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Principle of Marketing

Answer to Question 1:

Cadbury Schweppes has always held the image of “corporate good guys” because of their strict adherence to one basic principle: “responsible wealth creation.” (Cadbury Schweppes, n.d.,  p. 10) In fact, this phrase can be seen on the front of their Corporate Social Responsibility Report. Although these words have been configured only recently, seeing the company history would establish that this principle has been a founding concept of one of its major stakeholders, the Cadburys. This family has been the driving force towards changes in both the company’s internal and external environments.

John Cadbury, its founder, started the company early in the 19th century as a beverage company offering tea, coffee and cocoa. Being a Quaker, Cadbury conceived the idea of selling these items as alternatives to alcohol.  Although he started his shop with just himself and his ideals, his sons, George and Richard, were able to develop the company in the middle to late 19th century and they made sure that their company would have an organizational culture that fully respected and took care of their approximately 2,600 employees, the second major stakeholder of the company.

To ensure this, they created a village with a factory in a garden in Bournville.  Employees were trained to have a well-rounded approach to work.  Throughout their leadership in the company, the Cadbury Brothers were able to create 12 acres of recreation grounds to encourage employees to take up sports and exercise.  In fact, swimming lessons were available to those interested.  Summer concerts in the open air were a regular affair and an educational academy was built to help employees develop themselves.  The Cadbury Brothers were one of the first to embrace participative management in their factories.

They allowed the experimentation of different management principles to find solutions to many social, industrial and labor problems. By 1918, the brothers established two Work Councils (one for men and another for women) that took care of conceptualizing and implementing its social responsibility to its employees.  These were in-charge of ensuring safe working conditions, determined their salary rates, established good education benefits, conceptualized recreational activities, developed housing and health programs.

This sincerity in making Cadbury a good company in all aspects has been passed on to the next generation in the person of Adrian Cadbury, who developed their business even higher to the next level by going global.  However, buying new brands such as Typhoo, Kenco and Peter Paul entailed the need for changes in management structure.

From factory management, Cadbury had to develop divisions that encompassed factories in order to adapt to their new business environment.  Instead of its daily and yearly planning, management has also decided to fund four year plans to encourage long-range planning without hampering its productivity with the problems of annual budget acquisition. In a sense, from the very paternalistic system of management, Cadbury has turned into a decentralized structure.  By the 1980’s, the board was restructured to allow non-executive board members and by 1990, there was a shift in focus from simple productivity and growth to increasing shareholder value.

By 1997, a scheme called Managing for Value (MFV) was formed to make employees more accountable, aggressive and adapatable in pursuing goals.  This enabled employees to put more value in every step of the process they were in. To encourage even better participation in this program, the company decided to put more value for these stakeholders’ work output by providing them incentives in the form of shares of stocks. By the end of the case study, 20 percent of the employee population owned shares of stocks.

The two major stakeholders who have obviously formed Cadbury into the entity that it has now become are obviously the owning family and their employees.  The Cadburys took to heart their responsibility to care for their employees and this has influenced the changes that the company went through to become the good global giant it is now.  Other stake holders such as stock owners and suppliers are also affected greatly by the family’s business tactics because the growth of the company entails better business deals.

Also, the general public stands to benefit a lot from the sincerity of the Cadburys to promote good ethics.  This ensures that the products that go into the market are safe and of good quality.  The Corporate Social Responsibility Committee it has recently established is proof of this company’s commitment to provide great value in the environment it seeks to participate in.

From a one-man shop to a 2, 600 employee company to a global entity that requires 60,000 workers and 40,000 suppliers, the Cadburys and their pursuit for corporate social responsibility have been the main driving forces that start great changes in the company’s business environment.

Answer to Question 2:

The epidemic on obesity is a threat to the confectionary and snacks industry because of the issue that it forces to the surface… that left alone, consumers will not choose healthy food and will overeat what is not as nutritious. For its part, Cadbury Schweppes has tried to do its part in informing customers of the proper intake of sweets with programs such as “Be Treatwise” and the “Get to Know Your GDA’s” campaign which give out data on what a true balance diet should mean.

It has also launched its Cadbury 99 line which sized or packed chocolates based on its caloric content (which should be below 99 calories per piece). Although critics still lash out on the company for being unrealistic, it is also very illogical for these people to insist that the industry regulate itself.  Government intervention must happen to correct this market error.

The epidemic on obesity has been uncovered late in the last century and yet its victims are still rising.  The problem is not with a virus nor is it with a fast-spreading bacteria.  The trouble lies with the public discipline and just like any public problem, it is the government’s role to find the solution.

Obesity can be considered as a result of market failure which is a term used to indicate the “lack of success of a market to provide efficiency in the manufacturing of its resources.” (Lipsey & Chrystall, n.d., p. 148) A perfect scenario of the food industry would involve consumers purchasing food based on the nutritional pyramid or the guideline daily amounts recommended.

This ideal setting would also indicate that suppliers of nutritious food would be dominating the industry compared to those who are manufacturing snacks and sweets. However, this is not the case.  Consumers prefer processed food over organic not only because these are usually tastier but also due to higher costs of health food. This preference for less healthy food plus the lack of physical activity creates the phenomenon called obesity.

Obesity is an externality or a result not intended by the players (food manufacturers and its consumers) that affects the general public.  It can be likened to a pollutant residue of a factory that seeks to manufacture good items but unintentionally causes harm to the public that it serves due to lack of waste control.  It would be a mistake to assess that obesity is a byproduct of greedy food manufacturers who are out there to sabotage the health of their consumers.  In a sense, it is the public’s lack of will power that should be controlled and this makes it a concern of the government.

Government officials have been elected or placed in their powerful positions because people believe that they have the ability to think of ways to make everyone else’s life better.  One of the things that health buffs are asking the government to do is to increase information or awareness about proper diet and healthy lifestyles. However, this is not enough to sway the public towards nutritious food and aerobic exercises.  Schools have been including health information in their curriculum and every student has at least a small inkling of which foods are healthier than most.

The government needs to create stronger measures against poor health habits to be able to succeed over obesity. There are suggestions that school food should be regulated to ensure its health benefits.  Another strong proposal is to ban vending machines and the marketing of junk food to children.  One more idea could be to mandate that all working people should have their time to do physical activity equal to the prescribed amount of daily exercise. These are great propositions that government should seriously consider but caution must be taken because these can also mean overstepping on citizens’ human rights.

Freedom of choice is a fundamental belief that is upheld by almost every strong capitalist government. Each of its citizens has the right to choose what he wants for his own life.  The government can look abusive if it decides to overstep its power and force its people to eat a proper diet and regulate its physical exercise.

However, the problem with obesity can be compared to the problem of drug addiction.  It is a general assumption that the government must act against drug abuse because its victims cannot help themselves from becoming addicted to these substances.  In lieu of individuals’ who cannot discipline themselves for their own good, the government acts as the authority to help them move toward a better and more responsible life.  Obesity is just like drug addiction.

It can be seen that although many people are aware of the pre-requisites of good healthy habits, most prefer to act otherwise to indulge in their own sweet or delectable albeit less nutritional choices. It is the lack of discipline that creates obesity and government may have to take stronger measures to help people with weaker wills to fight their obsession with unhealthy choices.

Answer to Question 3:

“The increase in the number of laws requiring that firms recall products that are defective has resulted in the realization that companies must now begin to develop reverse distribution systems to handle the flow of recycled and defective products.” (Lancioni, n.d., p. 166) Being a very efficient entity, Cadbury Schweppes has been able to establish good reverse distribution systems to easily recall its contaminated products once the British Food Standards Agency (FSA) demanded it. It may have also helped that its chocolates were popular and easily identified by the general public.  However, the contamination of salmonella and the FSA’s stern reprimand can mar the very clean reputation of a company known for its high ethical standards.

Critics who are always out to find something bad to say about almost perfect institutions like Cadbury Schweppes would like to believe that the company tried to avoid the recall by not informing the FSA early enough.  However, it has already asked a laboratory to contact the Health Protection Agency for its assistance in January and it was the agency that delayed its report to FSA for six months. The company still has to bear the possibility of sanctions even when they immediately recalled one million suspected contaminated chocolates at once. This could mean major losses financially and also a public relations wound that may not heal at once if not treated well.

Cadbury Schweppes prides itself on its ethical standards.  In fact, one of the five pillars of corporate and social responsibility that the company prioritizes is environmental health and safety.  It is this thrust that made the company quickly but systematically throw the contaminated chocolates.  Before doing so, wrappers and packaging were fast removed and recycled while the chocolates were secretly dumped to landfills for security purposes.  A post graduate student had suggested that the sweets be incinerated and recycled for energy but that would have delayed the process and may even aggravate the situation if mishandled.

“The societal marketing concept holds that the company should generate customer satisfaction and long-run societal well-being as the key to achieving both its goals and its responsibilities.” (Kotler, n.d., p. 88) Cadbury Schweppes has been one of the companies that have realized this earlier since its founder’s Quaker principles have been the firm motivation of any key decision in the company throughout the decades. This shows in its ethical waste management targets which are included in its 2006 Corporate and Social Responsibility Report that seeks not only to decrease the company’s solid discards but also to initiate a system that utilizes fully biodegradable and recoverable packaging by the year 2010.

As of the moment, the company is stern in recycling not only in its plants but also its partnering suppliers. In the United States, Cadbury Schweppes overhauled a product’s packaging which resulted to the removal of 3.7 million pounds of plastic from the landfills of America. A plant in India designed an incineration system that was able to completely delete its incinerated waste. In Australia, used wrappers are transformed into plastic pellets that can be used for stocks.

Machines and equipment are regularly maintained which results not only to the reduced need for water but also lessens the liquid trash that the company produces. This may not seem to be  a great feat unless seen in relation to the approximately eight million cubic tons of dirty water that the company discards to maintain its manufacturing processes.

 Even then, the company takes on the responsibility of pre-treating the water before it is sent to local treatment facilities. In Egypt, they even deviced a way to remove the fat and grease from the liquid waste before it is turned over for treatment.  Research is also being done in cooperation with the University of Birmingham to create electricity with the used water.  If the studies become successful, the company would be able to generate its own energy for their factories which results not only to a cleaner environment but also to cost reductions.

Although the salmonella contamination may have caused a big dent on the company’s clean reputation, financial books and its Quaker pride, corporate management will surely be able to take it as a lesson learned to even improve the company’s ethical standards. Having been known for their strict adherence to good ethical standards that uplift not only the company and its employees but also its consumers, Cadbury Schweppes will find better ways to ensure the health of its business in a very competitive but rewarding industry.

Answer to Question 4:

The Quaker culture from where the company has started is still evident in Cadbury Schweppes’ business culture.  In the industry, the company is known as one of the corporate good guys- always in keeping up with the ideals of social responsibility in the confectionery business it has sought to establish itself in.  It has become a good example of a big corporation that has truly given much of its effort to show the world that people can profit without having to sell their souls.

“Organizations are goal-seeking phenomena.” (Salaman, 2004, p. 14) This best describes how John Cadbury started his company.  It was this man’s vision to find a way to temper his society’s problems related to alcohol drinking that led him to open a shop that sells tea, coffee and cocoa.  It was John Cadbury’s goal to answer a societal need that prompted him to earn a profit.  The strength of his business was his ideals but it was still quite weak in the sense that it was a one-man show.

 It was his two sons, George and Richard, who envisioned an even greater dream of having a big company that not only profits greatly but totally puts value in the lives of the people who participate in its production and management.  The world was just learning more about running businesses in the 1800’s and  the Cadbury Brothers decided to set-up a hacienda system within the company.

The corporate culture they have established was based on the idea that “in culture there is strength.” (Deal & Kennedy, cited in Thompson & Mehugh, 1995, p. 143) Studies on human resources management reveal that although employees can be different from each other and irrational in their behaviors, employees can be handled properly through incentives that revolve around their daily lives. The Cadbury Brothers built their strength on this principle and decided to create the Bournville factory that was known as a village factory in a garden.  The approximately 2,600 workers had a well-rounded approach to work within their paradise-like set-up.

There were acres of grounds devoted to recreation and laborers were advised to take advantage of the facilities to live healthy lives. There were avenues for them to learn more through academic incentives and the Cadbury Brothers sought to find ways to show the community that profit can actually be earned through hard work, perseverance with complete devotion to social responsibility. To draw the employees closer to the company, the Cadbury Brothers decided to experiment with participative management and other principles that could help solve the labor illnesses of society during that era.

By the turn of the century, work assemblies already abound and “traditional work patterns were often non-market oriented,” (Littler, 1985, p. 159) The brothers decided to adjust their management style by setting up Work Councils to handle the working conditions of both male and female workers. This even put more strength into the company as employees were truly well-taken care of in every aspect of their lives.

However, by 1952, this management style would have crippled a company that sought to encompass other brands in the market.  Diversification was the name of the game at that time and the “hacienda” type of management was not going to be effective in dealing with even more factories.  Diversification and globalization meant the infusion of different cultures which would have been hard to handle under their Bournville factory type of scheme.

Sir Adrian Cadbury decided to gear towards division management yet he still tailored-fit it to promote what was best for the company and its employees.  He decided to fund four year planning schemes instead of annual budget allocations to help his managers fulfill their responsibilities without the burden of having to ensure their budget for the upcoming year. Being quite a large entity already, by the 1990’s, it was already time to devote more attention to putting value for shareholders instead of focusing on growth.

To keep the interests of his employees on their work despite the pressure to become more goal-oriented, he converted his incentives into shares of stocks.  At the time, many companies were using hard views of Strategic Human Resource Management (SHRM) focusing on cutting down costs through replacement of manual labor with equipment and machinery.  Still, Cadbury leaned towards the soft view of placing more importance in developing the commitment, creativity and drive of the company’s labor force.

The strength of Cadbury Schweppes is founded on its sincere appreciation of its employees while the weaknesses that were connected with the developing environments were easily managed because of the company’s focused direction towards social responsibility in whatever endeavor it chose to tread.

 Bibliography

Kotler, P. (n.d.) Principle of Marketing (European Edition). London, Prentice Hall.

Lancioni, R.A. (n.d.) Reverse Logistics. In: Gattorna, Aldershot Gower 4th ed. The Gover

            Handbook of Logistics and Distribution Management. pp. 166-173.

Lipsey, R.G. & Chrystall, K.A. (n.d.) Title of Book. Place of Publication, Publisher.

Littler, C. (1985) The Experience of Work. Place, Publication.

Salaman, G. (2004) Organisations. Module 4 Study Guide. U.K., The Open University.

Thompson, P. & McHugh, D. (1995) Work Organisations: A Critical Introduction.

 

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