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Cadbury's Altruistic Spirit And The Shareholder Value

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The market for corporate control generated $180 billion during 1985-1986 and raised $346 billion for shareholders through mergers and acquisitions in 1977-1987 (Jensen, 1988). Cadbury was viewed as a firm that integrated corporate social responsibility and Quaker values in its everyday decision-making and management (Hemingway and Maclagan, 2004). Todd Stitzer and Roger Carr both previously managed Cadbury and believe that after Kraft’s takeover in 2010 the altruistic spirit that has been embedded in the culture of the firm will be lost (Wiggins, 2010). Rowlinson (1995) argues that Cadbury was maximising the shareholder’s value instead of satisfying other stakeholder’s needs all along. Shareholder value can be defined as only carrying out investments that bring the most benefits to the shareholders. These events make it important to explore when Cadbury really lost is altruistic spirit and how it was affected by the shareholder value. In this essay I will examine whether Cadbury’s altruistic spirit was lost after or before Kraft purchased it. I will argue and further develop Lazonick (2000) and Rowlinson’s (1995) points about Cadbury losing its altruistic spirit before the takeover by Kraft through the introduction of a shareholder value strategy and expansion through external growth. I will present my argument in three main parts. Firstly I will explore how mergers and acquisitions helped Cadbury grow, the reasons behind them and how it affected the culture of the firm.

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