact on the range and thus the vertical axis can be modified to represent an index where the dividing line between low and high growth is at 1.0. Industries expanding faster than inflation or GNP would show above the line and those growing at less than inflation or GNP would be classed as low growth and show below the line. The horizontal (x) axis shows relativemarket share. The share is calculated by reference to the largest competitor in the market.

Let us shortly explore that fact that strategy does have an impact on PMI, for example, with one tool of strategy development: the Ansoff matrix (for a simplified model see Figure 5, for the original model see Ansoff, 1987). This tool is relatively old and simplistic, but quite easy to put to use and therefore might be quite handy in a first step to develop a company's strategy.

The Ansoff matrix explores the choices of a company in a framework of existing vs. new markets and existing vs. new products. Starting with the upper left segment in an existing market and existing product environment (market penetration), this relatively low risk strategy aims towards generating additional growth with selling existing products in existing markets in order to increase their market share and an increased product usage of existing customers. This can of course also be achieved by acquiring competitors, where the company will rather aim for solid consolidation and high synergy realization and therefore most likely will do best when choosing the absorption or best of both worlds approach of ...