Volume 1 Issue 10 Business & Management Ezine
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w Volume 1 Issue 10 Business & Management Ezine February 2010 Techno India, EM-4/1, Sector-V, Salt Lake, Kolkata - 700091 Table of Contents Sl. No. Topic Page No. [1] First Byte [ Editorial ] Ed/1 [2] Cover Story : Merger & Acquisition Ca/1-12 Cadbury vs Kraft (Monojit Banerjee) [3] Cover Story : Marketing Pr/1-7 Cadbury’s Promotions (Anis Chattopadhyay) [4] BIZarre Sc/1-4 Let’s Have Scotch! (Debraj Datta) [5] Soft Skills In/1-7 Dodging The Bullets: Guidelines For Facing Specific Interview Questions [Part-5] (Virag Bhushan Dwivedi) Disclaimer: Any views expressed by author(s) are their own. Bizzy Bytes is in no way responsible for the personal opinions of the author(s). We try to keep all information accurate, but that is subject to reliability of the sources. Bizzy Bytes Page : Cr/2 February 2010 The Bizzy Bytes Team: Editorial Team: Content Writers: [1] Monojit Banerjee [1] Anis Chattopadhyay [2] Anis Chattopadhyay [2] Debraj Datta [3] Bijan Chakraborty [3] Virag Bhushan Dwivedi [4] Arjan Biswas [4] Monojit Banerjee [5] Vijay Kumar Singh Graphics Design Team: Marketing Team: [1] Monojit Banerjee [1] Monojit Banerjee [2] Archita Pal Choudhury [2] Anis Chattopadhyay [3] Bijan Chakraborty [4] Amit Kundu [5] Archita Pal Choudhury [6] Shamima Haque [7] Arjan Biswas [8] Vijay Kumar Singh [9] Debraj Datta [10] Jayeeta Debnath Munshi Our Advisors: [1] Debraj Datta Bizzy Bytes is available at: Contact details: www.tisoms.co.nr (Download all issues today) Techno India School of Management studies You can also provide us your EM-4/1, Sector-V, Salt Lake, email ids and we will mail you Kolkata – 700091 every issue as and when it is published. Monojit Banerjee M: +(91)9231342749 Never miss an issue !!! E: [email protected] All intellectual property rights are reserved by Bizzy Bytes magazine. No part of this magazine can be copied, extracted or distributed without prior written permission. The magazine issue itself may be freely distributed, provided all due credits are visible. Bizzy Bytes Page : Cr/3 February 2010 Editorial First Byte Monojit Banerjee Editor Bizzy Bytes Email: [email protected] Bizzy Bytes, the business and management ezine of Techno India School of Management Studies [TISOMS], has been in existence for 10 months now and we are delighted to present our readers with the February 2010 issue. On behalf of Bizzy Bytes, let me once again take this opportunity to thank all those people who have made this possible. We have, for our readers, the following regular columns: BIZarre, a column by Debraj Dutta, (faculty, Department of Management Studies, Meghnad Saha Institute of Technology) featuring some curious and extremely interesting facts and stories from the business world. Soft Skills, a column by Virag Bhushan Dwivedi, an alumnus of our college. Also in this issue: Cover Story: Cadbury – Those of us who have grown up with Cadbury’s chocolates should be very sad and nostalgic on this day. Cadbury is no more!! While I chose to do a post mortem study of the blow-by-blow account of the acquisition of Cadbury by Kraft, supported by biographical sketches of both organizations, Anis focuses on memorable marketing campaigns of Cadbury throughout its eventful lifetime. Hope you enjoy all this. Keep sending us your views. Thanks & regards, Monojit Banerjee Bizzy Bytes Ed/1 February 2010 Cover Story : Merger & Acquisition Cadbury vs Kraft -- Monojit Banerjee Introduction: Newsflash (Tuesday, January 19th, 2010): Cadbury Agrees to Kraft takeover offer: The Cadbury board has accepted a new offer by US food company Kraft to acquire the company for 840 pence per share, valuing the company at £11.5bn ($18.9bn)., with shareholders to also get a 10 pence special dividend, bringing it to a total of 850 pence. It has advised Cadbury shareholders to accept the deal by 2nd February. Kraft and US confectioner Hershey were competing to acquire Cadbury but this new increased offer by Kraft has apparently forced Hershey out of the race. Cadbury shareholders are expected to agree to the takeover. Even Italian manufacturer Ferrero was interested in buying Cadbury to create a European chocolate powerhouse. It was speculated that it might team up with Hershey. But nothing ultimately materialized. The key shareholder of Kraft is Warren Buffet. Impact: Kraft said the deal would create a "global confectionery leader". There are renewed fears over possible job cuts at Cadbury's UK operations as a result of the agreed takeover. The offer will consist of 500 pence in cash, with the rest made of Kraft shares. Kraft will borrow £7bn ($11.5bn) to finance the deal. The increase in Kraft's debt to pay for Cadbury is a cause for concern for its employees. The need for Kraft to cut costs could mean staff cuts in the longer-term. Kraft also said it expected "meaningful cost savings" as a result of the merger. When a large entity like this has to make cost savings of the magnitude they will need to make, industry watchers are tempted to ask how those cost savings will be made. Kraft already has a track record of cutting production and moving production abroad. There is concern that they may not keep production in the UK in the long run. The company has given no specific assurances over the future of 4,500 UK jobs, though it says it wants to invest in the Bournville site and maintain production at Somerdale, near Bristol, also known as Keynsham. Bizzy Bytes Page : Ca/1 February 2010 It has not ruled out cuts, and staff numbers at Cadbury's head office in Uxbridge are expected to be reduced. Buying Cadbury raises a lot of questions around how the integration of both companies will proceed: In the United States, Cadbury's chocolate presence is negligible with Hershey owning the rights to the Cadbury Dairy Milk brand (and the recipe); experts speculate that Kraft will have to cancel this deal and compensate Hershey Co. financially. For candy and gum, Mars- Wrigley is slightly stronger than Cadbury in the US, which means Kraft might need to retain the Cadbury team for a while (which was mostly the Adams team before Cadbury bought Adams) as not to fall prey to competition since Mars-Wrigley is a stable entity by now. For the rest of North America (Canada and Mexico), Cadbury has very strong presence again led by the gum and candy portfolios which were originally part of Adams. Canada is a balanced market with a decent gum, candy, chocolate and cough drops portfolio for Cadbury (Hershey does not own the rights to Cadbury Dairy Milk in Canada). Mexico is primarily a candy and gum market, led mainly by Clorets gum. Cadbury's direct distribution network in Mexico is very strong which could be a good entry point for other confectionery owned by Kraft. In the Europe, things are different, the Cadbury team in the UK is quite large and it is expected that a lot of jobs could be lost. In the Eastern Europe, anti-trust laws might force Kraft to divest part of the confectionary business by selling whole or parts of companies owned by Cadbury such as Wedel in Poland and Kandia in Romania. Cadbury's state of the art gum factory in Poland is definitely a fort that Kraft needs to keep especially that Wrigley produces a large portion of its gum products in Poland and is supplying the rest of Europe from it. In Russia, Kraft has stronger presence than Cadbury. Cadbury's presence is in Russia is only recent with the previous acquisition of Nordic gum manufacturer, Dirol which is strong in Russia. In the Middle East, Cadbury is by far more successful than Kraft. Cadbury dominated the region by acquiring Adams in 2003. Adams's 3 strongholds, Egypt, Morocco and Lebanon combined with Cadbury's strong presence in Egypt gave Cadbury domination of the Moroccan, Egyptian, Syrian and Lebanese markets in gum and domination of Egypt's chocolate market. In 2009, Cadbury consolidated its business in Middle East and North Africa by setting regional headquarters in Cairo and focusing its efforts behind a few main brands such as Dairy Milk, Halls and Clorets and discontinuing smaller brands to achieve more regional focus. The move has led to financial and communication synergies which allowed Cadbury to gain more share during the year. Kraft on the other hand, has been struggling in North Africa with low end products (cakes, cookies and condiments) which it has inherited from a local Egyptian company they have previously acquired to enter the Egyptian market. However, Tang and Kraft's cheese brands have shown a strong presence in the GCC region primarily in Saudi Arabia and Bahrain. Kraft's recent acquisition of Danonne Buscuits adds more complexity as the Middle East team is not fully integrated and the brands inherited from Dannone have failed to make a break through in the market. By buying Cadbury, Kraft gains a major foothold into developing markets, particularly India, South Africa and the Middle East where Cadbury is dominating the confectionary market and has strong distribution networks. In India in particular, Cadbury Dairy Milk Chocolate is the winning horse in the market with strong brand equity led by years of celebrity endorsements. In the Middle East, Cadbury has strong presence with Flake chocolate in Saudi Arabia and Cadbury Dairy Milk chocolate in Egypt. For gum, Cadbury's Clorets brand (which was part of Adams) is the largest gum brand across North Africa and the Middle Bizzy Bytes Page : Ca/2 February 2010 East in total. However, Mars-Wrigley's "Extra" gum is the leader in UAE.