Engaging stakeholders in a business A Cadbury Schweppes case study

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Introduction

Cadbury Schweppes is one of the UK's best-known companies. It was formed in 1969 by a merger between two companies with distinguished histories: Cadbury and Schweppes. It is a major public limited company(plc).

Since 1969, Cadbury Schweppes has grown into an international confectionery and beverages company, selling chocolate, sweets, gum and beverages around the world. It is constantly extending its product range by developing both new and existing products whilst also buying other companies and using its expertise to develop those companies' established brands.

Like any other company, Cadbury Schweppes has to make profits as this helps to generate wealth for the economy - funding taxes, employment and pensions. It also has to provide a return for those who have invested in the company. It does this by successfully continuing to offer consumers a range of products that they want to purchase. Cadbury Schweppes' core purpose is 'working together to create brands people love' and some of its best-loved brands in the UK include:

  • Cadbury Dairy Milk (100 years old in 2005)
  • Bassett's range including Liquorice Allsorts, Fruit Allsorts and Jelly Babies
  • Flake
  • Roses
  • Trebor Mints
  • Maynards range including Wine Gums and Sours.

In December 2004, in a survey of major UK-based business leaders, Cadbury Schweppes was voted 'Britain's Most Admired Company'. The award was voted for by other leading Financial Times Stock Exchange (FTSE) businesses who rated companies against nine criteria - quality of management; financial soundness; quality of goods and services; ability to attract, develop and retain top talent; value as long-term investment; capacity to innovate; quality of marketing; community and environmental responsibility; and use of corporate assets.

This case study looks at how Cadbury Schweppes interacts with its stakeholders, acknowledges its responsibilities towards them and looks to balance their various interests.

Stakeholders and their interests

A stakeholder is any individual or group that is affected in some way by a company's activities. Stakeholders range from small shareholders with a few hundred pounds worth of shares in a company, to communities in which a company has business premises that may employ a few, or thousands of people.

In being committed to its core purpose of 'working together to create brands people love', Cadbury Schweppes recognises that it does not operate in isolation and works at its commitment to each one of its stakeholders. It is governed by five goals:

  • deliver superior shareowner performance
  • profitably and significantly increase global confectionery share
  • profitably secure and grow regional beverages share
  • ensure our capabilities are best in class
  • reinforce reputation with employees and society.

The table identifies Cadbury Schweppes' main stakeholders and outlines their particular interest in the company and its activities.

The importance of engaging stakeholders

Engaging stakeholders involves establishing good lines of communication between a company and its various stakeholders and then maintaining a constructive relationship with them. Through this relationship, stakeholders can have their say and the company can listen and respond.

The original Cadbury company was set up over 150 years ago by the Cadbury family who believed in fair treatment for their employees and were well known for helping in the community.

They established relationships with their stakeholders by consulting regularly with their employees, responding positively to their needs and aspirations and generally treating them well. This was rare for its day and enabled them to bring several important benefits to the company:

  • employees worked hard and were seldom absent
  • high morale and good health raised productivity and improved efficiency
  • the company gained a reputation as a good employer, making it easier to recruit and retain employees
  • the company became renowned for the quality of its goods, customers wanted to supply them and consumers want to buy them
  • the company's products became popular with customers who chose to buy their products over and above competitors
  • it became easier for the company to expand its activities - communities welcomed its presence among them, suppliers enjoyed working with them and investors were happy to lend money to the company or to purchase its shares.

In the 1980s the company's then Chairman, Sir Adrian Cadbury set out Cadbury Schweppes' commitment to its stakeholders in a booklet called "The Character of the Company" and more recently these views were enshrined in the company's Purpose and Values and its Business Principles.

Today, Cadbury Schweppes continues to listen and work with its stakeholders. It has open and regular conversations with them and what they say and do continues to influence how the company thinks and acts. For example, Cadbury Schweppes maintains a close relationship with its consumers to ensure it is making products that meet their needs. Listening to consumers in this way helps the company to maximise its investment in product research and development and grow its market share.

Engaging with stakeholders helps ensure potential problems are addressed, or changes communicated and understood. For these reasons it is important for companies to find ways and means of engaging with all their stakeholders, including shareowners whose willingness to hold shares underpins a company's financial position. Cadbury Schweppes has the advantage that working closely with stakeholders has long been central to the way in which it conducts its business.

How to engage stakeholders

Cadbury Schweppes has open and regular discussions with its stakeholders and uses different ways to communicate with different stakeholder groups.

Shareowners - Cadbury Schweppes has over 60,000 registered shareowners. These include private individuals as well as large institutional investors, such as pension funds and banks. All shareowners are also entitled to attend the Annual General Meeting, at which they have the opportunity to ask questions, discuss the company's performance and vote on certain issues.

Consumers - Consumers can contact the company by various means and Cadbury Schweppes deals with consumer enquiries on a daily basis. It performs market research to track changing consumer trends. Many parts of the business also use surveys and market research panels to find out what consumers think of products.

Customers - The company has ongoing discussions with its customers. Wholesalers and retailers provide the vital link to consumers and it is they who make Cadbury Schweppes' brands widely available. The company works in partnership with customers to meet their need for attractive, high-quality products and business success.

Suppliers (and business partners) - Cadbury Schweppes has 40,000 suppliers around the world and its Ethical Sourcing Standards set out how to work with them. The company is in regular dialogue with its suppliers and responds to their suggestions. For example, if a supplier had views on ways of improving quality or efficiency then Cadbury Schweppes would listen and possibly act on ideas if they made good business sense. Working in partnership with suppliers makes it possible to find out their needs and also to ensure they satisfy Cadbury Schweppes' requirements for quality materials while operating in a socially responsible way. Cadbury Schweppes evaluates potential suppliers against a set of standards such as environmental protection and ethical labour practices prior to doing business with them and encourages their principles and standards to be upheld during the relationship.

Employees - Cadbury Schweppes has a tradition of encouraging direct, two-way involvement and communication with employees. Managers hold regular individual and team meetings to inform colleagues about the business and hear their views. The company also conducts surveys to check how its employees feel about working at Cadbury Schweppes. Internal newsletters, a group website and many local websites help employees keep up to date with what is going on.

Society - The company regards itself as a citizen in the countries in which it operates and enters into regular dialogue with organisations such as national governments and international bodies. For example, the World Health Organisation (WHO) to discuss issues that effect the company. These issues can be anything from agricultural policy to education and skills.

Cadbury Schweppes also encourages its employees to get involved in community programmes so they can give something back to society and gain new experiences and broaden their horizons.

Balancing different stakeholder views

Not all stakeholders share the same interests. Cadbury Schweppes listens to its stakeholders and balances their interests with the long-term benefits to the company.

For example, it may be in the shareowners short-term interest to want Cadbury Schweppes to keep all costs to a minimum in order to maximise their near-term return on investment, through profits and dividends.

However, Cadbury Schweppes has a target of 1of pre-tax profits which it invests in communities around the world because it believes it has a responsibility to help build prosperous stable communities where it operates and that this is good for long-term business growth and success. This activity is recorded in the company's Corporate and Social Responsibility Report.

Conclusion

Engaging is about providing open access and Cadbury Schweppes has always taken its responsibility seriously. It knows that listening to and engaging with stakeholders is essential to its success and has benefits for stakeholders.

Engaging with stakeholders does more than sustain their goodwill and co-operation: it enables the company to remain competitive and successful, to keep in touch with wider social expectations, as well as making sure that the values and business principles of the company are upheld.

Cadbury Schweppes | Engaging stakeholders in a business