Business Avce Unit 5: Cadbury Case Study

Introduction

The person, who created the Cadbury business, is John Cadbury in 1824. The business started as a shop in a fashionable place in Birmingham. It sold things such as tea and coffee, mustard and a new sideline - cocoa and drinking chocolate, which John Cadbury prepared himself using a mortar and pestle. In 1847 the Cadbury business became a partnership. This is because John Cadbury took his brother, which also made it a family business. The business was now known as The Cadbury Brothers. A factory in Birmingham was rented, to produce their products. In 1854 the company received its first Royal Warrant as 'manufacturers of cocoa and chocolate to Queen Victoria'. In 1856 John Cadbury's son Richard joined the company, followed in 1861 Richard and George became the second Cadbury brothers to run the business when their father retired due to failing health.

The first Cadbury factory was built in the country; it was built in the green fields of Kings Norton, outside the city of Birmingham, between 1899.

This place was named "Bournville", which was named by George Cadbury where he built the factory. This took place because George Cadbury had an image, with a saying,

"If the country is a good place to live in, why not work in it?"

So he took his workers to live and work in (the country) Bournville. Further on the years Cadbury invited new recipes, so new chocolate were been created, for instance in 1915 Cadbury's Milk Tray, in 1920, Cadbury's Flake, in 1938 Roses were created.

In 1969 Cadbury and Schweppes that is a beverage business merged together as a business. This business grew worldwide over centuries, it manufactured, marketed and distributed products in over 200 countries and new chocolates and drinks were been created. While confectionery and soft drinks remained the core of the business, the group also expanded into related food categories such as hot beverages and biscuits and also into health and hygiene

The main activities of Cadbury after it merged with Schweppes are to produces confectionery such as crunchie, twirl, roses, mini egg, whole nut, Cadbury's Milk Tray and beverages such as Dr Pepper and Seven up. Cadbury and Schweppes have 180 brands.

Now these days Cadbury and Schweppes the business is functional it is owned by many shareholders (some of whom are members of staff). The company employs around 38,000 people worldwide but in Britain 12,000 employees. The company owns 7,500 vehicles that are used for the business (delivery) in Britain. In Britain there are 17 Cadbury and Schweppes sites.

Ownership

Cadbury is a public limited company. It has the opportunity to become larger than the other forms of private business organisation. It is allowed to raise capital through the medium of the Stock Exchange, which quotes their share prices, and this creates a fullness of financial possibilities. The initials "PLC" (or plc) appear after the name of the public limited company. Only two people are needed to form a public limited company and there is no stated maximum of shareholders. In Cadbury's case it is owned by many shareowners, some of whom are members of staff.

Cadburys business advantage is:

Ё Shareholders have limited liability, so it means that the shareowners lose what they put in the business and they receive annual dividends.

Ё It is easier to raise finance from banks, because Cadbury has many assets, which means banks are insured their money back or Cadbury's assets instead of the money.

Ё Since it has many assets, it is possible to operate on large scale, which means more production and promotion for the product. This leads to Cadbury's objective to grow the business and also to operate in a wide range of markets. This leads Cadbury to have a high income, which is a success to Cadburys objective, which is to maximise profits.

Ё Suppliers feel more confident about trading with legally established bodies

Ё There are tax advantages associated with giving shares to employees

The disadvantages are:

Ё Since Cadbury is a plc, its affairs are public; e.g., accounts and annual returns must be audited. This gives opportunities to competitors to get information about Cadbury. For example if Cadbury makes a loss, investors (competitors) will know about it and use it to their advantage.

Ё It's a complicated business. Cadbury is a large business it has many different departments for different jobs, all these departments have to work together. Information passes between departments can be confusing.

Ё Cadbury has many assets, which contain many capitals, which are very costly to use.

Ё Since Cadbury is a large business, formatting and running, its costs can be expensive

Ё Since Cadbury is a plc, Heavy penalties are imposed if "rules" are broken.

Objectives

Public limited companies like Cadbury will have objectives such as:

v Maximise profit

v To be the number one product in a given market

v To maximise sales

v To grow

v To operate in a wide range of markets

v To give satisfaction to customers

v Have a good reputation

v To provide the freedom for workers to express them selves and suggest ideas to help the business

v Achieve best possible financial return on capital

v Boost or maintain share market values

These objectives will ensure Cadburys success as a business. From the statistics I have, it shows that Cadbury is a very successful business.

Statistics from 1994 to 1998.

The statistics from the financial overview show the finance has just been increasing positively.

They have satisfied shareholders because their share increased by 6%.

There

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