| |
|
Kraft-Cadbury:
a Project Manager's Perspective
Leadership is the key to the effective management
of the radical changes that have taken place at Revenue
& Customs
Chris Mills PIPC
BNET, January 2010
Kraft’s decision to increase its offer for Cadbury
can be seen as a triumph for the US food manufacturer
but a number of key considerations present as clouds
on the horizon.
- The virulence with which Cadbury greeted the original
offer means that there are likely to be issues between
the management teams when it comes to determining
future strategy and, in particular, operational decisions
that directly affect the UK company. Strong leadership
and a clear professional approach to all integration
efforts and the pursuit of synergies will be vital
if Cadbury’s accusation of “low growth,
underperformance and missed targets” is to be
avoided.
- Kraft’s initial claims of savings in the
region of $675m per year from year three, offsetting
acquisition costs of $1.3bn, are unlikely to instil
a rush of excitement in the markets and point to a
recognition that Cadbury may prove difficult to absorb.
- US-based opposition from analysts and investors,
including Berkshire Hathaway ’sage’ Warren
Buffett, points to the fact that the combined entity
will need to cut deeper and seek at least another
20 percent in savings to prove the success of the
deal. And that, in turn, will cause deep unrest amongst
the UK-based workforce.
The right approach is to tackle these issues from
the perspective of the new, combined entity and as
quickly as possible.
Critically, Kraft CEO Irene Rosenfeld and her board
need to develop a clear and detailed view of where and
to what targets their newly-enlarged organisation will
operate in, and how this will work.
Too many acquisitions fail to deliver value because
the leadership team is focused on ‘doing the deal’
rather than delivering the merger benefits.
These new, combined targets should help them swiftly
identify where additional savings (or opportunities
for growth) lie. They’ll need to be pursued vigorously,
no matter whose sensibilities are offended.
Chris Mills is a partner at PIPC , a global management
consultancy responsible for some of the world's largest
post-merger integrations.
|
|
