Negative Impacts Of The Kraft Foods 2010 Takeover Of Cadbury

With reference to organisations or industries that you know, to what extent do you think that recent changes in the UK economy will have inevitably damaged the long-term profits of businesses that operate in this country? (40 marks)

The UK economy is constantly changing for various reasons such as improvement in medicine and increased globalisation leading to people living longer and the UK economy becoming more diverse culturally. Whether or not it provides an opportunity or a threat to a business will largely depend upon how the management of the business decides to attempt to change because of the change of the demographics.

There are a few components for headway of worldwide exchange all around. This incorporate creative generation methods, new transnational enterprises and proficient transportation framework. By ideals of universal exchange system and offices the organization like TESCO can work globally and do its business. This could be accomplished with no or little obstructions. Based upon these new exchange controls TESCO is uncommonly working and doing its business particularly in European nations. This is along these lines getting moved up to a universal or a worldwide organization. The promoting branch of TESCO is proficient and attempt to investigate the new universal laws being encircled by European Union or other global exchange associations. TESCO

In the late 1990’s and early 2000’s the food industry was struggling with weak sales and low inflation which caused waves of consolidation among some of the largest firms in the industry. In 1998 General Mills studied areas of potential growth and value creation for their company which lead to small acquisitions of other firms. Looking to further grow their company, in December 2000, management of General Mills made a recommendation to its shareholders that they authorize the creation of more shares of common stock and approve a proposal for the company to acquire Pillsbury Company, a producer of baked goods, from Diageo PLC.

As previously identified, there are also “non-legal/extra-governmental” political risks which could bring unexpected upheaval to foreign firms. Macro political risks such as the threat of violence, corruption, war or military coup, political instability and terrorism are all direct threats to foreign investors.

The foreign partner can also become a competitor by selling its production in places where the parental company is already in.

There are two major barriers that are leading to an inevitable failure in the Royal Biscuit and Edeling merger. The first, and most important, is the lack of cultural competency between Brighton and Wallach, the two merger officiators. Both parties are displaying characteristics of ethnocentrism and misperception. Second, is the lack of corporate competency resulting from dissimilar corporate cultures, histories and business strategies. If the merger of the two companies is to be successful then corporate synergy must be realized; otherwise the union is doomed to failure.

Cadbury is a British multinational confectionery company wholly owned by Mondelez International since 2010. It is the second-largest confectionery brand in the world after Wrigley's. Cadbury is internationally headquartered in Uxbridge, West London, and operates in more than 50 countries worldwide. It is famous for its Dairy Milk chocolate, the Creme Egg and Roses selection box, and many other confectionery products. Cadbury was established in Birmingham, England in 1824, by John Cadbury who sold tea, coffee and drinking chocolate. Cadbury developed the business with his brother Benjamin, followed by his sons Richard and George. George developed the Bournville estate, a model village designed to give the company's workers improved living conditions. Dairy Milk chocolate, introduced in 1905, used a higher proportion of milk within the recipe compared with rival products. By 1914, the chocolate was the company's best-selling product. Cadbury, alongside Rowntree's and Fry, were the big three British confectionery manufacturers throughout much of the nineteenth and twentieth centuries.

Politicians want mass deprivatization of these firms due to some disadvantages they cause in the economy, one of this disadvantage is that foreign investors will repatriate profits to their home country and therefore does not benefit the host country, the other problem is that they bring stiff competition to the various industries and host country firms will close down due to competition. Finally the politicians will want investors in the country to invest in these firms and not foreigners and they will not want illegal allocation of these resources to some individuals.

However, regardless of the obvious benefits for Cadbury Schweppes, the acquisition presents significant risks that to me outweigh the grandiose potential of becoming number one. Not only would CS being overpaying for Adams but it appears to not be as profitable after the acquisition takes place. Adams would lose $15M in back office services it currently provides. While it is believed there would be a strong cultural fit at these two companies, CS was not prepared to provide leadership for the merged companies in the expanded Americas

The selling of Pillsbury would ensure Diageo 33% ownership of the General Mills/Pillsbury business without active managerial involvement and the Burger King spin off allowed floating of shares without tax penalties. In general, divesting of Diageo’s non-core business allowed for infusion of capital that allowed new internal investments and external acquisitions in businesses that can be more easily integrated to Diageo’s core competencies and can generate growth in stable, top-line revenues that are more reflective of the industry cost of capital.

In Britain there are 17 Cadbury and Schweppes sites. Ownership Cadbury is a public limited company. It has the opportunity to become larger than the other forms of private business organisation.

Companies need to follow the rule to playing the game in a foreign country. Furthermore, government is another part the CEO needs to think about it, some government will stop or against some products unless under their control. The most well-known examples will be the Facebook and Google in China. Google China was founded in 2005 as the google subsidiary corporation and shut down the service in 2010 by not cooperate with the Chinese government. In the main while, the Facebook CEO puts lots effort dealing with the Chinese government, but still unable to entry the Chinese market.

Multiple theories have been developed to explain the link between Multi-National Corporations (MNCs) and Foreign Direct Investment (FDI), however, for the purpose of this essay, the theory titled ‘Dunning’s Eclectic Paradigm’ will be used to analyse the workings of MNCs and FDI (Neary 2016). In order to determine whether the Eclectic Paradigm is effective in its aims, its three main tenets which will be applied to a real-estate MNC named ‘Juwai’. These tenets include: ownership advantages, location advantages, and finally internalisation advantages, all of which can be used to create an argument stating that the Eclectic Theory is the superior concept to explain the workings of MNCs, particularly when compared to other concepts such as the New International Division of Labour theory (Erdener & Shapiro 2005).

Emerging Market Multinationals mainly emerged because domestic companies in developed countries saw a shift in growth pattern once they reached the peak of their economic curve. Growth slowed down and even became stagnant. This was primarily because the markets in the developed countries had already reached their optimum levels. On the other hand, this was the period of time when developing countries began to experience rapid economic growth. This prompted companies to look towards the potential and resources of these emerging markets as their source of salvation and develop