Jake Watkins
Miss Kiely
Unit 1 Assignment 2
Learning Aim C- Examine the Environment in Which Businesses Operate:
Introduction to Cadbury’s
Cadbury’s is a British multinational confectionery chocolate brand. Their first store opened in 1824
selling a variety of goods consisting of chocolate, tea, coffee, cocoa hot chocolate. Cadbury’s have
come a long way since opening, they are one of the first businesses to offer sick pay and healthcare
and is the world’s first Fairtrade brand in 2010. The business is now owned by Mondelez
International since 2010 and is currently the largest confectionery brand in the world after their
rival, Mars. Franks (2017)
Furthermore, Cadbury dairy milk and Bournvita was introduced in 1948 and have numerous
successful brands. These include Cadbury, Eclairs, Oreo, Bournville, and 5 Star. When Cadbury’s was
taken over in 2010 by Kraft (now known as Mondelez) they revamped rules governing how foreign
businesses buy/takeover UK companies which caused bidders to provide more information about
intentions after the purchase which became an issue, which negatively impacted Cadbury’s in a
series of ways such as Cadbury’s Somerdale factory being closed down. Morris (2014)
Moreover, Cadbury’s main competitors are Hershey’s, Nestle and especially Mars. Cadbury’s
compete with Mars to gain the largest chocolate market share, in 2008 Cadbury had a market share
of 34.1%. They also increased global sales by 5.5% up to £5bn in 2018 and increased sales by 14.4%
in Europe due to many factors such as CSR, marketing and especially the amount of countries they
operate in. The confectionery brand operate in over 60 countries and their headquarters are in
Uxbridge, London. Although the business’ lowest market share is in North America, they hold a
number 1 market position in places such as Asia, Pacific region, Middle east and Africa.
In addition, Cadbury’s finance director ‘Andrew Bonfield’ once said that their corporate culture
would be lost if a large multinational business such as Kraft (known as Mondelez now) merged or
took over the organisation, which is ironic considering a year after Kraft bought Cadbury’s. Bowers
(2009)
Corporate social responsibility (CSR) is another factor that has strengthened Cadbury’s brand image
over the years, CSR provides positive social value whilst giving back to the community to strengthen
a business’s brand image. Cadbury’s website they launched in 2008 ‘bearcadbury.com’ provides
information to customers about ethical resourcing and the environment, for example in the CSR
report it states that Cadbury’s had reduced carbon emissions by 4%, contributing to their aim of a
10% reduction of carbon emissions by 2010 at the time.
External Environment
PESTLE:
P- Political
E- Economic
S- Sociological
T- Technological
,Jake Watkins
Miss Kiely
Unit 1 Assignment 2
L- Legal
E- Environmental
This is a tool used by businesses to analyse PESTLE key factors which offer an insight into the
external factors affecting a business. Each factor of PESTLE will be analysed and explained for
Cadbury’s
Political:
The government have a major impact on Cadbury’s because they can control what they do. Things
that they have done previously is add sugar tax to Cadbury products due to the high sugar content
and the increasing obesity rate in the UK, this means that consumer demand could decrease because
of the price increase. Furthermore, the government can also provide loans and grants to support
businesses such as Cadbury, which is a positive way they can impact the enterprise. The current
government can also close factories and stores due to Coronavirus which can affect the supply chain.
Overall, the government can control the way Cadbury operate positively and negatively.
In addition, Cadbury currently trade in the EU and obey all EU regulations because Britain have not
yet exited the EU, this has affected them massively because at first, they were going to rebrand and
change to ‘Dark Milk’ because it was rumoured, they would be barred from selling across the EU
once the UK leaves the EU, but a spokesman denied links between Brexit and Dark Milk, saying they
had no plans whatsoever to change the recipe or rebrand. Flood (2016)
Causing Cadbury to rebrand could lead to a possible decrease in sales and reaching lower profit
margins because customers may not want to purchase chocolate off a new brand because they are
already used to Cadbury Dairy Milk, not Dark Milk. As a result of exiting from the EU, the enterprise
said chocolate could get smaller or customers pay more for chocolate, so they would have to boost
productivity and potentially pass on higher prices to consumers by raising prices or shrinkflation.
Meaning that consumers may purchase from other competitors who are not affected by Brexit as
much as Cadbury, leading to them gaining a competitive advantage. Ruddick (2017)
Moreover, advertising on unhealthy products has a great impact on Cadbury, mainly because their
chocolate is extremely unhealthy and the government putting a ban on junk food advertisements on
TV after 9pm could cause Cadbury to not reach their target market as a lot of younger children adore
Cadbury and their chocolate, resulting in a decline in sales. Meaning that overall, this would have a
very negative impact on the company because their chocolate is not being advertised to the majority
target market. The Advertising Standards Authority (ASA) brought online guidelines in line with
broadcast media to prevent junk food ads being advertised where under 16’s makes up just over
25% of the audience. Stewart (2018)
Furthermore, political factors do have a big effect on Cadbury because it can restrict the way they
would like to operate. For example, restrictions on advertising of unhealthy products can cause
Cadbury to not reach their target market because customers may not see their chocolate advertised
on TV. Meaning that a decline in sales can occur because consumers may not be aware of new
Cadbury products and buy chocolate from competitors such as Mars.
Economic
, Jake Watkins
Miss Kiely
Unit 1 Assignment 2
Interest rates are the amount you are charged for borrowing money, the current interest rate set by
the Bank of England is currently 0.1%. When interest rates are low, customers have more disposable
income because it reduces the monthly cost of mortgage payments so customers will have more
money in their pocket to spend. This is beneficial for Cadbury because a rise in consumer spending
will occur and more people will be inclined to buy their chocolate, leading to an increase in sales
revenue. When interest rates are also low customers are also less likely to save because the reward
from saving falls, so consumers substitute saving for spending because borrowing is cheaper, so
people spend and invest more freely. On the other hand, when interest rates are high or increase
consumers have less disposable income because the cost of borrowing increases, limiting the growth
in consumer spending which is negative for Cadbury’s. Meaning that consumers will spend less on
chocolate and lower profit margins will be met. High interest rates also mean consumers are more
likely to save because customers with debts have less income to spend so they try and save their
money in the bank, higher interest rates make it more attractive to individuals to save in a deposit
account because of the interest gained. Therefore, low interest rates have a positive impact on
Cadbury because customers will feel more inclined to spend instead of saving, and high interest
rates have a negative impact because the cost of borrowing is higher which discourages consumers
to spend.
Furthermore, supply and demand are an economic factor which is an economic model of price
determination in a market. Simply, it is the relationship between quantity selling and the quantity
consumers are buying. For example, if the supply for cocoa is greater than the demand of cocoa
price will go down because producers supply less of the cocoa, decreasing output. Whereas, if the
demand of cocoa is greater than the supply (amount available) price will increase. This is because
there is a shortage of cocoa. Moreover, one major factor that affects supply and demand for
Cadbury is changes in income level, due to the current pandemic at the moment the UK have gone
into a recession, so this means that there are fewer jobs available, so people are not earning a
monthly income. To help encourage those who can afford to buy, prices will fall so sales can
increase. Morgan (2018)
Moreover, another economic factor that impacts a business are exchange rates. Exchange rates are
the rate at which one currency will be exchanged for another. Exchange rates impact Cadbury
because imports and exports can vary in price if the pound is strong/weak. A strong pound for
Cadbury means it is cheaper to import goods, so it is cheaper to sell their goods to other countries
around the world. Cheap imports of goods and services, on the supply side of the economy can have
a liberating impact because low priced imports generate competition for domestic countries. On the
other hand, a weak British pound is good for exports because Cadbury’s goods will become cheaper
to overseas buyers, but a weak pound will mean there’s higher import costs, which can push up
inflation.
A historical chart that shows the Pound to Dollar exchange rate over the years:
https://www.macrotrends.net/assets/images/large/pound-dollar-exchange-rate-historical-chart.png
Miss Kiely
Unit 1 Assignment 2
Learning Aim C- Examine the Environment in Which Businesses Operate:
Introduction to Cadbury’s
Cadbury’s is a British multinational confectionery chocolate brand. Their first store opened in 1824
selling a variety of goods consisting of chocolate, tea, coffee, cocoa hot chocolate. Cadbury’s have
come a long way since opening, they are one of the first businesses to offer sick pay and healthcare
and is the world’s first Fairtrade brand in 2010. The business is now owned by Mondelez
International since 2010 and is currently the largest confectionery brand in the world after their
rival, Mars. Franks (2017)
Furthermore, Cadbury dairy milk and Bournvita was introduced in 1948 and have numerous
successful brands. These include Cadbury, Eclairs, Oreo, Bournville, and 5 Star. When Cadbury’s was
taken over in 2010 by Kraft (now known as Mondelez) they revamped rules governing how foreign
businesses buy/takeover UK companies which caused bidders to provide more information about
intentions after the purchase which became an issue, which negatively impacted Cadbury’s in a
series of ways such as Cadbury’s Somerdale factory being closed down. Morris (2014)
Moreover, Cadbury’s main competitors are Hershey’s, Nestle and especially Mars. Cadbury’s
compete with Mars to gain the largest chocolate market share, in 2008 Cadbury had a market share
of 34.1%. They also increased global sales by 5.5% up to £5bn in 2018 and increased sales by 14.4%
in Europe due to many factors such as CSR, marketing and especially the amount of countries they
operate in. The confectionery brand operate in over 60 countries and their headquarters are in
Uxbridge, London. Although the business’ lowest market share is in North America, they hold a
number 1 market position in places such as Asia, Pacific region, Middle east and Africa.
In addition, Cadbury’s finance director ‘Andrew Bonfield’ once said that their corporate culture
would be lost if a large multinational business such as Kraft (known as Mondelez now) merged or
took over the organisation, which is ironic considering a year after Kraft bought Cadbury’s. Bowers
(2009)
Corporate social responsibility (CSR) is another factor that has strengthened Cadbury’s brand image
over the years, CSR provides positive social value whilst giving back to the community to strengthen
a business’s brand image. Cadbury’s website they launched in 2008 ‘bearcadbury.com’ provides
information to customers about ethical resourcing and the environment, for example in the CSR
report it states that Cadbury’s had reduced carbon emissions by 4%, contributing to their aim of a
10% reduction of carbon emissions by 2010 at the time.
External Environment
PESTLE:
P- Political
E- Economic
S- Sociological
T- Technological
,Jake Watkins
Miss Kiely
Unit 1 Assignment 2
L- Legal
E- Environmental
This is a tool used by businesses to analyse PESTLE key factors which offer an insight into the
external factors affecting a business. Each factor of PESTLE will be analysed and explained for
Cadbury’s
Political:
The government have a major impact on Cadbury’s because they can control what they do. Things
that they have done previously is add sugar tax to Cadbury products due to the high sugar content
and the increasing obesity rate in the UK, this means that consumer demand could decrease because
of the price increase. Furthermore, the government can also provide loans and grants to support
businesses such as Cadbury, which is a positive way they can impact the enterprise. The current
government can also close factories and stores due to Coronavirus which can affect the supply chain.
Overall, the government can control the way Cadbury operate positively and negatively.
In addition, Cadbury currently trade in the EU and obey all EU regulations because Britain have not
yet exited the EU, this has affected them massively because at first, they were going to rebrand and
change to ‘Dark Milk’ because it was rumoured, they would be barred from selling across the EU
once the UK leaves the EU, but a spokesman denied links between Brexit and Dark Milk, saying they
had no plans whatsoever to change the recipe or rebrand. Flood (2016)
Causing Cadbury to rebrand could lead to a possible decrease in sales and reaching lower profit
margins because customers may not want to purchase chocolate off a new brand because they are
already used to Cadbury Dairy Milk, not Dark Milk. As a result of exiting from the EU, the enterprise
said chocolate could get smaller or customers pay more for chocolate, so they would have to boost
productivity and potentially pass on higher prices to consumers by raising prices or shrinkflation.
Meaning that consumers may purchase from other competitors who are not affected by Brexit as
much as Cadbury, leading to them gaining a competitive advantage. Ruddick (2017)
Moreover, advertising on unhealthy products has a great impact on Cadbury, mainly because their
chocolate is extremely unhealthy and the government putting a ban on junk food advertisements on
TV after 9pm could cause Cadbury to not reach their target market as a lot of younger children adore
Cadbury and their chocolate, resulting in a decline in sales. Meaning that overall, this would have a
very negative impact on the company because their chocolate is not being advertised to the majority
target market. The Advertising Standards Authority (ASA) brought online guidelines in line with
broadcast media to prevent junk food ads being advertised where under 16’s makes up just over
25% of the audience. Stewart (2018)
Furthermore, political factors do have a big effect on Cadbury because it can restrict the way they
would like to operate. For example, restrictions on advertising of unhealthy products can cause
Cadbury to not reach their target market because customers may not see their chocolate advertised
on TV. Meaning that a decline in sales can occur because consumers may not be aware of new
Cadbury products and buy chocolate from competitors such as Mars.
Economic
, Jake Watkins
Miss Kiely
Unit 1 Assignment 2
Interest rates are the amount you are charged for borrowing money, the current interest rate set by
the Bank of England is currently 0.1%. When interest rates are low, customers have more disposable
income because it reduces the monthly cost of mortgage payments so customers will have more
money in their pocket to spend. This is beneficial for Cadbury because a rise in consumer spending
will occur and more people will be inclined to buy their chocolate, leading to an increase in sales
revenue. When interest rates are also low customers are also less likely to save because the reward
from saving falls, so consumers substitute saving for spending because borrowing is cheaper, so
people spend and invest more freely. On the other hand, when interest rates are high or increase
consumers have less disposable income because the cost of borrowing increases, limiting the growth
in consumer spending which is negative for Cadbury’s. Meaning that consumers will spend less on
chocolate and lower profit margins will be met. High interest rates also mean consumers are more
likely to save because customers with debts have less income to spend so they try and save their
money in the bank, higher interest rates make it more attractive to individuals to save in a deposit
account because of the interest gained. Therefore, low interest rates have a positive impact on
Cadbury because customers will feel more inclined to spend instead of saving, and high interest
rates have a negative impact because the cost of borrowing is higher which discourages consumers
to spend.
Furthermore, supply and demand are an economic factor which is an economic model of price
determination in a market. Simply, it is the relationship between quantity selling and the quantity
consumers are buying. For example, if the supply for cocoa is greater than the demand of cocoa
price will go down because producers supply less of the cocoa, decreasing output. Whereas, if the
demand of cocoa is greater than the supply (amount available) price will increase. This is because
there is a shortage of cocoa. Moreover, one major factor that affects supply and demand for
Cadbury is changes in income level, due to the current pandemic at the moment the UK have gone
into a recession, so this means that there are fewer jobs available, so people are not earning a
monthly income. To help encourage those who can afford to buy, prices will fall so sales can
increase. Morgan (2018)
Moreover, another economic factor that impacts a business are exchange rates. Exchange rates are
the rate at which one currency will be exchanged for another. Exchange rates impact Cadbury
because imports and exports can vary in price if the pound is strong/weak. A strong pound for
Cadbury means it is cheaper to import goods, so it is cheaper to sell their goods to other countries
around the world. Cheap imports of goods and services, on the supply side of the economy can have
a liberating impact because low priced imports generate competition for domestic countries. On the
other hand, a weak British pound is good for exports because Cadbury’s goods will become cheaper
to overseas buyers, but a weak pound will mean there’s higher import costs, which can push up
inflation.
A historical chart that shows the Pound to Dollar exchange rate over the years:
https://www.macrotrends.net/assets/images/large/pound-dollar-exchange-rate-historical-chart.png
