A Business Model For The 21st Century

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

  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

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

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.

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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 Beverages ¹ ; 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.

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4 Internal and External Environmental Forces

4.1 SWOT-Analysis 2

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.

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

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Marketing and Communications Activities

The following Figure 4-3 highlights that 72.7% of executives rated PepsiCo as strong or very strong in their marketing and communications activities. Cadbury Schweppes was ranked the weakest with 22.2% of executives rating the company as either weak or very weak.

Opportunities

Cadbury Schweppes is often rated in weak positions and need to strengthen their NPD, brand, innovation and marketing strategies, in order to compete more effectively with other global food leaders. A great opportunity is to develop new products and step into markets with

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