Lau Hiu Fung

Cadbury Schweppes– Understanding Organization ‐ Assignment

Teesside University of UK Hong Kong Institute of Technology MAR1036-N Understanding Organizations Assessment Report

LAU HIU FUNG

Donald Lau 11830049 V8188813 MAR1036-N Understanding Organizations

Cadbury Schweppes– Understanding Organization ‐ Assignment

Assessment Report TABLE OF CONTENTS

INTRODUCTION ...... 3

CHAPTER

1. ORGANIZATION ANALYSIS ...... 4

Condensed Environment ...... 4

Political ...... 5

Economic ...... 6

Social ...... 7

Technological ...... 7

Legal ...... 8

Ecological ...... 9

2. CULTURAL DIFFERENCES IN MANAGEMENT ...... 10

Implications of cultural change on Cadbury and Kraft ...... 11

Comparison of Kraft’s and Cadbury’s culture ...... 12

Benefit of management in new organization ...... 12

3. THE FACTORS HOW TO IMPLEMENT AND CULTURAL CHANGE ...... 13

Strategy Plan and Implementation of change ...... 13-14

Organizational structure ...... 15-18

Strategic as practice ...... 19

CONCLUSION AND RECOMMEDATIONS ...... 20

REFERENCE ...... 21

APPENDIX ...... 22

Cadbury Schweppes– Understanding Organization ‐ Assignment

Introduction: Early history of Cadbury’s Quaker origins to Cadbury’s KraftHeinz since 1650. The company of Cadbury was founded by pacifist George Fox in 1650. In the past of Cadbury, formerly Cadbury's and Cadbury Schweppes, is a British multinational chocolate company. Since 2010, The Company of Kraft Foods Group, Inc. had purchased to Cadbury’s KraftHeinz. According to the original company of Kraft Foods Group which in turn was renamed Mondelez International. It is the second-largest chocolate brand in the world after Mars. Cadbury is Multinational Corporation in Uxbridge, West London, and operates in more than 50 countries worldwide. In the famous of product, its Dairy Milk chocolate, the Cream Egg and Roses selection box, and many other Chocolate products. One of the famous of British brands, in 2013 The Daily News named Cadbury among Britain's most successful exports. In the previous name of Quaker, this pioneers believed ‘your soul lived or perished according to its use of the gift of life. They inspired the ‘men of America’ such as Hershey and Mars. Quakers were banned from Oxford and Cambridge. Quakers were not allowed to join the armed services or to stand as members of Parliament. They turned to the world of business but within the Society of Friends strict guidelines. Quakers viewed themselves as principled capitalists in the society. Cadbury was developed in Birmingham of British in 1824, in this period of sold tea, coffee and drinking chocolate that is developed by John. His brother of Benjamin and his sons Richard and George they were developed in the business. One of his son, George developed the garden and village designed to provide the company's workers improved living conditions. Since 1905, they are designed the Daily Milk Chocolate and used a higher proportion of milk within the cuisine compared with competitor of products. Approached to1914, the chocolate was the corporation of excellent for selling in the product. Cadbury, combine with Rowntree's and Fry, were the Great three British chocolate manufacturers which were from beginning to end of the nineteenth and twentieth century. The Cadbury family built 300 houses for its workforce away from the Birmingham ‘slums’. They are Philanthropists which have the sense of civic duty. Philanthropists were guided by a sense of civic duty. Cadbury’s aimed to build a pleasant peaceful estate with a sense of belonging. They were provided the schools & leisure facilities. Also, they provide the class in the evening for men and women. Cadbury’s family which employed doctors and dentists to look after their families. They provided the external activity for country and

Cadbury Schweppes– Understanding Organization ‐ Assignment summer camp. They are made in the first of pension provision in the UK for employees. Recently, employees are still allowed the time of rest for community work and 80% of the workforces are active.

Cha pter 1 Organization Analysis in Condensed Environment: We are analysis of organization in Cadbury Schweppes which divide into six criteria of concept to describe the business environment and process. The six criteria as shown below: There are differences to have political, economic, social, technological, legal, and ecological.

A PESTLE analysis is a strategic business tool used by organizations to discover, evaluate, organize, and track macro-economic factors which can impact on their business now and in the future. The framework examines opportunities and threats due to Political, Economic, Social, and Technological, Ecological and Legal forces. Outputs from the analysis inform strategic planning processes and contribute to market research. It provides an overview of all the crucial external influences on the organization.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Political in the organization analysis: This is according to the political problem in the marketing of Cadbury Schweppes since 1915. Cadbury's Milk Tray was first produced in 1915 and continued in production throughout the remainder of the First World War. Within the period of the First World War, there have more than 2,000 of Cadbury's male employees joined the British Armed Forces, and to support the British war effort, Cadbury provided chocolate, books and clothing to the military troops. George Cadbury built up two company-owned buildings for use as hospitals – "The Beeches" and "Fircroft", and the management of both hospitals earned the War Office's highest award. Factory girls, dubbed 'The Cadbury Angels', volunteered to do the laundry of injured soldiers recovering in the hospitals. After the war, the Bournville factory was redeveloped and mass production began in earnest. In 1918, Cadbury opened their first overseas factory in Hobart, Tasmania. The parts of the Bournville factory were turned over to war work, producing milling machines and seats for British fighter aircraft. Workers ploughed football fields to plant crops. As chocolate was regarded as an essential food, it was placed under government supervision for the entire war. During the War, rationing of articles for daily use was enforced and raw materials were in short supply. Cadbury Dairy Milk came off the shelves in 1941 when the government banned manufacturers from using fresh milk. Instead there was Ration Chocolate, made with dried skimmed milk

Post war product launches

1947 – Milk Tray bar is launched 1948 – Cadbury Fudge is launched 1955 – First TV ad is aired 1960 – Skippy is launched 1967 – Aztec Bar is launched 1967 – Toffee Buttons is launched 1969 – Cadbury merged with Swcheppes 1970 – Curly Wurly is launched 1971 – Old Jamaica is launched 1971 – Cadbury’s Crème Egg is launched

Cadbury Schweppes– Understanding Organization ‐ Assignment

Economic in the organization analysis: The external environment of economic in which is being the factors of the marketing change in environment. The factors that influence the consumers buying power and marketing strategies. This can consider and monitor by four criteria which can influence the economic. The four criteria consist of inflation, deflation, unemployment and income. There are more important reasons affecting the economic, such as discretionary income and resource availability. Since 2010, it had greater expansion of business after the purchased of Cadbury by Kraft co. The growth of business in economic is influenced by external environment of condensed conditions. When there have no geographical boundaries in business development, it cans growth and expansion of differences cultural in involving that multinational management. There are stages of business cycle which can influence the marketing of Cadbury. A business cycle is a cycle of fluctuation in the Gross Domestic Product (GDP) Formula consists of consumption, government spending, investments, and net export. We break down the GDP formula into steps in this guide. Gross Domestic Product is the monetary value, in local currency, of all final economic goods and services produced within a country during a special period of time (GDP) around its long-term natural growth rate. It explains the expansion and contraction in economic activity Marketing Economic Market economy definition – a pure market economy is an economic system where there are no regulations and players are free to trade as they please that an economy experiences over time. A business cycle is completed when it goes through a single boom and a single contraction in sequence. The time period to complete this sequence is called the length of the business cycle. A boom is characterized by a period of rapid economic growth whereas a period of relatively stagnated economic growth is a recession These are measured in terms of growth of the real GDP, which is inflation Fiscal Policy refers to the budgetary policy of the government.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Social in the organization analysis: After merger of Cadbury and Kraft co., the new management is control by America. Today, corporate responsibility has expanded to cover the entire societal framework in the America and throughout the world. There are new orientation of marketing philosophies, policies, procedures, and actions that have the enhancement of society’s welfare as a primary objective. The social responsibilities while traditionally of sense in concerned manager’s relationships with customers, employees, and stockholders. The social value in the business organization is the meaning of extend to relations with government and the general public. These factors were influenced to the new management of Kraft co. with Cadbury. There are factors occurs of the terrorism, demographic trends and lifestyle preference in which affecting the population growth and decrease. As terrorism of the war this will decrease the people in demographic statistics. These factors of population of people that affecting in quantities of Cadbury marketing.

Technologies that affect the organization: Recently, there are new technology that affecting the research of marketing in Cadbury. The results of research and the technique in which is divide into two methods of Big Data and Machine Learning. The term Big Data refers to the large volume of data (both structured and unstructured) that affecting a business day-to-day. It is used to IT equipment (Ipad) to collect the user data and then user data will be analyzed by AI machine. Organizations can ride on the data to reveal insights that lead to better decisions and strategic business moves. Machine Learning is a data analysis methodology which automates the building of analytical model. It is a branch of artificial intelligence that machines should be able to learn and adapt through experience. Using algorithms that iteratively learn from data, machine learning allows computers to find hidden insights without being explicitly programmed where to focus. So that, it used to the two methods for generate the results and then made better decisions and strategic business in the Cadbury and Kraft co. This technology can collect to external condition of environment.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Legal in the organization analysis: The external environment of Legal in which it is includes of laws and interpretation of laws. This is component of marketing environment that require company to protect the competitor and consumer right. The Laws in organization it affects the marketing and maintains a competitive environment. According to reference in 1890, Sherman Antitrust Act broadly prohibits anticompetitive agreements and unilateral conduct that monopolizes or attempts to monopolize the relevant market. It identifies a competitive marketing system as national policy goals. More reference in 1914, Clayton Antitrust Act who enacted at the restriction that was a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act sought to prevent anticompetitive practices in their incipiency. The practices it such as price discrimination, exclusive dealing, typing contracts, and interlocking boards of directors where effecting monopolize the relevant market. In addition to reference in1914, the Federal Trade Commission Act, prohibits the unfair methods of competition, establish the Federal Trade Commission Act, an administrative agency that investigate the business practices and enforce the FTC Act. The Act, signed into law by Woodrow Wilson in 1914, outlaws unfair methods of competition and outlaws unfair acts or practices that affect commerce. The laws in organization it regulate the competition, the reference in 1936 the Robinson Patman Act who codified that prohibits anticompetitive practices by producers, specifically price discrimination. It was designed to protect small retail shops against competition from chain stores by fixing a minimum price for retail products. It also prohibits selling at unreasonably low price to eliminate competition. Another external environment as it is affecting the marketing that it how to protect the consumers. We can reference in 1998 of the Children’s online Privacy Protection Act, it responsibilities an operator has to protect children's privacy and safety online including restrictions on the marketing of those under 13. It identified the products of chocolates in Cadbury that affecting the growth of children. Protecting competitive of the aim is used to maintain competitive environment. This can reduce the trend toward monopolies. Founding in reference, they are Clayton Antitrust Act and Clayton Act who’s made the laws. Regulating competitive of marketing environment this can to protect independent merchants against competition from larger chain stores.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Ecological in the organizational analysis:

In 1878, Cadbury’s factory decided to build new business premises in countryside four miles from Birmingham. The move to the countryside of model village was unprecedented in business. The garden style of business premises in countryside, which made the comfortable and convenience perception with their workers. This is no concerning in environment problem in garden style of business offices and premises. That is protecting the countryside and shoreline. They made the measure to reducing the toxic emission, pollution, spills. They enacted at regulation to make the hazard prevention and noise pollution.

Better transport access for milk that was inward shipped by canal, and cocoa that was brought in by rail from London, Southampton and Liverpool docks was taken into consideration. With the development of the Birmingham West Suburban Railway along the path of the Worcester and Birmingham Canal, they acquired the Bournbrook estate, comprising 14.5 acres (5.9 ha) of countryside 5 miles (8.0 km) south of the outskirts of Birmingham. Located next to the Stirchley Street railway station, which itself was opposite the canal, they renamed the estate Bournville and opened the Bournville factory the following year.

In 1893, George Cadbury bought 120 acres (49 ha) of land close to the works and planned, at his own expense, a model village of garden which would 'alleviate the evils of modern more cramped living conditions'. By 1900 the estate included 314 cottages and houses set on 330 acres (130 ha) of land. As the Cadbury families were Quakers there were no pubs of beer in the estate.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Chapter 2 Cultural Differences in management: Cultural diversity appears while it is in the organization of products and places of location in development with many countries. The business organization of cultural diversity when it is has great impact in global economy. When there have no geographical boundaries in business development, it cans growth and expansion of differences cultural in involving that multinational management. This can meet the objective of requirement in common culture. Therefore, the point of view cultural diversity becomes the need for the organizations going globally international. After the merger of Cadbury and Kraft co., there are contribution of Cultural Diversity towards development and expansion of any business organization. We are further to explain the theory of cultural Diversity and discussion on how cultural Diversity will be significant to the development of global business. Culture is something of impact that is being carry forwarded from history, and it is related to behaviour patterns, beliefs etc. Diversity Cultural is base on ethnic, gender, racial, and social economic variety in a situation, institution, or group; the coexistence of different ethnic, gender, racial, and socioeconomic groups within one social unit. The variety of products in selling that is involving the totality of socially transmitted behavior patterns, arts, beliefs, institutions, and all other products of human work and thought. Adler (2008) explained the stress of cultural diversity on multinationals and global firms, beginning that now a day it becomes very obvious that national cultural differences are significant impact. However, Alder said that comparative impacts depend on the stage of the growth of firm, industry and world economy. Therefore, we understand the importance of cultural diversity at geographical location it is very important to understand the organizational culture first. The cultural of the family and particular community that order how each members of the family or community will behave and act to each other and with outside of the home or community. The performance of behaviors in family and community while it impact from the past of history in rituals. The value of cultural organization in minds that through the rituals, practices and keeping the common behaviors. In here indicate that the organization cultural is not differences with normal cultural as well as it impact by common perception from the organization’s members.

Cadbury Schweppes– Understanding Organization ‐ Assignment

There are important and significance of diversity cultural in the workplace. This can influence that the workers from different cultures reflect different learning styles and bring different preferred working styles to their jobs.

Implications of cultural change on Cadbury and Kraft: Implications on Kraft Implication on Cadbury Strengthened Brand Damaged Heritage Drives higher performance leading to Lower moral and performance higher revenue Better control of the organization Staff burn-out Better reputation Risk of losing benefits schemes to American procedures Efficiencies through alignment of Trust Issues procedures and processes Alignment of goals Weakened Brand

The impact of cultural change on Cadbury and it became new organization of Kraft Foods Group, Inc. Staff would be de-motivated leading to low morale and performance, and then it reduced of productivity and loss of revenue. Before the merger and acquisitions of both company, the risk of resignation resulting from change of process and procedure. There are lacks of trust leads to weak loyalty and graceful attitude, it may reduce communication. There are staffs conflicted with each other that leading to pressure and stress, so that it increases the emotion of the staffs. All people of the staffs they feelings of insecurity and uncertainty depend on career in the future. There are problem in relation to the risk of diminishing Cadbury’s brand.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Comparison of Kraft’s and Cadbury’s culture: Type of Culture Characteristic Cadbury Kraft Participation √ √ Friendship & Networking Networked Networking throughout the organization Helping others √ √

Performance and effectiveness √ √ Hard work √ √ Mercenary Material reward √ Destroying competition √ People working alone Fragmented Few links with colleagues Aiming for goals outside organization

Deep friendships √

Shared value of sociability √ √ Communal Family atmosphere √ A passion for business √ √ Sense of value in work √

Benefit of management in new organization: Culture create competitive benefit in new organization, competitive advantage is defined as how a business creates value for its customers. This can make the greater than the costs of supplying them. Moreover, it can superior to that of its competitors. Ultimate, it can enable them to the best competition. After merger of Cadbury and Kraft co., there are long terms to expand the multinational of many countries in the marketing . When there have no geographical boundaries in business development, it cans growth and expansion of differences cultural in involving that multinational management.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Chapter 3 The factors how to implement and cultural change:

Strong leadership Government Interventions Good support From team Cultural Bad press by the made Empathy and respect for Change acquired company Employee resistance Unions Good strategy and paln

Good communication of Brand loyalty e.g. Consumer change boycotting brand Resources e.g. human and finance

Adapted from Kurt Lewin(1943) Force Field

Strategy Plan and Implementation of change: Establish in sense of urgency: Examine the limitations of the existing culture and its impact on performance. Communication to Senior Management the need for the change. Forming a powerful guiding coalition: Assemble a group from senior management and Union members to champion the change. Use press coverage to maintain momentum. Seek internal and external support, e.g. Government to aid the transition. Creating a vision Senior management to develop a new mission statement which of incorporates the new culture and develop effective strategies to execute the vision. Communicating the vision: It is necessary to communicated new vision throughout the organization and to consumers using different channels such as TV, emails, documentation, bulletins, etc. It provides constant two feedbacks during transition. Empowering others to act on the vision: Create the right environment to empower staff to act on the change. Identify any constraints and resource issues for the change to be implemented and removed obstacles. Ensure staffs have the time to commit to the change.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Plan for and create short term wins: Plan a corporate away day for Cadbury and Kraft staff to bond, whilst driving the message of change and the benefits. Inter-company positions changes to help merge culture. Motivate employees involving in the improvement through rewards. Negotiate new realistic terms and conditions, e.g. wages and pension. Consolidating gains and producing more change: Use the new synergies derived from the short term wins to spring board long term change, i.e. those yet to be confronted, such as tackling Union resistance and consumer loyalty. Institutionalize new approaches: Articulate to the organization the connection between new norms, behaviors and the organization performance. Document the new culture and organizations polices. Make sure leaders that come on board adopt the new culture straight away.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Organizational structure: We can work in effective and efficiency of organization structure while it makes possible the application of the process of management. It also creates a framework of order and command through which the activities can be planned, organized, directed and controlled. Moreover, it defines task, responsibilities, work roles, relationships and channels of communication.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Structure by division of work

• By major purpose - grouping according to specialism (dept or skill) • By product or service – integrated into semi autonomous units with collective responsibility for business process (e.g. A&E) • Location – geographical boundaries (e.g. LA services) • Nature of work – a special common feature such as local conditions needing first hand knowledge (e.g. central depts.) • Common timescales – different tasks are undertaken at different times (e.g. shift working) • Staff employed – allocation of duties according to experience, skill or qualification (e.g. doctors or nurses) • Customers or clients to be served – separate groups to deal with different requirements (e.g. trade and retail)

Peter Drucker (1989), explained the theory of organisational structure: “Good organisation structure does not itself produce good performance. But poor organisation structure makes good performance impossible, no matter how good the individual managers may be. To improve organisation structure… will therefore always improve performance.”

Cadbury Schweppes– Understanding Organization ‐ Assignment

Impact of Technology on Organisational Structure

• Scale – impact on the number of jobs

provided, a means of compartmentalisation to

manage human activity

• Function – produces a need to accommodate

new jobs or functions within a structure

• Integration – influences existing structures,

e.g. integration of production, logistics and

marketing

Cadbury Schweppes– Understanding Organization ‐ Assignment

Strategic as practice:

What

Who Where

Why When

How

To ensure the organisation serves its basic purpose – efficient production of goods or services

To take charge of strategy making and To design and maintain adapt the organisation in the stability of the a controlled way to organisation changes in its environment

To ensure the To serve as the key organisation serves the informational link ends of those people between the organisation who control it and its environment

As a formal authority to operate the organisations status system

Cadbury Schweppes– Understanding Organization ‐ Assignment

Conclusion: The primary reasons for mergers and acquisitions are revenue gain. However this approach rarely takes account of culture differences which may inhibit successful adaption. The analysis shows that Kraft needs to change the culture of Cadbury to take better control of the organization and strengthen its brand. However, to achieve this it will require strong leadership, good communication and a well thought out strategic and plan. One of the most complex and difficult problem to overcome will be staff resistance, but a long term impact of the change could be more profound to consumer brand loyalty.

Recommendations: z Early identification and involvement of stakeholders is pivotal z It would be advisable to do a culture assessment of the organization prior to purchase. z Cultivate cultural change, do not forcefully exert a new culture, rather allow it grow organically over time. z Constant communication and feedback is key, this cannot be over emphasized.

Cadbury Schweppes– Understanding Organization ‐ Assignment

Reference: Adler, N. (2008). International Dimensions of Organizational Behavior. Ohio, Thomson Higher Education.

• http://www.kraftheinzcompany.com/ • https://www.youtube.com/watch?v=bA7VtOdxJRA • http://www.mondelezinternational.com/about-us/~/media/MondelezCor porate/uploads/downloads/mondelez_intl_fact_sheet.pdf • http://www.mondelezinternational.com/investors/corporate-governance #ourBoard

Cadbury Schweppes– Understanding Organization ‐ Assignment

Appendix: