Page 2: Managing for value (MFV)
Managing for Value moves the focus of business management away from a largely 'scale-driven' approach ("How much do we produce of this? How many countries do we sell to? Are we the biggest?") towards a 'value-driven' approach ("What contribution is this brand or this product range making to the overall value of the company? What financial return are we obtaining from our ongoing investment in it?").
This shift in approach recognised the importance of providing adequate returns to shareholders and of keeping the good opinion of institutional investors.
Adopting MFV caused Cadbury Schweppes to scrutinise all its operations. The company rationalised its activities, sold off those of its beverage brands that were underperforming and as a consequence withdrew from participating in beverages in more than 150 markets.
By selling its underperforming beverage brands to other firms, Cadbury Schweppes raised almost $1 billion. This led to a new challenge: how to put this inflow of funds to best use within the overall MFV initiative. It reviewed its business in search of the most promising 'areas for action'.
Applying MFV principles in 1999 Cadbury Schweppes challenged all its businesses to find ways to use funds that would tackle two problems simultaneously: to revitalise some familiar brands and produce a higher return on advertising expenditure. The response of one of the business units, Cadbury Trebor Bassett in the UK, is the subject of this case study.