Project Report On Project Appraisal

INDIAN INSTITUTE OF PLANNING & MANAGEMENT

Submitted to: - Prof. Samerendra Mitra

Submitted by: Munmun Das ISBE-A/PGP/10-12/SS
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The Griffins business dates back to before the turn of the century. The result was a truly international operation with both the New Zealand and Australian companies supplying each other. in 1991 we became known as Cadbury Confectionery Ltd. Finally. as well as sales offices in Wellington and Christchurch. the United Kingdom based parent company. With manufacturing bases in both Dunedin and Auckland. George Griffin established the company when he opened a small confectionery business at Nelson. the Company employs nearly 1. The Cadbury group has also flourished internationally. Over the years the company has been involved with many other long standing brands and entrepreneurs – names such as Fry – a chocolate brand dating back to 1756. In 1986 Cadbury Schweppes Hudson merged with Cadbury Schweppes Australia. Cadbury Schweppes plc – the parent company – has manufacturing facilities in 20 countries and its famous brands are bought and enjoyed in more than 110 countries around the world. in 1990 Cadbury required the Griffins confectionery business. and can now boast dominance in New Zealand‟s chocolate and sugar confectionery markets.About Cadbury In 1930 R Hudson and Company finally joined with Cadbury. Cadbury Schweppes Australia is a fully owned subsidiary of Cadbury Schweppes plc. and sold the Hudson biscuit operation in a reciprocal agreement.000 in total. Cadbury is one of the world‟s leading chocolate makers and is number one in England and Australia as well as in New Zealand. This gave the flourishing local firm a direct link with one of the greatest in international chocolate manufacturing and marketing. Most recently. 2|Page . and of course Schweppes which is still part of the Cadbury group internationally although not in New Zealand. In 1969 Cadbury Fry and Schweppes merged internationally with the New Zealand Company becoming known as Cadbury Schweppes Hudson Limited in 1973.

Vision The governing objective for Cadbury India is to deliver:  Superior Shareholder Value  Cadbury in every pocket The company believes that this requires:  Broadening our consumer appeal and extending their reach to newer markets  Sustained growth of their market share through aggressive product development  Striving for international quality in their products and processes  Focusing on cost competitiveness and productivity in their operations and innovative utilization of their assets  Investing to develop people 3|Page . Recently. Gems and Bournvita. Cadbury bought Induri Diary farm in Pune in 1964. The factory employs about 750 people and houses the R&D and engineering development facilities of the company. Today. Nutties. the company began operations in their newest and most modern plant at malanpur. the Induri Factory manufactures intermediate products like milk crumb and a range finished chocolates. this unit manufactures Éclairs. In 1989. crumb and chocolate making facilities. Equipped with state-of-the-art technology and backed by constant investment. a major investment program resulted in the installation of modern molding. 5 Star. the factory has grown manifold and manufactures a range of products that include Cadbury Dairy Milk. Gems.PRODUCTION Cadbury India‟s first manufacturing facility was set up at Thane (Mumbai) in 1966. In a move towards backward integration. Today. Perk and Picnic.

4|Page .Environmental assessment Environment for new venture Within the industry      Threat of new Entrants Power of suppliers Power of Buyer Product substitutes New business models Outside the industry        Social & cultural Economic Legal/ Regulatory Technology Global Political demographic Within the Industry  Threat of new entrants The industry‟s main barrier to entry is with respect to advertising. but also the lingering impact of past marketing campaigns. thus entrants must overcome not only current advertising efforts. The incumbent firms have spent millions of rupees to create brand-loyalty with consumers. High sunk costs also act as a barrier to entry. The cumulative effects of advertising create an absolute cost advantage for the incumbent firms.

both generic and brand names. In order to strengthen the special relationship consumers share with chocolates.  Competition within industry: The chocolate industry is highly concentrated.  Threat of substitutes: The current trends in the market suggest that traditional sweets are possible substitutes for chocolates. the main ones being cocoa beans. This gives consumers a great deal of leverage and leads Cadbury to spend millions of rupees to create product differentiation via advertisements and new products to catch up with the evolving trends in the market. dairy products (including milk). sugar and other sweeteners (including polyols and artificial sweeteners such as aspartame). Cadbury buys its raw materials from suppliers around the world.  Power of Suppliers: Industry uses a wide range of raw materials in manufacturing chocolate products. No single supplier accounts for more than 10% of their raw material purchases. especially between Cadbury and Nestle. It is easy for a consumer to purchase a nearly identical product for a lower price. Power of Buyer End consumers have strong buyer power because of the availability of substitutes. Cadbury India launched its all-year-round „Cadbury Celebration gifting‟ range with an array of newly designed Cadbury Celebration packs. gum base and fruit and nuts. Cadbury and Nestle together account for 90% of the retail sales with Cadbury being the market leader. Both Cadbury and Nestle have rival products in every segment 5|Page . Competition in this industry is fierce.

if the prices of these commodities keep increasing. bar-one.  If exchange rates changed it would affect the cost of exporting. munch. 6|Page .(Cadbury‟s Dairy Milk. Nestlé‟s Classic. high volumes. the chief ingredients used in chocolates.g.  The prices of cocoa and milk. more up to date equipment would mean that the goods where produced quicker and cheaper but would also result in job lose.  If pensions and national insurance went up then Cadburys costs would go up meaning that their profit would go down.  If unemployment was high then people will have less money to spend on luxury goods like chocolate.  Technological  An increase in capital expenditure e.  If inflation went up/down it would affect the cost of materials and therefore their profit would increase/decrease accordingly. Cadbury will be forced to increase the prices. Perk vs.  If the interest rates go up it will mean that there is no capital expenditure and no new jobs will be created which will therefore affect employment. etc. so a change to the euro would mean that it was better for exporting  If the national income went down people would have less money to spend on luxury items such as chocolate.  If taxation went up then it would increase the production costs meaning that their profit would go down.  A low margin.) Outside the industry  Political & Economic  A change in government will cause a change in polices. have gone up by 50 percent. again their profit would decrease. 5 Star. price sensitivity of the industry and competition from cheaper substitutes leaves little room for price maneuvering.

then they will stop eating chocolate and spend their money on gym memberships etc.75% reduction in planning and processing time and increase in productivity.  Demographic     AGE: 5-60 GENDER: Male/Female FAMILY LIFE CYCLE: Young. health and fitness awareness and perception.g. This means that Cadburys profits will decrease. Older INCOME: As concluded from the survey that our prices are economical so everyone can afford it.  E-Commerce has not picked up that well .  Adoption of JDA software‟s space and category management solution resulted in 93.not much turnover through this route – future growth prospects of this channel. 7|Page . Married.  If people‟s lifestyles changed e. Expensive costs to Cadburys to implement.  Legal  More legislation in place to make sure that the workplace is safe and the worker is better protected. Research and development. aging populations. college graduate.keep developing new products to keep up with competition and customer needs. different cultures. high school graduate.  EDUCATION: Grade school or less.  Socio-cultural  It includes life styles of people. more people wanting to get fit and lose weight. Single.  Social  If the population size decreased then their would be less people to buy their products therefore less profit. some high school. spending patterns.

 CLIMATE: Northern n southern. 8|Page . Geographic  REGION: Chocolates are everybody‟s favorite so there is no limit of region. development and membership of geographic region.  COUNTRIES: Perhaps categorized by size. it is used all over the world.

“Cadbury‟s commitment to Fair-trade is life-changing news for cocoa farmers who will be able to sell more of their cocoa as Fair-trade.Competitive Analysis FUTURE GOALS CURRENT STRATEGY  Future Goals of Cadbury Dairy milk For cocoa producers in Ghana this is exciting and life changing news as Fair-trade Certification of Cadbury Dairy Milk® will dramatically increase sales of Fair-trade Certified cocoa providing them with the opportunity to grow their businesses and provide a better future for their families and communities. The move will also open up new opportunities for cocoa farmers in other parts of the world. helping to improve living standards and create a better future for their families and communities. 9|Page . giving even more producers the chance to change their lives and become part of the Fair-trade system.

in the market so if the price of the competitors increases. Cadbury Dairy Milk. foreign chocolates (Chinese Chocolates). Amul. lotee etc. The belief is that good things happen when one starts a venture on a positive note (like sharing sweets). and of great benefit to the company in furthering its competitive advantage. Kit Kat has been able to define a new segment in the industry in the form of the wafer enrobed any time snack. Parle chox. While the previous Payday campaign was a narrow interpretation of the occasion based positioning. The brand has been trying to position itself as a symbol of enjoyment and celebrations.  Competitor’s Response Profile Cadbury is very much satisfied with their current strategy. Shubh Aarambh has given the brand a broad playing ground. It also helps the company for building its future planning and targeting the customer for more satisfaction through its innovative products. but if the price of the competitor‟s decrease. It will be interesting to see how Dairy Milk milks this idea to the fullest. the demand of the dairy milk also increases. was launched in India in 1995. Whether the activity is small like writing an exam or huge like starting a company. Kit Kat. There are many competitors like Cadbury 5-star. Within months of its launch. Indians have the tradition of sharing sweets on auspicious occasions and also when one initiates a venture/activity. In the crucial markets of Bombay and Delhi both are running neck-and-neck. sharing of sweets is an integral part of the event. Kit Kat outsells Perk in the outlets where both are available. one of world‟s most popular chocolate. Current Strategy of Cadbury Dairy milk Shubh Aarambh is a great idea for this great brand. it fulfilled every target Nestle had set. Its launch was accompanied by the launch of Cadbury‟s Perk in order to counter Kit Kat and safeguard the flagship brand – CDM. Nestle Kit-Kat. Cadbury chocolate‟s marketing strategy with its main competitors that has proved to be extensive through. 10 | P a g e . It has even said to have threatened the mother brand. the demand of the dairy milks not much affected by it.

However. Crunch and Fruit n Nut has a market share of about 5 %.  Chocolates are no more a children‟s item. Symbolizing togetherness. In fact. Chocolates are even considered as a good gift option.  Most of people buy chocolate by impulse decision. with Nestle pitching Bar One (launched in 1993) against it with the punch line 'for those in between times'. Amul‟s memorable advertising campaign positioning it as a “A Gift for Someone You Love”. of which chocolates constitutes just 1-2 %. Ever since. Although positioned internationally as energy bar. Kaira District Cooperative Milk Producers Ltd. With its milk chocolates. It is very nebulous one though. Amul‟s sales grew by 39% then.is selling whatever it produces. They would like to further 5 Star's equity in the functional or snacking direction. both these brands enjoyed a high consumer preference. GCMMF is involved in a large number of products. before the launch of Perk. size/form/taste of chocolates. 5 Star was originally targeted at teenagers. 5 Star's energy bar positioning made it a snacking chocolate.  Consumers preference vis-à-vis place of purchase. saw the sales graph rising. The company is not concentrating much on its chocolate business. Amul chocolates are not on company‟s focus. (KDCMPL) . In June 1994. Badam Bar.  Assumption  Kit Kat and Cadbury Dairy Milk had a high unaided awareness level and also. Due to lack of focus and with multinationals spending huge amounts on advertisements its market share has been falling.the manufacturer of Amul chocolate . Limited capacity is also a reason for the share it has. Interestingly. Amul is perceived for giving value for money. etc 11 | P a g e . Cadbury will be launching a new campaign for 5 Star shortly.Gujarat Cooperative Milk Marketing Federation (GCMMF) launched the Amul Chocolate way back in 1974. Amul has maintained a low profile. the company reworked the strategy for 5 Star to make it a source of energy. As of now. 5 Star was positioned on an emotional platform in India during the late 1980s.

established brand name and leader in innovation and could counterattack the competitors o Advantage that it is totally focused on chocolate. Recall level for Cadbury‟s Dairy Milk and Kit Kat.4%) o Strong manufacturing competence. usually the receivers are o A friend of opposite sex o Children  The idea of making chocolates available at sweet shops. “reasonably O.  Capabilities  Strength o Maintain a stable growth of a company. o Cadbury is the largest global confectionery supplier. £7971. chewing gum o Overall.  When it comes to gifting. o High financial strength (Sales turnover 1997. ice cream parlors. Most of the respondents had a high ad. o Acquisition rules in UK reduce its dependence on the UK market.  Weakness 12 | P a g e . candy.K. The concept of exclusive chocolate parlors was rated favorably (around 63%).  The product category does not enjoy high brand loyalty levels.  People are not price sensitive and consider the prices of chocolates available in India.”.to Rs15/-. gift shops. o Keep up with the financial strength by increasing its sales and profit.4 million and 9. Suitable price for a 40gm chocolate was felt to be between Rs10/. They are ready to pay a premium for good quality. with 9. fast food joints/restaurants was asked to be rated.9% of global market share. Cadbury has been successful through the new products (development) it has to offer.

o Weak position in the US market. o Total French production of chocolate bars and confectionary has slowed down in more recent years. o Other competitors have greater international experience . o Consumption of chocolate products. New to the US.7 per cent. fall in demand due to the gloomy economic situation. o Sales of milk chocolate bars.Cadbury has traditionally been strong in Europe. possible lack of understanding of the new emerging markets compared to competitors 13 | P a g e . which account for 24 per cent by volume of total sales of chocolate bars.g. decreased by 3. Nestle have a more diverse product portfolio. o Lack of distribution network. o The company is dependent on the confectionery and beverage market. where profits can be used to invest in other areas of the business and R&D. partly due to the economic slump. whereas other competitors e.

capacity Raw material cost Financial condition Kit Kat Less Good More Avg Less Good Urban Good Good High Good Nestle More Good Avg Less Few Good Urban Good Good Avg Medium Cadbury More Good More More Huge Good Urban & Rural Good Good Avg Good 14 | P a g e . Effectiveness Design. variety.Competitive Analysis Competitive profile analysis Competitive factor Product uniqueness Relative prod. Quality Price Service Availability Reputation Location Advtg.