Hershey Torkabadi

INTERNATIONAL BUSINESS SCHOOL (IBS) UNIVERSITI TEKNOLOGI MALAYSIA MASTER IN BUSINESS ADMINISTRATION STRATEGIC MANAGEMENT Assoc Prof Dr Mas
Bambang Baroto
SCORE:
Mohammad Torkabadi MR101168
CASE TITLE:
Hershey Company 2009
COMMENTS:
1.0
1.1
EXTERNAL ANALYSIS
PEST ANALYSIS
1.1.1 ECONOMIE FORCES
Case issue
Due to lower commodity prices, total charges to Hershey's Global Supply Transformation Program have been forecasted
Opportunity
Threat
downward from $665 million to $640 million. [regarless the Hershey just considering that commodity price is low]
Cocoa future contract prices in 2008 ranged from $0.86 to $1.50 per pound, which represented a significant increase from 2007 prices. Consequently, organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 bi llion by 2011. . However, poor harvests in two of the world's largest producers of sugar, Brazil and India, sent sugar prices soaring in the second half of 2009. Wholesale sugar prices in the U.S. were up more than 70 percent in the first eight months of 2009, reaching a near 30-year high of 22.21 cents
a pound. Some research analysts expect that international wholesale sugar prices may reach 40 cents a pound. India, which up until two years ago was a net exporter of sugar, has become a net importer of sugar after two straight poor harvests and
resilient demand.
Confectionery products include chocolate, gum, cereal bars, and sugar confectionery products with a projected global market value of $107.4 billion by 2010. Chocolate currently accounts for 55.8 percent of the market's overall global value. Consequently, organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011.
1.1.2 SOCIAL, CULTURE, DEMOGRAPHIC ENVIRONNENT FORCES
Case issue
Seasonal sales such as Halloween and Valentine's Day account for 10 percent of the annual sales in the industry. Brazil's sugarcane harvest is suffering from too much rain.
Opportunity
Threat
1.1.3 POLITICAL, GOUVERNENT AND LEGAL FORCES Case issue

Sugar, another commodity found in confectionery products, is controlled via government regulations which often result in prices that are
Opportunity
Threat
often double those found in the world sugar market.
1.1.4 TECHNOLOGICAL FORCES Case issue N/A Opportunity Threat
1.2
COMPETITIVE FORCES
Case issues Opportunity Threat
Mergers and acquisitions in the past few years have influenced both the market share and product portfolio of global firms in the con fectionery industry. Mars, a privately owned company, acquired William Wrigley, one of the largest chewing gum firms in America, for $23 billion in May 2008. Nestle, one of the global leaders in the industry, expanded its nutritional product with the acquisition of Jenny Craig, a company with an established brand of nutritional weight-management products. Nestle brands enjoy worldwide recognition, and the company has the 63rd position in the Top Global Brands ranking by Business Week. Nestle recently entered the organic products segment with projected sales of $24 billion by 2010. Nestle's image, however, has suffered within the global community due to allegations about sourcing of cocoa from farms that employed
children in Africa, as well as its marketing tactics used to promote its infant milk substitutes in developing nations Company [Nestle] acquisitions include the medical nutritional business of Novartis, Gerber baby foods, and Jenny Craig, a company with an
established brand of nutritional weight-management products. In May 2008, the board of Cadbury Schweppes made the decision to split the company into two separately listed companies. The company
was split into Cadbury plc (currently the worldwide confectionery opera tions listed on the London Stock Exchange) Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products with no
artificial colors or artificial flavorings under the Natural Confectionery Company.
Case issues
Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in Australia. Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also developed a line of
Opportunity
Threat
low-fat products and healthy snacks. In 2008, Mars purchased the William Wrigley Company, which includes such brands as Orbit and Double mint gum. Under the terms of the $23 billion acquisition, the Wrigley Company will become a subsidiary of Mars and will operate along with Mars's other bus iness units of Chocolate, Pet Care, Food, Drinks, and Symbioscience.
1.3
INDUSTRY ANALYSIS
1.3.1 THE DESCRIPTION OF THE INDUSTRY

Describing the industry and fragmentation by case words:
Case issues
The confectionery industry is fragmented with consumer tastes that drive the diverse demand for products in the industry which range from gums and jelly beans to chocolate products. Confectionery products include chocolate, gum, cereal bars, and sugar confectionery products with a projected global market value of $107.4 billion by 2010. Chocolate currently accounts for 55.8 percent of the market's overall global value. Consequently, organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011.
Major competitors: Market share (confectionary industry) Major 50 firms 40% market share Hershey Cadbury Mars Nestle Other major companies Small firms in industry 60% market share Confectioners Industry average 1.32B 2.20K 505.67M N/A Other small firms N/A N/A N/A N/A 10.1% 8.91B 51.24B N/A N/A N/A 12800 45000 N/A N/A N/A 5.27B 9.29B N/A N/A N/A 353.89M 466.89M N/A N/A N/A Market Cap Employees Revenue Net Income
Companys profile: The largest producer of chocolate in North America, Hershey Company reported second quarter 2009 sales up 5.9 percent to $1.1 7 billion and profit of $71 3 million on July 23, the fourth strong quarter in a row for the company. Hershey has five operating segments by geographic regions: (1) United States, (2) Canada, (3) Mexico, (4) Brazil, and (5) other international locations (India, the Philippines, Korea, Japan, and China). For segment reporting purposes, Hershey aggregates operations in the Americas (United States, Canada, Mexico and Brazil). The com pany aggregates their other international operations with the Americas to form one reportable segment" (Hershey, Form 10K, 2008). Hershey's sales outside of the United States accounted for 14.4 percent of sales in 2008, 13.8 percent of sales in 2007, and 10.9 percent of sales in 2006. Competitors profile: Nestle: It has operations in the Americas, Europe, Asia, and Africa. The company has six business divisions that are organized along product groups including the beverage division (Nescafe coffee, Libby fruit juices, and Nestle waters), prepared dishes, and cooking aids division (Stouffer's, Lean Cuisine, breakfast cereals), milk products, nutrition and ice cream division (Nido, Everyday, Haagen Dazs, Dryers, Power Bar, and Jenny Craig products), pet care division (Purina Dow Chow and Purina One), a pharma ceutical products division (ophthalmic drugs and surgical equipment, contact lens solutions), and their confectionary division (Kit Kat, Butt erfinger). Cadbury: In May 2008, the board of Cadbury Schweppes made the decision to split the company into two separately listed companies. The company was split into Cadbury plc (currently the worldwide confectionery operations listed on the London Stock Exchange) and The DPS (Dr Pepper Snapple) Group, formerly Cadbury Schweppes American Beverages (CSAB) now listed as DPS in on the New York Stock Exchange. Key brands include Dr Pepper, Canada Dry, Snapple, and Sunkist products with DPS brands ranked as the third largest refreshment beverage business in North America. Some of the leading chocolate brands of the company include the Cadbury Chocolate Cream Egg and Mr. Big Bar, as well as confectionary brands such as Trident gum and Dentyne Ice, which complement the gum brands of the company. The company also makes Hall's cough drops, and controls over 22 percent of the medicated confectionery market. Due to increased consumer concerns about artificial ingredients, the company also manufactures a line of products with no artificial colors or artificial flavorings under the Natural Confectionery Company. The company is a market leader in the global confectionery industry with a market share of 10.1 percent. Within the choco late category, Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in Australia.
Mars: Mars has several business units, including snack food (42 percent), pet care (49.5 percent), food (6.5 percent), and drinks (1.8 percent), which contribute to their diverse product portfolio. Mars products are sold worldwide, and the company has locations in North America, Latin America, Europe, and the Middle East
1.3.2 COMPETITIVE PRESSURE AMONG RIVALRY Opport Threa unity t Competitive Force
Strong Moderate Weak
Case issues
Mergers and acquisitions in the past few years have influenced both the market share and product portfolio of global firms in the con fectionery industry. Mars, a privately owned company, acquired William Wrigley, one of the largest chewing gum firms in America, for $23 billion in
May 2008. Nestle, one of the global leaders in the industry, expanded its nutritional product with the acquisition of Jenny Craig, a company with an
established brand of nutritional weight -management products. Nestle brands enjoy worldwide recognition, and the company has the 63rd position in the Top Global Brands ranking by
Business Week. Nestle recently entered the organic products segment with projected sales of $24 billion by 2010. Nestle's image, however, has suffered within the global community due to allegations about sourcing of cocoa from farms that
employed children in Africa, as well as its marketing tactics used to promote its infant milk substitutes in developing nations Company [Nestle] acquisitions include the medical nutritional business of Novartis, Gerber baby foods, and Jenny Craig, a
company with an established brand of nutritional weight-management products.
10
Case issues
In May 2008, the board of Cadbury Schweppes made the decision to split the company into two separately listed companies. The company was split into Cadbury plc (currently the worldwide confectionery opera tions listed on the London Stock Exchange) Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of
Opport Threa unity t
Competitive Force
products with no artificial colors or artificial flavorings under the Natural Confectionery Company. Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in
Australia. Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also
developed a line of low-fat products and healthy snacks. In 2008, Mars purchased the William Wrigley Company, which includes such brands as Orbit and Double mint gum. Under the terms of the $23 billion acqui sition, the Wrigley Company will become a subsidiary of Mars and will operate along with Mars's other business units of Chocolate, Pet Care, Food, Drinks, and Symbioscience.
1.3.3 COMPETITIVE PRESSURE ASSOCIATED WITH NEW ENTRANT Opport Threa unity t Competitive Force
Case issues
11
Case issues
The confectionery industry is fragmented with consumer tastes that drive the diverse demand for products in the industry which range from gums and jelly beans to chocolate products. [new entrant can enter and take market share by fulfilling customers taste] Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also
Competitive Force
developed a line of low-fat products and healthy snacks.[existing companies are entering this market segment] Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products with no artificial colors or artificial flavorings under the Natural Confectionery Company.[existing companies are entering this market segment] Nestle recently entered the organic products segment with projected sales of $24 billion by 2010. .[existing companies are
entering this market segment]
1.3.4 COMPETITIVE PRESSURE FROM THE SUBSTITUTE PRODUCTS Opport Threa unity t Competitive Force
Case issues
12
Case issues
Consequently, organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011. Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products with no artificial colors or artificial flavorings under the Natural Confectionery Company.
Competitive Force
13
1.3.5 COMPETITIVE PRESSURE FROM THE SUPPLIERS BARGAINING POWER Opport Threa unity t Competitive Force
Case issues
Brazil, which produce nearly half of the words sugar, has been converting up to half of its supplies into ethanol instead of refined sugar
Wholesale sugar prices in the U.S. were up more than 70 percent in the first eight months of 2009, reaching a near 30-year high
of 22.21 cents a pound. Some research analysts expect that international wholesale sugar prices may reach 40 cents a pound. India, which up until two years ago was a net exporter of sugar, has become a net importer of sugar after two straight poor
harvests and resilient demand.
1.3.6 COMPETITIVE PRESSURE FROM BUYERS BARGAINING POSITION Opport Threa unity t
preference for organic and nonadulterated products.
Case issues
Consumers are increasingly aware of the nutritional value of various product ingredients with purchase decisions reflecting a
Competitive Force
Customers switched to lower price products.
14
Case issues
The confectionery industry is fragmented with consumer tastes that drive the diverse demand for products in the industry which range from gums and jelly beans to chocolate products.
Competitive Force
1.3.7 INDUSTRY ANALYSIS RESULTS SUMMERY No

1 2 3 4 5
Key Variables Competitive pressure among rivalry Competitive pressure associated with new entrant Competitive pressure from the substitute products Competitive pressure from suppliers bargaining power Competitive pressure from buyers bargaining power 7 3 0 0 0 10
Competitive Force
Strong
Moderate
Weak
3 1 2 4 3 11
2 0 0 0 0 2
Total:
y y y
According to the competitive pressure in the industry the competition is moderately strong the most Strong Forces is rivalry, it is more than the other forces in the industry and pressure is strong Industry is NOT attractive for the Incumbent/New companies
15
1.4
LIST OF ALL RECOGNIZED OPPORTUNITIES AND THREATS
1.4.1 OPPORTUNITIES
1. Confectionery products include chocolate, gum, cereal bars, and sugar confectionery products with a projected global market value of $107.4 billion by 2010. 2. Chocolate currently accounts for 55.8 percent of the market's overall global value. 3. Consequently, organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011.Due to lower commodity prices, total charges to Hershey's Global Supply Transformation Program have been forecasted downward from $665 million to $640 million. [regarless the Hershey just considering that commodity price is low] 4. Consequently, organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011. 5. Seasonal sales such as Halloween and Valentine's Day account for 10 percent of the annual sales in the industry. 6. Nestle's image, however, has suffered within the global community due to allegations about sourcing of cocoa from farms that employed children in Africa, as well as its marketing tactics used to promote its infant milk substitutes in developing nations 7. Consumers are increasingly aware of the nutritional value of various product ingredients with purchase decisions reflecting a preference for organic and nonadulterated products.
16
1.4.2 THREATS
1. Wholesale sugar prices in the U.S. were up more than 70 percent in the first eight months of 2009, reaching a near 30-year high of 22.21 cents a 2. pound. Some research analysts expect that international wholesale sugar prices may reach 40 cents a pound. 3. India, which up until two years ago was a net exporter of sugar, has become a net importer of sugar after two straight poor harvests and resilient 4. demand. poor harvests in two of the world's largest producers of sugar, Brazil and India, sent sugar prices soaring in the second half of 2009. . However, 5. Cocoa future contract prices in 2008 ranged from $0.86 to $1.50 per pound, which represented a significant increase from 2007 prices. 6. Brazil's sugarcane harvest is suffering from too much rain. 7. Sugar, another commodity found in confectionery products, is controlled via government regulations which often result in prices that are often double those found in the world sugar market. 8. Mergers and acquisitions in the past few years have influenced both the market share and product portfolio of global firms in the confectionery industry. 9. Mars, a privately owned company, acquired William Wrigley, one of the largest chewing gum firms in America, for $23 billion in May 2008. 10. Nestle, one of the global leaders in the industry, expanded its nutritional product with the acquisition of Jenny Craig, a company with an established brand of nutritional weight-management products. 11. Nestle brands enjoy worldwide recognition, and the company has the 63rd position in the Top Global Brands ranking by Business Week. 12. Nestle recently entered the organic products segment with projected sales of $24 billion by 2010. 13. Company acquisitions include the medical nutritional business of Novartis, Gerber baby foods, and Jenny Craig, a company with an established brand of nutritional weight-management products. 14. In May 2008, the board of Cadbury Schweppes made the decision to split the company into two separately listed companies. The company was split into Cadbury plc (currently the worldwide confectionery operations listed on the London Stock Exchange)
17
15. Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products w no artificial colors ith or artificial flavorings under the Natural Confectionery Company. 16. Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in Australia. 17. Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also developed a line of low-fat products and healthy snacks. 18. In 2008, Mars purchased the William Wrigley Company, which includes such brands as Orbit and Double mint gum. Under the terms of the $23 billion acquisition, the Wrigley Company will become a subsidiary of Mars and will operate along with Mars's other business units of Chocolate, Pet Care, Food, Drinks, and Symbioscience. 19. Mergers and acquisitions in the past few years have influenced both the market share and product portfolio of global firms in the confectionery industry. 20. Mars, a privately owned company, acquired William Wrigley, one of the largest chewing gum firms in America, for $23 billion in May 2008. 21. Nestle, one of the global leaders in the industry, expanded its nutritional product with the acquisition of Jenny Craig, a company with an established brand of nutritional weight-management products. 22. Nestle brands enjoy worldwide recognition, and the company has the 63rd position in the Top Global Brands ranking by Business Week. 23. Nestle recently entered the organic products segment with projected sales of $24 billion by 2010. 24. Company acquisitions include the medical nutritional business of Novartis, Gerber baby foods, and Jenny Craig, a company with an established brand of nutritional weight-management products. 25. In May 2008, the board of Cadbury Schweppes made the decision to split the company into two separately listed companies. The company was split into Cadbury plc (currently the worldwide confectionery operations listed on the London Stock Exchange) 26. Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products w no artificial colors ith or artificial flavorings under the Natural Confectionery Company.
18
27. Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in Australia. 28. Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also developed a line of low-fat products and healthy snacks. 29. In 2008, Mars purchased the William Wrigley Company, which includes such brands as Orbit and Double mint gum. Under the terms of the $23 billion acquisition, the Wrigley Company will become a subsidiary of Mars and will operate along with Mars's other business units of Chocolate, Pet Care, Food, Drinks, and Symbioscience. 30. Consequently, organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011. 31. Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products w no artificial colors ith or artificial flavorings under the Natural Confectionery Company. 32. Brazil, which produce nearly half of the words sugar, has been converting up to half of its supplies into ethanol instead of refined sugar 33. Wholesale sugar prices in the U.S. were up more than 70 percent in the first eight months of 2009, reaching a near 30-year high of 22.21 cents a 34. pound. Some research analysts expect that international wholesale sugar prices may reach 40 cents a pound. 35. India, which up until two years ago was a net exporter of sugar, has become a net importer of sugar after two straight poor harvests and resilient 36. demand. switched to lower price products. Customers 37. The confectionery industry is fragmented with consumer tastes that drive the diverse demand for products in the industry which range from gums and jelly beans to chocolate products.
19
1.5
LIST OF OPPORTUNITIES AND THREATS WITHOUT OVERLAPPED ITEMS
1.5.1 OPPORTUNITIES
1. Confectionery products include chocolate, gum, cereal bars, and sugar confectionery products with a projected global market v alue of $107.4 billion by 2010. 2. Chocolate currently accounts for 55.8 percent of the market's overall global value. 3. Due to lower commodity prices, total charges to Hershey's Global Supply Transformation Program have been forecasted downward from $665 million to $640 million. [regarless the Hershey just considering that commodity price is low] 4. Consequently, organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011. 5. Seasonal sales such as Halloween and Valentine's Day account for 10 percent of the annual sales in the industry. 6. Nestle's image, however, has suffered within the global community due to allegations about sourcing of cocoa from farms that employed children in Africa, as well as its marketing tactics used to promote its infant milk substitutes in developing nations
7. Consumers are increasingly aware of the nutritional value of various product ingredients with purchase decisions reflecting a preference for organic and
nonadulterated products.
1.5.2 THREATS
1. Wholesale sugar prices in the U.S. were up more than 70 percent in the first eight months of 2009, reaching a near 30-year high of 22.21 cents a 2. pound. Some research analysts expect that international wholesale sugar prices may reach 40 cents a pound. 3. India, which up until two years ago was a net exporter of sugar, has become a net importer of sugar after two straight poor harvests and resilient 4. demand. poor harvests in two of the world's largest producers of sugar, Brazil and India, sent sugar prices soaring in the second half of 2009. However,
20
5. Cocoa future contract prices in 2008 ranged from $0.86 to $1.50 per pound, which represented a significant increase from 2007 prices. 6. Brazil's sugarcane harvest is suffering from too much rain. 7. Sugar, another commodity found in confectionery products, is controlled via government regulations which often result in prices that are often double those found in the world sugar market. 8. Mergers and acquisitions in the past few years have influenced both the market share and product portfolio of global firms in the confectionery 9. Mars, a privately owned company, acquired William Wrigley, one of the largest chewing gum firms in America, for $23 billion in May 2008. industry. 10. Nestle, one of the global leaders in the industry, expanded its nutritional product with the acquisition of Jenny Craig, a company with an established brand of nutritional weight-management products. 11. Nestle brands enjoy worldwide recognition, and the company has the 63rd position in the Top Global Brands ranking by Business Week. 12. Nestle recently entered the organic products segment with projected sales of $24 billion by 2010. 13. Company acquisitions include the medical nutritional business of Novartis, Gerber baby foods, and Jenny Craig, a company with an established brand of nutritional weight-management products. 14. In May 2008, the board of Cadbury Schweppes made the decision to split the company into two separately listed companies. The c ompany was split into Cadbury plc (currently the worldwide confectionery operations listed on the London Stock Exchange) 15. Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products with no a rtificial colors or artificial flavorings under the Natural Confectionery Company. 16. Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in Australia. 17. Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also developed a line of low-fat products and healthy snacks.
21
18. In 2008, Mars purchased the William Wrigley Company, which includes such brands as Orbit and Double mint gum. Under the terms of the $23 billion acquisition, the Wrigley Company will become a subsidiary of Mars and will operate along with Mars's other business units of Chocolate, Pet Care, Food, Drinks, and Symbioscience.
19. India, which up until two years ago was a net exporter of sugar, has become a net importer of sugar after two straight poor harvests and resilient 20. demand. switched to lower price products. Customers 21. The confectionery industry is fragmented with consumer tastes that drive the diverse demand for products in the industry which range from gums and jelly beans to chocolate products.
22
1.6
KEY SUCCESS FACTOR

Mergers & Acquisitions
Merger & Acquisition of the companies in the industry will enhance the capability to meet customer demand as well as reducing the price of the products and reducing competition and promote the companys ability to penetrate into the global markets. Advertising & Marketing programms Advertising & marketing programs plays a major role in the industry because of the stiff competition in the industry. Therefore to build customer loyalty, the firm has to focus on the advertisement of their brands. Financial Position This is an important factor to being successful in this industry because the competition will demand the company to carry out advertisement of their products; undertake public awareness programs; acquisition of other companies and building capacity in terms of expertise and new Technology. These activities will demand the company to have adequate financial resources to implement them. Market share Having a bigger market is important to gain more revenue Customer Loyalty In this industry, there is a stiff competition among the players. The success of the company will depend on how best the company obtains Customer Loyalty to its various products lines.
23
From the long list of opportunities and threats important issues are chosen based on critical success factors and the function of the Hershey which can have main role in Companys functions which are:
OPPORTIUNITY
y y y
Organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011. Seasonal sales such as Halloween and Valentine's Day account for 10 percent of the annual sales in the industry. Nestle's image, however, has suffered within the global community due to allegations about sourcing of cocoa from farms that employed children in Africa, as well as its marketing tactics used to promote its infant milk substitutes in developing nations.
Consumers are increasingly aware of the nutritional value of various product ingredients with purchase decisions reflecting a preference for organic and nonadulterated products.
Confectionery products include chocolate, gum, cereal bars, and sugar confectionery products with a projected global market v alue of $107.4 billion by 2010.
Chocolate currently accounts for 55.8 percent of the market's overall global value. THREAT
y y
Mergers and acquisitions in the past few years have influenced both the market share and product portfolio of global firms in the confectionery industry. Nestle, one of the global leaders in the industry, expanded its nutritional product with the acquisition of Jenny Craig, a company with an established brand of nutritional weight-management products.
Nestle recently entered the organic products segment with projected sales of $24 billion by 2010.
24
Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products with no artificial colors or artificial flavorings under the Natural Confectionery Company.
y y
Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in Australia. Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also developed a line of low-fat products and healthy snacks.
y y
Some research analysts expect that international wholesale sugar prices may reach 40 cents a pound. Cocoa future contract prices in 2008 ranged from $0.86 to $1.50 per pound, which represented a significant increase from 2007 prices.
25
1.7
EFE MATRIX
Weighted Score
Opportunities
Organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011. Seasonal sales such as Halloween and Valentine's Day account for 10 percent of the annual sales in the industry. Nestle's image, however, has suffered within the global community due to allegations about sourcing of cocoa from farms that employed children in Africa, as well as its marketing tactics used to promote its infant milk substitutes in developing nations. Consumers are increasingly aware of the nutritional value of various product ingredients with purchase decisions reflecting a preference for organic and nonadulterated products. Confectionery products include chocolate, gum, cereal bars, and sugar confectionery products with a projected global market value of $107.4 billion by 2010. Chocolate currently accounts for 55.8 percent of the market's overall global value.
Weight
Rating
0.098039 0.04902 0.039216
3 4
0.294118 0.196078 0.156863
0.068627
0.205882
0.088235
0.352941
0.078431
Weight
0.313725
THREAT Mergers and acquisitions in the past few years have influenced both the market share and product portfolio of global firms in the confectionery industry.
Rating
0.098039
0.294118
26
Nestle, one of the global leaders in the industry, expanded its nutritional product with the acquisition of Jenny Craig, a company with an established brand of nutritional weight-management products. Nestle recently entered the organic products segment with projected sales of $24 billion by 2010. Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products with no artificial colors or artificial flavorings under the Natural Confectionery Company. Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in Australia. Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also developed a line of low-fat products and healthy snacks. Some research analysts expect that international wholesale sugar prices may reach 40 cents a pound. Cocoa future contract prices in 2008 ranged from $0.86 to $1.50 per pound, which represented a significant increase from 2007 prices.
TOTAL
0.078431 0.078431
2 2
0.156863 0.156863
0.068627
0.068627
0.068627 0.068627 0.058824
0.205882 0.27451 0.235294
4 4
0.058824
0.235294 3.147059
The result is highly above 2.5 which shows that Hershey can adopt itself with external factor appropriately. acquiring nonchocolate products as well as nutritional products to complement its existing products Hershey can be benefited from the growing market of nonchocolate products like its competitors.
27
1.8
CPM MATRIX
CRITICAL SUCCESS FACTORS Mergers & Acquisitions Financial Position Advertising & Marketing programms Customer loyality Market share TOTAL
y y
Weight
0.3 0.2 0.15 0.1 0.25
Hershey Rating
3 3 4 3 3
Nestle Rating
4 4 2 3 3
Cadbury Rating
3 3 3 3 4
Mars Rating
3 2 3 3 2
Score
0.9 0.6 0.6 0.3 0.75 3.15
Score
1.2 0.8 0.3 0.3 0.75 3.35
Score
0.9 0.6 0.45 0.3 1 3.25
Score
0.9 0.4 0.45 0.3 0.5 2.55
The CPM indicates that Hershy is the strongest in terms of Marketing and advertisment The CPM also shows that Nestle has got the highest average score of 3 followed by Cadbury. This means if Hershey is to be competitive, it has to focus on Mergers & Acquisitions followed by building a bigger market share and financial position.
28
2.0
2.9
INTERNAL ANALYSIS
VISION AND MISSION STATEMENT ASSESSMENT
2.9.1 VISION The company has no vision statement Proposed Vision Statement "Being the largest producer of chocolate in united state and objects of leading not only chocolate producer but also chewing gum, snack food, and dessert toppings and non-chocolate confectionery products
29
2.9.2 MISSION Bringing sweet moments of Hershey happiness to the world every day Undisputed Marketplace Leadership
Mission Statement Evaluation Matrix

Customers P&S Tech Employee Public image Growth Survival Profitability Shareholders Business Partner Markets Communities
Yes
No
No
Yes
No
Yes
Yes
Yes
No
Yes
Conclusion: The mission statement is too suitable and for company and good. Proposed Mission Statement Undisputed Marketplace Leadership
y y y y
Top-tier value creation, driven by superior performance across the business system Organizational capabilities and passion that compete in the present and build for the future Commitment to enabling and encouraging balanced, healthy lives Portfolio of brands that - Delights consumer across multiple segments - Delivers superior growth and profitability to retailers - Is available everywhere Ability to transform consumer and customer desires to marketplace wins
30
2.10
CULTURE
Culture
Hershey Nestle Cadbury Mars Conclusion
By 1909, Milton Hershey and his wife had established the Milton Hershey School for orphan boys and subsequently donated their entire personal fortune to the Hershey Trust Company to administer the school. Hershey's commitment to social responsibility extends beyond their school to both their products and supplier relationships. The company is actively involved in the International Cocoa Initiative Foundation, designed to eliminate child labor or forced labor in cocoa-producing regions. Hershey's role as an environmental steward is also evident that its plants use recycled water that is later purified for various landscaping projects.
N/A
N/A
N/A
This is strength
N/A
N/A
N/A
This is strength This is strength
N/A
N/A
N/A
N/A
N/A
N/A
This is strength
31
2.11
MANAGEMENT
2.11.1 MANAGEMENT FUNCTIONS 2.12
MANAGEMENT FUNCTIONS
Planning Hershey The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by the consumer. Hershey plans to increase its advertising from $30 million to $35 million in 2009 in order to promote its iconic brands. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. The company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. Nestle No data Cadbury No data Mars No data Conclusion This sentence is Weakness.
No data
No data
No data
This sentence is Strength
No data
No data
No data
This sentence is Strength. This sentence Weakness. is
No data
No data
No data
32
Organizing Hershey All of the outstanding shares of the Hershey Trust Company are owned by the Milton Hershey School Trust, which is the controlling stockholder for The Hershey Company. The trust has the right to cast 79.9% of all the votes entitled to be cast on matters requiring the vote of the Common Stock and Class B Common Stock voting together. There are 10 directors on the Milton Hershey Trust Company, and three membersJames Nevels, LeRoy Zimmerman, and Robert Cavanaughare members of the board of directors of the Hershey Trust Company, members of the board of managers of the Milton Hershey School, and board directors of The Hershey Company. According to the 2008 Annual Report, there are nine directors on the board of The Hershey Company, and the board meets six times per year in addition to meetings scheduled by various committees of the board. Board members are required to own at least 200 shares of common stock and an Executive committee that meet periodically in accordance with governance guidelines. Nestle No data Cadbury No data Mars No data Conclusion This sentence is Strength.
No data
No data
No data
This sentence Strength.
is
No data
No data
No data
This sentence Strength.
is
No data
No data
No data
This sentence is Strength.
The Hershey board has several standing committees, including an Audit, Governance, Compensation, and Executive Organization, and an Executive committee that meet periodically in accordance with governance guidelines.
No data
No data
No data
33
Organizing Hershey In February of 2008, the company announced that James E. Nevels, a board member of the Hershey Trust Company, would replace Kenneth Wolf as chairman of the board of directors of The Hershey Company. Existing legislation requires that the Milton Hershey Trust give notice to the attorney general of Pennsylvania prior to a sale of the company. Nestle No data Cadbury No data Mars No data Conclusion This sentence is Strength.
No data
No data
No data
For segment reporting purposes, Hershey aggregates operations In the Americas.The company aggregates their other international operations with the Americas to form one reportable segment. David West, named chief executive officer in2007, received a 40 percent increase in his compensation in 2008.
No data
No data
No data
This sentence is Strength. This sentence is Strength.
No data
No data
No data
His predecessor, Richard H. Lenny, had a more contentious relationship with the board of directors and resigned in 2007 over frustration with the trust that controls Hershey Structure: Global Research and Development; Hershey North America; People Officer; Global Marketing; Information Officer; Strategy and Business Development; Hershey International; Senior Global Operations; General Counsel and Secretary
No data
No data
No data
No data
No data
No data
34
Motivating Hershey David West, named chief executive officer in 2007, received a 40% increase in his compensation in 2008.Company officials believe that West's renewed emphasis on marketing is responsible for the increase in Hershey sales during the past year. Selling, marketing, and administrative costs were attributed to higher incentive compensation expenses for employees. Nestle No data Cadbury No data Mars No data Conclusion This sentence Strength. This sentence Strength. is
No data
No data
No data
is
Staffing Hershey Hershey employs about 12,800 full time and 1,600 part time employees, and approximately 47% of the workforce is covered via collective bargaining agreement. Nestle No data Cadbury 45,000 employee Page 117 exhibit4 No data Mars No data Conclusion This sentence is Weakness. This sentence is Weakness. This sentence is Weakness.
Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three year period. Hershey recently closed their Reading,Pennsylvania, plant in 2009, eliminating 300 jobs, and provides a severance package of two weeks of pay for each year of service up to 65 weeks for plant workers.
No data
No data
No data
No data
No data
35
Staffing Hershey Hershey pension plans, which resulted in a significant reduction in the fair value of the pension plan assets. Nestle No data Cadbury No data Mars No data Conclusion This sentence is Weakness.
Controlling Hershey Nestle Hershey is also actively involved in organizations such as the WorldCocoa No data Foundation, which supports environmental projects that include nonchemical pestmanagement practices, and which encourage sustainable farming practices to supportecosystems in the region. Hershey monitors greenhouse gas emissions energy-efficient lighting in all of their plants from operations and has installed No data Cadbury Mars No data No data Conclusion This sentence is Strength.
No data
No data
Hershey also closely monitors its supply relationships and purchases palm oil No data from suppliers with membership in the Roundtable on Sustainable Oil.
No data
No data
36
The company is actively involved in the International Cocoa Initiative Foundation, designed to eliminate child labor or forced labor in cocoa producing regions
No data
No data
No data
37
2.13
MARKETING
2.13.1 MARKETING FUNCTIONS
Hershey Advertising expenses for the quarter increased by 46 percent as the company continued to promote iconic brands such as the Hershey Kiss and Reese's products. most visitors think of "Chocolate World" in Hershey, Pennsylvania, as a theme park designed for the true chocolate lover
Marketing Strategy Nestle Cadbury N/A N/A
Mars N/A
Conclusion This issue is strength This issue is strength
N/A
N/A
N/A
Nestle brands enjoy worldwide recognition, Hershey's iconic brands such as Hershey Bar, Hershey and the company has Kisses, and Reese's are instantly recognized within the 63rd position in the the domestic market. Top Global Brands ranking by Business Week. Hershey concentrates advertising revenues on these brands while also promotes the health benefits of N/A flavonols in its dark chocolate products.
N/A
N/A
This issue is weakness
N/A
N/A
This issue is strength
38
Hershey plans to increase its advertising from $30 million to $35 million in 2009 in order to promote its iconic brands. . The company relies on special promotions to increase holiday sales, and it also uses advertising programs to supplement seasonal sales. Hershey was one of the first companies to engage in experiential marketing with the launch of the Hershey Chocolate World in 1973 in Hershey, Pennsylvania, which encouraged consumers to visit the theme park replete with Hershey products. Hershey opened their first flagship store at New York City's Time Square and recently opened Hershey Chocolate World in Shangahi prior to the 2008 Olympics. Core brands of the company such as Hershey's and Reese's drove increased sales in the United States, and the company has recently launched joint ventures in India and China to expand their international presence.
N/A
N/A
N/A
This issue is strength Using advertisement is a strength This issue is strength
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
This issue is strength In terms of presence in china and India its a strength
N/A
N/A
N/A
39
Hershey remains heavily dependent on its domestic markets with about 86 percent of revenues derived from operations in the United States.
N/A
In contrast, competitors such as Cadbury generate about 71 percent of their sales from outside the United States.
N/A
This sentence is weakness
During the past several years, the company has expanded its global presence through a variety of acquisitions and joint ventures with established firms in the international market
Company [Nestle] acquisitions include the medical nutritional business of Novartis, Gerber baby foods, and Jenny Craig, a company with an established brand of nutritional weight-management products.
N/A
In 2008, Mars purchased the William Wrigley Company, which includes such brands as Orbit and Double mint gum. Under the terms of the $23 billion acquisition, the Wrigley Company will become a subsidiary of Mars and will operate along with Mars's other business units of Chocolate, Pet Care, Food, Drinks, and Symbioscience.
This issue is strength
40
Promotion Programs
Advertising expenses for the quarter increased by 46 percent as the company continued to promote iconic brands such as the Hershey Kiss and Reese's products. The company relies on special promotions to increase holiday sales, and it also uses advertising programs to supplement seasonal sales.
N/A
N/A
N/A
N/A
N/A
N/A
Products and Services Planning

the company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by the consumer. Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter bats) created for the release of the movie Dark Knight. The company also encourages customers to personalize messages and gifts via its interactive home page . Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expanded to include Payday Pro energy bars and sugar-free products such as Twizzlers .
N/A N/A
N/A N/A
N/A N/A
This sentence is Weakness This sentence is Weakness This sentence is Strength This sentence is Strength
N/A
N/A
N/A
N/A
N/A
N/A
41
Hershey also continues to appeal to consumers with its premium line of dark chocolates that promote the antioxidant benefits of flavonoids found in these products. Hershey, as well as other competitors in the industry, is acquiring nonchocolate products as well as nutritional products to complement its existing products.
N/A
N/A
N/A
This sentence is Strength This sentence is Strength
N/A
N/A
N/A
Pricing
Hershey N/A N/A Nestle N/A Cadbury N/A Mars
Distribution
The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and gourmet stores. Hershey opened their first flagship store at New York City's Time Square
N/A N/A
N/A N/A
N/A N/A
42
Hershey products are sold to more than 2 million retail outlets, including wholesale distributors, chain grocery stores, convenience stores, and wholesale clubs as well as natural food stores. The McLean Company is the largest wholesale distributor of Hershey products and accounts for 26 percent of the total net sales for the company. . The Hershey and Godrej venture will distribute Hershey products via Godrej's distribution network to over 1.6 million outlets in India N/A N/A N/A N/A N/A N/A N/A N/A N/A
This sentence is Strength This sentence is Strength This sentence is Strength
Marketing Research
Direct research on consumer preferences as well as process innovations are supported via the Hershey Center of Health and Nutrition developed in 2007.
N/A
N/A
N/A
43
2.14
FINANCIAL ANALYSIS
2.14.1 FINANCIAL RATIOS Analysis is based on 2008data. Hershey

Current ratio: 1.06 No Data No Data Quick or acid test ratio: 0.73
Nestle
Liquidity Ratios Cadbury

No Data No Data No Data No Data
Mars
Conclusion This sentence is Strength.

Hershey
Hershey's other assets declined to $151,561 in 2008 from $540,249 in 2007
Nestle
Leverage Ratios Cadbury
Mars
Conclusion
This sentence is Weakness.
N/A Debt to Total Assets Ratio: 1.68 he company's long-term debt increased from $I,279,965 in20O7 to1,505,954 in 2008. Long-Term Debt-to-Equity Ratio: 4.73
N/A
N/A
This sentence is Weakness. N/A N/A N/A
44
Hershey
Fixed Assets Turnover: 5.80
Nestle
No Data
Activity Ratios Cadbury

No Data
Mars
No Data

Total Assets Turnover: 2.18
No Data
No Data
No Data
Hershey
Return on equity (ROE): 98%
Nestle
No Data
Profitability Ratios Cadbury

No Data
Mars
No Data

Return on assets (ROA): 9%
No Data
No Data
No Data This sentence is Weakness.
Gross Profit Margin2008: 34% Gross Profit Margin2009: 36% Operating Profit Margin: 14%(2008) 15%(2009)
No Data
Gross Profit Margin2009: 45% 11.71%
No Data
This sentence is Strength. No Data No Data
45
Hershey
Net Profit Margin: 6%
Nestle
No Data
Profitability Ratios Cadbury

No Data
Mars
No Data
Conclusion
Growth Ratios Hershey

Revenue growth rate: 3.8% Net Income growth rate: 45% Earing per share growth rate: 46% Hershey Company reported second quarter 2009 sales up 5.9 percent to $1.17 billion and profit of $71.3 million on July 23,the fourth strong quarter in a row for the company. Hershey projects a net sales growth of 2 to 3 percent in 2009 due to a decline in core brand sales as well as unfavorable currency exchange rates.
Nestle
No Data No Data No Data Consolidated sales of the Nestle Group for 2008 were CHF 109.9 billion, an increase of 2.2 percent increase from the previous year
Cadbury
No Data No Data No Data Cadbury reported revenues of $5,384 million and operating profit of $388 million in 2008. Revenue growth was particularly strong in emerging markets such as India, South Africa, and South Americas
Mars
No Data No Data No Data
Conclusion This sentence is Strength. This sentence is Strength. This sentence is Strength. This sentence is Strength.
No Data
No Data
No Data
No Data
46
Hershey
No Data No Data
Other Ratios Nestle
Cadbury
No Data No Data
Mars
Conclusion No Data
financial ratios which are the base for above statements Profitability Ratios 1 Return on equity (ROE) 2 Return on assets (ROA) 3 Return on sales (Profit Margin on sales) 4 Basic Earning power (BEP) 5 Earning Per Share 6 Price-Earning Ratio 7 Gross Profit Margin 8 Operating Profit Margin 9 Net Profit Margin Liquidity Ratios 1 Current ratio 2 Quick or acid test ratio Asset management/Activity Ratios 1 Inventory Turnover 2 Days Sales Outstanding (DSO) 3 Fixed Assets Turnover 4 Total Assets Turnover 7.62 43.12 1.80 1.19 8.24 42.13 1.75 1.16 8.66 37.41 2.24 1.41 0.98 0.72 0.88 0.65 1.06 0.73 82% 13% 11% 24% 2.17 38% 20% 11% 36% 5% 4% 11% 0.87 33% 9% 4% 98% 9% 6% 16% 1.27 34% 11% 6%
47
5 Accounts Receivable Turnover 6 Average Collection Period Leverage Ratios 1 Debt to Total Assets Ratio 2 Times-Interest-Earned Ratio 3 EBITDA Coverage 4 Debt to Equity Ratio 5 Long-Term Debt-to-Equity Ratio 0.84 8.55 8.77 3.06 1.83 0.86 3.87 4.08 3.60 2.16 0.91 6.03 6.54 6.31 4.73
48
2.15
PRODUCTION/ OPERATIONS
2.15.1 PRODUCTION/ OPERATIONS FUNCTIONS Process

Changes in product packaging have resulted in lighter materials and less waste during the manufacturing process and Hershey extensively recycles materials from their East Coast factories. Hershey monitors greenhouse gas emissions from operations and has installed energy-efficient lighting in all of their plants. The manufacturing facility, that is located in Jinshan, China, is designed to produce Hershey and Lotte products that are tailored to the needs of the Chinese market. N/A N/A N/A This sentence is Strength N/A N/A N/A This sentence is Strength
N/A
N/A
N/A
49
Joint venture and acquisition

In 2007, Hershey announced a joint venture with Lotte Confectionery Company, a leading confectionary company in Korea, to produce products for China. The joint venture [Lotte] is also designed to expand Hershey's presence in other Asian markets such as Korea and Japan. Core brands of the company such as Hershey's and Reese's drove increased sales in the United States, and the company has recently launched joint ventures in India and China to expand their international presence
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
50
Company [Nestle] acquisitions include the medical nutritional business of Novartis, Gerber baby foods, and Jenny Craig, a company with an established During the past several years, the company has expanded its global presence through a variety of brand of nutritional weight-management acquisitions and joint ventures with products. established firms in the international market
N/A
In 2008, Mars purchased the William Wrigley Company, which includes such brands as Orbit and Double mint gum. Under the terms of the $23 billion acquisition, the Wrigley Company will become a subsidiary of Mars and will operate along with Mars's other business units of Chocolate, Pet Care, Food, Drinks, and Symbioscience. N/A
Hershey also announced a joint venture with Godrej Beverages, a leading consumer goods, confectionery, and food company in India in 2007. Hershey acquired Grupo Lorena, a leading confectionary company in Mexico, with sales in excess of $30 million. This acquisition allowed Hershey to leverage these acquired brands both within Mexico and within the emerging Hispanic markets in the United States
N/A
N/A
N/A
N/A
N/A
51
Hershey, as well as other competitors in the industry, is acquiring nonchocolate products as well as nutritional products to complement its existing products.
Nestle recently entered the organic products segment with projected sales of $24 billion by 2010.
Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products with no artificial colors or artificial flavorings under the Natural Confectionery Company
Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also developed a line of low-fat products and healthy snacks.[
Capacity
Nestle & Mars Cadbury Conclusion
Market Capacity of 8.91B The largest producer of chocolate in North America
N/A
Market Capacity of 8.91B and Market share of 10.1% N/A
This sentence is Weakness
N/A
Inventory
No data in case
52
Workforce
Hershey Nestle Cadbury Mars Hershey
Although most visitors think of "Chocolate World" in Hershey, Pennsylvania, as a theme park designed for the true chocolate lover, the facility was designed to include housing, parks, and schools for employees of Hershey Foods. Hershey employs about 12,800 full-time and 1,600 part-time employees, and approximately 47 percent of the workforce is covered via collective bargaining agreements. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. Hershey recently closed their Reading, Pennsylvania, plant in 2009, eliminating 300 jobs, and provided a severance package of two weeks of pay for each year of service up to 65 weeks for plant workers. Number of Employee: 12,800
N/A
N/A
N/A
Strength for the company
N/A
N/A
N/A
This sentence is Strength This sentence is weakness Losing the human resource is a weakness for Hershey This sentence is weakness
N/A
N/A
N/A
N/A
N/A
N/A
Number of employee: N/A 45,100 N/A
Quality
Hershey's organic line includes Dagoba Organic, a company with a strong product line of high-quality organic chocolates and baking products that are sold via natural food and gourmet stores.
N/A
N/A
N/A
53
2.16
RESEARCH AND DEVELOPMENT:
2.16.1 RESEARCH AND DEVELOPMENT FUNCTIONS R&D

Hershey uses cross-functional product development to produce new products and expand product lines for their iconic brands such as Hershey's and Reese's products. Direct research on consumer preferences as well as process innovations are supported via the Hershey Center of Health and Nutrition developed in 2007. This center is involved in scientific research and also collaborates with external organizations to develop products to support both weight management and heart health.
N/A
N/A
N/A
This sentence is Strength This sentence is Strength This sentence is Strength
N/A
N/A
N/A
N/A
N/A
N/A
54
2.17
MANAGEMENT INFORMATION SYSTEM:
No data available for this part
55
2.18
VALUE CHAIN ANALYSIS
2.18.1 VALUE CHAIN SUPPORTING ACTIVITIES
Management Same as management part Finance Same as finance part R&D Same as R&D part Human Resource Same as production/operation workforce part
56
2.18.2 VALUE CHAIN MAIN ACTIVITIES input

Due to lower commodity prices, total charges to Hershey's Global Supply Transformation Program have been forecasted downward from $665 million to $640 million. The company is actively involved in the International Cocoa Initiative Foundation, designed to eliminate child labor or forced labor in cocoa-producing regions.
N/A
N/A
N/A
Strength The company has a kind of control over the supplier in this way which is strength for the company The company has a kind of control over the supplier in this way which is strength for the company This is weakness
N/A
N/A
N/A
Hershey also closely monitors its supply relationships and purchases palm oil from suppliers with membership in the Roundtable on Sustainable Oil. Higher energy and input costs were associated with increased costs along with the full cost of operation for Godrej Hershey in 2008. Many of the ingredients which are used for Hershey products are grown in West Africa, South America, and the Far East. Cacao beans are a primary ingredient in Hershey chocolates, and this commodity is traded on commodity exchanges via brokers. Due to their forward purchasing contracts, however, price fluctuations [of input: commodities] may not impact Hershey to the same degree as smaller firms in the industry (Hershey, Form 10K, 2008).
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
This is weakness since Hershey cannot easily control it
N/A
N/A
N/A
This is Strength
57
Process
Hershey Nestle Cadbury Same as Production operation process part Conclusion
Out Come(sales and marketing)

The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and gourmet stores. Other snack products of the company include Hershey Snacksters, Hershey and Reese's granola bass, and Mauna Loa macadamia nuts. Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter bats) created for the release of the movie Dark Knight. the company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by the consumer. Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expanded toinclude Payday Pro energy bars and sugar-free products such as Twizzlers . Hershey also continues to appeal to consumers with its premium line of dark chocolates that promote the antioxidant benefits of flavonoids found in these products.
N/A N/A
N/A N/A
N/A N/A
This is Strength This is Strength
N/A
N/A
N/A
This is Strength
N/A N/A
N/A N/A
N/A N/A
This is weakness This is weakness
N/A
N/A
N/A
This is Strength
N/A
N/A
N/A
This is Strength
58
Distribution
Hershey Nestle Same as marketing Distribution part Cadbury Conclusion
59
1. Although most visitors think of "Chocolate World" in Hershey, Pennsylvania, as a theme park designed for the true chocolate lover, the facility was designed to include housing, parks, and schools for employees of Hershey Foods. 2. The school continues to operate in Hershey, and provides free education and residential services including meals and health care to almost 17,000 children in need, and still is be administered via The Hershey Trust Company. 3. Hershey's commitment to social responsibility extends beyond their school to both their products and supplier relationships. 4. Hershey's role as an environmental steward is also evident that its plants use recycled water that is later purified for vari us landscaping projects. o 5. Hershey employs about 12,800 full-time and 1,600 part-time employees, and approximately 47 percent of the workforce is covered via collective bargaining agreements. 6. Hershey now expects year-end 2009 profits of 6 to 8 percent 7. Hershey plans to increase its advertising from $30 million to $35 million in 2009 in order to promote its iconic brands. 8. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. 9. The company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. 10. The company is actively involved in the International Cocoa Initiative Foundation, designed to eliminate child labor or forced labor in cocoa-producing regions. Hershey is also actively involved in organizations such as the World 11. Cocoa Foundation, which supports environmental projects that include nonchemical pest management practices, and which
encourage sustainable farming practices to support ecosystems in the region.
60
12. Hershey also closely monitors its supply relationships and purchases palm oil from suppliers with membership in the Roundtable on Sustainable Oil. 13. Hershey's role as an environmental steward is also evident that its plants use recycled water that is later purified for va rious landscaping projects 14. Hershey monitors greenhouse gas emissions from operations and has installed energy-efficient lighting in all of their plants. 15. The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and go urmet stores. 16. All of the outstanding shares of the Hershey Trust Company are owned by the Milton Hershey School Trust, which is the controlling stockholder for The Hershey Company. The trust has the right to cast 79.9% of all the votes entitled to be cast on matters requiring the vote of the Common Stock and Class B Common Stock voting together. 17. There are 10 directors on the Milton Hershey Trust Company, and three membersJames Nevels, LeRoy Zimmerman, and Robert Cavanaughare members of the board of directors of the Hershey Trust Company, members of the board of managers of the Milton Hershey School, and board directors of The Hershey Company. 18. According to the 2008 Annual Report, there are nine directors on the board of The Hershey Company, and the board meets six times per year in addition to meetings scheduled by various committees of the board. 19. Board members are required to own at least 200 shares of common stock and an Executive committee that meet periodically in ac cordance with governance guidelines. 20. The Hershey board has several standing committees, including an Audit, Governance, Compensation, and Executive Organization, and an
61
Executive committee that meet periodically in accordance with governance guidelines. 21. In February of 2008, the company announced that James E. Nevels, a board member of the Hershey Trust Company, would replace Kenneth Wolf as chairman of the board of directors of The Hershey Company. 22. Existing legislation requires that the Milton Hershey Trust give notice to the attorney general of Pennsylvania prior to a sale of the company. 23. For segment reporting purposes, Hershey aggregates operations In the Americas.The company aggregates their other international operations with the Americas to form one reportable segment. 24. David West, named chief executive officer in2007, received a 40 percent increase in his compensation in 2008. His predecessor, Richard H. Lenny, had a more contentious relationship with the board of directors 25. and resigned in 2007 over frustration with the trust that controls Hershey 26. Structure: Global Research and Development; Hershey North America; People Officer; Global Marketing; Information Officer;
Strategy and BusinessDevelopment; Hershey International; Senior Global Operations; General Counsel and Secretary 27. David West, named chief executive officer in 2007, received a 40% increase in his compensation in 2008.Company officials believe that West's renewed emphasis on marketing is responsible for the increase in Hershey sales during the past year. 28. Selling, marketing, and administrative costs were attributed to higher incentive compensation expenses for employees. 29. Hershey employs about 12,800 full time and 1,600 part time employees, and approximately 47% of the workforce is covered via collective bargaining agreement. 30. Hershey is also actively involved in organizations such as the World Cocoa Foundation, which supports environmental pro jects
62
that include nonchemical pest management practices, and which encourage sustainable farming practices to support ecos ystems in the region. 31. Hershey monitors greenhouse gas emissions from operations and has installed energy-efficient lighting in all of their plants 32. Hershey also closely monitors its supply relationships and purchases palm oil from suppliers with membership in the
Roundtable on Sustainable Oil. 33. The company is actively involved in the International Cocoa labor in cocoa producing regions 34. Advertising expenses for the quarter increased by 46 percent as the company continued to promote iconic brands such as the Hershey 35. Hershey Kiss and Reese's products. products are sold to more than 2 million retail outlets, including wholesaledistributors, chain grocery store s, Initiative Foundation, designed to eliminate child labor or forced
convenience stores, and wholesale clubs as well asnatural food stores 36. Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expanded to include Payday Pro energy bars and sugar-free products such as Twizzlers 37. Hershey also continues to appeal to consumers with its premium line of dark chocolates that promote the antioxidant benefits of flavonoids found in these products. 38. Hershey concentrates advertising revenues on these brands while also promotes the health benefits of flavonols in its dark chocolate products.
63
39. Hershey plans to increase its advertising from $30 million to $35 million in 2009 in order to promote its iconic brands. 40. The company relies on special promotions to increase holiday sales, sales 41. Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter bats) created for the release of the movie Dark Knight. 42. The company also encourages customers to personalize messages and gifts via its interactive home page 43. Hershey was one of the first companies to engage in experiential marketing with 44. the launch of the Hershey Chocolate World in 1973 in Hershey, Pennsylvania, which encouraged consumers to visit the theme park replete with Hershey products. 45. During the past several years, the company has expanded its global presence through a variety of acquisitions and jo int ventures with established firms in the international market 46. In 2007, Hershey announced a joint venture with Lotte Confectionery Company, a leading confectionary company in Korea, to produce products for China. 47. Hershey also announced a joint venture with Godrej Beverages, a in India in 2OO7 48. Hershey acquired Grupo Lorena, a leading confectionary company in Mexico, withsales in excess of $30 million. This acquisition allowed Hershey to leverage these acquiredbrands both within Mexico and within the emerging Hispanic markets in the United States leading consumer goods, confectionery and food company and it also uses advertising programs to supplement seasonal
64
49. Hershey, as well as other competitors in the industry, is acquiring no chocolate products as well as nutritional products to complement its existing products 50. The company relies on special promotions to increase holiday sales, and it also uses advertising programs to supplement seasonal sales 51. The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and gourmet stores. 52. Although most visitors think of "Chocolate World" in Hershey, Pennsylvania, as a theme park designed for the true chocolate lover, the facility was designed to include housing,parks, and schools for employees park eclipsed having its 75th million visitor. 53. Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter bats) created for the release of the movie Dark Knight 54. Hershey continues to produce chocolate andConfectionery products in Hershey, Pennsylvania, and has recently expanded its glob l presence via a joint ventures in China and India. 55. Hershey also closely monitors its supply relationships and purchases palm oil from suppliers with membership in the Roundtable on Sustainable Oil. 56. Changes in product packaging have resulted in lighter materials and less waste during the manufacturing process and Hershey e tensively recycles x materials from their East Coast factories. 57. Hershey's iconic brands such as Hershey Bar, Hershey Kisses, and Reese's are instantly recognized within the domestic market. of Hershey Foods. On August 3L,2009, the theme
65
58. The company offers a line of natural and organic chocolates under the Dagoba brand that aresold in natural food and gourmet stores. 59. Other snack products of the company include Hershey Snacksters, Hershey and Reese's granola bass, and Mauna Loamacadamia nuts. 60. Hershey plans to increase its advertising from $30 million to $35 million in 2009 in order to promote its iconic brands. 61. Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expanded to include Payday Pro energy bars and sugar-free products such as Twizzlers 62. The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and gourmet stores. 63. Hershey will also distribute and promote Lotte's refreshment products in the united States 64. Hershey products are sold to more than 2 million retail outlets, including wholesale distributors, chain grocery stores, convenience stores, and wholesale clubs as well as natural food stores. 65. The McLean Company is the largest wholesale distributor of Hershey products and accounts for 26 percent of the total net sales for the company. 66. Hersheyopened their first flagship store at New York Citys Time Square and recently openedHershey Chocolate World in Shanghai prior to the 2008 Olympics. 67. The manufacturing facility, that is located in Jinshan, China, is designed to produce Hershey and Lotte products that are tailored to the needs of the Chinese market. 68. The Hershey and Godrej venture will distribute Hershey products via Godrej's distribution network to over 1.6 million outlets in India. 69. Core brands of the company such as Hershey's and Reese's drove increased sales in the United States, and the company has recently launched joint ventures in India and China to expand their international presence
66
70. Core brands of the company such as Hershey's and Reese's drove increased sales in the United States, and the company has recently launched joint ventures in India and China to expand their international presence 71. Current ratio: 1.06 72. Quick or acid test ratio: 0.73 73. Fixed Assets Turnover: 5.80 74. Total Assets Turnover: 2.18 75. Return on equity (ROE): 98% 76. Return on assets (ROA): 9% 77. Operating Profit Margin: 15.46% 78. Net Profit Margin: 6% 79. Revenue growth rate: 3.8% 80. Net Income growth rate: 45% 81. Earing per share growth rate: 46% 82. Hershey Company reported second quarter 2009 sales up 5.9 percent to $1.17 billion and profit of $71.3 million on July 23,the fourth strong quarter in a row for the company. 83. Hershey projects a net sales growth of 2 to 3 percent in 2009 due to a decline in core brand sales as well as unavorable f currency exchange rates.
67
84. Changes in product packaging have resulted in lighter materials and less waste during the manufacturing process and Hershey e xtensively recycles materials from their East Coast factories. 85. Hershey is also actively involved in organizations such as the World Cocoa Foundation, which supports environmental projects that include nonchemical pest management practices 86. Hershey's role as an environmental steward is also evident that its plants use recycled water that is later purified for various landscaping projects. 87. Hershey monitors greenhouse gas emissions from operations and has installed energy-efficient lighting in all of their plants. 88. Hershey uses cross-functional product development to produce new products and expand product lines for their iconic brands such as Hershey's and Reese's products. 89. Hershey's organic line includes Dagoba Organic, a company with a strong product line of high-quality organic chocolates and baking products that are sold via natural food and gourmet stores. 90. The manufacturing facility, that is located in Jinshan, China, is designed to produce Hershey and Lotte products that are tailored to the needs of the Chinese market. 91. Hershey also announced a joint venture with Godrej Beverages, a leading consumer goods, confectionery, and food company in India in 2007. 92. Hershey acquired Grupo Lorena, a leading confectionary company in Mexico, withsales in excess of $30 million. 93. Due to their forward purchasing contracts, however, price fluctuations may not impact Hershey to the same degree as smaller firms in the industry 94. Hershey is also actively involved in organizations such as the WorldCocoa Foundation, which supports environmental projects
68
that include nonchemical pest management in the region
practices, and which
encourage sustainable farming practices to support ecosystems
95. Hershey uses cross-functional product development to produce new products and expand product lines for their iconic brands such as Hershey's and Reese's products. 96. Direct research on consumer preferences as well as process innovations are supported via the Hershey Center of Health and Nutriton i developed in 2007. 97. This center is involved in scientific research and also collaborates with external organizations to develop products to support both weight management and heart health. 98. Due to lower commodity prices, total charges to Hershey's Global Supply Transformation Program have been forecasted downward from $665 million to $640 million. 99. The company is actively involved in the International Cocoa Initiative Foundation, designed to eliminate child labor or forced labor in cocoa-producing regions. 100. Hershey also closely monitors its supply relationships and purchases palm oil from suppliers with membership in the Roundtable on
Sustainable Oil. 101. Due to their forward purchasing contracts, however, price fluctuations [of input: commodities] may not impact Hershey to the same
degree as smaller firms in the industry (Hershey, Form 10K, 2008).
69
2.1
WEAKNESS
1. The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by the consumer.
2. The company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. 3. Hershey, as well as other competitors in the industry, is acquiring no chocolate products as well as nutritional products to complement its existing products. 4. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three year period. 5. Hershey recently closed their Reading, Pennsylvania, plant in 2009, eliminating 300 jobs, and provides a severance package of two weeks of pay for each year of service up to 65 weeks for plant workers. 6. Hershey pension plans, which resulted in a significant reduction in the fair value of the pension plan assets. 7. With revenues in excess of $5 billion, Hershey continues to produce chocolate and confectionery products in Hershey, Pennsylvania, and has recently expanded its global presence via joint ventures in China and India. 8. Hershey's iconic brands such as Hershey Bar, Hershey Kisses, and Reese's are instantly recognized within the domestic market. 9. The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and gourmet stores. 10. Other snack products of the company include Hershey Snacksters, Hershey and Reese's granola bass, and Mauna Loa macadamia nut . s 11. The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by the consumer.
70
12. Hershey has five operating segments by geographic regions: (1) United States, (2) Canada, (3) Mexico, other international locations (India, the Philippines, Korea, Japan, and China.
(4) Brazil, and (5)
13. Hershey remains heavily dependent on its domestic markets with about 86 percent of revenues derived from operations in the United States. 14. Some of Hershey's premium products of have faltered lately as customers switched to lower price products.[implies the price of Hershey product is high] 15. Hershey remains heavily dependent on its domestic markets with about 86 percent of revenues derived from operations in the United States. 16. Hershey remains heavily dependent on its domestic markets with about 86 percent of revenues derived from operations in the United States. 17. Hershey's other assets declined to $151,561 in 2008 from $540,249 in 2007. Debt to Total Assets Ratio: 1.68 18. The companys long-term debt increased from $I,279,965 in20O7 to 1,505,954 in 2008. Long -Term Debt-to-Equity Ratio: 4.73. 19. Gross Profit Margin: 34 % 20. 2009 quarterly revenue growth: 5.90% 21. Hershey employs about 12,800 full-time and 1,600 part-time employees, and approximately 47 percent of the workforce is covered via collective bargaining agreements. 22. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. 23. Hershey recently closed their Reading, Pennsylvania, plant in 2009, eliminating 300 jobs, and provided a severance package of two weeks of pay for each year of service up to 65 weeks for plant workers. 24. Higher energy and input costs were associated with increased costs along with the full cost of operation for Godrej Hershey in 2008.
71
25. Many of the ingredients which are used for Hershey products are grown in West Africa, South America, and the Far East. Cacao beans are a primary ingredient in Hershey chocolates, and this commodity is traded on commodity exchanges via brokers.
72
2.2
RESULT OF STRENGTHS AND WEAKNESSES AFTER ELIMINATING OVERLAPS:
2.2.1 STRENGHTS
1. Mission statement
2. Although most visitors think of "Chocolate World" in Hershey, Pennsylvania, as a theme park designed for the true chocolate over, the facility l was designed to include housing, parks, and schools for employees of Hershey Foods. 3. The school continues to operate in Hershey, and provides free education and residential services including meals and health care to almo 17,000 st children in need, and still is be administered via The Hershey Trust Company. 4. Hershey's commitment to social responsibility extends beyond their school to both their products and supplier relationships. 5. Hershey's role as an environmental steward is also evident that its plants use recycled water that is later purified for vari us landscaping projects. o 6. Hershey employs about 12,800 full-time and 1,600 part-time employees, and approximately 47 percent of the workforce is covered via collective bargaining agreements. 7. Hershey now expects year-end 2009 profits of 6 to 8 percent 8. Hershey plans to increase its advertising from $30 million to $35 million in 2009 in order to promote its iconic brands. 9. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. 10. The company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. 11. The company is actively involved in the International Cocoa Initiative Foundation, designed to eliminate child labor or force labor in d
73
cocoa-producing regions. 12. Hershey is also actively involved in organizations such as the WorldCocoa Foundation, which supports environmental projects that include nonchemical pest management in the region. 13. Hershey also closely monitors its supply relationships and purchases palm oil from suppliers with membership in the Roundtable on Sustainable Oil. 14. Hershey's role as an environmental steward is also evident that its plants use recycled water that is later purified for va rious landscaping projects 15. Hershey monitors greenhouse gas emissions from operations and has installed energy-efficient lighting in all of their plants. 16. The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and gourmet stores. 17. All of the outstanding shares of the Hershey Trust Company are owned by the Milton Hershey School Trust, which is the controlling stockholder for The Hershey Company. The trust has the right to cast 79.9% of all the votes entitled to be cast on matters requiring the vote of the Common Stock and Class B Common Stock voting together. 18. There are 10 directors on the Milton Hershey Trust Company, and three membersJames Nevels, LeRoy Zimmerman, and Robert Cavanaughare members of the board of directors of the Hershey Trust Company, members of the board of managers of the Milton Hershey School, and board directors of The Hershey Company. 19. According to the 2008 Annual Report, there are nine directors on the board of The Hershey Company, and the board meets six times per year practices, and which encourage sustainable farming practices to support ecosystems
74
in addition to meetings scheduled by various committees of the board. 20. Board members are required to own at least 200 shares of common stock and an Executive committee that meet periodically in ac cordance with governance guidelines. 21. The Hershey board has several standing committees, including an Audit, Governance, Compensation, and Executive Organization, and an Executive committee that meet periodically in accordance with governance guidelines. 22. In February of 2008, the company announced that James E. Nevels, a board member of the Hershey Trust Company, would replace Kenneth Wolf as chairman of the board of directors of The Hershey Company. 23. Existing legislation requires that the Milton Hershey Trust give notice to the attorney general of Pennsylvania prior to a sale of the company. 24. For segment reporting purposes, Hershey aggregates operations In the Americas.The company aggregates their other international operations with the Americas to form one reportable segment. 25. David West, named chief executive officer in2007, received a 40 percent increase in his compensation in 2008. 26. His predecessor, Richard H. Lenny, had a more contentious relationship with the board of directorsand resigned in 2007 over
frustration with the trust that controls Hershey 27. Structure: Global Research and Development; Hershey North America; People Officer; Global Marketing; Information Officer;
Strategy and BusinessDevelopment; Hershey International; Senior Global Operations; General Counsel and Secretary 28. David West, named chief executive officer in 2007, received a 40% increase in his compensation in 2008.Company officials believe that West's renewed emphasis on marketing is responsible for the increase in Hershey sales during the past year.
75
29. Selling, marketing, and administrative costs were attributed to higher incentive compensation expenses for employees. 30. Hershey employs about 12,800 full time and 1,600 part time employees, and approximately 47% of the workforce is covered via collective bargaining agreement. 31. Hershey monitors greenhouse gas emissions from operations and has installed energy-efficient lighting in all of their plants 32. Advertising expenses for the quarter increased by 46 percent as the company continued to promote iconic brands such as the Hershey 33. Hershey Kiss and Reese's products. products are sold to more than 2 million retail outlets, including wholesaledistributors, chain grocery stores ,
convenience stores, and wholesale clubs as well asnatural food stores 34. Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expanded to include Payday Pro energy bars and sugar-free products such as Twizzlers 35. Hershey also continues to appeal to consumers with its premium line of dark chocolates that promote the antioxidant benefits of flavonoids found in these products. 36. Hershey concentrates advertising revenues on these brands while also promotes the health benefits of flavonols in its dark chocolate products. 37. The company relies on special promotions to increase holiday sales, sales 38. Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter and it also uses advertising programs to supplement seasonal
76
bats) created for the release of the movie Dark Knight. 39. The company also encourages customers to personalize messages and gifts via its interactive home page 40. Hershey was one of the first companies to engage in experiential marketing with 41. During the past several years, the company has expanded its global presence through a variety of acquisitions and jo int ventures with established firms in the international market 42. In 2007, Hershey announced a joint venture with Lotte Confectionery Company, a leading confectionary company in Korea, to produce products for China. 43. Hershey also announced a joint venture with Godrej Beverages, a in India in 2OO7 44. Hershey acquired Grupo Lorena, a leading confectionary company in Mexico, withsales in excess of $30 million. This acquisition allowed Hershey to leverage these acquiredbrands both within Mexico and within the emerging Hispanic markets in the United States 45. Hershey, as well as other competitors in the industry, is acquiring no chocolate products as well as nutritional products to complement its existing products 46. The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and gourmet stores. 47. Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter bats) created for the release of the movie Dark Knight leading consumer goods, confectionery and food company
77
48. Hershey continues to produce chocolate andConfectionery products in Hershey, Pennsylvania, and has recently expanded its glob l presence via a joint ventures in China and India. 49. Hershey also closely monitors its supply relationships and purchases palm oil from suppliers with membership in the Roundtable on Sustainable Oil. 50. Changes in product packaging have resulted in lighter materials and less waste during the manufacturing process and Hershey e tensively recycles x materials from their East Coast factories. 51. Hershey's iconic brands such as Hershey Bar, Hershey Kisses, and Reese's are instantly recognized within the domestic market. 52. Other snack products of the company include Hershey Snacksters, Hershey and Reese's granola bass, andMauna Loa macadamia nuts. 53. Hershey will also distribute and promote Lotte's refreshment products in the united States 54. Hershey products are sold to more than 2 million retail outlets, including wholesale distributors, chain grocery stores, convenience stores, and wholesale clubs as well as natural food stores. 55. The McLean Company is the largest wholesale distributor of Hershey products and accounts for 26 percent of the total net sales for the company. 56. Hersheyopened their first flagship store at New York Citys Time Square and recently openedHershey Chocolate World in Shanghai prior to the 2008 Olympics. 57. The manufacturing facility, that is located in Jinshan, China, is designed to produce Hershey and Lotte products that are tailored to the needs of the Chinese market. 58. The Hershey and Godrej venture will distribute Hershey products via Godrej's distribution network to over 1.6 million outlets in India.
78
59. Core brands of the company such as Hershey's and Reese's drove increased sales in the United States, and the company has recently launched joint ventures in India and China to expand their international presence 60. Current ratio: 1.06 61. Quick or acid test ratio: 0.73 62. Fixed Assets Turnover: 5.80 63. Total Assets Turnover: 2.18 64. Return on equity (ROE): 98% 65. Return on assets (ROA): 9% 66. Operating Profit Margin: 15.46% 67. Net Profit Margin: 6% 68. Revenue growth rate: 3.8% 69. Net Income growth rate: 45% 70. Earing per share growth rate: 46% 71. Hershey Company reported second quarter 2009 sales up 5.9 percent to $1.17 billion and profit of $71.3 million on July 23,the fourth strong quarter in a row for the company. 72. Hershey projects a net sales growth of 2 to 3 percent in 2009 due to a decline in core brand sales as well as unf vorable a currency exchange rates.
79
73. Hershey is also actively involved in organizations such as the World Cocoa Foundation, which supports environmental projects that include nonchemical pest management practices 74. Hershey uses cross-functional product development to produce new products and expand product lines for their iconic brands such as Hershey's and Reese's products. 75. Hershey's organic line includes Dagoba Organic, a company with a strong product line of high-quality organic chocolates and baking products that are sold via natural food and gourmet stores. 76. Due to their forward purchasing contracts, however, price fluctuations may not impact Hershey to the same degree as smaller firms in the industry 77. Direct research on consumer preferences as well as process innovations are supported via the H ershey Center of Health and Nutrition developed in 2007. 78. This center is involved in scientific research and also collaborates with external organizations to develop products to suppo both weight rt management and heart health. 2.2.2 WEAKNESS
1. The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by the consumer.
2. The company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. 3. Hershey, as well as other competitors in the industry, is acquiring no chocolate products as well as nutritional products to complement its existing
80
products. 4. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three year period. 5. Hershey recently closed their Reading, Pennsylvania, plant in 2009, eliminating 300 jobs, and provides a severance package of two weeks of pay for each year of service up to 65 weeks for plant workers. 6. Hershey pension plans, which resulted in a significant reduction in the fair value of the pension plan assets. 7. With revenues in excess of $5 billion, Hershey continues to produce chocolate and confectionery products in Hershey, Pennsylvania, and has recently expanded its global presence via joint ventures in China and India. 8. Hershey's iconic brands such as Hershey Bar, Hershey Kisses, and Reese's are instantly recognized within the domestic market. 9. The company offers a line of natural and organic chocolates under the Dagoba brand that are sold in natural food and gourmet stores. 10. Other snack products of the company include Hershey Snacksters, Hershey and Reese's granola bass, and Mauna Loa macadamia nut . s 11. Hershey has five operating segments by geographic regions: (1) United States, (2) Canada, (3) Mexico, other international locations (India, the Philippines, Korea, Japan, and China. 12. Hershey remains heavily dependent on its domestic markets with about 86 percent of revenues derived from operations in the United States. 13. Some of Hershey's premium products of have faltered lately as customers switched to lower price products.[implies the price of Hershey product is high] 14. Hershey's other assets declined to $151,561 in 2008 from $540,249 in 2007. Debt to Total Assets Ratio: 1.68 15. The companys long-term debt increased from $I,279,965 in20O7 to 1,505,954 in 2008. Long -Term Debt-to-Equity Ratio: 4.73. (4) Brazil, and (5)
81
16. Gross Profit Margin: 34 % 17. 2009 quarterly revenue growth: 5.90% 18. Hershey employs about 12,800 full-time and 1,600 part-time employees, and approximately 47 percent of the workforce is covered via collective bargaining agreements. 19. Higher energy and input costs were associated with increased costs along with the full cost of operation for Godrej Hershey in 2008. 20. Many of the ingredients which are used for Hershey products are grown in West Africa, South America, and the Far East. Cacao beans are a primary ingredient in Hershey chocolates, and this commodity is traded on commodity exchanges via brokers.
82
More Important ones: A summary of major ones is

1. The company is actively involved in the International Cocoa Initiative Foundation, designed to eliminate child labor or force labor in d cocoa-producing regions. 2. Due to their forward purchasing contracts, however, price fluctuations may not impact Hershey to the same degree as smaller firms in the
industry (Hershey, Form 10K, 2008).

3. Hershey plans to increase its advertising from $30 million to $35 million in 2009 in order to promote its iconic brands. 4. Advertising expenses for the quarter increased by 46 percent as the company continued to promote iconic brands such as the Hershey Kiss and Reese's products. 5. Hershey concentrates advertising revenues on these brands while also promotes the health benefits of flavonols in its dark ch ocolate products. 6. Hershey also closely monitors its supply Oil. is actively involved in the International Cocoa Initiative Foundation, designed to eli inate child m labor or forced labor in relationships and purchases palm oil from suppliers with membership in the Round table on Sustainable 7. The company
cocoa producing regions 8. The company relies on special promotions to increase holiday sales, and it also uses advertising programs to supplement seaso sales. nal 9. Core brands of the company such as Hershey's and Reese's drove increased sales in the United States, and the company has recently launched joint ventures in India and China to expand their international presence. 10. During the past several years, the company has expanded its global presence through a variety of acquisitions and joint ventures with established firms in the international market
83
11. Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter bats) created for the release of the movie Dark Knight. The company also encourages customers to personalize messages and gifts via its interactive home page . 12. Hershey's organic line includes Dagoba Organic, a company with a strong product line of high-quality organic chocolates and baking products that are sold via natural food and gourmet stores. 13. Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expandedto include Payday Pro energy bars and sugar-free products such as Twizzlers . 14. Hershey, as well as other competitors in the industry, is acquiring nonchocolate products as well as nutritional products to complement its existing products.
15. Hershey products are sold to more than 2 million retail outlets, including wholesale distributors, chain grocery stores, convenience stores, and wholesale clubs as well as natural food stores. 16. Hershey also announced a joint venture with Godrej Beverages, a leading consumer goods, confectionery, and food company in In in 2007. dia 17. The joint venture [Lotte] is also designed to expand Hershey's presence in other Asian markets such as Korea and Japan. 18. Hershey acquired Grupo Lorena, a leading confectionary company in Mexico, with sales in excess of $30 million. This acquisition allowed Hershey to leverage these acquired brands both within Mexico and within the emerging Hispanic markets in the United States 19. Direct research on consumer preferences as well as process innovations are supported via the Hershey Center of Health and Nutrition developed in 2007. 20. Current ratio: 1.06 21. Operating Profit Margin: 14%(2008) 15%(2009)
84
2.2.3 WEAKNESS All the strengths should be listed here and repetitive ones should be eliminated. This part is not shown because of limited space A summary of major weaknesses is:
1. The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by t consumer. he 2. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. 3. The company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. 4. Hershey's iconic brands such as Hershey Bar, Hershey Kisses, and Reese's are instantly recognized within the domestic market. 5. Hershey remains heavily dependent on its domestic markets with about 86 percent of revenues derived from operations in the United States. 6. he company's long-term debt increased from $I,279,965 in20O7 to1,505,954 in 2008.
7. Long-Term Debt-to-Equity Ratio: 4.73 8. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period.
2.3
CHOOSING AMONG THE WEAKNESSES AND STRENGTHS
2.3.1 CHOOSING THE MAJOR STRENGTHS The most important strengths of the company are chosen from the list of strengths considering the competitive profile matrix and industry
85
description which shows which factors and which type of strengths are more significant. The result is shown in IFE matrix
2.3.2 CHOOSING THE MAJOR WEAKNESSES
The most important weaknesses of the company are chosen from the list of weaknesses considering the competitive profile matrix and industry description which shows which factors and which type of weaknesses are more significant. The result is shown in IFE matrix
2.4
IFE MATRIX
From the long list of Strengths and weaknesses important issues are chosen based on critical success factors and the function of the Hershey which can have main role in Companys functions.
86
STRENGTHS . The Hershey and Godrej venture will distribute Hershey products via Godrej's distribution network to over 1.6 million outlets in India Advertising expenses for the quarter increased by 46 percent as the company continued to promote iconic brands such as the Hershey Kiss and Reese's products. The company relies on special promotions to increase holiday sales, and it also uses advertising programs to supplement seasonal sales. During the past several years, the company has expanded its global presence through a variety of acquisitions and joint ventures with established firms in the international market Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter bats) created for the release of the movie Dark Knight. The company also encourages customers to personalize messages and gifts via its interactive home page. Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expanded to include Payday Pro energy bars and sugar-free products such as Twizzlers . Hershey, as well as other competitors in the industry, is acquiring nonchocolate products as well as nutritional products to complement its existing products. Hershey products are sold to more than 2 million retail outlets, including wholesale 87 distributors, chain grocery stores, convenience stores, and wholesale clubs as well as natural food stores.
Weight
0.034783 0.078261 0.069565
Rating 4 4 4
Weighted Score
0.13913 0.313043 0.278261
0.069565
0.208696
0.06087
0.243478
0.069565
0.208696
0.069565
0.208696
0.052174
0.156522
Direct research on consumer preferences as well as process innovations are supported via the Hershey Center of Health and Nutrition developed in 2007. Operating Profit Margin: 14%(2008) 15%(2009) WEAKNESSES The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by the consumer. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. The company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. Hershey's iconic brands such as Hershey Bar, Hershey Kisses, and Reese's are instantly recognized within the domestic market. Hershey remains heavily dependent on its domestic markets with about 86 percent of revenues derived from operations in the United States.
he company's long-term debt increased 2008. Long-Term Debt-to-Equity Ratio: 4.73 from $I,279,965 in20O7 to1,505,954 in
0.06087 0.06087
3 3 Rating 1 1 2 2 2 2
0.182609 0.182609
Weight
0.06087 0.043478 0.043478 0.06087 0.078261
Weighted Score
0.06087 0.043478 0.086957 0.121739 0.156522
Analysi s showed that Hershey s IFE of 2.72 is
0.043478
0.086957
Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. total
0.043478
0.043478 2.721739
higher than the
88
average of 2.5. Generally, Hershey is good on its business in the big market of North America. The analysis shows that the company can survive and continue its performance.
89
3.0 4.0
STRATEGY ANALYSIS AND CHOICE OBJECTIVES AND STRATEGY

Objectives
Long-term Expand to global market, especially the emerging market. Swift the core sales zone from U.S market to overseas market. Market development- Compete with food giants in more markets. Short-term Reinforce chocolate market share and consolidate the U.S domestic market. Product development- Keep developing customer-love products, like organic products, meanwhile gradually enter into no chocolate market. Strategy Long-term Develop and deliver specialized services on a segmented basis as Market Development: Global expansion must be required implemented quickly by acquisition and join ventures as a tool Forward and Backward Integration: consolidate current Retrenchment: Simplify management procedure, use distribution channles, reinforce relationship with suppliers. technology, like online-meeting to reduce administration cost. Market Penetration: Increasing marketing expenditure on key Short-term Product Development: Strongly develop organic products Production Development: Keep investing on energy-efficiency products activities. Market Penetration: Protect current domestic market share by Backward Integration: Bargain with suppliers, struggle for enhance marketing expenditure. forward contacts
90
4.5
SWOT MATRIX
Strengths 1. . The Hershey and Godrej venture will distribute Hershey products via Godrej's distribution network to over 1.6 million outlets in IndiaAdvertising expenses for the quarter increased by 46 percent as the company continued to promote iconic brands such as the Hershey Kiss and Reese's products. 2. The company relies on special promotions to increase holiday sales, and it also uses advertising programs to supplement seasonal sales. 3. During the past several years, the company has expanded its global presence through a variety of acquisitions and joint ventures with established firms in the international market 4. Hershey also has special editions products that are themed with events, such as their Dark Knight Collection (milk chocolate peanut butter bats) created for the release of the movie Dark Weaknesses 1. The company also plans to close their online gift business, which featured seasonal products and gifts that could be personalized by the consumer. 2. Due to global supply initiatives, the company projects a reduction of 1,500 positions over the next three-year period. 3. The company plans to discontinue their Cacao Reserve brand as well as their Starbucks chocolate partnership. 4. Hershey's iconic brands such as Hershey Bar, Hershey Kisses, and Reese's are instantly recognized within the domestic market. 5. Hershey remains heavily dependent on its domestic markets with about
91
Knight. The company also encourages customers to personalize messages and gifts via its interactive home page. 5. Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expanded to include Payday Pro energy bars and sugar-free products such as Twizzlers . 6. Hershey, as well as other competitors in the industry, is acquiring nonchocolate products as well as nutritional products to complement its existing products. 7. Hershey products are sold to more than 2 million retail outlets, including wholesale distributors, chain grocery stores, convenience stores, and wholesale clubs as well as natural food stores. 8. Direct research on consumer preferences as well as process innovations are supported via the Hershey Center of Health and Nutrition developed in 2007. 9. Operating Profit Margin: 14%(2008) 15%(2009)
86 percent of revenues derived from operations in the United States. 6. he company's long-term debt increased from $I,279,965 in20O7 to1,505,954 in 2008. 7. Long-Term Debt-to-Equity Ratio: 4.73
92
Opportunities
1. Organic foods products are one of the fastest growing sectors in the United States with a projected value of $26.3 billion by 2011. 2. Seasonal sales such as Halloween and Valentine's Day account for 10 percent of the 3. Nestle's image, however, has suffered within
SO Strategies
WO Strategies
Market Penetration: introducing its products by Product Development: Increasing the aggressive marketing efforts. S2S3 S9O8O2 O5O6 sales by introducing new organic products or offering special addition and the global community due to allegations Market Development: offering its products in the progressing in this niche market in order about sourcing of cocoa from farms that global market and going further than North America to decrease its dept. W6 W7 O1O2 O3 O4 O5 employed children in Africa, as well as its especially to emerging markets like china and South marketing tactics used to promote its infant America. S1S3O3O5 O6 Market Development: offering its milk substitutes in developing nations. products in the global market and going 4. Consumers are increasingly aware of the Product Development: Increasing the sales by further than North America especially to nutritional value of various product introducing new organic products or offering special emerging markets like china and South ingredients with purchase decisions reflecting addition and progressing in this niche market. America To present a globally S4S5S6S7S8O1O2O3 O4 O5 recognized brand. O3O5 O6 W4 W5 a preference for organic and nonadulterated
products. 5. Confectionery products include chocolate, gum, cereal bars, and sugar confectionery products with a projected global market value of $107.4 billion by 2010.
annual sales in the industry.
93
6. Chocolate currently accounts for 55.8 percent of the market's overall global value.
Threats
1. Mergers and acquisitions in the past few years have influenced both the market share and product portfolio of global firms in the confectionery industry. 2. Nestle, one of the global leaders in the
ST Strategies
WT Strategies
Market Development: offering its products in the global market and going further than North America Retrenchment: the company should with the acquisition of Jenny Craig, a especially to emerging markets like china and South close some of its plants and stop the company with an established brand of America. S1S3T1T5 products that are not preferred by nutritional weight-management products. customers in an effort to cut the costs Product Development: Increasing the sales by and decrease the debts and become able 3. Nestle recently entered the organic products acquisitions. segment with projected sales of $24 billion by introducing new organic products or offering special for addition and progressing in this niche market. W1W2 W3 W6 W7T1T4T6T4T6T7T8 2010. S4S5S6S7S8T2T3T4T6
industry, expanded its nutritional product 4. Due to increased consumer concerns about artificial ingredients, the company [Cadbury] also manufactures a line of products with no artificial colors or artificial flavorings under the Natural Confectionery Company.
94
5. Cadbury has a 71 percent market share in India, and enjoys a 53 percent market share in the chocolate category in Australia. 6. Due to increased consumer preference for low-fat and organic products, Mars Nutrition and Health Well Being has also developed a line of low-fat products and healthy snacks. 7. Some research analysts expect that international wholesale sugar prices may reach 40 cents a pound. 8. Cocoa future contract prices in 2008 ranged from $0.86 to $1.50 per pound, which represented a significant increase from 2007 prices.
95
4.6
SPACE MATRIX
Financial Position (FP) Return on equity (ROE): Return on assets (ROA): 9% strength Leverage:. Hershey's other assets declined to $151,561 in 2008 from $540,249 in 2007/
Debt to Total Assets Ratio: 1.68/ he company's long-term debt increased from $I,279,965 in20O7 to1,505,954 in 2008. Long-Term Debt-to-Equity Ratio: 4.73 This
Rating +6 +2
sentence is Weakness. +5 +13
Liquidity Ratio: Current ratio: 1.06 (STRENGTH) Sub Total (FP) Industry Position (IP)
Growth potential: Consequently, organic foods products are one of the fastest growing sectors in the United States with a +6 projected value of $26.3 billion by 2011.Confectionary industry average Qrtly Rev Growth:0.10% [ ref: page117 exhibit4] Confectionery products include chocolate, gum, cereal bars, and sugar confectionery products with a projected global market +5
96
value of $107.4 billion by 2010. Profit potential: Confectionary industry average Gross Margine:33.89% [ ref: page117 exhibit4] Productivity: Confectionary industry average Oper Margine:10.91% [ ref: page117 exhibit4] +5 +4
Sub Total (IP) Stability Position (SP) Demand variability: The confectionery industry is fragmented with consumer tastes that drive the diverse demand for products in the industry which -6
range from gums and jelly beans to chocolate products.
+21
Competitive pressure: according to industry analysis of this report its high Sub Total (SP) Competitive Position (CP) Market share: Hershey remains heavily dependent on its domestic markets with about 86 percent of revenues derived from operations in the United States.
-6 -12
-5
97
Product quality: Hershey's organic line includes Dagoba Organic, a company with a strong product line of high-quality organic chocolates and baking products that are sold via natural food and gourmet stores.
-1
Control over suppliers and distributers: The McLean Company is the largest wholesale distributor of Hershey products and -2 accounts for 26 percent of the total net sales for the company./ The Hershey and Godrej venture will distribute Hershey products via Godrej's distribution network to over 1.6 million outlets in India
Sub Total (CP) Conclusion FP Average is 13/3 = 4.33 IP Average is +21/4 = 5.25 SP Average is -12/2 = 6 CP Average is 8 / 3 = -2.6 Discretional Vector Coordinates: x-axis -2.6+ (+5.25) = + y-axis: 6 + (4.33) = -1.67 2.65
-8
98
. FP
CP
IP
The company has competitive ad vantages in a growing industry. The competitive strategies should be taken such as Product development and Market development are recommended considering the findings from SWOT
(2.6, -1.6)
SP
99

Hershey Torkabadi

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Hershey Torkabadi

Загружено:

Авторское право:

Доступные форматы

INTERNATIONAL BUSINESS SCHOOL (IBS) UNIVERSITI TEKNOLOGI MALAYSIA MASTER IN BUSINESS ADMINISTRATION STRATEGIC MANAGEMENT Assoc Prof Dr Mas

Mohammad Torkabadi MR101168

Hershey Company 2009

1.1.1 ECONOMIE FORCES

Hershey Company 2009

1.1.2 SOCIAL, CULTURE, DEMOGRAPHIC ENVIRONNENT FORCES

1.1.3 POLITICAL, GOUVERNENT AND LEGAL FORCES Case issue

often double those found in the world sugar market.

Hershey Company 2009

1.1.4 TECHNOLOGICAL FORCES Case issue N/A Opportunity Threat

Hershey Company 2009

artificial colors or artificial flavorings under the Natural Confectionery Company.

Hershey Company 2009

Hershey Company 2009

1.3.1 THE DESCRIPTION OF THE INDUSTRY

Hershey Company 2009

Hershey Company 2009

Hershey Company 2009

company with an established brand of nutritional weight-management products.

Hershey Company 2009

Opport Threa unity t

Hershey Company 2009

Opport Threa unity t

entering this market segment]

Hershey Company 2009

Opport Threa unity t

Hershey Company 2009

harvests and resilient demand.

Customers switched to lower price products.

Hershey Company 2009

Opport Threa unity t

1.3.7 INDUSTRY ANALYSIS RESULTS SUMMERY No

Hershey Company 2009

LIST OF ALL RECOGNIZED OPPORTUNITIES AND THREATS

Hershey Company 2009

Hershey Company 2009

Hershey Company 2009

Hershey Company 2009

LIST OF OPPORTUNITIES AND THREATS WITHOUT OVERLAPPED ITEMS

Hershey Company 2009

Hershey Company 2009

Hershey Company 2009

KEY SUCCESS FACTOR

Hershey Company 2009

Hershey Company 2009

Hershey Company 2009

0.098039 0.04902 0.039216

0.294118 0.196078 0.156863

Hershey Company 2009

0.068627 0.068627 0.058824

0.205882 0.27451 0.235294

Hershey Company 2009

Hershey Company 2009

VISION AND MISSION STATEMENT ASSESSMENT

Hershey Company 2009

Mission Statement Evaluation Matrix

Hershey Company 2009

This is strength This is strength

Hershey Company 2009

2.11.1 MANAGEMENT FUNCTIONS 2.12

This sentence is Strength

This sentence is Strength. This sentence Weakness. is