It's worth noting that cultural differences are ingrained in a company and not just a matter of geography. Management must recognise, respect and value cultural differences as sources of synergy and efficiency in order to manage the acquisition process effectively. Prior to even considering an M&A, our experience at Gallup has shown that a company must first and foremost understand its own cultural identity as well as that of the target.
Kraft would be well served to continue the Cadbury brand portfolio until it truly understands the Cadbury consumer, the power of the Cadbury brand and the drivers that differentiate it from the competition. For instance, we would suggest a brand ambassador audit among key customer-facing employees and a customer assessment to understand the brand differentiators of Cadbury before action is taken to align or reposition the portfolio.
Once it understands what engages colleagues at Cadbury, it will be vital that Kraft/Cadbury retains brand loyalty among British consumers. It's worth noting that British consumers are not going to be terribly upset about a US company investing money in the economy and protecting jobs for UK employees. The ‘efficiencies' however that Kraft hopes to gain from the acquisition have to be clearly spelled out amidst all the negative coverage so that UK consumers understand the benefit of the merger in the proper context.
The recent announcement that it will close the Somerdale factory near Bristol is just one example of the power of communication. The plant had already been slated for closure by Cadbury but Kraft created unrealistic expectations with its employees, consumers and even the Government around how the transition would be handled. The fact that benefits extended to workers as a result of the plant closure will not be significantly different under new ownership of the company was drowned out in the avalanche of negative articles around the decision that was viewed as a retraction rather then a continuance.
It is clear that the strategy Kraft has chosen is not clearly understood and certainly has not clearly been communicated. But Kraft need not worry too much; the end consumer that regularly buys Cadbury based on their emotional engagement with the brand will probably continue to do so unless Kraft inherently changes the products that are sold under the Cadbury brand. To repair its public image, however, Kraft should emphasise its corporate social responsibility programmes and benefits to the UK market in its campaign to establish trust and integrity with UK consumers.
Kraft has a huge opportunity to engage the public in its campaign, but has not been going about this in a very smart way. While the hostile takeover was unavoidable, given Cadbury's stance, it has not endeared Kraft to the UK public. In terms of public relations, the company is starting off on the back foot so there is no time like the present to engage professional assistance. Public relations, though, have to be structured around a campaign that emphasises the benefits to the UK consumer, Cadbury employees and communities that rely on Cadbury as a responsible corporate citizen. The behaviour of the company as it goes through the deal execution and integration phases also has to match the campaign, as the UK consumer and citizen will be paying close attention.
Kraft should also conduct a cultural audit of Cadbury. An acquiring company must measure and analyse a host of cultural indicators for each potential target including employee engagement, barriers to engagement, management structures, leadership profiles, company mission, strategic development goals, measurement systems, performance management and succession planning and reward systems to truly understand how to structure its post-merger integration plan.
The new combined entity will need to redefine itself as an organisation with shared values and a shared mission that are easily communicated and understood by the UK consumer. This very important message should be determined and communicated effectively during the deal execution phase, a trick that has largely been missed. A final thought, on average, US banks, retailers and consumer product companies do a much better job at engaging the consumer than their UK counterparts. Cadbury can probably learn a few tricks from the Americans, but the key is to let the consumer figure that out for themselves through their experiences with the brand.
Christian Hasenoehrl is partner at Gallup