Question

Organizational Design: Potential Merger of Hershey and Cadbury

Organizational design is a process that deals with how an international business should be organized in order to ensure that its worldwide business activities are integrated in an efficient and effective manner.

Organizations exist for the purpose of enabling a group of people to effectively coordinate their collective activities and accomplish objectives. This exercise examines why the design of organizational structure is important, what organizational dimensions must be considered when selecting organizational structures, and current trends in the design of organizations. To illustrate these issues, this exercise examines a potential merger between two international companies, Hershey Co., of the U.S. and Cadbury plc of the United Kingdom.

Read the case below and answer the questions that follow.

In August of 2009, Kraft Foods Inc. announced an offer to acquire the British confectionery company, Cadbury plc. If Cadbury shareholders accepted Kraft's offer, the combined company would leapfrog Mars Inc., to become the world's largest candy maker.

Upon hearing of Kraft's acquisition proposal, senior management from U.S.-based Hershey Co., pondered how to respond. Hershey had a smaller overall share of the world confectionery market than its major competitors. Hershey's market share within international markets was miniscule with 86 percent of Hershey's revenues coming from its home market in the U.S. In contrast, Cadbury's operations were highly internationalized, including a strong presence in rapidly growing emerging markets.

Many observers believed that Hershey's international competitive disadvantage could be reduced if it could acquire Cadbury. However, any attempt to outbid deep-pocketed Kraft would be expensive and risky for the much smaller Hershey. As a result, Hershey would have to quickly restructure a newly merged Hershey-Cadbury company, in order to generate improved revenues and profits.

Question:

1.Which is NOT a reason to restructure a combined Hershey-Cadbury organization in order to ensure the new company is an efficient and profitable competitor?

a. Integration between the firm’s strategy and the environment in which the firm is operating is important to its success.

b. The different geographic footprints of the two organizations and differing corporate cultures and histories could be problematic without restructuring.

C. Consistency between organizational structure and competitive strategy in combined organization is not a critical element to their success.

D. The two organizations probably have different policies and procedures that need to be redesigned into a single consistent set.

2.

Which is NOT a dimension that a combined Hershey-Cadbury organization should consider when choosing an organizational design?

a. competitive expertise regarding the strategies of key competitors in each country in which the company operates

b. customer expertise regarding the similarity of client groups, industries, market segments, or population groups that transcend the boundaries of individual countries or regions

c. functional expertise regarding the various value chain activities that the newly combined company would be involved in

d. geographic expertise regarding the countries and regions in which the newly combined company would operate

e. product and technical expertise regarding the different businesses that the company participates in

Answer 1