Research Korner: Cadbury Case Study

Cadbury Research Proposal

Introduction   Governance has existed in the form of company legislation for many years and is not recent phenomenon. Against a background of corporate turbulence in recent years, it has taken on a prominent role since the 1990’s. Beginning with the Cadbury report in 1992, a number of codes and practices have been introduced. These codes require U.K listed companies to comply with their provisions and recommendations on board structure and activities. Whilst good governance is deemed to promote corporate stability and shareholder confidence, it does not contribute to the bottom line and would not prevent corporate disasters such as Enron and WorldCom therefore a question comes to mind - will the shareholders and other stakeholders derive any benefit from the changes to the Combined Code if the Higgs report is adopted.   Much of the focus has been on Institutional Investors, Executive directors and best practice codes, with improving the effectiveness, competency and efficiency of boards. As a result structural and operational aspects of corporate boards have been questioned. (Hermalin and Weisbach, 1998; John and Senbet, 1998; Frank et al, 2001). There has, to date been much comment and speculation but little rigorous research has been on non- executive directors who are most affected by the Higgs proposed changes to the Combined Code.   The context of my research will describe and discuss recent changes in the pattern of work of non-executive directors of large public limited companies in the U.K. An analysis will be made of the impact on their work of the series of reports and codes on the revised combined code which was published in the U.K.in 2003.  This connected series of report and codes was initiated with the publication of the Cadbury Report in December 1992 and a revised version of the combined code published 2003.  In my proposal and dissertation, I will refer to the series of revised reports and codes as the ‘Cadbury series'.   My research findings will be  based on  the views of a group of non-executive directors who, in 2003, would still have been on the boards of large public limited companies, which they would either have joined during, or prior to, 2003.  The target companies will be constituents of FTSE 100 and 250 indexes and because most of these non-executive directors would have served on their boards throughout the changes initiated by the Cadbury series, they will be in the position to assess the impact of these changes on board behaviour within their individual companies.   Research Objectives   The main aims and objectives of the proposed research are:   To explore the structures and patterns of work in the past. In order to achieve this aim a series of interview questions and interviews will be developed to produce summary statistical measures concerning the era before the Combined Code came into force;   To examine and analyse the extent of separation of chief executive and chairman roles, and the proportion of chairmen who were independent at the time of appointment;   To establish the length of tenure of non-executive directors and chairmen along with an examination of the procedures regarding recruitment, appointment and the diversity, skills and expertise on the board; and   To analyse the impact of a Senior Independent director and relate this to a wider examination of the relationship with major shareholders.   Potential Impact of the Research Higgs recommended in his report that the Government and the Financial Reporting Council measure the extent to which behaviour has changed as a result of his proposals and review the progress against his recommendations two years from the date of the review in July 2003. I trust that this research will add and or build upon other research currently being carried out by providing a wide –ranging perspective on the impact of Higgs proposal. Recording the opinions of non-executive directors through which we catch a glimpse of boardroom behaviour and its associated activities, will not only inform and enlighten fellow researchers and  but will also, hopefully, stimulate further analyses on this topic and raise issues concerning contemporary trends and future developments in the corporate world of governance.   Research Methodology As a qualitative research, it will be implemented in two phases. In the first instance, five to six areas of change proposed by Higgs will be the subject of discussion and my main focus of research. Names of non - executive directors will be drawn at random from a variety of public sources of NEDs at both FTSE 100 and FTSE 250 and where necessary lists of names will be purchased to facilitate the process.  A questionnaire will be prepared and presented to the NEDs in question to compare the situation in 1992 /99 with that in 2003 in order to assess the level of change in their involvement and the involvement of their boards in defined tasks and activities.   The second phase of the research will be conducted through semi-structured interviews. They will be asked a series of questions, the responses to which will subsequently be used to test a series of research propositions about the impact of the Cadbury series. Where appropriate, the researcher will match the findings of the research conducted to the specific issues

Cadbury Research Proposal

Introduction Governance has existed in the form of company legislation for many years and is not recent phenomenon. Against a backg...

Cadbury

Cadbury Cadbury is one of the world’s largest businesses that is engaged in a chocolate business and positioned itself in the market as one of the company that has a great market share for almost all of the countries. Moreover, the company also spread in the emerging markets most especially in the competitive markets where the company will find another domain. The popular products of the company includes many global, regional and local all-time favorites such as Cadbury Dairy Milk, Flake, Crème Egg, and Green & Black’s in chocolate; Trident, Dentyne ad many other popular brands that  are available in the markets. PESTLE Analysis Political – The Company’s strong advantage is the seniority in business. With that the company can able to manage any adjustment needed in every country. The seniority of the management enables the other foreign country also welcomes the company’s existence because of its competence in the market. Economic – There is no doubt that the Cadbury is making a big contribution in the economies of the foreign country as well as in their own country. The high level or rate of sweet-lovers, the company placed a label as the best choice of the market. Another contradicting factor is the economic downturn that affects all confectionery companies. Social – The impact of the business in the society is really great because of it became sweeteners after every meal. Therefore, many individuals can enjoy the happiness it brings inside the house. In some instances, the other people turned down the idea of eating chocolate because of some serious health problems. In terms of valuing the people, Cadbury recognizes the rights of the workforce and valued the ideas they might contribute for their progress. Technology – From the traditional crafting of chocolates, the company also recognized the importance of technology. From the production, Cadbury had incorporated into many types of machinery that make their production be a cost-efficient procedure. Legal – The ideas of creating a specified taste to be available in the markets. The competitors and the other company making the same nature of business are unique. In terms of the merging and acquisition business, the company recognized the legal aspect that is the basis of the right flow of the business.  Environment – The Company recognizes the certain impacts that they might bring in the environment. There are available strategies and continuous inspection came from the local officials to insure that the resource, as well as the environment is not exploited. Porter’s Five Forces Analysis Supplier Power – The Cadbury has many contracted suppliers that can support their on-going operations. Although there is an existing competition, the raw materials such as nuts or special ingredients are sufficient enough to satisfy their production. The good relationship of the company in their suppliers is considered as an advantage. Barriers to Entry – Since the company is already popular and widely known, Cadbury can earn the trust of the countries. The only hindrance that might affect the production of the Cadbury is to find a good location and gather the requirements for the smooth entry and the foreign policy that might affect the operation. Power of Buyer – The demands is not that high because of the existing health conscious. The price subjectivity of the products is not a question for the people but the increasing number of competitors that offers the same type of products at a lower cost might be the cause of the customer loyalty alteration. Rivalries – Many businesses are competing against the Cadbury and planning to take over the supremacy the company kept for years. The difference of choice depends on the taste ad preferences of the customers. And in the past years, companies like the in the other industries are continuously developing their products or innovating the ideas making it more hard to compete. Threats for Substitutes – There are only a minimum rate for threats which came from the other competitors. The reason behind this is the brand strategy already created by the company. Through their high level of equity, the brand name is transformed into three different categories that make it more effective in the market. It allows the corporate brand name to be combined in supporting the product identification.  Corporate Strategy The company’s board of shareholder values and believes that it is best to achieve the strong performance through the growth of opportunities and maintaining their strong position in the market. In addition, the brilliant minds of the corporate sector are guided by their plans and using the importance of their brand strategy that involved specific targets and continues to focus on it. They addressed in forward looking plans that tries to diminish any uncertainties and challenges involved and exchanged it with strategies based on the assumptions existing in the present markets. This idea will help the company operate for the future and achieve long-term reign.

Cadbury

Cadbury Cadbury is one of the world’s largest businesses that is engaged in a chocolate business and positioned itself in the market as...