Table of contents
A Report of Cadbury Nigeria Plc on how to improve competitiveness and create sustainable growth through advertising
1.1 Administrative Summary
Financial globalization, persuasive marketing, and the fast-changing nature of business in international markets have presented consumers with a variety of options regarding goods and services, together with their attendant difficulties in making choices. Many scholars have therefore delved into identifying what factors influence consumers decision to choose some products or services against similar goods from rival companies.
Sales promotion in the Nigerian food drink industry is therefore central for innovative companies that which to stay competitive in a global market flooded with assorted goods and services from indigenous and multinational companies. The quest for market share thus creates a fiercely contested market place where benefits from using each product or service must be effectively communicated to consumers through promotional strategies with direct impact on existing or potential customers. The process of achieving competitiveness, on one hand, depends on managers’ adaptability to change and innovative strategies and, on the other hand, the quality of value offered to customers and stakeholders.
This Consultancy task is presented in three chapters: first, Cadbury’s current market position, its productivity level, as well as challenges which are assessed through PESTEL, SWOT, Porter’s 5 Forces and the Meta Model; the second part focused on proffering solutions through the Balanced Score Card and Strategy Road Map (SRM), including the benefits and risks of applying the proposed changes. Consequences of failing to adapt to the change and innovative strategies are also outlined together with a review or related literatures. The third part contains the Consultant’s reflection on prior experience regarding the module in this report.
Findings from this report show that organizations must embrace change and innovation to improve and maximize use of people, process and technology in line with organizational mission, values and objectives to maintain high-level productivity, profitability and competitive advantage.
1.2 Introduction to the Report
According to a study conducted by Adeolu and his team of researchers in 2005, using a total of 315 consumers of soft drink who were selected at random in Ile-ife, Ibadan and Lagos, advertising was identified as a key to business performance in the manufacturing sector. For instance, the study probed into the impact of advertising on end users’ preference, with focus on Bournvita, which has been a popular food drink around Nigeria for decades. Results of the study show the degree of influence among genders, social class and age groups. Out of the 315 survey participants, 38.73% revealed that they chose Bournvita because of the company’s appealing ads. 42.62% cited product quality, while 71.43% agreed that captivating advertising is a major marketing tool that companies should consider for growth. The Consult therefore examines Cadbury’s current situation and how it can maximize advertising for competitiveness, profitability and sustainable growth.
Branding, according to Hankinson and Cowking (1993), is a similar strategy to advertising, and must be a top priority for organizations where managers understand its indispensability and invaluable contributions to business growth. Branding does not just describe what companies offer their customers, it serves as a catalyst for building trust, loyalty and support. Additionally, consumers’ perception of a brand is what triggers their decision to buy a product and forgo similar goods from rival companies. However, Keller and Lehman (2006) adds that branding must provide great value and consumer safety to retain buyers on a long-term basis.
On maximising use of advertising and branding, Umer and his colleagues in 2014 stated that a company’s market position is a function of what marketing strategies are applied or eliminated. Advertising therefore focuses on winning consumers’ loyalty through quality delivery and valuable experience. This highlights the link between sales and sustainability, including the relationship between management and customers.
Olsson and Catalina (2006) described advertising as an aspect of the promotional mix which is connected to the 4Ps of marketing—price, product, place and promotion.
1.3 Background of the Study
According to Kotler (1980), selling concepts have proved that consumers do not purchase goods produced by companies with little or no investments in promotional activities. On this backdrop, the volume of sales documented by Cadbury Nigeria Plc could have been higher if effective promotional strategies were in place.
Aggressive marketing strategies, including a mix of public relations, advertising and sales promotion, are some of the road maps through which the company can enhance profitability. Positive experience from using a company’s product or service instils loyalty in existing customers and, in turn, attracts more users through service ratings, testimonies and social status attached to such companies, especially where some famous people in the society have shown public support (Kabuoh et al., 2015).
The success of modern-day print and electronic media advertising have shown that advertising isn’t only for increasing sales by sensitizing people on the existence or benefit of using a company’s products or services. Advertising provides entertainment and educates viewers, readers and listeners (Olufayo., 2012).Agwu et al. (2014) explained the difference between advertising as science and art, noting that the concept is better described as a combination of some unique elements selected from social sciences and communication arts (anthropology, drama, psychology etc). Generally, an appealing promotional activity demands possession of quality advertising skills and good use of pictures, jingles, words, colours, slogans, among others, to influence consumer preferences.
Notwithstanding the fierce competition against Nestle Nigeria Plc, Cadbury has thrived in the food and beverage manufacturing sector since 1956, when it started operations, first selling imported chocolate products before registering as a public limited company under Cadbury Fry Expert Limited in 1965. Between 1956 and 1969, the company sold a cocoa beverage commonly known as Pronto and a malt beverage, BOURNVITA, which boosted earnings despite the “unappealing” packaging. A solid network of competent wholesale distributors was responsible for such a historical expansion. Cadbury started full-time manufacturing of BOURNIVTA in 1966. However, its recent slide in performance and earnings is attributes to stiff competition from local and multinational companies, particularly Nestle Nigeria Plc, producers of the famous beverage drink, MILO.
This study therefore provides answers to:
- How has Cadbury performed against market competitors?
- How can advertising boost competitiveness, profitability and sustainability for manufacturing companies?
CHAPTER 1: REPORT ON CADBURY
1.4 An Overview of the Company
To many Nigerians, Cadbury represents one of most-popular food beverage and confectionary companies. Its headquarters is located in Ikeja, Lagos, specifically on Lateef Jakande Road in Agidingbi area of the city from where it competes with a strong rival company, Nestle Nigeria, the famous manufacturer of MILO and Nescafe CERELAC, among other popular products.
Cadbury’s product line includes: Tom Tom, Eclairs, Buttermint, Malta sweet, Bournvita, Richoco etc. In 1976, the manufacturing giant got listing on the NSE. Quality delivery has since transformed Cadbury into a multinational company. Famous for is corporate social responsibility (CSR) and unique business ideas, Cadbury has impacted on many lives through educational sponsorship, sports, research and development (R&D) etc. One of its best years was 2016, when it documented a total of N28.4 billion as gross earnings (Ekwujuru., 2018).
Cadbury is into production and sale of sugar confectionary, food drinks and food products although its major business is processing of cocoa for exports, a business it transacts under Stanmark, an affiliated processor where it holds 90% stake and supplies 100% of cocoa demands. Cadbury’s Managing Director (MD) is Muhammad Amir Shamsi. The company’s Non-Executive Chairman is AtedoNari Atowari Peterside.
Cadbury Schweppes Overseas bought nearly 75% stake in Cadbury Nigeria Plc in 2010 and the remaining 25% is shared between corporate investors and a group of entrepreneurs. The Nigerian food beverage manufacturer started its strategic restructuring process in 2008. However, the change in investment, business process, people and technology are yet to achieve the desired goals. This study thus aims to restore profitability through a methodological approach that also sustains growth by continuously creating value for stakeholders.
1.5 Situational Analysis: Current Performance, Productivity and Competitive Position
The innovative business approaches applied since 2008 have yielded significant profits despite some fluctuations between 2014 and 2016. For instance, Cadbury’s 2011 financial statement showed robust growth in profit, revenue and market share. This remarkable profitability was attributed to debt settlement. In the same year, profit before tax (PBT) rose by 160% whereas profit after tax (PAT) skyrocketed by 217%. In addition, Cadbury’s capital investment has increased since 2010 thereby improving overall performance and cost efficiency, a result which highlights the need for value creation through change and innovation strategies.
Cadbury in 2013 published in its financial statement that plan was in progress to reduce capital investments. The strategy was to reduce its share capital ratio to 2:5 and repay about N12bn owed in the company’s ordinary share capital and share premium accounts. Shareholders of the company who had expected about N9.5 profits per share had their expectations dashed and the managerial decision sparked huge criticisms from a group of minority shareholders. Compensation options from the food beverage manufacturer included keeping the capital for future investment, using it as working capital, or sharing the excess cash to shareholders. A 2013 report from The Nation confirmed Cadbury’s decision to apply the third option—returning the excess cash to investors—citing stakeholders’ interest and the need create value through strategic investments as reasons for the resolution.
For FY11 and FY12, Cadbury documented increase in profit margins. Specifically, Return on Investments (ROI) rose by 29% in 2011 and 19% in 2012, a result the company claimed was below expectations but, in September 2013, announced an 18.2% rise in undocumented ROEs. Its major rival, Nestle, rose by 43% in the same period. Cadbury’s average ROE between 2010-13 stood at 7%.
Image 1: Cadbury’s Balance Sheet (FY12 & FY17) with a 3-year financial projection
Cadbury’s financial audit for 2013 indicates that no debt was incurred for FY13. The company documented a cash balance of N16.8bn and an improved working balance totalling N8 bn plus excess cash to pay off all short-term investors. Unfortunately, total profits declines by 50% in 2014 (Oludare et al., 2014).
By dint of fluctuations in earnings, Cadbury declared loss of N766.39m in Q2 2017 as confirmed by Proshare, a Nigerian financial news website. This downward trend was a follow-up to the huge loss in 2016, when Cadbury lost to its major rival, Nestle, which documented double profits to retain market leadership.
Table 1: Company Financials (Source: The Nigerian Stock Exchange)
Image 2: Company Balance Sheet (Source: Company Annual Report)
Image 3: Company Financial Growth Level (Source: Cadbury Annual Report)
To understand these tables containing EV/EBITDA NTM ratios, users of this study should view it as valuation metrics applied by companies or organizations to identify the interrelatedness between value and operational earning capabilities. In other words, it is a tool applied to understand a company’s current business situation, specifically to show whether it is overrated or undervalued.
The three tables above show that Cadbury has a financial valuation ratio above competitors at an average 13.00, which indicates that its value is far below market rivals. Also, the valuation metrics indicate that Cadbury is a low-performer among Nigerian manufacturers of beverage food drinks by 9.87.
Table 2: Company Yearly Financial Statement for FY15-FY2017 with a 3-year projection
Lastly, the manufacturer’s financial valuation ratio has been on constant fall for a period of 3 years (2015 – 2018), with minimal improvement expected from 2019. The 3-year financial projection falls below an industry average of 12.2.
1.6 The Meta Model Analysis
In Beinhocker’s 2016 work, the researcher explained that the three-fold challenges to organizational growth are: bureaucratic bottlenecks, managerial incompetence due to inflexibility and poor use or under-development of human and material capital. The named factors exert influence on how grammar and inner dynamics adapt to change and innovation strategies, especially where there’s pressure from the outer dynamics. This Consultancy study therefore aims at helping Cadbury management improve productivity through innovative business practices and culture shift.
According to the chief proponent, Matthews (2017), a Meta model is a special framework for examining all existing high-impact elements within an organization’s business environment. This makes the analytical tool suitable for this study on Cadbury.
The analytic framework from Matthews offers a comprehensive understanding of the outer dynamics which he divided into two factors namely: competitive and macro dynamic factors.
Under macro dynamics, the researcher identified governmental policies on production and sourcing or raw materials, CSR, environmental responsibilities, employment law, legal costs, technological development and the capital-intensive nature of multinational corporations. Other factors include investment in ICT, marketing and R&D, as well as the loss from importation of machinery which are required by local manufacturers for increased productivity.
According to Matthews (2017), the Competitive factors, which are also known as co-competitive dynamics, examines multifaceted challenges faced to consumers, investors and stakeholders. In addition, these elements from the external environment determine business performance, particularly in sales, marketing and profit margins. Accordingly, these processes are explained through a PEST Analysis, the analytical model through which the Consultant identifies and presents Cadbury’s opportunities and threats to business survival. Details appear below on image 2.
Image 4: The Meta Model Concept by Matthews Robin (2017)
Image 5: PEST Analysis of Cadbury (Concept by Aguilar)
Competitors in Cadbury’s business environment have adapted to out dynamic elements which mostly determine an organization’s productivity level, profits and competitiveness by altering strategies on pricing and investment (Value Based Management., 2016; Porter., 1985). More explanations are on Porter’s 5 Forces framework in Image 3.
Image 6: M. E. Porter’s 5 Forces Concept
The analytic model explains Cadbury’s competitive business environment, especially its scramble to acquire a bigger share of the food and beverage markets against rival company, Nestle, and others. This effort to achieve competitiveness, profitability and sustainability through value creation requires optimal use of human and material resources as well as enhanced adaptability to internal and external factors within the business setting. Strategies to be considered here include: increased investment in R&D, technology and human capital; highly effective and optimized processes; restructuring of leadership and roles; product differentiation; unique marketing approaches etc.
Image 7: M. E. Porter’s SWOT Analysis Framework
1.6.1 Inner Dynamics
Impact from the 2009 global financial crisis reflects on Cadbury’s performance, particularly through high exchange rates, low purchasing power of consumers, and scarcity or incremental price of raw materials. Additionally, the large-scale manufacturer is facing tough challenges from the poor state of Nigerian roads, including unstable and expensive power supply which increases operational costs due to the exorbitant price of alternative sources of electricity.
To control financial losses, Cadbury has therefore opted for downsizing. However, government regulations on technological investments have stalled business growth in the manufacturing sector. The need to cut down operational costs explains Cadbury’s 2013 decision on shareholders’ excess cash and, more specifically, devaluation of share values in a period when customers/investors are becoming selective and nearly impossible to please. The shift to imported goods thus makes highlights a need for organizations to embrace aggressive marketing, low pricing, quality products and consumer safety for market visibility, competitiveness and profitability. Strategic innovations by Cadbury makes it relevant on the global stage despite its low performance in comparison to Nestle.
Image 8: Cadbury vs Nestle Financials for FY16 (Source: 4Traders)
1.6.2 The Payoff Concept
In Cresswell’s 1994 piece, Payoffs refer to every loss or benefit accruing to organizations’ efforts at improving employee welfare and impacting on host communities’ lives through effective and strategic investments in CSR. Payoffs also include expenditures on producing high-value, affordable and safe products/services. Cresswell distinguished payoffs as either quantitative or qualitative.
On this premise, findings show that Cadbury and Nestle have invested heavily on developing its human capital, process and technology for business expansion and sustainable profits notwithstanding obstacles posed by new entrants in the food and beverage manufacturing sector. The image below graphically explains Cadbury’s turnover growth rate
Image 6: Turnover Growth Rate for FY15 – FY16 (Source: 4Traders)
Nestle competition against Cadbury for FY16, having documented incremental growth in gross earnings—N151bn (2015) and N182bn (2016). The growth rate of 19.8% was far above Cadbury’s meagre N27.8bn (2015) and N29.9 (2016) which was only 7.6%.
The financial performance from Cadbury between FY15 and FY16 was rated low in comparison with the giant strides from its biggest competitor, Nestle. However, business analysts are of the opinion that the global financial crisis was to blame. The earnings from both companies show how profits can be maximised—even in volatile business environments—through change and innovation strategies. Cadbury therefore needs a policy shift to remain competitive and this requires a clear understanding of the company’s threats, opportunities, weaknesses and strengths (Beinhocker., 2006).
1.7 Cadbury’s Major Threat
Cadbury’s major challenge lies in the managers’ myopic view of advertising as the newest marketing strategy for capturing value through increased customer base and wider markets.
1.8 Solutions from the BSC and SRM
1.8.1 The BSC Solution
BSC is very useful in evaluating an organizations’ financial performance (past and present), including every change and innovation process or activities that are applied in line with the particular firm’s business objectives and values to achieve growth. This methodology therefore relies on four pivotal aspects vis-a-vis finance, clientele, internal processes and learning/growth.
From this backdrop, an analysis of Cadbury with the 4-perspective methodology will provide the Consultant with insights into the business environment and, in turn, aid formulation of the most productive, value-creating strategies that guarantee customer/investor satisfaction.
Cadbury Nigeria thus need to change from existing business strategy and focus on investments that promote low-cost but effective persuasive advertising. The publicity approach should also aim at downplaying the company’s weaknesses while emphasizing on its strengths as a measure for improving earnings, enhancing market visibility and repositioning to compete against Nestle Nigeria from a vantage point.
It is also necessary for the manufacturer to strategize towards unifying activities between suppliers, distributors, marketers and end-users. This can be achieved by setting up a responsive feedback channel for consumers’ complaints, suggestions and problems. Further, employees of the company should be sensitized on the benefits of such feedback mediums and how to use them effectively for value creation. Consumers show commitment to their organizational roles and responsibilities and are willing to improve their capacity levels when the system does not alienate but include them in the decision-making processes. A clear understanding on the company’s mission, core values and beliefs does not only improve employee performance and realization of set goals, it enhances processes and create value which is a prerequisite for building a cordial relationship with investors.
The Consultant hereby suggests that Cadbury should regularly examine its business processes, invest in R&D, and apply innovative advertising to attain organizational goals.
1.8.2 Solution through the Strategy Map
Cadbury needs to change its inner dynamics to improve current earnings which fall below Nestle’s. Pricing is also another aspect of the competition. Considering the insignificant different between the price of Cadbury’s Bournvita and Nestle’s Milo, the former has a good chance of dominating the markets if its leadership adapts to strategic innovation. Culture re-orientation is therefore necessary for Cadbury to maximise growth opportunities in the food beverage manufacturing sector.
Investment in technological development is another factor to be considered for Cadbury’s resurgence. This will enhance rollout of quality, safe, affordable and differentiated products that appeal to consumers and inspire purchases with less consideration for pricing.
Cadbury’s internal business activities, especially on learning and growth, should be reviewed for immediate business transformation. Regular trainings should be organized for suppliers and distributors to enhance their professional levels for excellence—even in previously unknown markets. In furtherance, Cadbury Nigeria should evaluate its operational management approaches and improve processes through bonding of suppliers and distributors in the value chain, considering their roles as well as positive implications of strategic collaborations.
Efforts should therefore lean on low-cost strategies that increase total assets—tangible and intangible—and efficient delivery of goods/services to end-users. Reducing cost of production is another measure that guarantee high productivity levels, but the quality of products matters most to consumers, and as such, enhancing the production process and eliminating every unproductive activity will sustain value creation and offer maximum benefits to all stakeholders. According to Pike (2008), other solutions include maximal use of resources, strategic use of working capital, and institutionalization of a responsible management with the capacity to timely implement, monitor and control policy initiatives. Relationship building with suppliers, distributors and consumers is also very important to achieving organizational goals. Use of effective communication channels will not only aid the management in proper handling of issues, suggestions and criticisms, but will provide a guideline on innovative approaches that offer competitive advantage.
1.9 Suggestions for Business Transformation
Findings from this study show there’s no remarkable difference in pricing mechanisms used by both companies: Cadbury and Nestle. The major difference lies in consumers’ perception of the brands which are, to a great extent, influenced by advertising. This indicates that Cadbury has potentials to topple competitors through innovative advertising.
The following suggestions will therefore provide Cadbury with competitive advantage if well implemented:
- Choice of Advertisers: The output quality and experience of advertising companies, individuals or media houses play a major role in translating print and electronic media ads into sales and profits. Churchill (1995) suggests that such professional services should come from advertisers who have good knowledge on market trends, and are able to formulate strategies in line with local and international standards to influence consumers’ buying preference.
- Brand Enhancement: The bottom line of advertising is brand enhancement. This distinguishes companies, products and services, and is a reason why most consumers remain loyal to some brands no matter the cost. Brand is enhanced when combined with persuasive advertising and quality delivery of goods and services.
- Innovative Advertising: Cadbury needs change and innovation strategies, particularly in its advertising choices. The company should consider using highly educative ideas such as comparing its products with similar goods in a way that those competing products or companies are not mentioned but implied in the message. Li et al (2002) noted that consumers are mostly inquisitive about convincing claims and can easily switch once expectations are met.
- Suppliers and Distributors: Cadbury has to improve its supply chain by hiring experienced workers and investing in human capital development. Regular training will not only improve productivity levels but enhance relationships between the company and its customers since distributors and suppliers also gather meaningful information from the markets which are subsequently applied in decision-making processes.
1.10 Risks of Neglecting the Proposals
Findings from the recent decline in sales and profits show that Cadbury has underused its potentials. According to Okigbo (1997), companies need persuasive advertising to remain visible in the markets, expand markets and increase profits. If Cadbury management fails to strictly adhere to proposals in this study, here are a few consequences it might encounter:
- The company will lose a large part of its market share to Nestle and other fast-growing contenders in the manufacturing sector.
- Low performance will lead to undercapitalization and an eventual collapse.
- Nestle will monopolize the food beverage manufacturing sector and thereby dictating prices in its favour as other less competitive companies opt for closure.
- Affected workers at Cadbury will be thrown out of the working class and as such lose their purchasing power. This, in turn, affect the national economic growth indicators.
- Many skilled personnel will migrate to rival companies and sell out intellectual property acquired from years of experience at Cadbury.
- Affected workers or unions may file lawsuits against Cadbury for breaching contractual agreements thereby increasing the total amount of losses incurred by the manufacturer.
1.11 Consultant’s Opinion and Advice
Cadbury Nigeria Plc understands effective communication as the motive of advertising but the problem lies with understanding what customers crave, knowing what ads are suitable for which medium or age group, and considering the time and place for action. No matter the chosen platform, advertising has to be dramatic, appealing, bold, convincing and persuasive.
Based on findings from this study, Cadbury needs more investments in training its marketers and upgrading their welfare packages. Similarly, the company should actively participate in community projects through life-changing investments in CSR and social or environmental responsibility.
Apart from adapting to strategies that link up the company and its customers, Cadbury management should maximise use of responsive websites through which purchases can be made, including dissemination of information, after sales service, complaints or suggestions etc. This includes time delivery of purchased goods to customers’ homes intact. Where necessary, buyers should have extra benefits, especially for repeated buys—if the company wants to generate sales leads (Chen & Lee., 2005).
Choice of advertising mediums or methods is crucial for business survival, and Cadbury has to go for the best in order to achieve the desired impact of existing or potential buyers. Also, the company should conduct private assessment on the performance of advertising, with regards to turnover, to ascertain whether it should be eliminated or adjusted. Continuous advertising is therefore necessary for a product’s longevity. This requires regular evaluations and adaptations to changing needs in the world’s constantly-evolving markets.
Lastly, Cadbury needs change and innovation strategies that support value-based management practices. There is also need to enhance the management process, restructure leadership, especially where change to resistance is noticed or expected, and conduct regular reviews of policies, activities and performance for proper adjustments that suit organizational values, objectives and brand image. The Consultant is certain that strict adherence to these suggestions will improve efficiency (Baker., 1996).
CHAPTER 2: EVIDENCE REVIEW
The continuous decline in resources and competitiveness has forced managers to consider making changes in their business processes and quality of goods or services offered to consumers in local and global markets (Brannemo., 2006). This highlights the need for outsourcing, a management strategy which encourages organizations to delegate some key activities to specialist who deliver maximum quality (Cousins et al., 2006). These stresses the importance of advertisers even though most people enjoy watching attractive, educative and entertaining ads without having a clear perspective on what advertising signifies. Agwu (2012) noted that the love for quality adverts is evident in the fact that viewers, especially in the electronic media, fail to notice the interruptions during popular television programmes or sports events, among others. Bardi (2010) pointed out that aggressive advertising is a common place in the media while Ogbechie (1997) collaborated the fact, adding that people only get tired of viewing the less appealing or non-innovative ones. Other scholars like Kenneth and Donald (2010) and Ikpefan et al (2014), agreed that advertising mediums are found everywhere—in the offices, homes, streets, print and electronic media, among others.
Onunkwo (1997) and Terrence (2007) defined advertising as a paid, strategic marketing plan through which consumers are informed of the benefits accruing from using some branded products. The ultimate aim of this practice is to arouse inquisitiveness that lead to immediate or future purchase. Advertising is therefore a means of creating awareness for goods and services, with sales and profits as the interior motives (Ogbodoh., 1997), when properly utilized.
No company survives with some kind of advertising—paid or free(Duckworth., 1995). In addition, persuasive advertising can never be effective if it doesn’t impact on consumers’ preferences(Tony., 2006).
According to Abernethy and Franke (1996), the impact of advertising on consumer choices is never clear unless the message from a particular company triggers significant rise in sales for a specified product or service. Tony (2006) noted that the purpose of advertising is to distinguish goods from different brands.Barnard and Ehrenberg (1998), however, slammed advertising as an innovative marketing tool because it fails to recognize the negative effects from harmful products or services such as cigarettes, caffeinated drinks, canned foods etc. On the other hand, the scholars added that advertising has been undervalued despite its contributions to the growth of world economies.
2.1 The Strategy Road Map Methodology
There’s a relationship between sales, profits and advertising, and these are all foundational to the success of organizations. The strategic road map (SRM) thus seeks to understand the determining factors between a business strategy and branding, as well as how both collaborate to improve earnings.
Further, advertising is a key aspect of productivity; it increases sales volume and ultimately boosts overall profits. In Nigeria, advertisers rely on cultural values whereas their Western counterparts focus on market-oriented ads. However, media advertising has been criticized for distortion of facts, especially on the development indicators of growing economies. These shortcomings can be repositioned with the right business strategies applied by change and innovation-centric leaders (Tony., 2006).
In business, administration entails planning, directing, controlling, budgeting and renumeration. The marketing mix of product, place, promotion and price are also adapted to the aforementioned to attain organizational goals. However, according to Chesbrough and Rosenbloom (2002), successful companies are those that maximise opportunities provided by the concepts to improve sales volume, decrease operational costs and increase profits. Managers must therefore understand that strategies are the key to business survival, and that business models are most productive when change and innovation are infused in branding and advertising. This continuously creates value for stakeholders in any profit-oriented system.
Luecke (2005) explains that strategy is a streamlined, comprehensive and easy-to-use plan which individuals, groups, organizations and governmental bodies adapt to, for the purpose of gaining competitive advantage over market contenders as well as to reduce or eliminate the impact of factors from the external and internal environments. When properly applied, and in line with organizational vales, goals and aspirations, strategies become essential value drivers which managers should constantly review and update for sustainable growth. Kaplan and Norton (2004), on the other hand, viewed strategies as lines of action through which organizations different product and services to create value for shareholders while adequately compensating the society with commitment to improving development indicators, and offering quality benefits for customers who patronize their products.
Further, Howard and Cameron’s 2006 work were a contrast to previous opinions on the purpose of strategies. The scholars argued that an effective management or the process of achieving business growth depends on how employees understand organizational policies and put them in practice as well as the efficiency of links between management departments. This explains why human capital development is a major aspect of business survival strategies. Again, Kaplan and Norton suggested performance appraisal and monitoring of activities in order to adjust or eliminate unproductive processes.
In Ozoh’s 1998 work, he explained the relationship between effective advertising and a company’s understanding or closeness to its customers. Onunkwo (1997) opined that advertising is most productive when elements of timing, operational activities, planning, control and supervision are maximised in line with the company’s capital expenditure. Again, Okigbo (1997) stated that there’s no significant difference between advertising and marketing, adding that both concepts provide organizations with far-reaching information dissemination outlets that expands target markets (Osuagwu & Achumba., 1994).
SRM and BSC highlight the existing interrelatedness between organizational structures and how assets (tangible and intangible) are utilized. The management approaches aid understanding of workers’ opinion about management ideas, methods or goals. Additionally, the tools serve as a measurement framework through which contributions from distributors, suppliers and marketers are weighted to validate results that are subsequently used in financial planning.
Image 7: Kaplan and Norton’s Concept of SRM
Kaplan and Norton are of the opinion that SRM helps users in assessing the links between assets, with focus is however on value creation and sustainable growth. The BSC and SRM standards are as follows:
- To create great value through improved internal business processes.
- To offer unique products and services that perfectly suit consumer needs. This is considered as the main aspect of creating value.
- To adjust antagonistic elements of short-term financial goals in order to reduce price and, at the same time, expand profits.
- To define organizational values, especially on what are considered as intangible resources and those that should be aligned with human capital, information, as well as learning and growth perspective.
Image 8: Eden and Ackerman’s 5-stage SRM
2.2 Benefits of Strategy Roadmap
SRM is a strategy adapted by organizations to enhance the production process as well as increase productivity levels, employee welfare, managerial output, and earnings from effective advertisement on print and electronic media (Eden &Ackerman., 2011). Other benefits of the strategy roadmap are as follows:
- Optimised communication links in the value chain, including private organizations.
- Improved evaluation procedures that ease understanding of organizations’ market performance.
- Better knowledge of organizational values, objectives and standards by employees.
- Strengthened goals that influence market visibility through unique approaches.
- Emphasis on cash, timing and capabilities of actors in the system and maximization of these factors for business growth.
Image 9: Meryer and Allen’s Framework on Strategic Objectives
2.3 Planning with SRM
BSC and SRM exist for the sole purpose of distinguishing brands from their market challengers through the identification of each organizations internal processes or activities, including the value and functions of assets (tangible or intangible) that provide competitiveness.
2.4 Implementing and Updating the Strategy Map
According to Martins (2013), every organization needs a strategic plan and performance assessment mechanisms that differentiate productive and unproductive activities. The design also identifies problem areas within companies, suggests the appropriate time and how SRM and BSC are applied, as well as indicates the periodic review process that enhance market dominance.
Paladino (2013) is also of the opinion that activities in an organization should be regularly assessed for optimal performance and sustainable growth, adding that SRM and BSC aim at providing companies with an outline for future activities. The management approaches, however, play no role in making or explaining decisions to the affected individuals and groups.
2.5 SRM Limitations
Martins (2013) adds that SRM failed for as a strategic management tool for its inability to categorically explain organizational activities and what purposes they stand for. This indicates that SRM does not rely on assumptions to question the rationale behind any activity, process or need.
2.6 The Balanced Score Card (BSC) Methodology
Kaplan and Norton found through their 2005 study that successful organizations are those whose leaders regularly conduct analysis of business situations, particularly in the monetary aspect, and with the use of essential evaluation tools such as customers, internal activities/process as well as learning and development.
On this premise, Del and Kennedy (1982) concluded that the purpose for which any organization exists is found in its mission statement and plans, adding that performance must be checked for compliance with vision and, where necessary, apply effective remedies. This methodology is widely used in the 21st century for the fact that it focuses on the development of internal processes and evaluation of how intangible assets enhance or impeded growth of businesses.
Image 10: Kaplan and Norton’s BSC Concept
Additionally, companies differ in management and practice, yet, the role of BSC as a major pathway through which best value-creating strategies are examined, changed or eliminated.
BSC delves into organizational activities, concepts, ideas and aspirations to provide management with clear understanding of performance levels. In the words of Bremser and Wagner (2013), it also distinguishes between productive and unproductive activities. As a strategic management tool, BSC supports adaptation to a streamlined strategy and clear vision through which activities are control for high profits, value creation and sustainability. Kaplan and Norton (1996) described the framework as a reliable tool that stabilizes a firm’s strategies and processes.
BSC’s performance assessment metrics are error-free, and they provide organizations with workable solutions to all problems in structure, process and use of resources. It also provides answers to a myriad of questions about the organization’s strengths, weaknesses, opportunities and threats. Developing this strategy-reliant model, however, entails having a perfect understanding of the company’s structure and careful implementation of strategies.
2.7 BSC as a Management System
Most organizations conduct their businesses with performance assessment frameworks that provide fiscal and non-financial calculations, but BSC is different, unique, and the most common estimation tool (Simons., 1988). Progressive companies therefore apply change and innovation strategies through the scorecard, which serves as a major check on the administrative process.
The Consultant therefore advise Cadbury management to first choose a simple, realistic and less cumbersome scorecard that inspires unity of purpose. This plan of action must be thoroughly explained to workers in order to achieve the desired results. Importantly, BSC will never achieve its aim until users shift their perspective of the concept from being a measurement tool to a management model.
2.8 Do Companies need a BSC?
Since this 21st century, business enterprises have operated in volatile environments which emphasize the need for effective assessment tools and use of aggressive advertising to boost sales, marketing and profits. To achieve organizational growth, managers are now looking up to media analysts and increasing investments in consumer-based ideas that maximize companies’ strengths. These strategies will not achieve their purposes without use of financial performance evaluation frameworks (Kolter., 1997).
The Balanced Score Card makes use of financial calculations in determining the productivity level of management, employees, suppliers, advertisers, and others in the value chain. However, its use of more integrated and broad assessment structure to link finance, customers and internal process and ascertain system performance for both short and long-term investments, makes the management tool appealing to most managers.
Stewart (1991 & 1994) explained that BSC helps users to identify unproductive activities or processes within an organization. It also highlights areas that need adjustment. In addition, BSC provides managers with the most suitable options to be included in the management structure.
2.9 Prospective DBA Perspective for Transforming Clients’ Business
Current trends in global businesses highlight the need for competitive advantage and this is worrisome to most policymakers and economists in developing economies because some external factors such as capital, politics, infrastructure development, among others, are discouraging potential large-scale entrepreneurs as well as scaring off foreign and local investors. Nigeria’s manufacturing industry has been a major contributor to National Income (NI) and has more to offer in the nation’s economic diversification objectives. The government’s diversification strategy has also re-positioned agriculture and Small and Medium-scale Enterprises (SMEs) which serve as growth drivers for food and beverage manufacturers like Cadbury. Additionally, products from the company are considered appealing to buyers in global markets but there’s a need for more investments in advertising. A strong presence in the media will not only reposition the company’s stand against competitors but offer a chance to outpace Nestle in Nigeria’s food and beverage manufacturing sector.
Effective advertising is therefore invaluable to any organization’s quest to convert consumers and increase sales volume for more profits. On this premise, I am keen on studying more about “The Impact of Advertising on the Growth of Nigerian SMEs.” I believe that results from this research will enhance entrepreneurship development in the country, provide jobs, enhance equitable distribution of wealth and contribute to Nigeria’s economic growth strategies.
AN ASSESSMENT OF THE RESEARCHER’S EMPLOYABILITY ENHANCEMENT
3.1 Personal Qualities Required to Successfully Complete this Assignment
To conduct this research like a professional in the real world, I had to gain composure since objectivity was essential to arrive at valid conclusions.
The study shows that a major problem with Nigeria companies, not just food and beverage manufacturers, is lack of commitment to relationship-building strategies. On its part, Cadbury performed badly on advertising, which has the capacity to transform businesses in both short and long terms. The module used in this research will be useful in my educational pursuits and future challenges on the global stage.
The acquired knowledge and practical skills have clearly separated my competence as a research student. Most importantly, learning how to successfully apply PEST analysis, SWOT and the Meta model on a company’s business situation has expanded my horizon, and infused the confidence I need to transform an organization’s weakness into strength. I am pleased with the results from this research although this only highlights the need for personal advancement in my future academic endeavours.
3.2 Evaluation of the Researcher’s Ability for this Academic Task
Before starting this coursework, I had no clue about any analytic frameworks applied in the research. The theme was intimidating and confusing at the start however, discussions I had with the tutor gave me an insight. It is a thing of joy to know that at the end, I have succeeded in analysing well the business operations of a company with regards to advertising, sales and profits. Further, gaining full knowledge of an organization’s current market position, competitors, history, policies, legal provisions and regulatory framework through analytical frameworks like the Meta model was highly encouraging.
I gained an insight into previously unfamiliar methodologies and concepts. In the end, my idea of project designing and execution as well as the time factor in conducting quality, reliable and effective consultancy services was updated. Moreover, I now have better understanding of how organizations evaluate performance according to the four-phase perspectives of financial, internal business processes, customer, and innovation and learning.
Notably, I learned of the importance of a well-structured BSC and how the methodology determines a company’s profitability, growth and sustainability. In continuation, a comprehensive evaluation of this module gave me an opportunity to make application of the SRM as a solution-finder to several circumstantial challenges that reduce customer satisfaction and hamper value creation for stakeholders.
I am elated to have acquired knowledge of every successful company’s growth and sustenance secrets—competent leadership, quality delivery of goods and services, and use of effective, dynamic and suitable strategies.
Lastly, I am aware of the lasting benefits of good leadership. Successful leaders, in my opinion, are those who influence strategy design processes and control implementation in line with organizational goals which revolve around creating value for stakeholders and constantly offering customer satisfaction in both short and long terms.
3.3 Related Leadership Skills needed for Personal Development and Career Growth
From this task, I now have a different, constructive perspective about on business. I believe this understanding will bring to bear a lifetime impact as I continue to develop my competence level in preparation for the world stage.
Though I am currently taking management courses, the understanding I have about the rigours of business management in practical was low. Nevertheless, I learned so much from this module. Importantly, it has dawned on me that no organization survives competition without adapting to some effectiveand, sometimes, aggressive marketing techniques. It is thus unarguable that advertising is an indispensable part of SRM. Similarly, the module broadened my perspective on how organizations create value only when employees have a clear understanding of strategies.
This task requires good time-management abilities, with focus on the role of timing and quality delivery in real-life business settings where professional consultants have a responsibility of providing clients with excellence and exceptional outcomes within a timeframe. “Time,” they say, “is money.” Therefore, it is a vital feature for all successful enterprises.
Despite some challenges, I have the courage to move forward with some of the achievements made after learning how to control the frustrations encountered earlier on choosing the best plan that guarantees quality delivery of goods and services to all stakeholders.
Another important leadership skill gained from the module is SRM, that gives a direction for projected results of a company in both short and long-terms. I hope to practicalize the knowledge and skills on future modules, particularly my upcoming research like the senior executive who is in charge of the decision-making process of an organization. This, I believe, will add a boost to my readiness for challenges on the universal stage.
It is very true that all management competence should be capable of building new ideas to maintain competitiveness against market rivals. Hence, I am very eager to acquire good innovative skills of leadership, which I know for certain that will yield good results in the growth of my professional career.