Case Study Description of Cadbury Schweppes: Capturing Confectionery (B)
In late 2002, global confectionery and beverage maker Cadbury Schweppes needed to decide whether or not to make an acquisition bid for Adams, an underperforming gum company which had been put up for sale by pharmaceutical giant Pfizer. Examining the decision from a strategic perspective, the (A) case provides brief histories of the two companies; traces the global confectionery industry, focusing especially on chocolate and gum; and details the analysis of the merger decision. The (B) case explores the specific identified synergies in-depth and provides an opportunity to judge their viability. The (C) and (D) cases conclude the story and update the case with issues facing the global confectionery leader in 2008.
Authors :: David J. Collis, Toby Stuart, Troy Smith
Swot Analysis of "Cadbury Schweppes: Capturing Confectionery (B)" written by David J. Collis, Toby Stuart, Troy Smith includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Confectionery Gum facing as an external strategic factors. Some of the topics covered in Cadbury Schweppes: Capturing Confectionery (B) case study are - Strategic Management Strategies, Mergers & acquisitions, Reorganization, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Cadbury Schweppes: Capturing Confectionery (B) casestudy better are - – central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, increasing energy prices, talent flight as more people leaving formal jobs,
technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Cadbury Schweppes: Capturing Confectionery (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cadbury Schweppes: Capturing Confectionery (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Confectionery Gum, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Confectionery Gum operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Cadbury Schweppes: Capturing Confectionery (B) can be done for the following purposes –
1. Strategic planning using facts provided in Cadbury Schweppes: Capturing Confectionery (B) case study
2. Improving business portfolio management of Confectionery Gum
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Confectionery Gum
Strengths Cadbury Schweppes: Capturing Confectionery (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Confectionery Gum in Cadbury Schweppes: Capturing Confectionery (B) Harvard Business Review case study are -
Successful track record of launching new products
– Confectionery Gum has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Confectionery Gum has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High switching costs
– The high switching costs that Confectionery Gum has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Superior customer experience
– The customer experience strategy of Confectionery Gum in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Strategy & Execution field
– Confectionery Gum is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Confectionery Gum in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Cadbury Schweppes: Capturing Confectionery (B) firm has clearly differentiated products in the market place. This has enabled Confectionery Gum to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Confectionery Gum to invest into research and development (R&D) and innovation.
High brand equity
– Confectionery Gum has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Confectionery Gum to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Confectionery Gum is present in almost all the verticals within the industry. This has provided firm in Cadbury Schweppes: Capturing Confectionery (B) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Confectionery Gum are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Confectionery Gum is one of the most innovative firm in sector. Manager in Cadbury Schweppes: Capturing Confectionery (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Confectionery Gum is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David J. Collis, Toby Stuart, Troy Smith can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Operational resilience
– The operational resilience strategy in the Cadbury Schweppes: Capturing Confectionery (B) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Confectionery Gum is one of the leading recruiters in the industry. Managers in the Cadbury Schweppes: Capturing Confectionery (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Cadbury Schweppes: Capturing Confectionery (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cadbury Schweppes: Capturing Confectionery (B) are -
Capital Spending Reduction
– Even during the low interest decade, Confectionery Gum has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High operating costs
– Compare to the competitors, firm in the HBR case study Cadbury Schweppes: Capturing Confectionery (B) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Confectionery Gum 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cadbury Schweppes: Capturing Confectionery (B), in the dynamic environment Confectionery Gum has struggled to respond to the nimble upstart competition. Confectionery Gum has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Confectionery Gum supply chain. Even after few cautionary changes mentioned in the HBR case study - Cadbury Schweppes: Capturing Confectionery (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Confectionery Gum vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, David J. Collis, Toby Stuart, Troy Smith suggests that, Confectionery Gum is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Confectionery Gum, firm in the HBR case study Cadbury Schweppes: Capturing Confectionery (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Confectionery Gum is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Cadbury Schweppes: Capturing Confectionery (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Confectionery Gum products
– To increase the profitability and margins on the products, Confectionery Gum needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Confectionery Gum has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Cadbury Schweppes: Capturing Confectionery (B) HBR case study mentions - Confectionery Gum takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Cadbury Schweppes: Capturing Confectionery (B), is just above the industry average. Confectionery Gum needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Cadbury Schweppes: Capturing Confectionery (B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Cadbury Schweppes: Capturing Confectionery (B) are -
Using analytics as competitive advantage
– Confectionery Gum has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Cadbury Schweppes: Capturing Confectionery (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Confectionery Gum to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Confectionery Gum can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Confectionery Gum can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Confectionery Gum to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Confectionery Gum to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Confectionery Gum to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Confectionery Gum can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Confectionery Gum in the consumer business. Now Confectionery Gum can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Confectionery Gum in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Confectionery Gum can use these opportunities to build new business models that can help the communities that Confectionery Gum operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Confectionery Gum can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Confectionery Gum can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Cadbury Schweppes: Capturing Confectionery (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Confectionery Gum can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Confectionery Gum has opened avenues for new revenue streams for the organization in the industry. This can help Confectionery Gum to build a more holistic ecosystem as suggested in the Cadbury Schweppes: Capturing Confectionery (B) case study. Confectionery Gum can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Cadbury Schweppes: Capturing Confectionery (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cadbury Schweppes: Capturing Confectionery (B) are -
Stagnating economy with rate increase
– Confectionery Gum can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Confectionery Gum needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Confectionery Gum can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– Confectionery Gum needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Confectionery Gum needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing wage structure of Confectionery Gum
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Confectionery Gum.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cadbury Schweppes: Capturing Confectionery (B), Confectionery Gum may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Confectionery Gum with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Confectionery Gum will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Confectionery Gum in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Confectionery Gum is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Confectionery Gum can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Confectionery Gum demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Cadbury Schweppes: Capturing Confectionery (B) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Cadbury Schweppes: Capturing Confectionery (B) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Cadbury Schweppes: Capturing Confectionery (B) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Cadbury Schweppes: Capturing Confectionery (B) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Cadbury Schweppes: Capturing Confectionery (B) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Confectionery Gum needs to make to build a sustainable competitive advantage.
