Objectives of Cadbury Schweppes plc Essay
Growing organically and by acquisition’ – growing organically means is to expand the company e. g. more factories produced, more employees recruited from outside of the company and etc. Acquisition is when a company merges with another company to be stronger and to achieve the company’s objectives for growth e. g. Cadburys limited merged with Schweppes to become a more stronger company. Setting clearly defined and realistic objectives will enable many employees for CS to understand exactly what their job entails and achieving clearly stated objectives might be linked to bonus payments which can easily act as a motivation to employees.
As you can see, CS main objective is strategic objective because a primary objective is an ultimate long-term goal for their business. I personally think that the growth of any business is what CS or other companies use to survive as a business. If CS don’t keep expanding their company, they then will find it hard to compete with their competition e. g. Nestle. If CS doesn’t keep up with their main rivals, they then can decline in demand, which can ruin the company. If CS do grow and dominate the market, they then can experiment more with different brands
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If CS do experiment with more new brands and doesn’t do well in the market, CS then can rely on their other brands e. g. if the new brand ‘Boost’ doesn’t do so well with people, CS then can always rely on other brands ‘Dairy Milk. ‘ This is known as risk-bearing economy of scale. CS objective can also be placed into a secondary objective also because without the primary objective, CS primary growth strategy can be minimised without setting a day-to-day objective, which makes a direct contribution to meeting the primary objectives e. g.
increase sales by 5% each year, keep labour turnover at less than 4%. If secondary objectives are accomplished within CS, they then can develop their company. The growth objective is mainly a long term objective but I also think that the growth objective of CS can be a short term because short-term objectives will often differ from long-term objectives, especially if CS is experiencing poor financial performance at present. A short-term objective may be to consolidate, or even simply to survive the difficult trading conditions that it is experiencing.
Once this has been achieved and the business has stabilised its performance, then it may well look to achieve its long-term objective of diversification into new products and new markets, or growth through joining up with other firms. CS objective for expanding is in the private sector because private sector objectives will often differ considerably from objectives set in the public sector. Profit maximisation is often quoted as the over-riding objective for CS in the private sector.
This will involve trying to produce at the point where there is the maximum difference between the firm’s total revenue and its total cost, which results in large dividend payments for the shareholders. However, it is far more likely that CS will aim to profit satisfy rather than profit maximise (that is, they will aim to earn a satisfactory level of profits to keep shareholders content, and then use the remaining resources to pursue other objectives such as diversification and growth).
CS set objectives to improve their image and to appear more socially responsible and environmentally friendly, which is often achieved through strategies of recycling materials; sponsoring local events and strictly adhering to all employee legislation e. g. pay levels, Health & Safety, discrimination, etc. One of the best-known publicity that CS has is advertising and sponsoring Coronation Street, which is a well-known soap program in the UK. I personally think that CS is growing and will increase in the future.
One of the reasons that CS is increasing very fast in the market is because of the impact of Information Communication Technology (ICT). ICT combined computer and telecommunications technologies that made it possible for CS to work almost anywhere. Very few jobs are not directly or indirectly affected by computer technology now. The change of using ICT has happened very quickly and has changed CS. Before the use of ICT, CS had to use paper work to keep information on. This has now developed to be keep information on computers and other sources of ICT. Emailing is a very useful aspect of the Internet.
It allows different members of CS to work together although they maybe in different parts of the country or even the world. The Internet also provides CS to have a web site that will attract a wide range of people, which will increase CS growth and income objectives. Web sites can cause CS competition hard to compete with CS because of the attraction of the web site, is making the rivals of CS hard to compete with CS. Mobile phones are also has an impact on CS which means that employees can be contacted at any time either directly or by text messaging.
This is not always an advantage and can lead to people feeling stressed as they are never away from work. As you can see above examples, there are many ways that ICT can affect CS, which helps CS to keep growing and compete with their competition. The two ways that CS can grow are internally and externally, which CS uses both methods to grow. They use internal growth because it increases its size through investing in its existing product range e. g. Dairy Milk, or by developing new products e. g. Boost.
This will normally be financed through the use of retained profits (from previous trading years), bank loans or through the issue of shares. Internal growth is a slower and safer method of expansion than external growth. Cs also has used the external method for growth, which happened in 1969, when Cadbury Limited merged with Schweppes to increase the company. This type of merge is called Lateral, which occurs where two firms combine which are similar in some way, but are not in the same industry e. g. Cadbury-Schweppes.
Here, both companies produced products which were sold to similar market segments (confectionery and soft drinks). Often, the firms can benefit from the management and marketing techniques employed by the other. I think Cadbury Schweppes objective to grow as the best beverages and confectionery industry is accomplished in many ways but I also think they are not expanding as fast as their competition. To see how these two of my judgements are analysed and justified are by doing comparison against CS main competition who is Nestle, Mars Inc, Hershey and Phillip Morris.
The other way to see whether CS has grown is by statistics. Using these two types of information, I can see if CS is really expanding or decreasing compared to their competition. The growth of Cadbury Schweppes: Since 200 years when Cadbury was born, the business has grown one of the best beverages and Confectionery Company’s. I personally think that CS is growing at their pace but not at the pace of their competition. However I believe that CS is still growing. There is also proof that CS objective “Cadbury Schweppes’ governing objective is growth of shareowner value,” is true.
In 1997, CS introduced Managing for Value (MFV) with the aim of producing superior and sustainable returns for its shareowners (“Cadbury Schweppes’ governing objective is growth of shareowner value. “). Since 1997, CS has set three term targets against which the progress can be measured. Primarily, these targets are growth in underlying earnings per share, free cash flow generation and superior growth in total shareowner return. The targets have been set over four year periods, the first from 1997 to 2000 and currently 2001 to 2004.