The End of another English Institution

So its good-bye to Cadburys after 150 years. There is nothing wrong with the company. If fact Kraft are arguably paying over the odds for one of its competitors.

Cadburys has led the world as a fair and just employer, a visionary in Fair Trade as well as an ace confectioner. I hope Kraft is a good owner for Cadburys. But I have my doubts.

Her is a story that used to be related at most business schools. It relates to acquisitions and mergers. You can draw your own parallels.

Between the Worlds Wars, the Coca Cola company was doing OK, even during the hard times of the 20's and 30's. It has a number of competitors including Pepsi Cola, but all were really also-rans to the mighty Coca Cola. Things got so bad at Pepsi during the depression that it went bankrupt twice and was offered for sale to Coca Cola on three separate occasions. Coca Cola looked at their struggling rival and instead of buying them out, let them be. They reasoned that Pepsi would soon go bust and die. (see here)

Anyone today can see that this was about as bad a decision as you could make. Pepsi Cola has been a thorn in the side of Coca Cola ever since.

The rules of the game dictate that you take out your competitors whenever you can. You do not buy them to build them up or enhance their competitive products. You buy them up, use their niche brands where you can, and close them down.

Of course Cadburys is anything but a a struggling company. It is a vibrant business making healthy profits. Often these profit come directly from products in direct competition with those from Kraft. So, you have to ask yourself, how will Kraft gain from this deal? By building Cadburys up? Or by closing it down and taking its branding and top products as their own.

Depressing isn't it.

I do not know how many times we have got to do this in this country before someone gets the message. The government stands around with their hands in their pockets mumbling about how great globalisation is while the industry and life blood of the country gets vaporised. Rover, Corus, Redcar, BNFL and now Cadburys have all joined a very long list. How many lessons do you need?

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