INDUSTRY & COMPETITIVE ANALYSIS CADBURY INDIA (Part – I) Presented By Mohd. Yasser Arafat (55) Division-A The sweetest story ever told… or heard Vision Purpose and Values • Objective – Grow shareholder value…over the long term. • Strategy – Create robust and sustainable regional positions in our core categories of confectionery and beverages through organic growth, acquisition and disposal. • Process – Achieve this by managing by value. Chronology of a success story 1750 - Mayans discover cocoa. 1831 - Manufacture of drinking chocolate and cocoa began in Birmingham. 1865 - John and Benjamin Cadbury launch Cocoa Essence. 1886 - Cadbury became one of the first firms to open dining rooms with kitchens and with food on sale. 1899 - Became a private limited company “Cadbury Brothers Ltd”. Chronology Contd… 1905 - Dairy Milk was launched. 1915 - Milk Tray introduced. 1932 - Bournvita was launched. 1947 - Cadbury factory set up in India. 1969 - Cadbury merged with Schweppes. 1993 - Cadbury opened the world's largest and most advanced chilled warehouse in Birmingham. Multi-Category Presence Key Markets Americas France Spain Poland S.Africa US Canada Mexico Asia Pac Europe Africa UK Brazil Australia Japan Thailand Chocolate Sugar Gum The Indian Chapter • Cadbury began operations in India in 1947. • Challenge in India – Get people accustomed to chocolatesprimarily seen as a western taste. – Do so by reaching out to the masses in a land where mindsets and preferences are as diverse as the country itself What makes a successful brand? • Carves out a distinct role in the consumer’s life • Constantly delights the consumer year after year • Consistent value proposition • Local expressions of universal needs Elicit a ‘WOW’ at any given time Strategy of Cadbury • Increasing consumer base by focusing on affordability and availability. • Small affordable priced packs launched. • Advertising aimed at changing consumer perception and eating habits. • Commitment to stakeholders in line with Corporate Governance policy. Business Model • • • • Attractive and growing markets Expandable consumption Strong positions Impulse categories less exposed to retail consolidation • High barriers to entry Attractive and Resilient Returns Strategic Changes • Organisational – Comprehensive structural and leadership change. – Consolidated operational structure. – Increased scale of each regional operating unit. – Separated supply chain management from commercial management. Goals and Priorities 1. Deliver superior shareowner performance. 2. Profitably and significantly increase global confectionery share. 3. Profitably secure and grow regional beverages share. 4. Ensure our capabilities are best in class. 5. Reinforce reputation with employees and society. Contd… Goals and Priorities Contd… 6. Up to a third of benefits reinvested in top line growth. 7. Operating margin growth of 50 – 75 basis points pa. 8. Net sales value growth of 3% - 5% pa. 9. Targeting a 10% reduction in direct and indirect costs 20% reduction in factory base 10% reduction in headcount 10. Savings across: supply chain; commercial; back office 11. Operational gearing from volume growth. Strategic Framework Distribution Strategy CADBURYS INDIA LIMITED Each in district CNF CNF Distributors DIS DIS Retailers RET RET RET DIS CNF CNF BCG MATRIX High Relative Market Share Low ??? High Bournvita Dairy Milk Market Growth Bournville Candy 5 Star Perk Low Delight Gems Eclairs Circle Size = proportion of total revenue business contributes to corp. Ansoff Model EXISTING EXISTING Market Market penetration (Dairy Milk, Perk, Bournvita) NEW Market development (Candy) Product NEW Product development (Bournville,Chockis) Diversification (Gems,Eclairs) GE McKinsey Matrix Business Strength Industry Attractiveness • Market Size • Growth Rate • Profit Margin • Intensity of Competition • Seasonality • Cyclicality • Resource Requirements • Social Impact • Regulation • Environment • Opportunities & Threats • Relative Market Share • Relative Costs • Reputation/ Image • Profit Margins • Bargaining Leverage • Ability to Match Quality/Service 10.0 Strong 6.7 High 6.7 Medium Average 1.0 Rating Scale: 1 = Weak ; 10 = Strong Weak Bournville Dairy Milk, Bournvita, Perk Gems, Eclairs 3.3 Low 3.3 5 Star 1.0 Porter’s Five Forces Model POTENTIAL ENTRANTS (Regional Players) Bargaining power of suppliers SUPPLIERS (Cocoa farmers & others) Threat of substitute products or services Threat of new entrants INDUSTRY COMPETITORS Rivalry Among Existing Firms (Nestle,Amul) SUBSTITUTES (Working in all Substitute areas) BUYERS (Consumers & Customers) Bargaining power of buyers PEST Forces Macro Forces Political (Stability) Economic (Affordable small Packs) Social (Muh Meetha) Technological (introduction of double pack) Micro Forces Supply (Local) Competition (MNC & Regional) Demand (Created)