Case 1: Hershey
July 24th, 2012
Introduction to Hershey
Hershey Foods Corporation is number one in the confectionary foods market. Although many people associate Hershey with chocolate, the company started when founder Milton Hershey decided to produce caramel in 1894.They are most famous for their major candy brands such as Hershey's, Reese's, Kit Kat, Kisses, Twizzlers, Jolly Rancher etc. However, Hershey also sells grocery products including: baking chocolate, chocolate milk, ice cream toppings, cocoa, chocolate syrup, and peanut butter. Hershey has two main operating divisions, Hershey Chocolate North America and Hershey International. Hershey exports their products to over 90 countries, has over 13,000 employees, and generates over $4 billion in sales revenue every year.
Mission Statement Analysis
Hershey’s Mission Statement: “Bringing sweet moments of Hershey happiness to the world everyday. Hershey’s mission statement is short and sweet (pun intended). They are able to address the majority of the nine components of the mission Statement with one sentence. Their customers are the world, their product is Hershey, their market is the world, their philosophy is to bring happiness, and their self-concept is that they perceive themselves as a company that can bring happy moments to individuals who use their products across the world everyday.
Hershey External Analysis
1. Falling commodity prices - Falling commodity prices have allowed Hershey to realize greater profits. 2. Global health awareness is shifting – People are craving a healthier lifestyle and Hershey is able to keep up with this change by marketing their high anti-oxidant dark line of chocolates. 3. Mergers and Acquisitions have changes the market place – In the past few years companies in the confectionary market have been merging. When competitors make poorly thought out purchases chances are there will be failure. Hershey has the opportunity to capitalize on other companies’ merger and acquisition mistakes by swooping in and buying failing assets at a discount. 4. Competitors losing image – Nestle has damaged its self-image by employing children and using questionable marketing tactics. Hershey has the opportunity to take away Nestles disgruntled customers. 5. Global brand awareness is growing – International sales have risen over 4% in 3 years due to greater international brand awareness. * Threats
1. Competitors are expanding – Competitors are expanding into non-confectionary markets further diversifying their business. This puts Hershey at risk. 2. Uncertain commodity prices – When cocoa and sugar price move higher due to a lack of supply Hershey’s profits are hurt. 3. International strength of competitors – Competitors stand to earn greater profits overseas and run less of a risk of exposure to economic downturns in the U.S. If Hershey profits are hurt due to a U.S. economic downturn International competitors can gain market share both in the U.S. and at home. 4. Shift in consumer preferences – Some of Hershey’s premium brand products have been failing because customers have been shifting to lower cost products. 5. Downturn in U.S. economy – If the U.S. economy falters so will Hershey.
External Analysis Assessment
Given Hershey’s weighted score it has been determined that they are well positioned to deal with external threats and opportunities. Hershey is a well-established company that has been doing business for over a century. A score of 3.43 indicates a superior company.
Competitive Analysis (Porters 5 Forces)
Rivalry Among Competing Firms
Hershey is an industry leader in its market. Most competitors are trying to keep up with Hershey instead of vice versa. The confectionary industry in particular is very fierce. Competitors are large and well diversified both in products and geographic location. Competitors not only sell...
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