Case | HBS Case Collection | March 2008 (Revised September 2012)
Cadbury Schweppes: Capturing Confectionery (A)
David Collis, Toby Stuart and Troy Smith
In late 2002, global confectionery and beverage maker Cadbury Schweppes needed to decide whether or not to make an acquisition bid for Adams, an underperforming gum company which had been put up for sale by pharmaceutical giant Pfizer. Examining the decision from a strategic perspective, the (A) case provides brief histories of the two companies; traces the global confectionery industry, focusing especially on chocolate and gum; and details the analysis of the merger decision. The (B) case explores the specific identified synergies in-depth and provides an opportunity to judge their viability. The (C) and (D) cases conclude the story and update the case with issues facing the global confectionery leader in 2008.
Keywords: History; Strategy; Decision Choices and Conditions; Mergers and Acquisitions; Food and Beverage Industry;
1. The importance of Ethics in Business: A Cadbury Schweppes case study This case study explains the importance of ethics in a business. Let’s with a little background of Cadbury Schweppes. It was formed by a merger in 1969 between Cadbury and Schweppes. Since then the business has expanded into a leading international confectionery and beverages company. Through an active programme of both acquisitions and disposals the company has created a strong portfolio of brands which are sold in almost every country in the world. Cadbury Schweppes has nearly 54,000 employees. Its good practice was recognised when it was voted one of the 'most admired companies for community and environmental responsibility' by Management Today magazine in 2003. It was also ranked second in the Food and Drink sector in the Business in the Community 'Per Cent Club' Index of corporate giving for 2003, with an investment in the community of around 3 of its UK pre-tax profits. Work ethics of Cadbury Schweppes has direct control over what happens in the transformation stage of its own process and can also influence the behaviour of suppliers and distributors. It plays close attention on potential suppliers and requests them to complete a questionnaire prior to engagement. They also make sure the proper raw materials are obtained and transformed into final products and then, delivered to customers. Beside this, Cadbury Schweppes is involved in following ethical activities: The Cocoa Initiative Cadbury Schweppes deals with tens of thousands of suppliers around the world and aims to work closely with them to ensure they receive fair treatment. In this case the example of cocoa farmers is being given. Cadbury Schweppes is a member of a global alliance. This alliance: ‘International Cocoa Initiative - Working Towards Responsible Standards for Cocoa Growing’ was established to ensure that cocoa is grown responsibly. Fair Trade Cocoa charges a fixed minimum price along with a premium amount which goes to the farmers. This premium is given in exchange for using the Fair Trade logo and accreditation. Presently, a modest amount of cocoa goes to the Fair Trade market. To ensure the food quality Cadbury Schweppes helps all cocoa farmers to improve their standard of living by