ASSIGNMENT NO. 3
HERSHEY, NESTLE, CADBURY & MARS
PREPARED BY: RANA WAQAR AHMED (Reg. ID: 10158)
SUBMITTED TO : SIR MUBASHIR SANDELA
DATED: 10th March, 2013
S. No.| Particulars| Hershey| Cadbury| Nestle| Mars|
1.| Top Tier| | | | |
2.| Middle Tier| | | | |
3.| Bottom Tier| | | | |
4.| Social / Corporate Responsibity| | | | |
5.| Manufacturing | | | | |
6.| Facility other than origin| | | | |
7.| Stock value | | | | |
8.| Forward and backward integration| | | | |
9.| Nutritional brand| | | | |
10.| Organic products| | | | |
11.| Diversification| | | | |
12.| Growth Ratio over last 3 years| | | | |
* Chocolate producers unable to distribute products to certain countries. * Major issue is child labour in cocoa farms
* Mostly affected areas in Africa where child labour runs rampant. * The Chocolate Manufacturers Association (CMA) and the World Cocoa Foundation (WCF) created the Harkin-Engel Protocol, which is an agreement that focuses on child labour practices on cocoa farms in West Africa (U.S. Labour, 2006). * Result opened new channels to export and distribute cocoa to international countries.
1.1 Economic Analysis
* In 2006, due to hurricane impact, the price of refined sugar decreased from $0.38 to $0.31 per pound (Hershey’s 10-K, 2009). * This allowed companies to cut retail costs and redistribute the savings. * A lot of waste material is produced, and companies spend thousands of dollars on disposing it. * However, there is a new opportunity born due to recent developments in bio-fuel. * Since 2007, Lovell discovered a new method of production that can use the by-product of chocolate manufacturing companies.
1.2 Socio-cultural Analysis
* Consumers want a larger variety of chocolates and healthier alternatives to the traditional chocolates. * Dark chocolates provided several health benefits by adding a flavonoid in the chocolate that prevents various cardiovascular problems (Chocolate Trading Co., 2005).
1.3 Technological Analysis
* The chocolate and cocoa industries lack supports of Non-Government Organizations (NGO), which restrict the farmer’s access to business guidance, funding, and continuing education. * Farmers can’t learn new technologies making them less efficient. * This prevents the chocolate manufacturers from gaining cocoa efficiently to create more chocolates for the consumer.
1. Target Audience
The primary consumers of Hershey Chocolates include a vast audience ranging from children, teenagers and adults. But mostly, Hershey targets its consumers ranging from age 13-30 years old. The chocolate bar is considered a snack or is part of a daily diet in case of some athletes. The chocolates are available in most grocery stores, gas stations, malls etc. Consumers primarily buy chocolates according to their price. They also prefer if the chocolates fit their health and nutritional requirements, although there is a very low margin of difference between selecting according to price and according to health.
4. Five forces
5.1 Threat for new entrants
There is very little threat for new entrants in the chocolate industry because of the current economy, the various differences in products, and the constant need for large capital requirements. Also, since there is a lack of distribution channels and with the strict FDA regulations kept in place for food manufacturers, the threat for new entrants is almost non-existent (Michael et al, 2007)
5.2 Bargaining powers of buyers
As stated by Michael et al, 2007, the bargaining powers of buyers increase by two factors: a number of large volume buyers and the buyers’ relatively low profits from the product. But since the industry as so many different...