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Introduction Part A1

Cadbury purchased Frys and the company grew. valuing the confectionery business at $19.Introduction Kraft was incorporated in 2000 in the Commonwealth of Virginia (Kraft 2007). Kraft makes and sells packaged foods and drinks worldwide in more than 150 countries (Kraft 2007). Maxwell House coffee.5 billion (£11. Jacobs coffees. 2010.5 billion) (REUTERS 2010). Kraft has more than 50 additional brands with revenues of at least $100 million (Kraft 2007). a grocer's shop in Bull Street (Cadbury 2011). Part A-Q1 The layers of external environment are including the macro-environment. Milka chocolates and LU biscuits (Kraft 2007). Kraft has nine brands with profits exceeding $1 billion: Kraft cheeses. making brands such as Dairy Milk chocolate. Cadbury is the world's second-largest confectionery company after Mars-Wrigley. but experimented with drinking chocolate and drinking chocolate cocoa too (Cadbury 2011). confectionery and quick meals with a rich portfolio of iconic brands (Kraft 2011). In 1919. John Cadbury launched He sold tea and coffee. Cadbury was established in Birmingham in 1824 (Cadbury 2011). marking chocolate on an industrial scale (Cadbury 2011). In 2007. dinners and dressings. . Oscar Mayer meats. Cadbury finally approved a revised offer from Kraft. On January 19. Nabisco cookies and crackers and its Oreo brand. Kraft Food Inc believes that the combination would build on Kraft Foods' position as a global powerhouse in snacks. Philadelphia cream cheese.

In the United States. the threat from substitutes. the propose Kraft Foods purchase Cadbury is that creating a global confectionery leader.industry and the competitors and market (Deakins Oneill and MILEHAM 2000). In social. As they get older. and 5. the threat of new entrants. economic. The confectionery does well in a recession because the person tends to purchase more sweets and more comfort food (Anonymous 2009). their chocolate preferences move to family-size bars (Anonymous 2010). the researcher . The external events may bring the company¶s threat and opportunities (Deakins. 2. the nature of rivalry in the industry. the 2007-2009 recession has been justifiably called the "Great Recession´ (Yoon 2011). In case. 4. 3. In economic. as the population ages their chocolate habits evolve (Anonymous 2010). due to the recession. environmental and legal analysis (Anonymous 2005a). technological. the bargaining power of suppliers. social. The five forces it considers are: 1. customers are less on the go and more likely to stay home in the evenings (Anonymous 2010). the demand for sweet is growing (Anonymous 2009). PESTEL is a political. As a result. That means that the demand for chocolate is growing due to the population ages. the researcher found that some economic and social is related to the decision of Kraft takeover. Finally. the bargaining power of buyers. Oneill and MILEHAM 2000). In case.

experience and compatibility. Besides this. normally by a buyer (Gillman 2010). the bargaining power of supplier is low. Therefore. and India. Kraft may base on the two partner selection criteria. Therefore. where Cadbury holds leading positions (Kraft 2010).chocolate. . where Kraft Foods has a stronger presence. they can help each other to creating the global confectionery leader. For the compatibility. Kraft identified Cadbury as a µpotential partner¶. The Cadbury is focused on three types . The combination has highly complementary geographic footprints (Kraft 2010). Russia and China. Kraft can use the secondary sources to know Cadbury¶s image. First. the combination of Kraft and Cadbury can purchase the cheaper materials easily. Due diligence is the examination of a potential target for acquisition. Therefore. But how does Kraft know Cadbury is a true µpotential partner¶? Kraft can know Cadbury true capability through µdue diligence¶. According to the experience. Cadbury had the experience in managing joint venture since it had purchased Frys in 1919. It is because the combination would enhance scale for Kraft and Cadbury in developing markets such as Brazil. Kraft Foods wan to use Cadbury¶s product development capabilities to increase the strength Kraft Food¶s presence in the confectionery sector (Kraft 2010). Since the sugar and a cocoa bean are not unique materials. Mexico and South Africa. gum and sweets (Twentyman 2009). Kraft is good at makes and sells packaged foods and drinks.found that the bargaining power of supplier is related to the decision of Kraft takeover.

The soft activities are risk of acquisition too. Knight and Riesenberger 2008). the acquisition of Kraft is related to the hostile acquisition. Then. Kraft may not achieve the total complementary geographic footprints. Part A-Q2 Acquisition is mean that add a small firm onto the existing structure of a larger organization (Anonymous 2005b). this high control strategy is need actual resource commitments by the Kraft (Cavusgil et al 2008). Kraft understand Cadbury¶s true information. Kraft can find the primary documents to Third. the Cognitive biase is one risk of acquisition (Calandro 2008). The hostile acquisition is against will of one set of directors (Stonehouse et al 2004). It has less flexibility to reconfigure the company¶s operation (Cavusgil et al 2008). Kraft may express over-optimism about the synergy evaluation. such as annual reports. The agreed acquisition is that the target company accept bid and recommend acceptance to shareholders (Stonehouse et al 2004). In case. In this case. can use human resource to investigated Cadbury. Second. For example. the Kraft can ask Cadbury employees.such as newspaper. The one disadvantage of acquisition is the high risk because the acquisition is high-control strategy (Cavusgil. For example. The acquisition is dividing into agreed acquisition and hostile acquisition (Stonehouse Hamill. Campbell and Purdie 2004). including the arrangements of human recourse. the problem solving of cultural issues and communication .

A joint venture is a business bargain in which companies accept to develop. Patriotic sentiment is a devotion to one's country. for a limited time. excluding dissimilarity caused by the dependencies of the term's meaning upon context. the researcher suggested that the joint venture is a feasible alternative. patriotism is a devotion to one's country (Miscevic 2010). Kraft needs to handle the culture conflicts. Therefore. In a generalized sense applicable to all countries and peoples. Since the Cadbury was a British candy old brand. the British¶s national may not buy the Cadbury and Kraft¶s products due to their patriotic sentiment. Kraft may put the wrong person into the management team. In case. expenses and assets (Linklaters & Paines 1990). Since these two companies are belonging to different national culture or different corporate culture. Therefore. the different of communication style may lead to affect the operation. geography and philosophy (Miscevic 2010). . there are culture conflicts after Kraft purchase Cadbury. it may affect the operation. The national thought that the action of Kraft takeover was selling the national price (Birmingham Mail ONLINE 2010). The other risk is about the patriotic sentiment. the national do not hope Kraft purchase Cadbury (Birmingham Mail ONLINE 2010). if Kraft cannot properly handle this culture issues and the communication problem. They exercise control over the organization and consequently share profit. Also. Besides this. a new entity and new assets by contributing equity (Linklaters & Paines 1990).(Cavusgil et al 2008).

2.Compare with the acquisition. decrease competitive pressure (Calandro 2008). Kraft and Cadbury may not build trust. 6. building trusts between potential joint venture partners. reduce costs and improve outcomes. Besides this. the clash of culture is one of the reasons of failure of partnership (Smith 2003). The national culture is driven by the belief that each country that has person with shared history and experiences would be considered a country of same culture (Bhaskaran and Gligorovska 2009). Also. Kraft and Cadbury can build trust and avoiding payer or community opposition. The cultural differences between two companies may be due of the different national culture. avoiding payer or community opposition. The risk of joint venture is about the failure rate. Hofstede (1980) differentiates between organizational culture and national culture assuming that "unique" . since the acquisition was the hostile acquisition. In case. Restrain competitor. 7. the acquisition was facing of the opposition of British¶s national. Reduce time to market. Joint venture failure rates remain high since many joint ventures fail to performed their potential (Inkpen and Li) Part A-Q3 In this case. the joint venture is more flexibility and lower risk (Cavusgil et al 2008). The other advantages of joint venture are: 1. Kraft and Cadbury had to integrate with each others with a different cultural background. 5. gain know-how. 4. If Kraft cooperates with Cadbury by the joint ventures. organization culture and corporate culture. 3.

the score of the five dimensions of United Kingdom is similar to United States (Hofstede 2012). Therefore. or the national cultures or a combination of two. The determinants of corporate culture are including the national culture(s). Campbell.4). history of organization. United States . uncertainty avoidance and long-term orientation (Huettinger 2008). Hamill. The five dimensions of the Hofstede model are power distance. The United States scores (46) on this dimension. Corporate culture is said to be ³the pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide them norms of behavior in the organization´ (Deshpande¶ and Webster. By applying Hofstede model. Purdie 2004). According to the national culture. the corporate culture can have its base on the ³original´ organizational culture. According to the Meschi and Roger (1994). there is the comparison between the United Kingdom and United States. size of organization. when the corporate develops into a multinational corporation. management and leadership style. At United Kingdom has a low score (35) on uncertainty avoidance which means that as a nation they are happy to wake up not knowing what the day brings (Hofstede 2012). the corporate culture is identified by "shared" values within the corporate. industry culture.values are particular to national culture whereas. The uncertainty avoidance of five dimension is the biggest different between the United Kingdom and United States (Hofstede 2012). nature of the employees (Stonehouse. pp. individualism. masculinity. 1989.

society is what one would describe as ³uncertainty accepting´ (Hofstede 2012). Therefore. There are some examples of Kraft. Kraft had the acquisition of Danone (Rosenthal 2008). In 1962. . According to the management style. In 1986. There are some examples of Cadbury. Therefore. corporate through entered different country market. It was because they was both To conclude. Kraft respectively entered into the Taiwan and mainland China market (Kraft 2011). the corporate culture had some implications on the impact of both on this ³partnership´. About the history of organization. there was the different style of the Kraft and Cadbury. Before Kraft¶s acquisition. the history of organization got the highest influence of the corporate culture and the national culture got the second influence of the corporate culture. acquisition and merger (The New York Times 1987). Cadbury also acquired the Canada Dry and Sunkist Therefore. Danone is a French food-products multinational corporation (Danone 2011). Kraft and Cadbury¶s organizational culture may not totally belong to the United State¶s culture and United Kingdom. In 1982 and 1984. In 2007. Kraft was similar to the Cadbury. such as the negotiation style. About the size of the organization. it was about Kraft and Cadbury development. are multinational corporate. Kraft entered into Hong Kong market (Kraft 2011). Kraft and Cadbury were an international beverage lines. Cadbury was a family business (Skapinker 2000) and Kraft was not (Kraft 2011).

Since the British believe in the concept of win-win. According to Kraft and Cadbury¶s history. This government was limited the . company¶s activities to regulatory. Refer to the United State and United Kingdom¶s negotiation party. Galbraith and Tompkins 2010). Beside this. and thus takes a broad approach (Tompkins. Kraft and Cadbury may have the conflict on the negotiation process and then the relationship of this ³partnership´ may not good. That means that Kraft and Cadbury need better management skill and communication skills to handle this integration of culture. Kraft was trend to the particularism and Cadbury was trend to the universalism. For universalism. Kraft was competitors (Lothar 2008). The primary negotiation style of United Kingdom is cooperative and people may be open to compromising if viewed helpful in order to move the negotiation forward (Lothar 2008). they expect people to reciprocate their respect and trust (Lothar 2008). It is because although United State people will look for win-win solutions. it is prefer to have more details and practical decision to be taken (Tompkins et al 2010). For Particularism. it is concern for the most important principles and concepts. Therefore.Negotiation is meaning that getting people of different cultures to see agreement by considered dialogue on an agreement (Chang 2011). United Kingdom¶s government plays a facilitative role in this partnership (FT Magazine 2010). they may strive to µwin more¶ than the other side does (Lothar 2008). Kraft was outcome driven and relationship driven (Lothar 2008). In United Kingdom. Cadbury was problem solver (Lothar 2008).

Retention of Kraft Foods¶ investment-grade credit rating. 4. .05 on a cash basis. A mid-teens return on investment.Part A-Q4 Kraft Foods believes that the final offer will deliver the four key benefits: 1. 3. well in excess of Kraft Foods¶ cost of capital. Maintenance of Kraft Foods¶ dividend (Kraft 2010). Accretion to earnings per share in 2011 of approximately USD 0. 2.

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