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Cadbury Schweppes Case Study Ppt Templates

Page 1: Introduction

Established markets generate intense competition during which new and innovative marketing strategies are required and new and existing products are developed. As a market develops, consumers become more experienced and discerning and look for more benefits from the products they choose. Although some organisations' products may appear unchanged at this developed stage of a market, the more...
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Page 2: Background to the confectionery market

Per capita confectionery consumption in the UK is among the highest in the world, exceeded only by Ireland and Denmark. Chocolate confectionery accounts for around 70of sales value in the UK market, with sales of sweets (sugar confectionery) at around 30 per cent. Historically, the chocolate confectionery market has been characterised by the dominance of a number of well established brands...
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Page 3: An overview of Cadbury Schweppes

Cadbury Schweppes is a global business which manufactures, markets and distributes branded products in over 200 countries. It aims to provide pleasure, taste and enjoyment through the manufacture and marketing of a wide range of beverage and confectionery brands sold to consumers of all ages. Cadbury Schweppes employs over 40,000 people worldwide. The Group's strategy is to increase...
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Page 4: The snack market

It is not difficult to find out about 'snacking'. Walk into any newsagent, supermarket and petrol station and you are confronted by many different types of confectionery, as well as different varieties of crisps, cakes, nuts, pies and doughnuts. This is the snacking business. 'Held in the hand'. categories include: Confectionery £4.9bn (chocolate sector £3.4bn) Biscuits...
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Page 5: Market research

Market research is a process designed to link managers to consumers through information. It is used to identify opportunities and make better informed decisions about products which have future market potential. Market research has revealed that snacks play more of a functional role than one of pure indulgence: they are often a meal substitute. Research also shows that successful snack brands...
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Page 6: Product development

Cadbury set out two objectives for the development of Fuse: to grow the market for chocolate confectionery to increase Cadbury's share of the snacking sector. The 'Fuse' concept was developed after market research identified the growth of snacking and a definite gap in the market for a more chocolatey snack. A number of ingredients were devised and tested following a survey which questioned...
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Page 7: Early consumer testing

As products are developed, they must be tested to ensure that consumers would be willing to buy them. As approximately 85 per cent of all new products launched into the grocery and allied trade sectors fail in their first year, extensive research helps to reduce the risk of launching a new product into an already competitive market. Fuse went through two extensive 'in home placement' tests. The...
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Page 8: Pack design and brand name

A key element of any new product launch is the development of a strong pack design and brand name. The design brief for Fuse had two clear requirements: To communicate the dynamic and slightly wacky 'personality' of the new product and create interest at point-of-purchase (i.e. in store). To bring the brand name to life by communicating the fusion of Cadbury's chocolate with the snacking...
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Page 9: Further consumer testing

Testing is vital throughout the entire product development process. It helps to provide valuable information that can be used to fine-tune the product and minimise many of the launch risks. In research, Fuse scored higher for texture, 'interesting eat' and combination of ingredients, than its competitors and achieved the highest rating ever for a new Cadbury product - 82 per cent of consumers...
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Page 10: The launch strategy

The launch strategy of any new product is critical. Cadbury has two targets for its products - trade customers who stock the product and consumers who buy it. In recent years, product launching has become an art which can make or break a product. A successful launch makes potential customers aware of the new product and keen to try it. Before consumers could try the product, however, it was...
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Page 11: Post-launch results

After a new product launch, it is important to analyse whether the product has managed to meet its launch objectives. During 1996, the chocolate market grew by 9 per cent with 19 per cent of this growth attributable to Fuse - a single brand which had only been available for a quarter of the year. One way of evaluating the effectiveness of advertising and promotional campaigns is to ask market...
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Page 12: Conclusion

This case study has examined Cadbury's ability to use innovation in a developed and crowded market-place. There were three clear elements in this process: the use of consumer research to identify a significant market opportunity product research and development combined with extensive consumer testing massive trade and consumer hype generated by a national launch. Snacking remains the...
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Presentation on theme: "CFC rules & Cadbury Schweppes case C-196/04"— Presentation transcript:

1 CFC rules & Cadbury Schweppes case C-196/04
Petra Airas

2 CFC rules Controlled foreign corporation rules
CFC rules were created to prevent tax evasion and to discourage companies from shifting income to countries where tax rate is really lowCFC rules differ from country to countryCFC laws work alongside tax treatiesLegislation on CFCs (väliyhteisölainsäädäntö)The legislation on CFCs is designed to apply when the CFC is subject, in the State in which it is established, to a 'lower level of taxation', which is the case, under that legislation, in respect of any accounting period in which the tax paid by the CFC is less than three quarters of the amount of tax which would have been paid in the United Kingdom on the taxable profits as they would have been calculated for the purposes of taxation in that Member State.

3 Cadbury Schweppes case freedom of establishment (art.49 EC)
Parent company established in the United KingdomTwo subsidaries (CSTS and CSTI) in Ireland where the tax rate was lower 10%According to the decision making the reference, it is clear that CSTS and CSTI were established in Dublin solely in order that the profits related to the internal financing activities of the Cadbury Schweppes group could benefit from the tax regime of the IFSC.Given the rate of tax applicable to companies established in the IFSC, the profits of CSTS and CSTI were subject to 'a lower level of taxation' within the meaning of the legislation on CFCs. The United Kingdom tax authorities took the view that, for the 1996 financial year, none of the conditions for exemption from taxation provided for by that legislation applied to those subsidiaries.According to the decision making the reference, it is common ground that CSTS and CSTI were established in Dublin solely in order that the profits related to the internal financing activities of the Cadbury Schweppes group could benefit from the tax regime of the IFSC. I CADBURY SCHWEPPES AND CADBURY SCHWEPPES OVERSEAS 19 Given the rate of tax applicable to companies established in the IFSC, the profits of CSTS and CSTI were subject to 'a lower level of taxation' within the meaning of the legislation on CFCs. The United Kingdom tax authorities took the view that, for the 1996 financial year, none of the conditions for exemption from taxation provided for by that legislation applied to those subsidiaries. 20 By decision of 18 August 2000, the Commissioners of Inland Revenue therefore claimed, under the CFC legislation, corporation tax from CSO in the sum of GBP on the profits made by CSTI in the financial year ending 28 December The tax notice related only to the profits made by CSTI because, in that financial year, CSTS made a loss.

4 Ireland12,5UK3028262423212005200620072008200920102011201220132014

5 Cadbury Schweppes case
UK Government forced the company to make up the difference between the Irish and the UK tax rate. The Treasury was claiming more than £8.6m in corporation tax from the company on its Irish subsidiaries from 1996.On 21 August 2000, CS and CSO appealed against that tax notice to the Special Commissioners of Income Tax, London. Before that body, they maintained that the legislation on CFCs was contrary to Articles 43 EC, 49 EC, and 56 EC.

6 Court’s decisionThe Court pointed out that a national measure restricting freedom of establishment may be justified only where it specifically relates to wholly artificial arrangements aimed at circumventing the application of the legislation of the Member State concerned and does not go beyond what is necessary to achieve that purpose.CFC legislation must not be applied where it is proven, on the basis of objective factors that despite the existence of tax motives that controlled company is actually established in the host Member State and carries on genuine economic activities there.Court saw that Great Britain’s CFC legislation ristricted in this case freedom of establishment (art. 49).

7 Impact on finnish legislation
Finnish tax administration informs on its website that Finland will follow precept on the basis of Cadbury Schweppes case until new CFC legislation takes effect.In order for a foreign corporate entity to qualify as a controlled foreign corporation for the Finnish CFC regime purposes its actual income tax burden in its state of residence must be less than 3/5 of the tax burden of a Finnish resident corporate entity in Finland.(Väliyhteisöllä tarkoitetaan Suomessa yleisesti verovelvollisen määräämisvallassa olevaa yhteisöä, jonka tuloverotuksen tosiasiallinen taso yhteisön asuinvaltiossa on alhaisempi kuin 3/5 Suomessa asuvan yhteisön verotuksen tasosta täällä.)We have some exemptions when CFC regime must not be applied for instance in shipping business.On the basis of ECJ’s decision on Cadbury Schweppes case CFC regime will not get put into practice in EU/EEA-area, when company is actually established in the host Member State and carries on genuine economic activities there.

8 https://www.vero.fi/fi-FI/Syventavat_veroohjeet/Elinkeinoverotus/Euroopan_yhteisojen_tuomioistuimen_EYT_r% %29Marjaana Helminen, Finnish international taxation