Dr. Omar Ramzy
July 16, 2009
Table of Contents
Dealing with Globalization6
International Trade Operations10
Strategy and the Firm11
Value Chain Activities15
Incentives and Controls29
Competition, Strategy and Structure30
Entry Strategy and Strategic Alliances32
Cadbury is the world’s largest confectionary producer; it is also a beverage industry. Based out of London, United Kingdom, it operates worldwide with global production, marketing, and sales functions. The company was founded in 1824 when entrepreneur John Cadbury vended tea, coffee, and chocolate in the UK. He later established Cadbury Brothers Limited, which expanded operations to British occupied India, making Cadbury one of the first multinational companies in the confectionary industry. Cadbury’s many famous products last to this day. Cadbury’s world-known Dairy Milk product celebrated its centennial anniversary in 2005. Cadbury entered the Egyptian market in 1991. The Egyptian market was an opportunity for Cadbury considering its consumers’ attractive preferences and tastes for confectionary products. Moreover, the Egyptian market possessed the necessary infrastructure and production capacity for Cadbury to expand its business in Egypt. Cadbury began its operations and sales in Egypt with the launch of three products, Cadbury Dairy Milk, Cadbury Dairy Milk Krisp, and Cadbury Dairy Milk Hazelnut, its three main global products. Cadbury gradually expanded production through various acquisitions, beginning in 1997 by acquiring Egyptian-owned BimBim, a local business established in 1977. Cadbury’s motive for acquiring Bim Bim was to gain market share, appeal to Egyptian consumers, and to acquire the highest end local Egyptian confectionary company. Moreover, realizing that the Cadbury is perceived as a high-end product by Egyptians, it was essential for Cadbury to appeal to Egypt’s middle class market, where BimBim was the market leader. The other major confectionary company Cadbury acquired was Adams, the major producer of Halls, Chicklets, and Clorets, forming Cadbury Adams. These acquisitions tremendously aided Cadbury in accessing the Egyptian market.
Dealing with Globalization
Despite being a confectionary and beverage company, Cadbury realizes that it has the market edge in its confectionary business and thus has separated and discriminated between its two industry operations. Since it is the market leader in the confectionary industries of many nations, Cadbury has globalized its confectionary (mainly chocolate industry), while localizing its beverage industry to the U.S. alone, known as the Dr. Pepper Snapple Group, Inc. Globalization has forced Cadbury to cut costs in order to remain competitive. This has result been outsourcing production from its headquarters in the UK to other countries. The most recent instance of this outsourcing has been Cadbury’s decision to close its production facilities in Keynsham, England to production Poland. The result has been the controversy of 500 to 700 jobs lost in England. Contrarily, Cadbury’s operations abroad have created a plethora of opportunities. Cadbury has launched an initiative with a Ghanaian cooperative to enhance the livelihoods of 40,000 cocoa farmers. Cadbury’s initiatives are in-line with fair-trade agreements enforced by major trade institution Fair-trade Foundation. This agreement will increase the incomes of 40,000 Ghanaian farmers by an annual $750,000. Cadbury’s trade with Ghana just shows how companies can no longer operate in...