Cadbury to Be Swallowed Whole

Topics: Investment, Developing country, Economics Pages: 4 (1237 words) Published: October 15, 2012
Cadbury To Be Swallowed Whole?

1. Emerging market is a financial market of a developing country, usually a small market with a short operating history. Monopoly power is the power of a monopoly firm where they are able to control or set a price in its market.

2. Kraft’s marketing strategy will benefit significantly from buying Cadbury in two different ways. Firstly, when we look at the brand portfolio of Kraft, which is the world’s second biggest food company. It is clear that there are plenty of old-timer cash cows, such as cheese, Nabisco and Suchard, but there are only very few rising stars. According to the Boston Matrix, cash cow means a product with a high share of a slow growth market, which can generate a stable profit. Stars are the products that are in high growth markets with a relatively high share of that market of that market. In this case, The cash cows of Kraft would be Maxwell House Coffee, Toblerone chocolate which can generate a stable profit but no growth. On the other hand, There is a star product in Cadbury, which is the chewing gum business ( Trident and Trebor Mint Gum ) in a high growth market with a relatively high share. And Cadbury also owns a number of long-established brands, its chewing gum business is regarded as having huge growth potential. Therefore, I think Kraft would definitely benefit from buying Cadbury with it’s chewing gum business, because stars tend to generate high amounts of income in a high growth market. Secondly, Kraft generates 80% of all its profit in America, and its stuck at home while the biggest areas for future growth would be china, India and other developing countries. Cadbury generates only 30% of its income in Britain, and also a major brand in Brazil and India. In the first half of 2009, 69% of its sales growth came from ‘emerging markets’, which I think Cadbury is having a better performance than Kraft’s. Because Cadbury has made a huge success in those developing countries, like India...
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