The third structure is divided by the areas of activity, which are finance, operation, human resources and strategy, the fourth one is separated by products and markets respectively. The main advantage of this functional structure is to concentrate the specialises and facilitate easier managerial control. If Cadbury Schweppes chooses to operate under territorial structure whose third structure is divided by the market areas, it will take a long time for top director to make decisions, because its products are sold in over 200 countries and six regional operations.
For instance, when the chairman needs the final financial report of Cadbury’s Diary Milk in all the markets to inspect the sales, it can be passed directly from Chief Financial Officer in the functional structure, but it has to be collected from all the departments for one product in the territorial structure. On the other hand, there is risk of the specialist areas to be too short-sighted and too concentrate on own operation not the whole organisation. In addition, Cadbury Schweppes can’t give attentions to particular markets.
Whereas the main advantage for territorial structure, which is also the main reason for it to be large organisations’ favourite, is that it allows companies to focus on the unique nature of an area and develop specific skills and approaches to suit the needs of the region. Why does Cadbury Schweppes which is multinational give up this attractive structure and choose functional structure? The reason for this is that this company develops mostly by acquiring company which has existed for a fixed period in different countries.
For example, Cadbury Schweppes acquired Orangina which has been famous company in France and sold the products with the same name but different company in the same market-France, thus it need not to do market research for adding a new brands into the company. In that case, the main advantage of territorial structure is not quite useful to Cadbury Schweppes, which prefers better management more. Companies might do some change because of new policies.
Because Cadbury Schweppes nearly finish the acquisition policy and the operational performance is perfect, Cadbury Schweppes separated responsibility from operational department to strategy to prepare a new policy for this company. After this new policy finishing, Cadbury Schweppes will need to focus on operation again, thus there will be some change among the functions again. There might be some changes in employment, too. In 1999, in order to operate the policy of opening new international markets, Cadbury Schweppes appointed Derek Bonham because of his leadership and broad international business experience with many organisations.
Recently, Cadbury Schweppes changed the Deputy Chairman for a new policy. In other words, the structure of Cadbury Schweppes also is decentralisation. There are two reasons for that. Firstly, Cadbury Schweppes is widely dispersed geographically, so it gives power to every single business in each countries, such as: Orangina-Pampryl operates as a stand-alone business in France and Snapple Beverage Group takes the responsibility for bottle , sales and marketing for both Yoo-Hoo and Orangina brands in the US and Canada. That means the lower level of managers have power to make decisions, thus the operation will be efficient.
For example, if machines are broken in Orangina-Pampryl in France, the manager can make decisions whether to buy new machines or repair them without reporting to headquarter, therefore, it won’t delay supplies. Another reason is that the wide range of products and services, it needs the leaders have specific knowledge of particular products. Cadbury Schweppes appointed Todd Stitzer to the Board because of his knowledge of Dr Pepper and Seven UP. In the future, all the decisions about Dr Pepper and Seven Up can be report to Todd Stitzer directly.
In the decentralisation, it applies for high quality managers even in lower levels, because they will need to make important decisions, which can decides whether make profit or waste money for the company. I am going to use the same example above-Orangina-Pampryl. When the manager makes a decision, he/she has to check out the causes first. If they are because of the long term use, new machines will need to be bought, or it will take long time to repair them, thus the production will be delayed. If they are caused by some small problems, they just need to be repaired, or it will waste money.
From the organisation structure diagram of Cadbury Schweppes above, we can easy find that the span of control of Chief Executive Officer is four, follow by these four authorities, there are six regional operations for each function. The board span of control determines that the structure of Cadbury Schweppes is flat. In summary, Cadbury Schweppes is belongs to a divisional form configuration, which illustrate that a organisation holds together a number of disparate activities and operations with a central core of administration or headquarter.
The headquarter can decide whether to establish, expand, sell or close down each of divisions. Prepare for strategy Last five years, there are a series of agreement about Cadbury Schweppes sells brands to coca-cola. Everyone is worrying about whether this company is declining. In fact it is not necessary. Because Cadbury Schweppes did most of transactions in North America, Austria and New Zealand, which have been slow markets for some old brands, selling them when they have value can make more profit than keeping them.
Products of life cycle will be a good illustration. Select Schweppes which is one of those brands to be an example and draw its life cycle blow. Before Cadbury Schweppes launch it in North America, it is the development stages (in red) for this company preparing. Since it was launched, it started to make profit, which is the stage called growth (in blue). In twentieth century, Cadbury Schweppes has got a considerable market share for Schweppes in North America, Schweppes reached to maturity (in orange) of the life cycle.
Recently, the profit made by Schweppes started decreasing; it turned to the stage named saturation (in purple). As the diagram, the profits of Schweppes will keep on declining because of new product establishment if it still be sold in North America. Therefore, Cadbury Schweppes sold its brands is not because of poor performance, in fact, it is reserving money to operate the new strategy. Future Challenges The financial report illustrates that the main profits of Cadbury Schweppes is from Europe confectionery and North America Beverages although it has expanded all over the world.
In the future, Cadbury Schweppes will invest on many new markets in Asia, India and Middle East. It is also going to open new markets by promoting different types of products in old markets, such as: develop confectionery in North America and promote beverages in Europe. In addition, Cadbury Schweppes is going to invest in other types of businesses, such as: sugar, chewing gum. Furthermore, buying shares of famous companies to make extra profit is the other purpose for Cadbury Schweppes in the future.