Cadbury Takeover

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  • Topic: Kraft Foods, Cadbury plc, Kraft
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  • Published : April 23, 2012
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Case Study: Cadbury Takeover

Introduction:
In the beginning of 2010 the US food giant took-over one of the most famous British confectionary companies, Cadbury, affectively making Kraft the largest food confectionary company in the world (Smith, 2010). According to Rigby and Masters (2010) the takeover “was one of the biggest – and most hotly contested – acquisitions in the UK”. The process was exhaustively followed by media, which criticized inability of British Government to limit takeovers of such famed British brands in the future – as it is part of the British identity. Moreover, during such process a large number of employees have suffered, not only through a large number of redundancies, but also through the change in management and overall organization of the company, which has affected employees values amongst the other factors. This assignment will be looking into various details of changes in employees values as well as relationships and overall changes of the work ethics.

Comparison of employment values before the takeover:
Quakers found Cadbury in 1824 in Birmingham. Quakers, also known as “Religious Society of Friends”, is a Christian movement that believes in equality of people, this creates strong moral ethical behavior, social justice and community (BBC, 2009). Beliefs associated with the movement directly influenced employment values in Cadbury, known for its ‘benign paternalism’ (Lucas and Rappeport, 2011), as it has been placing importance on sociable values, participating and friendly environment since its beginning. According to Evening Standard (2009): “For most of its 185-year history Cadbury has been viewed as one of the most paternalistic and socially aware employers in the UK”. For instance, recreational, training and education facilities were added into factories (Rose, 1986; Katsoulakos and Katsoulakos, 2006). Furthermore, employees have had access to medical care as well as good welfare system (ibid). According to Leggett (2010) Cadbury places “strong social conscience at the heart … from year one”. This has been strengthened by opening factory in a “green field site” of Bournville in 1979 (Katsoulakos and Katsoulakos, 2006). Until now the area is mainly associated with chocolate (Robinson, 2010) where a large number of employees have history of working at the factory for many years along their family and friends, this has created a very strong sense of community until the speculations on takeover by Kraft began (Jones, 2010).

Kraft was established in the beginning of 20th century and over years had expanded through mergers and acquisitions of various brands, including Oreo cookies, Jacobs coffee and Philadelphia cheese amongst many other brands (Ovide, 2011). As a result of such historical developments and association with conglomerates such as Phillip Morris – one of the leading tobacco companies, it has developed rather different reputation to Cadbury. In fact it has been called: “union-busting corporate giant that is at the heart of the global obesity crisis … (which) runs with military precision” (Evening Standard, 2009). As a result Kraft’s employment values are different to responsible corporate citizen Cadbury. Kraft is known for its strong bureaucracy with a very layered and tall structure (Holbert, 2010), which is so important to manage multinational corporations of its size. Additionally to its size and management style, Kraft is known to be very profit driven and due to weak trade unions in the US and overall hire-fire culture in the country, its employees are used to instability, underlined by high turnovers. Thus to summarize, Cadbury has been known for strong paternalistic values, decentralized structure and egalitarianism, whilst Kraft is known for its strong highly structured bureaucracy and centralized structure (Holbert, 2010).

Changes in the relationships and structure after takeover:

As described above employment values and overall cultures of two...
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