Name : Anees Abdul Aziz Merchant

Programme : PGDMM

Semester : III

G.R. No / SAP ID*. 77111110054

Year of Registration : July 2011

Registered Study centre : Vile Parle

Subject : Strategic Management

Default / Re-exam Attempt: Default

Email ID: aneesmerchant@gmail.com Tele : +919820243828

*GR No/SAP ID is identified as Student No

Q1) Take any company of your choice and explain your viewpoint on its hierarchy of Goals. It should include Vision, Mission, Goals, Objectives, Plans and Policies. I have chosen to review Cadbury India as case to review Cadbury was originally incorporated in India as a wholly subsidiary of Cadbury Schweppes Overseas Ltd in 1948. In 1978, the companys original name was changed Cadbury Fry (India) Ltd to Hindustan Cocoa Products as CSOL diluted its 40% stake to comply with FERA guidelines. The current name was restored in 1989, however in 2001 the parent company made an open offer to acquire the 49% stake taking its overall share to 90%. Today the company employs 2000 individuals across India. Currently Cadbury India is the oldest and strongest player in the confectionary market with 68% share. Some of the popular brands are like Dairy Milk, Gems, 5 Star, Perk, Bournvita, Temptations, etc. It has a very strong network of distribution reaching to millions of customers every day. Cadburys vision statement is Life full of Cadbury and Cadbury full of life. It lives very true to this statement as Cadbury participates in many spaces of consumer life through a cache of product offerings. Its recent advertisements on Kuch meetha ho jaye has been a pretty hit advertisement. Cadbury India believe that work and fun can co-exist beautifully. Therefore at Cadbury India, it's all about work hard, play harder!. They bring moments of delight to consumers every day and every time. Therefore, they strongly believe that the people who create these products should also have fun while doing so. Cadburys simple mission statement is Cadbury means quality: this is our promise. Our reputation is built on quality; our commitment to continuous improvement will ensure that our promise. Characteristic of this mission statement; We can say that this mission statement is realistic because if we see the quality and day to day improvements easily show that Cadburys have real mission statement.

Cadbury successfully turned its mission statement into its overall objectives and goals. Cadbury says Cadbury is the name of quality and the Cadbury dairy milk chocolate and also different products is the biggest example of it. And it says our commitment to continuous improvement and the demand and customers satisfaction shows that its products successfully fulfill the needs wants and demands by continuous improvement in the features of products. In short we can say that company turned its mission statement into practical form and set its overall objectives and goals as Cadbury do and now a day become a market leader. Also apart from this Cadburys objective is to grow shareholder value over the long term. Cadbury in every pocket. Cadbury has defined a well-defined objectives and values to enable to growth of the firm and capture market share Cadburys marketing strategy is aimed at achieving this vision by growing the market, by appropriate pricing strategy that will create a mass market and to have offerings in every category to widen the market Adopting value based management for major strategic and operational decisions and business systems Creating an outstanding leadership capability with the management and Sharpening the company culture to reflect accountability, aggressiveness and adaptability. Aligning the management rewards structure with the interests of our shareowners. Cadbury today dominates the Indian chocolate market with 65-70% market share. Besides this, it has 4% market share in the organized sugar confectionary market and a 15% market share in milk / malted foods segment. Cadburys India operations are not only the largest Asia but also the cheapest. In India, it has the largest market share anywhere in the world and has been

the fastest growing FMCG company in the last three years with a compound annual growth of 12.5 percent. If I start looking at the SWOT analysis of the company it can reveal further dynamics of the business

Strengths
Cadbury is a reputed company internationally as the top most choclate provider in the world The brand is well known to people and they can easily identify it from others Cadbury the world leaders in choclate, is a well-known force in marketing and distribution Users have a positive perception about the qualities of brand Cadbury main strength is Dairy Milk. Dairy Milk is the most consumed choclate in India By using popular models like Cyrus Brocha, Preity Zinta and Amitabh Bachan has managed to potray as a strong brand resulting in converting other brand buyers to become staunch loyalist Cadbury has well adjusted itself to Indian custom It has properly repositioned itself in India whenever required i.e. from children to adults, togetherness bar to energizing bar for young ones, etc

Weakness
There is lack of penetration in the rural market where people tend to dismiss to it as a high end product. It is mainly found in urban and semi-urban areas It has been relatively high priced brand, which is turning the price conscious customer away People avoid having their choclate thinking about the egg ingredients

Opportunities
The choclate market has seen one of the greatest increases in the recent times (almost @ 30%) There is lot of potential for growth and a huge population who do not eat choclates even today that can be converted as new users

Threats
There exists no brand loyalty in the choclate market and consumers frequently shift their brands New brands are coming and existing brands are introducing new variants to add up to an already overcrowded market

The critical analysis of 3Ps further reveal advantages of the firm

3P s

Price

After the roaring success of Nestle Munch and Chocostick, Cadbury's empire struck hard. The Rs.5 price point accounts for more than half of choclate sales. Today, Cadbury has four products at the price point CDM, Perk, 5 Star and Gems and the five ruppe CDM is the single largest selling SKU Typically it is said that choclates are consumed when everyone is happy. And this is something advertising has always potrayed. But it is found that choclates are eaten under diverse conditions and moods - when people are anxious, sad and happy. Considering this, it can be said choclate is a true soul mate. And that is what Cadbury Dairy Milk (CDM) positioned itself as - a special freind

Promotion

Place

Choclates need to be distributed directly, unlike other FMCG products like soaps and detegents. 90% of the choclates are sold directly to the retailers. Cadbury's distribution network used to encompass 2100 distributors and 450,000 retailers. Besides using IT to solve distribution logistics, Cadbury has installed VISI coolers at several outlets to enable reach and maintain the product quality. To avoid canabilization Cadbury has setup two core distribution channels - one for Core business and other for Mass markets. The first one is dedicated to high-end product and sold through premium retailers and second one constitutes eclairs, chocki, halls et.

Future plans of Cadbury India Company wants to source all the cocoa for its Indian products from within the country. The company has plans to increase acreage for cocoa cultivation. The

increase in acreage will involve a tripling of investments in contract farming and in five years it wants to source cocoa for domestic production entirely from India. Here is a transcript of Sagar Malviya and Sandeep Srikanth's commentson CNBC-TV18. India produced about 10,000 tonne of cocoa in 200708, with annual demand of about 18,000 tonne. Cadbury India which already procures 5,000 tonne of cocoa through contract farming now wants that number to increase. Sanjay Purohit, Executive Director-Marketing, Cadbury India said, We have identified areas in Andhra Pradesh and Tamil Nadu, and are working with governments there to improve the acreage for cocoa cultivation. The increase in acreage will involve a tripling of investments in contract farming and in five years it wants to source cocoa for domestic production entirely from India. The Indian chocolate market is growing at 20% annually and Cadbury, which has 71% market share, presently, sources half of its cocoa requirements from other countries. It is importing cocoa from Ghana for a new range of dark chocolate under the name Bournville, which it has introduced in India. The company says this new brand, to be sold mainly through modern retailers, will be a platform to launch more products from its international range. All this is being done in an effort to preserve market share which is now being targeted by many global competitors who are coming in. Thus as an outsider Cadbury has a tremendous potential as a company since it already has a competitive edge from a market share point of view and is also able to recalculate its stance based on any outside pressure or issues. It has been a thought leader and a good example of an industry excellence.

Q2) Starbucks now plans to enter in India and they have asked you to find the feasibility of their entry through Michael Porter Five Forces and through STEEPLE analysis. India and China are the worlds two fastest growing economies. Starbucks had already ventured into the Chinese market and not surprisingly, their Chinese venture turned out to be much profitable than that of their US business. Thus, they want to replicate their success in Chinese mainland in India. Also, the Indian market is heavily driven by the upcoming youth culture which is totally driven by the western trends. With the growing disposable income of Indians, people tend to spend more towards apparels and fast foods. With the success of Indian owned Caf Coffee Day and Barista Coffee, it is a widely proven fact that there is lot of scope for the development of coffee caf culture in India. They are planning to start with targeting the niche upper class segment by opening their outlets in Taj Hotels and Resorts. Their primary target market is the younger generation of age 16-40years. Porters Five Forces

Competitor Rivalry Threat of substitutes

The bargaining power of buyers

Threat of new entrants

Porter's Five Forces

The bargaining power of suppliers

1. The Threat of New Entry The entry barriers in the coffee retail industry are relatively low in India, particularly for the foreign players. This is possible owing to the fact that 51 % FDI is allowed in India in retail sector. Any large or well-funded company having the thorough understanding of the market can enter into retail sector in India. However there few other dimensions Economies of Scale: given the fact that Starbucks is a global, it is having its own advantages when it comes to achieving the economies of scale. Though, for a start, they will open few stores in India, they have plans to open new stores in most of the major Indian cities. Capital Requirement: Starbucks being the global coffee retail chain, they are going to have any particular capital related problems. Also, they are having MoU being signed with TATAs for opening their outlets in their Taj group of hotels and resorts. Thus, their entry can assured to be pretty smooth Access to supply: India, being the sixth largest producer of coffee in the world is having the largest home grown supply of coffee beans. Thus, sourcing coffee for any new entrant in this industry is not going to be much of the problem Customer or supplier loyalty: Indian market is already being captured by the long established brands like Caf coffee day, Barista, Barista Lavazza and Costa Coffee. Thus, it is going to be pretty much difficult for any of the new entrant to establish its brand name in the Indian market. However, Starbucks being the international brand will definitely help in attracting the educated Indian crowd Market Experience: The existing players in the Indian coffee retail industry have been here in the market from last 10years. Thus, their management must be having greater understanding of the Indian markets and Pallets. Therefore, for Starbucks, it is going to be important to first understand the Indian preferences, before making any major move. Legislation or government action: In India FDI regulation for single branded retail stores is 51%. Thus, any foreign player will need to have an Indian

partner, compulsorily. Therefore, Starbucks is also planning to enter in Indian markets with collaboration with TATA coffee. Differentiation: Coffee is not the product where there is a great scope for product differentiation. However, it depends on most of the cases on the store ambience, which can act as the point of differentiation. 2. Threat of substitutes: Products for Product substitution: Product substitutes, here, will include other beverages, apart from the Starbucks coffee, for example, soda, fruit juices, water, beer or other liquid beverages. This will also include other fast food beverages like burgers etc. Substitution of a need: This will include the lower end local coffee houses or other snack shops which are less luxurious. These are places which provide people with the place to sit, chat and relax. 3. The Bargaining Power of Suppliers: In this case of coffee retail, the suppliers, supplying the retailer with the coffee beans are not having much of the bargaining power. This is particularly because of the fact that coffee retailers like that of Starbucks tend to be very big buyers for any of the supplier to lose as a whole. This also gives the Starbucks to dictate terms to the supplier. Similarly, suppliers of other resources like that of paper products etc., will not be having much of the bargaining power as there are many sources from which the company can source them. However, this is not valid in the case of the suppliers supplying the technological machinery as there are not many suppliers here. 4. The Bargaining Power of Buyers In the past, buyers in India were not having much of the bargaining power as there were not many food retail giants which were present in the country. However, with the advent of multinational food retail giants in India, like that of Mc Donalds, Barista Lavazza, Caf Coffee.

5. Competitive rivalry Major competition for Starbucks in India comes from that of Caf coffee day. The abbreviation CCD is known to most of the people in urban parts of India. Their positioning is same as what Starbucks have in US. The other competitors include Barista Lavazza, Barista and Costa Coffee, which are also the multinational brands, widely recognized. Apart from them, secondary competitors include the Georgia Coffee served in fast food joints like that of Mc Donalds and KFC STEEPLE Analysis Sociocultural Coffee stores hangout places, a place for young people, average age of Indians around 30, therefore a big scope for this industry to blossom in India Technological Today because of the fast moving pace and technology innovation many households are able to afford coffee making machines which give them close taste of an international product. Also the availability of raw materials enable the households to make the coffee at home Economic In que with Global price increase in coffee, Indian coffee manufacturers are also getting hit by the price increase. Coffee growers on the other hand are sorting to practices like Hoarding with the hope of further price increase in global markets so that they can cash in on exports. This is again creating supply side pressures and further escalating the prices. Ecological: A major factor affecting coffee prices is weather. Weather is an uncontrollable force that can seriously damage the crop yield in any given year. So, if weather does not cooperate, farmers are not able to produce as much as demanded and once again, there is a supply/demand imbalance that leads to rising prices.

Political The Government of India has communicated the sanction for the implementation of the Coffee Debt Relief Package 2010 for the debt ridden small coffee growers with a total implication of Rs. 241.33 crores vide order No 4/3/2008-Plant (B) dated 14th June, 2010. It is estimated that this relief package would benefit more than 95% of the small growers (74929 small growers out of the total of 78,665 coffee growers) having accumulated bank loans covering all the coffee growing regions of the country. Legal Starbucks since it is joining hands with Tatas its operations setup would be easy, however if it chooses to expand or grow further it would need to bide with the grueling laws of an international setup thereby causing issues for its expansion