Cadbury Schweppes Strategic Dilemma of Trebor Bassett

4243 WordsMar 13, 200517 Pages
INTRODUCTION Cadbury Schweppes is a UK-based beverage and confectionary group founded in 1969 with the merger of two English groups (Cadbury and Schweppes). This family-managed group grew and flourished through the years. It became an international major player in the late 80s and was admired by its peers for such an ascent. In 1990 the group bought two little entities from the same business and merged them into a single unit: Trebor Bassett. The CEO of this unit soon became the CEO of the group (1993) and he then realized that the success of the past years was seriously in danger and that a real turn needed to be taken. John Sunderland (CS'CEO) and John Stake (Human Resources Director) decided to spend time trying to understand the…show more content…
Communication was formal and a relation of control had been set up. Added to this, the group was too far away to appreciate the complex strategy issues of TB and was missing strategically-rooted mechanisms and systems on which to base a dialogue. In fact, the Group was keeping tracks of the numbers through several "books" that finally were isolated documents that contained very little strategic analysis. The "culture of variance" that came with the reach of budget objectives led to a lack of trust between the Group and TB since managers just gave enough results of what they needed to shield their performance from blemishes and "under promised" in order to subsequently "over deliver". Moreover, this "game playing" was leading to a lack of accountability of the business unit managers. As TB's business strategy was a reflection of CS' culture of targeting annual revenue, TB had focused on generating additional profits by getting bigger and exploiting scale efficiencies. Therefore, TB saw the solution to high short-term revenues in line extensions and broadened product portfolio. New products were introduced without much marketing support to increase total sales and production volume. And within the same product range, TB pushed for more volume by introducing a greater variety of pack sizes and formats. TB's product lines were getting too large and would require rationalization. In spite of these

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