In
1824, Cadbury was founded by John
Cadbury. John
Cadbury starts to sell tea,
coffee,
and drinking chocolate, in Birmingham,
England. He later moved into the production of a variety of chocolates and
drinking chocolates like nowadays, he has a factory in Bridge Street and his
costumer target is for the high income because the high cost of production.
John Cadbury tries to work with his brother Benjamin and the company’s name
changes to 'The Cadbury Brothers of Birmingham'. In 1905, Cadbury sell its Dairy Milk
bar, which give a higher dose of milk than previous chocolate, by producing the
Dairy Milk bar, Cadbury became the company's best-selling product in that year,
they have £85 million per year. In 1915 more than 2000 employees is send to the
arm by force and to support the war by giving clothing books and chocolate to
the soldiers. They combine Fruit and Nut to the Dairy Milk line in 1928, soon
followed by Whole Nut in 1933. By this point, Cadbury is one of the brand leaders worldwide. In
2010-2012 Cadbury is under Kraft Company, but now Cod bury is under Mondelez
International. Kraft food made a £10.2 billion to takeover Cadbury.
Cadbury was a luxury enjoyed
by the elite society, because of the high cost of producing. However today Cadbury is not a luxury good
anymore, they targeted customers is middle income and high income. The demand
for Cadbury is inelastic. The price of the product can be changes by the
company’s will that because the quantity is relatively less responsive to the
price changes. Therefore, the price elasticity of demand is really useful in
the business world by helping the company to build the price for the product.
In 2011 the price of sugar is increase by RM 0.20 per kg. The original price is
RM 2.30 per kg become RM 2.50 per kg. So the price of Cadbury increase from RM
5 to RM 6, the demand is decreasing from 100 units to 90 units. However the
total revenue increase from RM 500 to RM 540, from that we know that Cadbury is
a inelastic good.
Cadbury has oligopoly market structure. Oligopoly
basically is a market structure where there only a few companies or firms that
dominate the markets. The image below show much money that people spent to buy
chocolate in 2009. Cadbury and Kraft the highest 17.2%, follow by Mars 16.1%,
Nestle 14.2%, and Ferrero 8%.
Cadbury has down
sloping demand curve, when the price is at P1 point and the output is at the Q1
point then Cadbury has the maximum profit. Because if Cadbury placing the price
above the P1 point the demand will be elastic, people will tents to find the
new substituted for the chocolate cause of the high price of the product.
However if Cadbury put the price below the P1 point then the demand will be
inelastic, people will buy Cadbury because of the low price that offered from
the firm.
The price determinant
of Cadbury is affected by the tax from the government, the raw materials and
the customer’s trust. The text gives a big impact to the selling price of
Cadbury’s goods, in 2009, Cadbury was given tax by the government and the
effect is the profit is decreasing from £ 134 to £ 112. However the revenue is
increasing from £ 2440 to £ 2767. That because the sales of chocolate is 10%
stronger than before in UK, India and South Africa. When the raw materials
price become higher, Cadbury does not increase the price instate they cut down
the weight of the chocolate form the 140g to 120g. The reason is so they can
maintain the costumer even though that is a bit risky, that will be more risky
if they increase the price. Cadbury are using many type of cocoa trees from
many countries like South and Central America, West African and Asia.
Cadbury’s risk factors
are financial condition, result of operation, nature impact. Cadbury’s industry
may give a bad impact to the nature like air pollution and sound pollution. The
government may change the regulation in the country because of Cadbury’s
industry. That will give negative impact to many areas like producing,
distribution, labeling and the sale of the product. The changes that Cadbury
has to make will be costly to the company. The sale will decrease because of
the reputation of the company already bad in the society. People will have a
bad image to Cadbury and the sale of the product will decreasing cause of
people prefer to other chocolate company which is more ecofriendly or go green.
The government will charge taxes to Cadbury.
As we all know that when there is a tax and the
demand curve is inelastic, the costumer is paying more the tax than the
company. That will lead the company to have extra payment because of the tax and
even the demand curve is inelastic, when you raise the price of the product
there will be a few customer who will
not buy the product. Then the company will definitely have a decreasing the profits
compare with the previous year.
In order to get profit
in the company, raw material is the first factor that affects the cost and the
price. So Cadbury has come out with a policy to lower the cost of production in
raw material, like candy, gum and chocolate. Cadbury also has a supply chain
team. The team function is making sure of the supply that will be given to the
company like in sourcing of raw materials, packaging materials, planning, manufacturing, distribution
and customer services, as well as quality and safety of products, and employee
safety.
The team also has helped Cadbury to build a good relationship with other
companies that can supply them. After doing this Cadbury will get cheaper price
of the raw material, therefore Cadbury can lower the cost in producing but they
can sell the product in the same price, then they can increase the profit. Cadbury
has invested around £45 million in cocoa. Cadbury also has a policy to cut down
the weight of the chocolate bar instead of increasing the price like in the
third paragraph. Cadbury also has many properties as special farms, in other
countries.
Cadbury
has investing around £45 million in cocoa for over the next 10 years. The
investment not only for the cocoa but also for other reason like guaranteeing a reliable, long-term
source of the right quality cocoa, and the right quality of life for those who
grow the cocoa. Cadbury cocoa partnership based on the willingness to
supporting the cocoa growing, increase the cocoa farmers’ income in Ghana,
India and Indonesia. Cadbury also has invested £1m in 2008 in
seed fund for the cocoa and plan to rise to £5m in 2010.
The targeted costumer
is at the middle age people. Base on the interview that they have made form the
costumers. The reason the Cadbury target middle age people because they already
have income, and Cadbury thinks that by targeting the middle age they also can
receive their feedback about a policy that they have made and knowing how to
improve the product. Beside the middle age people are rarely get sick or
disease like diabetic. Many of the old timers not like chocolate because of
that.
By looking in Cadbury’s
condition, the firm will be batter in the upcoming years, Because Cadbury play
safe in the business. Cadbury has come out with many products to attract the
costumers, as people have many kind of factor that affecting the taste. Like
Cadbury Dairy Milk, Cadbury Luxury, and many more. The proved many chose to the
costumers and they keep innovate the product. Cadbury also come out with many
policies that help the company a lot like invested in the primary needs for
their product. Cadbury also have spent much money buying farms in many
countries, they really prepare in both the long-term plan and the short-term. Cadbury
also choose to cut down the weight instead of increase the price of the
product. Cadbury has though that both the revenue and the profits are come from
the external and trends that alter the environment. All that can be changes in
their business and the internal management strategy, from doing that they can
improve their business.
Reference
Udow , Henry.2008. “Cadbury: Annual Report Pursuant
To Section 13 OR 15(d) Of the Securities Exchange Act of 1934 for The Fiscal
Year Ended 31 December 2008”. Retrieved 23 October 2013 from http://files.investis.com/cadbury/docs/20-F.pdf
Wilkinson, Angela. 2013. ”Cadbury
News”. Retrieved 23 October 2013 from
https://www.cadbury.com.au/About-Cadbury/News.aspx?newsID=161
In
1824, Cadbury was founded by John
Cadbury. John
Cadbury starts to sell tea,
coffee,
and drinking chocolate, in Birmingham,
England. He later moved into the production of a variety of chocolates and
drinking chocolates like nowadays, he has a factory in Bridge Street and his
costumer target is for the high income because the high cost of production.
John Cadbury tries to work with his brother Benjamin and the company’s name
changes to 'The Cadbury Brothers of Birmingham'. In 1905, Cadbury sell its Dairy Milk
bar, which give a higher dose of milk than previous chocolate, by producing the
Dairy Milk bar, Cadbury became the company's best-selling product in that year,
they have £85 million per year. In 1915 more than 2000 employees is send to the
arm by force and to support the war by giving clothing books and chocolate to
the soldiers. They combine Fruit and Nut to the Dairy Milk line in 1928, soon
followed by Whole Nut in 1933. By this point, Cadbury is one of the brand leaders worldwide. In
2010-2012 Cadbury is under Kraft Company, but now Cod bury is under Mondelez
International. Kraft food made a £10.2 billion to takeover Cadbury. 
