Unit 1 Assessment 2 - The effects of the environment on a business
Section 1
An introduction to Cadbury’s
Cadbury’s are an international company who produce various types of chocolate related
products worldwide. Cadbury’s was first founded in 1824 in the English city of Birmingham
by a man who went by the name of John Cadbury. When John Cadbury first founded his
company, he believed that chocolate could be a force for good in the world. The Cadbury
family were pioneers of good business and put people and communities at the heart of the
way they made and sold their chocolate. Cadbury’s is now owned by the second largest
confectionary brand company Mondelez International.
PESTLE
Political Factors
Political factors such as sugar taxes are likely to affect both the taste of Cadbury’s chocolate
bars and how much the bars of chocolate are sold for. Cadbury’s must decide whether it is
worth spending more money on extra amounts of sugar in their chocolate to help satisfy the
customer or making their chocolate less sweet whilst spending less money. If Cadbury’s
decide to spend more money on sugar to help enhance the taste of their bars, it will lead to
smaller profit margins on each bar of chocolate sold. This will result in better tasting bars
which may help attract more customers, but will cost them fortunes in paying sugar taxes.
However, this may also help Cadbury’s to achieve their aim of becoming the number one
tasting product in their given market.
Brexit also has/had a huge effect on Cadbury’s supply chain and trade routes due to different
channels of distribution being shut-off and altered. This made it harder for Cadbury’s to
receive their supplies of cocoa and sugar slowing down their production lines. This made it
hard for Cadbury’s to produce enough chocolate to keep being a top competitor and
sustaining their large market share. This slowdown in production, however, will result in a
loss of revenue for Cadbury’s and a reduction in their market share to rivals such as Mars,
who were not directly affected by Brexit as much as Cadbury’s. Cadbury’s will find it harder
to achieve their aims as ingredients will have to be stretched to reach demand, resulting in a
loss of flavours in their bars.
Local governments are also directly involved with Cadbury’s and their production of
chocolate. By last estimates, the 8 Cadbury factories in the UK have employed over 3000
workers, providing housing and wages for their employees. This will help Cadbury’s increase
their brand image of being a family-friendly and ethical company meaning more potential
customers will start to trust Cadbury’s and buy their products. This will result in more sales
of their chocolate and higher profits margins. It will also help towards Cadbury’s achieving
their aim of increasing their market share and becoming market leader in the chocolate
manufacturing industry.
Economic Factors
For Cadbury’s, their biggest concern will be keeping up with the demand for their chocolate.
With Cadbury’s being one of the most popular chocolate companies in the UK and other
,parts of the world, such as the UK, Australia, and India (their top 3 markets) their demand for
chocolate is very high. Cadbury’s will need to keep up with this demand to become more
competitive and maintain dominancy in their chosen market. Keeping up with demand will
result in Cadbury’s increasing their revenue and profit margins, as well as maintaining
customer retention. Maintaining their customers will help Cadbury’s to grow and expand as a
business but could lead to an even greater surge in demand for their chocolate. Not only this,
but Cadbury’s must be aware and predict changes in demand. Specifically, in the chocolate
industry, changes in demand will occur via changes in taste and trends. For example, plain
Dairy Milk chocolate had an increase in demand of 3.8% from 2011 to 2013 but has since
decreased as it can be become quite bland and boring after eating it for so long and
consumer’s taste may start to change. So, Cadbury’s introduced new flavours like Dairy Milk
fruit & nut and Dairy Milk caramel to help give their customers and wider range of products
to choose from. This will help Cadbury’s appeal to a wider range of customers and help them
attract customers in different parts of the confectionary market as they are expanding their
range of flavours, resulting in a larger customer base and a larger market share.
Supply also goes hand in hand with demand and they have a particularly important
relationship at Cadbury’s because together they determine the price and quantity of the goods
being sold. The amount of supply Cadbury’s have will determine how much chocolate they
are able to sell. Cadbury’s have good, reliable supply chains and big amounts of supply will
help them to further grow the company and sell more chocolate. The Cadbury’s supply is
heavily influenced by their customers and how they react to price changes and new products,
so having a big elastic supply means that they can adapt their prices based on current events
and trends, for example with the Coronavirus the Uk’s GDP went down, because of this
customer were unwilling to spend cash unnecessarily. This will help Cadbury’s always
remain competitive no matter the environment and result in them having a competitive
advantage over their competitors due to the flexibility of their supply.
Fiscal policy, in simple terms, is an estimation of taxation and government spending that
impacts the economy. It helps leads the government into lowering taxes or spending more
money and aims to stimulate the economy. If taxes are reduced, it will benefit Cadbury’s, this
is because if tax is reduced is means that they will have higher profit margins due to less
fixed costs having to be paid. This will allow Cadbury’s to set the prices of their chocolate at
lower prices to become more competitive, whilst still making a profit. This results in more
customers for Cadbury’s as their prices have been lowered. It will also help towards
Cadbury’s achieving their aims of gaining more market share within the chocolate industry.
However, if the taxes are rise by the government Cadbury’s will have lower profit margins,
due to more money being spent on taxes. This will mean Cadbury’s will have to raise the
prices of their chocolate or take the loss in profits but remain more competitive. If they up
their prices, it will result in less profits for Cadbury’s as customers may wait for the prices to
go back down before they buy their chocolate again.
Social Factors
One social factor to consider is how people are starting to feel about their bodies and how
they look. People are starting become obsessed with how they look and how healthily they
are eating. So, Cadbury’s decided to remanufacture their bars to have 30% less sugar. This
will attract customers such as people who trying to look after their body, who aren’t trying to
cheat on their diets but have a little treat for all their hard work, without putting on too many
calories. This then results in Cadbury’s customer base being expanded which leads to higher
, revenue income and profit margins. It also contributes to Cadbury’s aims by increasing their
customer base and therefore their market share.
Another social factor that Cadbury’s must consider, if they are going to compete on an
international level, Cadbury’s must adapt to different cultures and tastes in different parts of
the world. This means that Cadbury’s will have to adjust their bars to suit that part of the
world. A survey done in 2013 demonstrated how different parts of the world have different
tastes based on their heritage, and it showed that people originating from Asia preferred more
sour tasting foods and people from Europe preferred more sweet tasting foods. Cadburys took
this information and chose to adapt their products to satisfy different taste buds. This meant
changing the production process, order of ingredients and even the amount of ingredients to
fully adapt their recipes based on where their chocolate was being sold. By doing this,
Cadbury’s will not only expand their customer base, but expand their business all over the
world, due to their adaptability to be able to variate their chocolate. This will then result in
more sales and higher profit margins, as well a new USP, that all their chocolate tastes and is
made different, leaving excitement for chocolate enthusiasts to try their chocolate all over the
world.
A third social factor is the buying habits of Cadbury's current and potential customers. For
example, families, families are more like to buy I bulk as they will often be buying for 3 or
more people at a time, so Cadbury's decided to implement family pack and deals to persuade
families to buy from them and not their competitors. The family packs were a huge success,
and their ‘Cadbury Family Heroes Treat Size Chocolate Pack’ has over 5,000 5-star reviews
on amazon in just the UK alone. Introducing more of these family packages and deals will
encourage and entice more families to buy their products. This then results in more 5-star
reviews online and high family satisfaction rates leading to more sales and larger profits. This
will also aid towards Cadbury’s aim of increasing their market share and eventually
becoming market leaders in the chocolate industry. Another example of buying habits, is
when people buy chocolate the most. Cadburys identified that the month(s) leading up to
Christmas is the time where customers buy the most amount of chocolate. So, Cadbury’s
invests the majority of their marketing budget each year in November and December to help
boost their brand awareness. This led to millions of pounds worth of Cadbury’s chocolate
being sold Christmas time and results in Cadbury’s maintain their reputation of being one of
the top chocolate brands in the world.
Technological Factors
One technological factor that affects Cadbury’s and their production rates is their production
machinery and techniques. Cadbury’s use a vast number of machines in different parts of
their chocolate making process. They use machines to process their cocoa beans into their
chocolate making state; mould their chocolate into different shapes, such as eggs during
Easter time and package their finished products. This makes the manufacturing process for
Cadbury’s much quicker as there is less human error and machines can work up to 1,000
times quicker than humans. This results in faster production rates at Cadbury’s and more
precise levels of accuracy in the making of the chocolate. This aids towards Cadbury’s goals
of having a larger market share as they are producing more chocolate than ever before with
these machines.
Another technological is how Cadbury’s use technology to market their products. Cadbury’s
use many technological platforms to market their products, such as TV adverts and social
Section 1
An introduction to Cadbury’s
Cadbury’s are an international company who produce various types of chocolate related
products worldwide. Cadbury’s was first founded in 1824 in the English city of Birmingham
by a man who went by the name of John Cadbury. When John Cadbury first founded his
company, he believed that chocolate could be a force for good in the world. The Cadbury
family were pioneers of good business and put people and communities at the heart of the
way they made and sold their chocolate. Cadbury’s is now owned by the second largest
confectionary brand company Mondelez International.
PESTLE
Political Factors
Political factors such as sugar taxes are likely to affect both the taste of Cadbury’s chocolate
bars and how much the bars of chocolate are sold for. Cadbury’s must decide whether it is
worth spending more money on extra amounts of sugar in their chocolate to help satisfy the
customer or making their chocolate less sweet whilst spending less money. If Cadbury’s
decide to spend more money on sugar to help enhance the taste of their bars, it will lead to
smaller profit margins on each bar of chocolate sold. This will result in better tasting bars
which may help attract more customers, but will cost them fortunes in paying sugar taxes.
However, this may also help Cadbury’s to achieve their aim of becoming the number one
tasting product in their given market.
Brexit also has/had a huge effect on Cadbury’s supply chain and trade routes due to different
channels of distribution being shut-off and altered. This made it harder for Cadbury’s to
receive their supplies of cocoa and sugar slowing down their production lines. This made it
hard for Cadbury’s to produce enough chocolate to keep being a top competitor and
sustaining their large market share. This slowdown in production, however, will result in a
loss of revenue for Cadbury’s and a reduction in their market share to rivals such as Mars,
who were not directly affected by Brexit as much as Cadbury’s. Cadbury’s will find it harder
to achieve their aims as ingredients will have to be stretched to reach demand, resulting in a
loss of flavours in their bars.
Local governments are also directly involved with Cadbury’s and their production of
chocolate. By last estimates, the 8 Cadbury factories in the UK have employed over 3000
workers, providing housing and wages for their employees. This will help Cadbury’s increase
their brand image of being a family-friendly and ethical company meaning more potential
customers will start to trust Cadbury’s and buy their products. This will result in more sales
of their chocolate and higher profits margins. It will also help towards Cadbury’s achieving
their aim of increasing their market share and becoming market leader in the chocolate
manufacturing industry.
Economic Factors
For Cadbury’s, their biggest concern will be keeping up with the demand for their chocolate.
With Cadbury’s being one of the most popular chocolate companies in the UK and other
,parts of the world, such as the UK, Australia, and India (their top 3 markets) their demand for
chocolate is very high. Cadbury’s will need to keep up with this demand to become more
competitive and maintain dominancy in their chosen market. Keeping up with demand will
result in Cadbury’s increasing their revenue and profit margins, as well as maintaining
customer retention. Maintaining their customers will help Cadbury’s to grow and expand as a
business but could lead to an even greater surge in demand for their chocolate. Not only this,
but Cadbury’s must be aware and predict changes in demand. Specifically, in the chocolate
industry, changes in demand will occur via changes in taste and trends. For example, plain
Dairy Milk chocolate had an increase in demand of 3.8% from 2011 to 2013 but has since
decreased as it can be become quite bland and boring after eating it for so long and
consumer’s taste may start to change. So, Cadbury’s introduced new flavours like Dairy Milk
fruit & nut and Dairy Milk caramel to help give their customers and wider range of products
to choose from. This will help Cadbury’s appeal to a wider range of customers and help them
attract customers in different parts of the confectionary market as they are expanding their
range of flavours, resulting in a larger customer base and a larger market share.
Supply also goes hand in hand with demand and they have a particularly important
relationship at Cadbury’s because together they determine the price and quantity of the goods
being sold. The amount of supply Cadbury’s have will determine how much chocolate they
are able to sell. Cadbury’s have good, reliable supply chains and big amounts of supply will
help them to further grow the company and sell more chocolate. The Cadbury’s supply is
heavily influenced by their customers and how they react to price changes and new products,
so having a big elastic supply means that they can adapt their prices based on current events
and trends, for example with the Coronavirus the Uk’s GDP went down, because of this
customer were unwilling to spend cash unnecessarily. This will help Cadbury’s always
remain competitive no matter the environment and result in them having a competitive
advantage over their competitors due to the flexibility of their supply.
Fiscal policy, in simple terms, is an estimation of taxation and government spending that
impacts the economy. It helps leads the government into lowering taxes or spending more
money and aims to stimulate the economy. If taxes are reduced, it will benefit Cadbury’s, this
is because if tax is reduced is means that they will have higher profit margins due to less
fixed costs having to be paid. This will allow Cadbury’s to set the prices of their chocolate at
lower prices to become more competitive, whilst still making a profit. This results in more
customers for Cadbury’s as their prices have been lowered. It will also help towards
Cadbury’s achieving their aims of gaining more market share within the chocolate industry.
However, if the taxes are rise by the government Cadbury’s will have lower profit margins,
due to more money being spent on taxes. This will mean Cadbury’s will have to raise the
prices of their chocolate or take the loss in profits but remain more competitive. If they up
their prices, it will result in less profits for Cadbury’s as customers may wait for the prices to
go back down before they buy their chocolate again.
Social Factors
One social factor to consider is how people are starting to feel about their bodies and how
they look. People are starting become obsessed with how they look and how healthily they
are eating. So, Cadbury’s decided to remanufacture their bars to have 30% less sugar. This
will attract customers such as people who trying to look after their body, who aren’t trying to
cheat on their diets but have a little treat for all their hard work, without putting on too many
calories. This then results in Cadbury’s customer base being expanded which leads to higher
, revenue income and profit margins. It also contributes to Cadbury’s aims by increasing their
customer base and therefore their market share.
Another social factor that Cadbury’s must consider, if they are going to compete on an
international level, Cadbury’s must adapt to different cultures and tastes in different parts of
the world. This means that Cadbury’s will have to adjust their bars to suit that part of the
world. A survey done in 2013 demonstrated how different parts of the world have different
tastes based on their heritage, and it showed that people originating from Asia preferred more
sour tasting foods and people from Europe preferred more sweet tasting foods. Cadburys took
this information and chose to adapt their products to satisfy different taste buds. This meant
changing the production process, order of ingredients and even the amount of ingredients to
fully adapt their recipes based on where their chocolate was being sold. By doing this,
Cadbury’s will not only expand their customer base, but expand their business all over the
world, due to their adaptability to be able to variate their chocolate. This will then result in
more sales and higher profit margins, as well a new USP, that all their chocolate tastes and is
made different, leaving excitement for chocolate enthusiasts to try their chocolate all over the
world.
A third social factor is the buying habits of Cadbury's current and potential customers. For
example, families, families are more like to buy I bulk as they will often be buying for 3 or
more people at a time, so Cadbury's decided to implement family pack and deals to persuade
families to buy from them and not their competitors. The family packs were a huge success,
and their ‘Cadbury Family Heroes Treat Size Chocolate Pack’ has over 5,000 5-star reviews
on amazon in just the UK alone. Introducing more of these family packages and deals will
encourage and entice more families to buy their products. This then results in more 5-star
reviews online and high family satisfaction rates leading to more sales and larger profits. This
will also aid towards Cadbury’s aim of increasing their market share and eventually
becoming market leaders in the chocolate industry. Another example of buying habits, is
when people buy chocolate the most. Cadburys identified that the month(s) leading up to
Christmas is the time where customers buy the most amount of chocolate. So, Cadbury’s
invests the majority of their marketing budget each year in November and December to help
boost their brand awareness. This led to millions of pounds worth of Cadbury’s chocolate
being sold Christmas time and results in Cadbury’s maintain their reputation of being one of
the top chocolate brands in the world.
Technological Factors
One technological factor that affects Cadbury’s and their production rates is their production
machinery and techniques. Cadbury’s use a vast number of machines in different parts of
their chocolate making process. They use machines to process their cocoa beans into their
chocolate making state; mould their chocolate into different shapes, such as eggs during
Easter time and package their finished products. This makes the manufacturing process for
Cadbury’s much quicker as there is less human error and machines can work up to 1,000
times quicker than humans. This results in faster production rates at Cadbury’s and more
precise levels of accuracy in the making of the chocolate. This aids towards Cadbury’s goals
of having a larger market share as they are producing more chocolate than ever before with
these machines.
Another technological is how Cadbury’s use technology to market their products. Cadbury’s
use many technological platforms to market their products, such as TV adverts and social
