Leeds Metropolitan University

Managing International Partnerships

Individual Assignment

A Business Model For The 21st Century

The Joint Venture Between

Cadbury-Schweppes, Ülker, and Sekem

Student:

Atilla Kibar

Course:

BA (Hons) International Business

Hand in Date:

14th May 2007

Word Count:

2709

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Table of contents

List of Figures II

List of Abbreviations III

1 Executive

Summary 1

2

Aims and objectives 1

3 Cadbury

Schweppes 2

3.1

Company Profile and Structure 2

4

Internal and External Environmental Forces 3

4.1 SWOT-Analysis 3

4.2

PEST ­ Analysis 5

4.3

Porter′s Five Forces 6

5 Market

Positioning 7

6 Market

Outlook 8

7

Company background of potential partners 9

7.1 Ülker 9

7.2 Sekem

Group 11

8

Business Analysis and proposal 12

8.1

Proposal and mode of entry 12

8.2 Location 12

8.3

Macro environmental factors 13

8.4 Strategy 13

8.5

Operational structure and value chain 15

8.6 Culture 17

9 Conclusion 17

Appendix 1 Theory 18

Appendix 2 Relevant data 25

Bibliography 30

I

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List of Figures

Figure 4-1: Reacting to Consumer Trends 3

Figure 4-2: Brand Innovation and NPD 4

Figure 4-3: Marketing and Communication Activities 4

Figure 4-4: Key Factors for Success (over the next 5 years) 5

Figure 5-1: Confectionery revenue growth 2006 7

Figure 5-2: Global confectionery market shares (2003-05) 8

Figure 6-1: Lifecycle 8

Figure 7-1: Public Survey (Ülker 2005) 10

Figure 8-1: Ansoff Matrix 13

Figure 8-2: Generic Strategies 14

Figure 8-3: Operational structure of joint activities 15

Figure 8-4: Value chain Innovation process 16

Figure 8-5: Cultural differences 17

II

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List of Abbreviations

Bn

Billion

CS

Cadbury

Schweppes

EMEA

Europe,

Middle East and Africa

EU

European

Union

FDI

Foreign

Direct

Investment

FLO

Fair-trade

Labelling

Organization

GNP

Gross

National

Product

MNEs

Multinational

Enterprises

NPD

New

Product

Development

OECD

Organisation for Economic Cooperation and Development

PEST

Political;

Economic;

Socio-Cultural; Technological

R&D

Research

and

Development

ROI

Return

on

Investment

SG

Sekem

Group

SWOT

Strengths;

Weaknesses; Opportunities; Threats

UK

United

Kingdom

ÜG

Ülker

Group

III

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1 Executive Summary

The natural and organic food and drinks market is experiencing a boom in popularity around

the world, as healthy eating messages start to make an impact on consumers. The food and

drink industry must now respond to increased consumer health awareness, sophistication,

experimentation and interest in new flavours and textures, with innovative new products.

Cadbury Schweppes recently announced that they want to split up their beverages and

confectionery businesses in order to focus more on their food sector. Hence, the time might be

right to think about expanding into markets with growth opportunities. A new strategy starts

with a vision, and should include as key elements considerations about sustainability,

distinctiveness, and competitive advantages. The vision for Cadbury Schweppes is derived

from its shifting environment in which they operate. The idea is to form an alliance were

Cadbury Schweppes is able to learn from its partners and consequently maintain its position

as a global leader in the 21st century.

2 Aims and objectives

The aim of this report is to provide a detailed overview about the potential of a joint venture

between Cadbury Schweppes, the Ülker Group, and the Sekem Group. For this purpose

environmental factors will be considered in the third section, followed by a current market

analysis. In the next section both potential partners will be introduced. The final section

provides the business proposal with analysis of strategy, operational structure, and value chain

innovation. It should be pointed out that only the most significant factors of several

frameworks are examined. Further details as well as the theory are described in the

appendices. Moreover, the appendices should support and confirm the statements given in this

work and assist the reader to get a clearer picture about the potential of the proposed business

idea.

1

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3 Cadbury Schweppes

3.1 Company Profile and Structure

The heritage of the company dates back to 1783 when Jacob Schweppe perfected his process

for manufacturing carbonated mineral water in Geneva, Switzerland, and to 1824 when John

Cadbury opened in Birmingham selling cocoa and chocolate. In 1969 Cadbury Schweppes

was formed through a merger between these two great household names. Today Cadbury

Schweppes (CS) is the worlds′ third largest soft drinks producer after the Coca Cola

Company and PepsiCo, and is also the leading UK confectionery producer. Sales in 2006

period amounted to £7.4bn with a profit of £1.165bn. Through almost fifty acquisitions in the

confectionary and beverages sector, Cadbury Schweppes has built up a much stronger

position within the confectionery market with key brands include Cadbury Dairy Milk,

Cadburys Crème Egg and Cadburys Caramel (www.cadburyschweppes.com).

The company is organised into four business segments (regions), and six global functions.

Each region is focused on commercial operations in its geographical and product area, and

also maintains teams from each of the six functions. The four regions are Americas

Beverages1; Americas Confectionery; Europe, Middle East and Africa (EMEA) and Asia

Pacific. The functions are Global Supply Chain, Global Commercial, Science & Technology,

Human Resources, Finance and Information Technology, and Legal

(www.cadburyschweppes.com).

1 Cadbury Schweppes sold the Europe Beverages region on 2nd February 2006, and announced on 15th Mar 07

that it intends to separate its confectionery and Americas Beverages businesses.

2

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4 Internal and External Environmental Forces

4.1 SWOT-Analysis2

Weaknesses

The weaknesses mentioned in the following section are taken from a survey which was

designed to establish an industry opinion on the top 10 leaders in food. The respondents were

asked to rank these companies in terms of ability to react to consumer trends, brand

innovation and new product development (NPD), and strength of marketing and

communications activities (Massey, 2006).

Reacting to Consumer Trends

As you can see from Figure 4-1, 63.6% of executives rated DANONE as the most effective,

while Cadbury Schweppes was rated as the second least effective at reacting to consumer

trends.

Figure 4-1: Reacting to Consumer Trends

Source: Business Insight

Brand Innovation and NPD

An interesting observation in Figure 4-2 is that Danone again was rated the leader in

innovation with 70.7% of the votes. Cadbury Schweppes again was rated the second weakest,

with over 20 % of executives rating the company as weak or very weak in brand innovation

and NPD.

2 For theoretical aspects of the frameworks see Appendix 1 on p. 18-24

3

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