Case Analysis for Hershey Foods

Topics: Chocolate, The Hershey Company, Hershey, Pennsylvania Pages: 3 (684 words) Published: March 23, 2011
Case analysis for Hershey Foods
Critical Issues- In his first year as CEO of Hershey Foods Richard Lenny faced conflict with the community, employees and investors. He had already endured the longest strike in the history of the company, closed plants, and managed to increase profits by 10%. The Hershey Trust Company, majority shareholder of Hershey Foods, is responsible for funding the activities of the Hershey School, and in recent times has come under criticism for lack of diversity in its portfolio. In an attempt to correct this situation, the trust forced Richard Lenny to put the company up for sale. Community outcry ensues, as school alumni, employees, former trust members, and government officials all intervene to block the sale of the company.

1.Hershey Foods is pitted against its own largest shareholder. Once the decision was made to not sell the company, Hershey said it had no intention of renewing its proposal to buy back shares of the company’s stock from the trust and remained committed to growing its business.

2.Managing investor relations, The Trust’s decision leaves the impression that Hershey Foods can never be sold. Small investors that own 69% of the stock, yet have less than 30% of the voting power are angry and feel neglected because they were not considered in the decision to sell the company

3.Employees have been through a trying time, worrying about layoffs, and not focusing on the day to day

Corporate Back ground

The company originated with candy-manufacturer Milton Hershey’s decision in 1894 to produce sweet chocolate as a coating for his caramels. Located in Lancaster, Pennsylvania, he called his new enterprise the Hershey Chocolate Company. In 1900, the company began producing milk chocolate in bars, wafers and other shapes. With mass-production, Hershey was able to lower the per-unit cost and make milk chocolate, once a lavish item for the wealthy, affordable to all.

The immediate success of Hershey’s low-cost,...
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