Page 3: The acquisition of Dr Pepper/Seven-Up
Knowing the strategy of the company helps to put the acquisition of Dr Pepper/Seven-Up into context. There has to be clear evidence, prior to the purchase of such a company, which shows that it will help push the group towards its intended targets.
Many companies have found to their cost that the take-over of another company can lead to disaster. For instance, when the acquired company does not complement the parent company's activities; or the parent company has no understanding of how to run the acquired company; or when predictions of market growth and improvements in profitability were hopelessly optimistic.
Cadbury Schweppes has established certain strategic priorities to ensure that any acquisition is a success. In essence these focus on the need to maintain strong links with the consumer, with products being freely, widely and obviously available. In addition, the trends of closer customer relationships will be given a high priority, particularly when looking at retailing and the factors influencing those retailers who will be stocking the company's products.
To make sure that any acquisition will work to the benefit of Cadbury Schweppes, a great deal of research will be undertaken, looking at market dynamics, the position of the targeted company in the market, plus forecasts for future development both within the market and by the company. This is exactly what happened with Dr Pepper/Seven-Up, and shows that every effort was made to make sure that Cadbury Schweppes got it right, as any mistake would be costly to rectify and could ultimately threaten the future of the whole group.