External Audit of Cadbury

Cadbury is synonymous with chocolate consumption worldwide. Opening shop in the early
19th century, Cadbury has emerged as a global brand with factories and offices the United Kingdom
and North America, and a notable presence in Asia and Africa as well.
The following is a PEST analysis of Cadbury which also will help to shed light on various external
factors that affect the chocolate industry. We will make special emphasis on Cadbury UK, as this is
where the company originally began.

POLITICAL
In the context of the UK, the change of government from the Labor party to the
Conservative/Liberal Democrat is bound to influence Cadburys operations. By last estimates, the 8
Cadbury factories in the UK had employed 3,000 workers. However, the stringent restrictions on the
entry of skilled workers from rest of Europe can affect Cadburys hiring decisions in the future.
The imposition of taxes is yet another political factor that will determine how Cadbury manages its
investment and payment to shareholders. For example, Value-added Tax rose by 2.5% in 2010 and
increased chocolate prices and reduced sales. And even before that in 2007, Cadbury Schweppes
decided to outsource a major portion of its accounting and HR to an Indian firm in the face of

increasing operational expenses and reducing margins. If other business units follow suit, this can
result in a loss of hundreds of jobs across the globe. But conversely, it will also create new
employment opportunities in countries like India.

ECONOMIC
Even though the global economic downturn did affect Cadburys expansion plans (owing to a
reduction in disposable income of customers and other stakeholders), sales actually remained quiet
steady.
In fact, Cadbury was able to gain a 30% increase in its annual profits, predominantly from the sales
of Dairy Milk and Trident. But even then, recession did play its part as the company managed only
to hit the lower end of its 4%-6% revenue for 2009, the peak of the recession. And while Dairy
Milk chocolate and Trident Gum sold well, other brands like Halls also saw a rise in their annual
sales.

SOCIAL
In one respect, Cadbury was born as a result of social factors. Being run by a Quaker family, their
opposition to alcohol served as the basis of running a business that sold tea, coffee, cocoa, and

liquid chocolate. But while chocolate and other products sold by the company are socially
acceptable worldwide, Cadbury has been on the receiving end of controversies, the recent one
involving Cadbury products being Halal Certified to cater to Muslim markets around the world.
In addition, there are also concerns in the western world owing to rising cases of obesity, especially
among children. Many nutritionists recommend people to reduce their consumption of chocolate
and candy, which is likely to affect Cadbury sales in the future.

TECHNOLOGY
Finally, technology has changed Cadburys production and packing process over the years, starting
with the introduction of new brew machines to blend coffee and cocoa gains. Recent moves in this
regard include the use of pathogen testing systems and filing patents for heat-resistant chocolate.

In this PEST analysis of Cadbury, we saw how this leading chocolate company has dealt with
external factors in the UK and in many other countries as well. Of course, the format of the
presentation barred us from discussing how the acquisition of Kraft Foods will affect company
performance in the future.

SWOT Analysis

Strengths in the SWOT Analysis of Cadbury

Cadbury is the worlds leader in chocolates. Known to have the best manufacturing and a wide
distribution channel, Cadbury has a presence in 200 or more countries. Cadbury has many strong
brands in its product portfolio such as dairy milk, Bournvita, Oreo, five star and others. The
products are high quality products and some of them are cash cows for Cadbury.

Cadbury products are blessed with a fantastic brand loyalty. Due to its marketing and strong
branding over the years, the brand equity of Cadbury is also high and hence Cadbury is comfortable
charging a premium for its product because of the high brand equity. Finally some brand names
within the Cadbury family are known worldwide and are desired by many. The smartest tactic that
Cadbury has done over the years with products like dairy milk and celebrations is that these
chocolates are positioned for gifting. In fact the recent Bourneville has a complete focus on the
gifting position. Due to this smart strategy Cadbury has safely differentiated itself from majority of
its competitors.

Weaknesses in the SWOT analysis of Cadbury:

As mentioned previously, a brand like Cadbury is expected to have much
strength and few weaknesses, and the same is the case. Cadburys
weakness is its rural distribution considering Pakistan has such a wide
rural diaspora which can be covered.
At the same time, A few cases here and there have happened based on
the quality of the product where cockroaches or other rodents were found
in the chocolate. It is inexcusable for a brand like Cadbury to show such
ignorance because such infected chocolates should not leave quality
control at all. Thus quality control needs to be strengthened.

Opportunities in the SWOT analysis of Cadbury

What is a weakness can become an opportunity. Penetrating rural

markets and distribution in rural markets can be a large opportunity for
Cadbury. It is present in foreign countries and a rural presence is much
needed for Cadbury which will boost the brands presence and turnover
Indian consumers have a sweet tooth and they frequently like to eat
small chocolates as well as chocolate bars. On top of it, there are various
flavors which consumers like. Thus, new tastes and new flavors are an
opportunity which Cadbury can generate regularly.

Threats in the SWOT analysis of Cadbury

With an increase in fuel cost as well as cost of transportation, distribution

cost has gone up. At the same time, the cost of procurement and
manufacturing is high as well. Thus, over the years, the constant
increase in costing and thereby pricing of the product is a threat to
Cadbury as it creates a gap for other companies to enter.
Health consciousness is on the rise amongst the Indian population. Many
people prefer drinking health juices as well as fruits rather than having
chocolates. Every week you will see articles on newspapers as well as on
blogs which advice against eating chocolate and propagate the benefits
of staying healthy. At the same time, many parents have stopped giving
chocolates to their kids looking at the adverse effects.
Cadbury has spent years to get the position of a gift on festivals and
occasions. What happens when the importance of these festivals drops?
The buying of chocolates also drops. Nowadays, if you gift a chocolate to
children, they are likely to demand a toy car, a bicycle or for a young
adult, a computer. Thus, with a rise in purchasing power, the demands of
gifts also have gone up in value and just a chocolate will not suffice. This
is also a threat for Cadbury.

Competitor Analysis:
Product Feature Nestle

Amul

Cadbury

Market Position

2nd

3rd

1st

No. of variants

Many

Few

Many

Gift Packs

Yes

No

Yes

Objective

To be the worlds largest

Confectioneries just

To grow the market

and best branded food

happens to be a side

for chocolate

manufacturer, whilst

business for Amul

confectionery

ensuring that the brand

whose core

To increase

name is synonymous with competency lies in

Cadburys share of

products of the highest

milk and milk products

the snacking sector

No clear-cut strategy

Growing the market

quality

Strategy

Integrated cost
leadership/differentiation

by apt pricing

Wide range of products

strategy that will

Low cost operators

create a mass market

and to have offerings
in every category to
widen the market

Summary
This report contains research analysis of Cadbury that includes external environment. Models like
PESTEL, (Political, Economic, Social, Technology & Environmental), Resource based analysis
have helped me to analyze my research in a better way. They help you to understand the political,
economic, social, legal, environmental etc. factors about the company, also the strengths,
weaknesses, opportunities and threats of the company help you better understand the problems and
gives a solution on how to make it better. It makes it clearer and specific to analyze the data and the
facts using these models.
In 2008, the Schweppes brand was sold to the Dr Pepper Group, and in 2010, Cadbury was acquired
by Kraft foods in the US. Hence, Cadbury and its range of products are now owned by the
American confectionary giant.
Cadburys Corporate Social Responsibility approach towards its workers, employees, and their
families and also towards the community, schools etc. is being covered by the activities they are
doing for the society. .
This report also covers a research analysis on how the company can enlarge their business overseas
by using PESTEL of the chosen researched country and CAGE Analysis by comparing the countrys
situation to the current UKs situation. It also gives the information on how and why you should
think of entering the other market, the main marketing strategy on why to enter the new market on
the basis of CAGE analysis.
The basic purpose is to brief about all other strategies that a company use to sustain in its external
environment while facing competition and different factors like changing polices, new markets
trends, new rules by government and many more factors which is briefly discuss above.
The references given at the end of the report are all according to the research done. All the websites
referred to gather all the correct information and put it accordingly in the report. It also helps you to
analyze it better by knowing all the external factors as well as strategies of the company.

Reference included:
http://pestleanalysis.com/pest-analysis-cadbury/
http://www.slideshare.net/soniad88/brand-audit-of-cadbury