1. Entrepreneurship and Business Ethics
1.1. Company History: John Cadbury started Cadbury as a grocer's shop in 1824. In 1831, he opened a factory and started producing on a commercial scale. In 1847, the first chocolate bar was made. John passed his business onto his sons Richard and George in 1861. In 1866, Cadbury's Cocoa Essence was made. In 1875, the first milk chocolate bar was made. This was also the year Cadbury made its first chocolate easter egg. in 1900, Cencil Alden, a popular local artist, started making ads for Cadbury. In 1905, Cadbury's Dairy Milk Chocolate bar was made. Cadbury purchased Fry's in 1919. Cadbury started using the colour purple for their Dairy Milk chocolate bars in 1920 and in 1921, the Cadbury script logo appeared. The company had some dificulty in 1939 during the second World War due to lack of resources, but it expanded in 1945 after the war. By 1970, Cadbury had many brands and its sales grew vastly, due to successful TV advertising. In 2008, Cadbury launched Cadbury Cocoa partnership and in 2009, its Dairy Milk chocolate bars became Fairtrade. In 2010, Cadbury became part of Mondelēz International, which also owns Halls, Oreo, Ritz, and many more!
1.2. New Product Development: Cadbury consistently develops new products in hopes of attracting more customers with different tastes and preferences. An example of a recent new product is the Crispello bar, which is targeted at women who are refusing chocolate in an attempt to lose weight. This chocolate bar is a mix of wafer and chocolate and it is unique because it is divided in 3 resealable packages to control the amount you eat.
1.3. Corporate Ethics and Social Responsibility: Cadbury deals with tens of thousands of suppliers from around the world and they work together to ensure people receive fair treatment. Cadbury is a member of a global coalition and they try to improve working practises on cocoa farms. Their Dairy Milk products also participate in Fairtrade, which ensures that a minimum price is paid for cocoa. Cadbury also looks for ways to save energy and control the release of gases into the atmosphere. In addition to that, Cadbury tries to diversify its staff and provides equal opportunities for its recruits regardless of gender, age, marital status, sexual orientation, disability, race or religion.
2. Business Fundamentals
2.1. Supply/Demand: There are always people who enjoy chocolate and will want to buy it, and as our population grows, the demand for chocolate will grow as well. The supply of cocoa has been steadily increasing over the years, so the price of chocolate is generally the same (not including inflation). However, if the supply of cocoa ever drops suddenly due to droughts or natural disasters, the supply, will drop while the demand remains the same, thus increasing the price of chocolate. A sudden change in demand will also affect the price of chocolate since if chocolate is somehow proven to be healthy, more people will want to buy it and if the demand increases, while supply remains the same, the price will also increase. This also goes the other way as well.
2.2. Trade Agreements: Cadbury Dairy Milk products are marked as Fairtrade. This means that the cocoa they purchased came from cocoa farmers who are paid a fair price and utilise sustainable farming methods.
2.3. Imports and Exports: Because cocoa only grows in certain climate conditions (hot, rainy, tropical climates with vegetation which can provide shade), to make chocolate, the cocoa has to be imported from other countries. The largest producer of cocoa is Africa, which produces about 68% of the world's cocoa. The rest of the world's cocoa is produced in Asia/Oceania and South America. The cocoa is then processed in Europe or Australia and is exported to Cadbury factories around the world to be turned into chocolate.
2.4. Business Structure: As you can see from the image above, like most companies, Cadbury is divided into many sections, where specialists of that field can contribute their knowledge and ideas to the company. Cadbury is a global for-profit company that operates internationally. They have subsidiaries scattered across all regions of the world. This strategy is effective because it is well suited to localized tastes. Day-to-day operations are handled by the CEO, Todd Stitzer, but each region is represented in a committee so they can react quickly trends. Cadbury is a public corporation which sells shares on the stock market, so you can become a part-owner of Cadbury too!
3. Hyperlinks: https://www.cadbury.co.uk/the-story https://www.cadbury.com.au/About-Chocolate/Chocolate-Making.aspx http://ng.mondelezinternational.com/~/media/MondelezCorporate/ng/uploads/downloads/Cadbury2013AnnualReport.pdf https://thecadburychocolatier.wordpress.com/cadbury-brand-positioning/ http://www.theguardian.com/lifeandstyle/wordofmouth/2012/oct/02/cadbury-crispello-chocolate-bar-women http://businesscasestudies.co.uk/cadbury-schweppes/ethical-business-practices/ethics-and-employment-policies.html#axzz3OvmemFu2 http://worldcocoafoundation.org/about-cocoa/cocoa-market-statistics/ https://www.cadbury.com.au/About-Cadbury/Fairtrade.aspx http://slaptijack.com/it-management/market-strategy-and-organizational-structure-three-companies/
4. Functions of Business
4.1. Production Process: Production starts at the Singapore cocoa factory where cocoa mass is made. Fresh full cream milk is condensed and transported to the factories. Then, sugar is added to the other ingredients to make a creamy chocolate liquid, which is evaporated to make chocolate crumb. The crumb is transported to factories, where it goes through a pin mill and is mixed with cocoa butter and cocoa liquid. The next steps are refining, conching and tempering. For chocolate bars with filling (e.g. Crunchie), the chocolate goes through the process of enrobing. Panning is another process used to coat raisins and caramel with chocolate through a revolving drum. The above video shows the production process for a chocolate egg.
4.2. 2 C's of Marketing
4.2.1. The Consumer Market: Consumers of chocolate can be any age or gender. Chocolate is usually purchased by people who enjoy sweets and have enough discretionary income since it is a want rather than a need.
4.2.2. The Competitive Market: Cadbury has many direct competitors such as Godiva, Nestle, Mars, Ferrero and Kinder. It also indirectly competes with companies like Lay's, Skittles, and other food people eat when they want a treat.
4.3. 4 P's of Marketing
4.3.1. Product and Services: Cadbury is a chocolate company and they offer relatively high quality chocolate compared to competitors. Their packaging is purple, which is a colour of royalty. Their Dairy Milk product is made under Fairtrade.
4.3.2. Promotion: Cadbury uses many different forms of promotions. One method was the golden ticket contest that was held a few years ago where the winner had the option to take home $250,000 or $125,000 and Cadbury's secret formula. They also offer tours of their factories.
4.3.3. Place: Cadbury generally sells through intermediaries, although you can purchase chocolate directly from its factories for cheaper prices. It's products are generally placed near shop exits and beside the cash registers in hopes of people giving in to impulse buying.
4.3.4. Price: Cadbury prices are average compared to its competitors. Chocolate bars cost about $1 to $3.
4.4. Accounting and Financial Statements
4.4.1. Cadbury Income Statement For the year ended 31 December, 2013 (numbers are in thousands) Revenue $35,760,753 COGS 22,660,657 Gross Profit $13,100,096 Expenses $ 7,601,245 Net Income $5,498,851
4.4.2. Cadbury Balance Sheet December 31, 2013 (numbers are in thousands) Assets Cash $17,749,157 Accounts Receivable 6,390,008 Property/Equipment 16,929,458 Other 2,104,001 Total Assets $43,172,624 Liabilities Employee Benefits $4,314,464 Accounts Payable 13,541,296 Other 1,321,933 Total Liabilities $19,177,693 Owner's Equity $23,994,931 Total Liabilities and OE $43,172,624
4.5. Promotional Methods: This is an example of a Cadbury ad. Cadbury also advertises on TV's with videos like the one shown to the right.
4.5.1. Cadbury also uses video ads which are placed on TV.