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Hershey Company 2009

Presented By: Aliya & Andleeb

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:

Bringing sweet moments of Hershey happiness to the world every day.

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

EFE IFE CPM

External Factor Evaluation (EFE) Matrix:


Sr.# 1 2 3 4 5 6 7 Opportunities Increasing demand of organic products Global expansion / emerging market Escalating demand for weight conscious people Inclination towards environment friendly organizations Increasing awareness regarding Child Labor issues New opportunities for using varied media Multiplicity among consumer tastes Threats Slow economic growth
Increase in prices of main ingredients An increase in Health conscious consumer

Weight 0.11 0.12 0.05 0.04 0.04 0.10 0.10

Rating 3 3 2 2 2 3 3

Weighted Score 0.33 0.36 0.1 0.08 0.08 0.3 0.3

1 2 3 4

Increase in conversion of sugar to ethanol Total Weighted Score

0.06 0.14 0.13 0.11


1.00

2 4 3 3

0.12 0.56 0.39 0.33


2.95

Poor (1), Below Average (2), Above Average (3), Superior (4)

Internal Factor Evaluation (IFE) Matrix:


Sr.# Strengths Weight Rating Weighted Score

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

Heterogeneity of supplier is missing


Manufacturing cost is high Future contract hedging Less variety of organic snacks Total Weighted Score

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)

Competitive Profile Matrix:


Hershey Critical Success Factors Brand recognition Product Quality Price Competitiveness Financial position Management Customer Loyalty Global Expansion Market share Total Weight 0.13 0.13 0.14 0.12 0.13 0.11 0.17 0.07 1.00 Rating 4 4 3 3 3 4 3 2 Score 0.52 0.52 0.42 0.36 0.39 0.44 0.51 0.14 3.30 Nestle Rating 3 3 3 4 4 3 4 4 Score 0.39 0.39 0.42 0.48 0.52 0.33 0.68 0.28 3.49 Mars Rating 3 3 4 3 3 3 3 3 Score 0.39 0.39 0.56 0.36 0.39 0.33 0.51 0.21 3.14

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.

The Strategic Position and Action Evaluation (SPACE) Matrix:


Financial Position: Leverage Working Capital Cash Flow Total Industry Position: Growth Potential Profit Potential Financial Stability Total Stability Position: Price range of competing products Competitive Pressure Price elasticity of demand Total Competitive Position Market Share Product quality Customer loyalty Rating: 5 4 4 ---13

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

Aggressive: Market Development Market Penetration Product Development

(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

The Grand Strategy Matrix:


Rapid Market Growth

Market Development Market Penetration Product Development


Weak Competitiv e Position

Strong Competitive Position

Slow Market Growth

Output Stage

Quantitative Strategic Planning Matrix (QSPM)

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

Presence in Asian Market (China, Bangladesh & India)

Producing New Products for Health & Weight Conscious Consumers

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

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