Cadbury Schweppes: The Strategic Dilemma of Trebor Bassett

Résumé du document

Cadbury Schweppes is a UK-based beverage and confectionary group founded in 1969 with the merger of two English groups (Cadbury and Schweppes). This family-managed group grew and flourished through the years. It became an international player in the late 1980s and was admired by its peers for such an ascent. In 1990 the group bought two little entities from the same business and merged them into a single unit: Trebor Bassett. The CEO of this unit soon became the CEO of the group (1993) and he then realized that the success was seriously in danger

Extraits

[...] Indeed thanks to Sir Dominic Cadbury's governance from 1983 to 1996, based on an international development and several strategic acquisitions, the company had become a truly global player: the financial company turnover increased by 30% between 1990 and 1996, the operating profit by 144%. This performance was underlined by the Most Admired UK Company Prize, awarded by the representatives of Britain's top 250 publicly traded companies and 10 leading investment dealer companies. In 1996, Cadbury Schweppes gathered activities in two major fields, both consumer-oriented: confectionary and beverages. The beverages branch was highly competitive, all the more so as few giant players operated on the market. [...]

[...] This signified a holistic change effort and a complete commitment from the top management in order to reach MfV's full benefits. The simply fact of saying that the company commits to shareholder value or aims at becoming “best in class” or is not a guarantee for success. Therefore, creating a consistent basis of value creation may appear unconnected with the organization. Limitations In such a large corporation, managers have to cope with organization's complexity and to ensure employees are connected with each business, from the top to bottom and across. [...]

[...] - Fragmented market allows a better segmentation for strategic coverage. - Great variety of pack sizes and formats creates a problem of visibility and differentiation. Bargaining power of suppliers Bargaining power of buyers Threat of substitute Products and services Threat of new entrants Substitute products - There is an ongoing trend towards bag sweets. [...]

[...] Understanding that VBM is about cultural rather than financial change may itself be part of the answer. Paying attention to people and culture issues allowed the pilot Trebor Bassett to begin with the program in 1997 giving accountability to the unit managers to “sharpen their thinking and broaden their vision”. In order to give them a better insight and a real sense of such a challenge, they were given more strategic power and responsibilities. A more extensive communication was settled too with training workshops for the managers and communication tools around the MfV way of work. [...]

[...] As a result, Cadbury Schweppes did not implement a lot of long-term projects, simply because profits had to increase year after year . that leads to management difficulties: the example of Trebor Bassett Cadbury Schweppes acquired in 1989 the George Bassett Group and the Trebor group, two of the largest British sugar confectionary firms. Trebor Bassett started life as a full entity in 1990 and became the sugar confectionery market leader with a 27% market share ahead of its major competitors Nestlé Mars and Wrigley's However, after its results peak in 1994, TB came to symbolize all the shortcomings of Cadbury Schweppes management process. [...]