Integration of the Corporate Culture: Kraft and Cadbury Partnership

4 pages
1007 words
Wesleyan University
Type of paper: 
Case study
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In the case of a merger or a takeover, it is important for the two companies to be sharing a similar corporate culture for both the acquiring and the acquired company. The aspect of cultural differences was a significant concern in the case for Kraft and Cadbury as they had some different cultural perspectives. Kraft eventually managed to resolve the issues by molding and unifying the two companies. Cadbury remained as a subsidiary of Kraft rather than full absorption into the corporate structure of Kraft. This help in the retention of the respective cultures creating a positive atmosphere and preventing any further future conflicts in cultural preferences.

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Strategic partnerships

Mergers mostly fail because they tend to engage in expansive corporate operations in the specific markets by offering complementary goods and services. However in the case for Kraft and Cadbury the purpose of the merger was to increase the distribution of the products in the key markets.

The acquisition of the 840p share prices and an added dividend gave the Kraft shareholders a substantial value for their shares. The undertaking would see the companys long-term growth accelerate by 4%-5%. The deal also ensured that Krafts earnings per share in the long-term would increase from the average of 7%-9% to an average of 9%-11% range. The companies would gain a competitive market notch through the combination of resources and pooling of their customers to the same platform. The companies would become the leading confectionery, snacks and fast meals company, allowing Kraft to engage in a fast-paced economic growth.

In the global confectionery goods sales, this alliance would enable Kraft into get to a top position in the industry and the market above Mar Wrigley. The combination of Kraft-Cadbury would also ensure that both companies would have a broader footprint in the global market and mostly in the developing countries. The markets that would now be covered broadly included Russia, Brazil, and China. Concurrently Cadbury would provide a strong presence for Kraft in India where their presence has been minimal. Cadbury would also provide a bigger presence for Kraft in the E.U where the company had initially experienced difficulties in obtaining the right economies of scale as it has in the home turf. Another competitive aspect that the company will gain is that the levels of incomes will rapidly increase, leading to a broader income base thus more money available for investing and marketing purposes.

Scales provided an increasing source and basis for the competitive advantage in the industry where Kraft would become the leading company in the biscuits and the confectionery, scales and an opportunity in the innovation industry. For the distribution aspects, Cadbury shall provide an effective and efficient ground for Kraft in the areas that it has lacked the right level of the competitive advantage. For instance, in the United States, the distribution network for Kraft to the supermarket lines as well as other major retailer lines sees the company enjoy highly dominant positions. The distribution network for Cadbury is skewed towards the consumption channels that are instant for instance the petrol stations and convenience stores. This merger allows Kraft to distribute and sell their products through some of these instant consumption outlets; this is because the channels available to Cadbury now form a comprehensive market network.

The new offer that was revised in the merger increased the reserved revenue resulting from the acquisition from $625M to $675M. The significant increase provides for a strong market presence and influence for the company, meaning that by enjoying a significant market proportion, then the companies would be in a position to control some of the market attributes. The combination of the companies would ensure that the companies realize $300M from the operational synergies in savings while there would be more of $250M savings with respect to the general and the administrative expenses while $125M would result in the savings from the advertising and the marketing activities. The combination of the two companies was the right form of collaboration for the two companies with respect to market domination.

The two companies share a corporate culture, meaning that the synchronization of their activities would be smooth and accommodate for the two companies. By implementing the strategies, then the Kraft would be in a position to appropriately manage their activities as well as identify the combined set of competency skills that are essential to foster growth and development thus leading to growth in the profits. It is important that the managers should be in a position to be in a position to formulate an ad identify the essential strategies for the companies.

In summary, from the many strategies that Cadbury tried to implement so that they can retain their competitive advantage. However, only some of the strategies that can be fully implemented such as the takeover strategy that saw to the immense accumulation of resources that could equip the company to emerge as a market-dominating giant. The merger and the acquisition helped the company to replace the dispersed and the autonomous local retail outlets. Gaining of competitive advantage in the market entails making of effective and informed decisions that help the organization to prosper.

Through the strategic takeover and merger, then the two companies can accomplish their objectives by focusing on the market strategies and further dominance. The implementation of the pooled resources, shall allow for more enhanced competition over the other competing forces. The aim of the action was to concentrate more on the customer base by enhancing the products they offer in the market; this is through better products that presumably fit well with regard to health perspectives since the consumers want to eat better and live better. Through the collaboration of the resources from the two companies then the companies can be in a position to provide the customers desires retaining their upper hand on the competitive advantage in the market. The two companies just have to further their concentration on the implementation of the vital resources essential for meeting the industrys expectations and product specifications.

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