Dear shareholders and employees of Kraft Foods,
Moving on from my previous blog entry, this entry serves to analyze Cadbury’s market status in the confectionary industry.
I’m sure all of you have heard of Cadbury, or even tried its products. Cadbury has been around since 1824, more than a century before our company was founded. The company has an extremely solid foundation and history of delivering high quality chocolate to consumers.
Cadbury products are marketed under many different brands such as Crème egg, Green and Black’s, Trident, Dentyne, Cadbury, Cadbury Éclairs, Hollywood, Bassett’s and the Natural Confectionary Company. These brands already have a solid market status and a concrete customer base, which makes their sales stable.
Cadbury also has 35,000 direct and indirect suppliers in over 60 different countries and manufacturing facilities in South Africa, Swaziland, Botswana, Namibia, Egypt, Lebanon, Kenya, Morocco, Ghana, and Nigeria. Moreover, Cadbury obtained their chocolates from sources, which do not employ child labor. Corporate Social Responsibility is instilled within Cadbury and this makes the company even more desirable.
Other strengths of Cadbury include strong growth prospects, as the demand for chocolate is relatively stable. Cadbury also has a strong focus towards innovation, with a dominant market position. Future opportunities include the emergence of low calorie chocolates market and strategic acquisitions of other brands, which will advance the company.
Despite of all the prospects Cadbury projects, our department has also considered their weaknesses such as their limited liquidity position and operating margin. Further analysis of their market position has also shown that their market share has been declining over the years.
Commercial threats that could hinder Cadbury’s progress are the growing demand for private label, hand made products and the rising prices of cocoa. Chocolate has always been an extremely affordable luxury and consumers will not be willing to spend a lot of money on it.
After analyzing Cadbury’s weaknesses, our department came up with several solutions. Acquiring it will give us the opportunity to resolve the issues, which will make Cadbury a better company than ever. Their declining market share can be resolved by creating a massive advertising campaign by using the publicity from the acquisition. Letting consumers know the magnitude of our market status will increase our brand image and credibility. Additionally, Cadbury’s limited operating margin will be supplemented by the acquisition. Sourcing for cheaper sources of cocoa will also be easier due to the economies of scale.
The addition of Cadbury into Kraft will not only elevate our company’s status as one of the biggest food manufacturers in the world but also make us the biggest international confectioner. Kraft will be a renowned brand, even bigger and stronger than before. Marketing our products will also be relatively easy as we gain credibility from our market status. Our new market status will be conducive to our company’s progress in the long run and propel our company forward. So why say no to this acquisition? Financing the acquisition may be the only outstanding issue, which our Finance department will try to resolve.
VP of Marketing