Week 3 in the Food Industry

Ohttp://www.businessweek.com/managing/content/feb2010/ca2010028_928488_page_2.htm
Tuesday February 9, 2010, 2:58 pm EST
LONDON (AP) -- Kraft Foods Inc. said Tuesday that it will close Cadbury's Somerdale plant in the United Kingdom as the British candy company originally planned, saying the plans were too far advanced to reverse.
Kraft, which got final approval this month to acquire Cadbury, previously said it hoped to keep the facility open.


http://finance.yahoo.com/news/Kraft-to-close-1-Cadbury-apf-2338914089.html?x=0&.v=6
Kraft-Cadbury: Making Acquisitions Work
Most acquisitions don't deliver the expected results, according to RHR Intl's research. Here's how both companies' leadership can boost the chances for success
By Guy Beaudin

After months of negotiations, Kraft (KFT) announced last month that it would acquire U.K. confection giant Cadbury (CBY) with a revised bid of $19.5 billion. The acquisition of Cadbury by Kraft will generate a joint portfolio of more than 40 confectionary brands, each with annual sales in excess of $100 million, essentially creating the world's biggest confectionary company.
Both Kraft and Cadbury have a lot at stake to make this deal work. Statistically, deals this complex have a high rate of failure. In fact, research conducted by RHR International found that 70% of acquisitions fail to deliver the expected results. Despite the discouraging data, there is much the leadership teams at both Kraft and Cadbury can do to put the odds in their favor.
Here is a look at the immediate challenges and what leadership at each company can do to mitigate them.
• The negotiation process was hostile.
Cadbury declined Kraft's initial offer. Compounding the issue was that the dialogue (which was hostile at times) between the two companies played out in the news for months prior to inking the final deal. Fence-mending will need to take place before any real integration can begin.
• They are iconic brands that have long pursued different positioning.
Corporate and national pride behind both companies is strong. For Cadbury, coming to terms with the fact that it may have to merge some of its identity with Kraft could be especially difficult. (Let's face it—Cadbury is nearly as important to British culture as the Beatles.) Although this issue is largely a marketing/positioning question, it will have impact on the reaction of both organizations to the acquisition.
• Perceived dominance.
Cadbury executives might assume that Kraft will adopt a dominant approach. Kraft will have to make their intentions with Cadbury clear as soon as possible to avoid unnecessary speculation.
• There is a learning curve.
Kraft purchased Cadbury to break into emerging markets, and it will take Kraft some time to learn the nuances of working in those markets.
• Tough decisions are inevitable.
Because Kraft borrowed heavily to buy Cadbury, it may be focused on revenue in the short term. Some difficult decisions could be on the horizon.
Making the Deal Work
Putting the challenges aside, the first 100 days after a deal is announced can determine the success or failure of the acquisition. In this situation, one of the best strategies to bring the two teams together is to identify common goals. Experience shows that the more quickly individuals from both companies get to work together on common projects with common goals, the better the integration will work.
At the same time, management must make quick, yet considerate, decisions on divisive issues. There has already been speculation around pending layoffs at both Kraft and Cadbury, which diminishes productivity at all levels. Management will need time to determine the best blend of talent, but it is a top priority and must be executed swiftly so that people can move on as soon as possible.
At first glance, Kraft and Cadbury appear to be very different companies. But the reality is that they have much in common; after all, they are both consumer-product companies that specialize in confection and packaged foods. The leadership team can capitalize on this by having talent from both organizations work jointly on projects. This will encourage employees to focus on their similarities, rather than their differences. Finally, employees at Kraft and Cadbury most likely have preconceived notions about the other based on what they have read in the news or heard through industry chatter. It is essential that the leadership team takes the time to discuss the differences in culture sooner rather than later, so that they can focus on similarities. Our experience shows that these differences begin to pale very quickly if they can be addressed early on.
Challenge to Kraft's Leadership
To be successful, Kraft needs to have an open and honest dialogue with Cadbury. This will give people a realistic understanding of what is going to happen, allowing them to make informed decisions about future prospects. Building trust is the only way to prevent the defection of talented people. Kraft will face an immediate disadvantage if Cadbury's top talent leaves because no one knows the details of making a company successful better than those who had a role in its success.
As the acquirer, Kraft also has the responsibility to provide a detailed road map for integration. This will ensure that everyone understands the process for joining the companies, which will free up the leadership team to address hidden issues. The plan should provide guidance on the effectiveness of executives and managers, the performance of work units and processes, and the management of organizational change.
Finally, Kraft will have to unite the two companies under one vision. Communications programs that support the new vision must be planned, initiated, and sustained, and employees that support the vision should be rewarded. Executives and work units must be redeployed where they will be the most efficient. Departments will have to be restructured and processes redesigned in order to align with the new company. A system should be put in place for development of team effectiveness, so that teams are cohesive. Conflict-resolution methods must be developed to ensure quick and effective solutions, while workforce standards are sharpened and common business practices established. Adjustments to the culture should be made when necessary.
Challenge to Cadbury's Leadership
Integrating after a merger or acquisition is challenging for any organization, even under the best of circumstances. But after the deal is done, it's critical for leadership of the acquired company to publicly embrace the acquisition and show enthusiasm about the future. By focusing on the benefits of the acquisition, Cadbury executives will be better equipped to communicate the value that Kraft brings to the brand.
Senior executives at Cadbury will need to take symbolic steps to demonstrate their openness to the merger. This might be in the form of meetings, handshakes, companywide memos, public speeches, and even positive quotes about the acquisition in the media.
Ultimately, Cadbury should be proud of its accomplishments over the years. Companies become acquisition targets because they have a reached a high level of success. Executives can retain that pride while still keeping other emotions in check. One thing is for certain: There is no room for egos during the integration process.
While there are many challenges to overcome on both sides of the Kraft-Cadbury deal, strong leadership can help to smooth the process. Executives from both Kraft and Cadbury must remember that if the integration is successful, it will be a boon to both the companies, and to consumers.
Guy Beaudin is a senior partner with RHR International, an organization of management psychologists and consultants who work closely with senior executives to accelerate individual, team, and business performance.

I found this article interesting. I have read quite a few articles about this, but this one really puts it in a business perspective that I can understand.