”All great changes are preceded by chaos.”
– Deepak Chopra
And the chaos that we are talking about here is BREXIT!
As Brexit is just around the corner, let us see how one of the major confectionery company in UK is being affected by it.
Cadbury
In 1824, John Cadbury opened his first store selling tea, coffee, cocoa and drinking chocolate, prepared using a mortar and pestle. Experimenting with this mortar and pestle he produced a range of chocolate products and he soon established himself as one of the leading chocolate traders in Birmingham. The enterprise kept on growing, and in 1847 John Cadbury partnered with his brother Benjamin and together they started trading as Cadbury Brothers of Birmingham. Today, Cadbury is the largest confectionery company in the UK with a market share of 29% and has net revenues of more than $9.8 billion as of 2017 (Cadbury 2019).
The 200-year-old chocolate enterprise is now faced with something it hasn’t seen before – BREXIT!
Brexit
On Thursday 23 June 2016, a public referendum was held to decide whether UK should stay or leave the EU. More than 30 million people voted, and Leave won with a 52% vote.
So why hasn’t Brexit happened yet? UK was originally supposed to leave on 29 March 2019- two years after article 50 was triggered- but was delayed as MPs rejected the Brexit deal, pushing the deadline to 31 October and now to 31 January (BBC 2019).
Brexit’s effect on Cadbury and What Can be Done to Ensure a Smooth Brexit?
As Brexit is approaching, Cadbury is stockpiling chocolates and ingredients in case of a no-deal, Mondelez Europe’s president Hugh Weber told The Times of London Newspaper.
The company has a contingency plan for a hard Brexit and is preparing by stocking higher levels of ingredients and finished products, but the shelf life of these products is not very high, and the plan might not work for the long run.
According to Huffington post, after Brexit, tariffs on chocolate could go as high as 30 percent, which means the prices for customers will increase. The absence of hard borders in Europe allowed for an integrated supply chain and keep costs low. High prices might result in lower demands, so better warehousing for chocolates would be necessary considering their shelf life.
In case of a no-deal, Cadbury must arrange work permits for their EU employees. Employee turnover might increase so new employees must be recruited, and better training facilities would be required.
New agreements will be made with EU countries and the organisation will have to change the way it trades with EU because the free flow in the supply chain will be disrupted.
The required changes can be achieved through Lewin’s 3 step model of change.
The Change Process
According to Lewin, successful change can be planned and requires unfreezing the status quo, changing to a new state, and refreezing to make the change permanent.
Unfreeze
According to Lewin, this step involves changing the present behaviors and attitudes of people in an organisation. This process takes into account the threats that the change presents to people, and the need to motivate people to accept change.
Cadbury has to start by making employees aware of the implications of Brexit and how it is affecting their organisation.
Employees need to understand why the changes are necessary and how would the change benefit them in order for them to accept it.
Change
This is the stage where the change is actually implemented. Effective communication and time is required in this stage because it is important for people to understand why change is necessary for it to be successful.
Retention of skilled employees will be important, and for this, Cadbury will have to acquire work permits for the EU national employees.
New staff will have to be recruited and trained for which facilities must be set up and budgeting must be done.
New cost management and inventory management plans must be developed to maintain stocks of ingredients and their shelf life must be monitored.
Refreeze
After the change has taken place and people have accepted the change, it is important for the organisation to again gain the equilibrium or “refreeze”.
Cadbury has to closely monitor the changes and ensure that the employees are satisfied with the changes and are motivated to work with them.
As the situation changes, it might become important to form new objectives and again revise the changes accordingly.
An organisation needs time to adapt to the new changes to gain back the equilibrium and the managers at Cadbury have to be patient and observant for this process to happen smoothly.
References
Cadbury (2019) The Story Of Cadbury [Online] available from <https://www.cadbury.com.au/About-Cadbury/The-Story-of-Cadbury.aspx> [02-12-2019]
BBC (2019) Brexit: All you need to know about the UK leaving the EU [Online] available from <https://www.bbc.co.uk/news/uk-politics-32810887> [02-12-2019]
UK Gov (2019) Brexit [online] available from <https://www.gov.uk/brexit> [02-12-2019]
Carly Ledbetter (2017) Here’s How Brexit Is Going To Affect Your Cadbury Chocolate [Online] available from <https://www.huffingtonpost.co.uk/entry/brexit-cadbury-chocolate_n_58dbd126e4b01ca7b428e956?guce_referrer=aHR0cHM6Ly9jb25zZW50LnlhaG9vLmNvbS9jb2xsZWN0Q29uc2VudD9zZXNzaW9uSWQ9M19jYy1zZXNzaW9uXzZlYzM5N2FlLWI5YWItNDk3MS05NzZmLTNlYTgyNGE2YjM0ZCZsYW5nPWVuLXVzJmlubGluZT1mYWxzZQ&guce_referrer_sig=AQAAAHwCcIeMUZeDaDlD_qVtQrFrNWwMz_uaLVhcu-lesgHX7n5O9iH5SPkO0q9TKVp5VMZPBpWGaINGp_YBVxtxnKm40j7I3TKjorDtzDQWIsf7w9j95fdICCswGFV-zjayJFeqemD7Tyv-5kmtUsONN12OFq6Mz8buGqPcZgQysqdO> [02-12-2019]
The Washington Post (2018) Brexit might be so bad that Cadbury is stockpiling chocolate just in case [Online] <https://www.washingtonpost.com/world/2018/09/11/brexit-might-be-so-bad-that-cadburys-is-stockpiling-chocolate-just-case/> [02-12-2019]
Independent (2018) Cadbury owner Mondelez stockpiling chocolate and biscuits to prepare for no-deal Brexit [Online] <https://www.independent.co.uk/news/business/news/cadburys-no-deal-brexit-chocolate-stockpiles-biscuits-mondelez-a8532276.html> [02-12-2019]
The Guardian (2017) Cadbury says chocolate could get smaller after Brexit [Online] <https://www.theguardian.com/business/2017/mar/24/cadbury-warns-chocolate-could-get-smaller-after-brexit> [02-12-2019]
Rebeca Zambrano (2018) The European Union, Brexit, and Chocolate [Online] <https://sites.utexas.edu/longhornglobalbiznet/the-european-union-brexit-and-chocolate/> [02-12-2019]
Cadbury UK (n.d.) Fact Sheet Chocolate Manufacturing [Online] <https://www.cadburyworld.co.uk/schoolandgroups/~/media/cadburyworld/en/files/pdf/factsheet-chocolate-manufacture> [02-12-2019]
HM Revenue and Customs (2019) Value of sugar confectionery and chocolate exports from the United Kingdom from 2003 to 2018, split by EU and non-EU trade (in 1,000 GBP). [Online] <https://www.statista.com/statistics/307380/uk-united-kingdom-confectionery-chocolate-exports-value-annually/> [02-12-2019]
Anthony Myers (2019) Mondelēz’s strong UK sales prepares company for a no-deal Brexit [Online] <https://www.confectionerynews.com/Article/2019/08/01/Mondelez-s-strong-UK-sales-prepares-company-for-a-no-deal-Brexit> [02-12-2019]
879.business.blog 