Kraft's acquisition of Cadbury

• Published date: 01 March 2019
• DOI: http://doi.org/10.1002/tie.21994
• Author: Alex Sharland
• Date: 01 March 2019

INTERNATIONAL BUSINESS CASE STUDIES

CASE COMMENTARY

Kraft's acquisition of Cadbury

Alex Sharland

Mitchell College of Business, University of

South Alabama, Mobile, Alabama

Correspondence

Alex Sharland, Assistant Dean for Graduate

and International Programs, Mitchell College

of Business, University of South Alabama,

5811 USA Drive South, Mobile, AL 36688.

Email: asharland@southalabama.edu

The case of Kraft Foods attempting to, and eventually succeeding in, acquiring Cadbury, the UK

chocolate maker, is replete with the drama and complexity of corporate takeovers. Govern-

ments, politicians, unions, customers, and other interest groups all chime in with their version of

what is good for their particular interest group. The clash of food giants makes for excellent

reading, and trying to determine how successful the combined company will be is a natural

question to consider. The strengths of the case lie in the way the context is established, with

the history of Cadbury, its culture, and the “soft”power achieved by the founding family

explained.

KEYWORDS

food industry, grocery industry, Kraft –Cadbury, marketing, mergers & acquisitions

1|WHEN KRAFT CAME CALLING ON

CADBURY

Big corporate takeovers (or mergers if you are on the losing side) cap-

ture the imagination. An aggressor is rebuffed, regroups, attacks again,

and tests the mettle of the defending management team. Glorious!

The case of Kraft attempting, and eventually succeeding, in

acquiring Cadbury in a hostile takeover bid has all these elements and

more. Governments, politicians, unions, customers, and other interest

groups all chimed in with their version of what was good for “….”,

insert whichever interest group is considered. Dr. Anwar's case cap-

tures the complexity of the situation and provides the reader with a

snapshot of how one respected and admired company can be

absorbed into another.

The strengths of the case lie in the way the context is established,

with the history of Cadbury, its culture, and the “soft”power achieved

by the founding family explained to the reader. Any company that has

a management group led by someone whose name is synonymous

with “good governance”(at least in Great Britain anyway) is surely

one that has to be reckoned with. Without question, most Brits grew

up loving the company, its products, and the position it occupied in

British society and culture. The position of Kraft in the United States

was not identical; however, the company was well known for its food

products (if nothing else).

The clash of food giants makes for excellent reading, and trying to

determine how successful the combined company will be is a natural

question for the reader. For the student in a Strategy of International

Business course, there are other natural lines of enquiry. These will

include how well Kraft will be able to adapt to the Cadbury culture or

how well Cadbury employees and managers will be able to deal with

the different priorities imposed by a management group with financial

metrics as the overarching measures of success?

The case makes excellent use of the management literature to

demonstrate that many of the issues it generated are part of the study

of business strategy in Management and International Business. Too

often, cases are written with little or no ties to strategic and/or theo-

retical considerations, and that leaves students drifting with respect

to how to explain the motives and decision framework of the senior

managers involved.

Perhaps more could have been written of the comparison of the

Kraft/Cadbury situation compared to other takeover/merger efforts.

The case of Pepsi and Danone is particularly pertinent because of the

similarity of the industry (food and beverages), the locations (United

States and Europe) and the time frame (21st century). The Pepsi–

Danone effort was a failure because of the opposition of the French

Government (see table 1). There was significant “concern”in the Brit-

ish Government, but ultimately, the Cadbury acquisition was allowed

to succeed. This was probably due to the commitment of the United

Kingdom to market-based economics in comparison with the French

orientation. This could be an interesting line of discussion or analysis

for students, especially in advanced-level courses considering the

influence of governments on business.

There is the possibility of a second case that evaluates the actions

taken by the combined group, its share of existing markets,

DOI: 10.1002/tie.21994

Thunderbird Int. Bus. Rev. 2019;61:453–454. wileyonlinelibrary.com/journal/tie © 2018 Wiley Periodicals, Inc. 453