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Introduction:
Hershey is one of the oldest chocolate companies in the United States, and an American icon for its chocolate bar. It is one of a group of companies established by Milton Hershey. Other companies established by Milton Hershey include:
Hershey Trust Company, Hershey Entertainment and Resorts Company, which runs Hershey park, a chocolate-themed amusement park, the Hershey Bears minor professional hockey team, Hershey park Stadium and the GIANT Center. Most of the employees for the factory come from the surrounding counties, towns, and boroughs, such as Lebanon County, Hummelstown, South Hanover, and Harrisburg.
Mission:
Proposed Mission:
Hershey is pledged to provide high quality products to consumers, community and children. Bringing sweet moments of Hershey happiness to the world while conducting business in a socially responsible and environmentally sustainable manner.
Hershey Products:
Hershey produces a variety of products that are chocolate or candy based, and The Hershey Company also produces gum. Some of these products began production over 100 years ago such as the Hershey Kiss and Hershey Bar.
Hershey Products:
Chocolate-based products Hershey's chocolate bars Hershey's Symphony Hershey's Extra Dark Almond Joy Mounds 100 Calorie Bar Hershey's Bliss Hershey's Drops Hershey's Miniatures Hershey's Pot of Gold
Hershey Products..
Kit
Kat Hershey's Nuggets Hershey's Kisses Reese's Peanut Butter Cups Pieces Whoppers York Peppermint Pattie Hershey Canada Non-Chocolate Candies
Strategy Formulation
Input Stage
Rating 3 3 2 2 2 3 3
1 2 3 4
2 4 3 3
Poor (1), Below Average (2), Above Average (3), Superior (4)
1
2 3 4 5 1
Brand Recognition
Socially Responsible Image Research and Development Strategic acquisitions and joint ventures Innovative and reliable workforce Weeknesses Need of independent Board Members
0.16
0.15 0.14 0.12 0.10 0.09
4
4 3 3 3 2
0.64
0.60 0.42 0.36 0.30 0.18
2
3 4 5
0.08
0.06 0.05 0.05 1.00
2
1 1 1
0.16
0.06 0.05 0.05 2.82
major weakness (1), minor weakness (2), minor strength (3), major strength (4)
Matching Stage
SWOT Matrix:
Strengths: 1. Brand Recognition 2. Socially Responsible Image 3. Research & Development 4. Strategic acquisitions and joint ventures 5. Innovative & reliable workforce
Weaknesses: 1. Need of Independent Board Members 2. Heterogeneity of supplier is missing 3. Manufacturing cost is high 4. Future contract hedging 5. Less variety of Organic Snacks
Opportunities:
1. 2. 3. 4. 5. 6. 7. Increasing demand of organic products Global expansion / emerging markets Escalating demand for weight conscious people Inclination towards environment friendly organizations Increasing awareness regarding Child Labor issues. Use of varied media Multiplicity among consumer tastes Slow economic growth Increase in prices of main ingredients Increase in Health Conscious consumer Increase in conversion of sugar
SO Strategies:
1. Can produce organic / sugar free products by using R&D dept. (S3,O1,O3) Hershey must portray its brand through marketing the ethical ways they do business (S1,O5) Hershey can promote its image using varied media. (S2,O6) Design new products from employee ideas.(S5,O7)
WO Strategies:
1. 2. Trust may divest shares. (W1,O2) Costs may be lowered by manufacturing products in countries where they are purchased. (W3,O2) Conduct survey to get feedback of consumer preferences to improve taste . (W5,O6,O7)
2.
3.
3.
4.
Threats:
1. 2. 3. 4.
ST Strategies:
1. Sales may be increased through new partnerships with NGOs. (S2,S4,T1, T2) Can produce products specially designed for health conscious consumers by using
WT Strategies:
1. To reduce risk and price uncertainty use hedging. (W4,T2) Introducing new range of organic items to cater health conscious segment.(W5,T3)
2.
2.
3 3 4 ---10
-3 -4 -4 ----11
Total
-2 -1 -2 ----5
Space Matrix:
Conclusions: FP Average = 13/3 = 4.33 IP Average = 10/3 = 3.33 SP Average = -11/3 = -4 CP Average = -5/3 = -1.66 Space Matrix Coordinates: X-axis: CP+IP or (-1.66 + 3.33) = 1.67 Y-axis: FP+SP or (4.33 + -4) = 0.33
FP
(1.67,0.33)
C P
IP
SP
BCG Matrix:
High Stars: Breath freshener market share 33.6% Medium Cash Cows: Chocolate market share 34.3% Confectionary market share 28.7% Dogs: Gum market share 2.5% Medium Question Marks: Non chocolates market share 14.8% Low
Low
Output Stage
QSPM Matrix:
Sr. No. Key Factors: Opportunities 1 Increasing demand of organic products 2 Global expansion / emerging markets 3 Escalating demand for weight conscious people 4 Inclination towards environment friendly organizations 5 Increasing awareness regarding Child Labor issues 6 New opportunities for using varied media 7 Multiplicity among consumer tastes Threats 1 Slow economic growth 2 Increase in prices of main ingredients 3 An increase in Health conscious consumer 4 Increase in conversion of sugar to ethanol
Strengths 1 Brand Recognition 2 Socially Responsible Image 3 Research and Development 4 Strategic acquisitions and joint ventures 5 Innovative and reliable workforce Weeknesses 1 Need of independent Board Members 2 Hetrogenity of supplier is missing 3 Manufacturing cost is high 4 Future contract hedging 5 Less variety of organic snacks Total
Weight 0.06 0.06 0.03 0.02 0.02 0.05 0.05 0.03 0.07 0.07 0.06 0.08 0.08 0.07 0.06 0.05 0.05 0.04 0.03 0.03 0.03 1.00
AS 1.00 4.00 1.00 3.00 1.00 1.00 0.00 3.00 0.00 0.00 0.00 3.00 4.00 3.00 3.00 0.00 2.00 1.00 2.00 1.00 0.00
TAS 0.06 0.24 0.03 0.06 0.02 0.05 0.00 0.09 0.00 0.00 0.00 0.24 0.32 0.21 0.18 0.00 0.10 0.04 0.06 0.03 0.00
1.73
AS
4.00 0.00 4.00 0.00 0.00 0.00 3.00 1.00 0.00 3.00 0.00 2.00 0.00 4.00 0.00 2.00 0.00 0.00 0.00 0.00 3.00
TAS
0.24 0.00 0.12 0.00 0.00 0.00 0.15 0.03 0.00 0.21 0.00 0.16 0.00 0.28 0.00 0.10 0.00 0.00 0.00 0.00 0.09 1.38
Conclusion:
As per QSPM Hershey must adopt the Intensive Growth strategy (Aggressive strategy) and go for Global expansion --- Presence in Asian Market
(China, Bangladesh & India). This strategy is recommended as the TAS is 1.73 which is more than the alternative strategy.
Thank You