Page 8: Strategic purpose
The example of Cadbury Schweppes and its acquisition of Dr Pepper/Seven-Up shows the importance of corporate strategyin influencing the decision to undertake such a major investment.
Strategic planning is often accused of being a waste of time and totally irrelevant in a quickly changing market. However, the approach used here shows that when it is undertaken with care and thought, it helps to move the company in a direction which will enhance the value to shareholders, provide a valuable product and service to customers, and help to safeguard or even create jobs and further opportunities for staff.
Even though the strategic objectives are clearly laid down, how they are to be achieved may not be so clear. With Cadbury Schweppes' acquisition of Dr Pepper/Seven-Up, it was not just a case of looking at the opportunities offered by the purchase of the company. It also entailed a thorough appraisal of the opportunities offered, compared to other means of achieving the objectives.
Only when research had been carried out into the suitability of Dr Pepper/Seven-Up, the market potential, synergy benefits and future growth opportunities, could a final decision be taken. Even then, financing the deal, along with persuading others of the wisdom of the move, was necessary prior to the successful completion of the take-over.
Cadbury Schweppes' vision is that it can become the number one non-cola beverage company worldwide, by capturing and integrating the best practices of the industry. With Dr Pepper the challenge is to increase consumption among current users, whilst encouraging non-users to sample the product. To do this will require the market to think of Dr Pepper as a mainstream soft drink and its availability must be ensured to take advantage of this.
These are the challenges facing the company which, if successful would more than justify the inclusion of Dr Pepper/Seven-Up within the family of companies owned by Cadbury Schweppes.