Hershey

Company
2009

Presented By: Aliya & Andleeb

Introduction:

Hershey is one of the oldest chocolate companies in

the United States, and an American icon for its
chocolate bar.
It is one of a group of companies established by
Milton Hershey. Other companies established by
Milton Hershey include:

Hershey Trust Company,

Hershey Entertainment and Resorts Company, which runs
Hershey park, a chocolate-themed amusement park, the
Hershey Bears minor professional hockey team, Hershey
park Stadium and the GIANT Center.
Most of the employees for the factory come from the
surrounding counties, towns, and boroughs, such as
Lebanon County, Hummelstown, South Hanover, and
Harrisburg.

Proposed Vision

To be the biggest socially responsible and

environmental friendly provider of full range of
sweets.

Mission:

Bringing sweet moments of Hershey happiness

to the world every day.

Proposed Mission:

Hershey is pledged to provide high quality

products to consumers, community and children.
Bringing sweet moments of Hershey happiness
to the world while conducting business in a
socially
responsible
and
environmentally
sustainable manner.

Hershey Products:

Hershey produces a variety of products that are

chocolate or candy based, and The Hershey
Company also produces gum.
Some of these products began production over 100
years ago such as the Hershey Kiss and Hershey
Bar.

Hershey Products:
Chocolate-based products
Hershey's chocolate bars
Hershey's Symphony
Hershey's Extra Dark
Almond Joy
Mounds
100 Calorie Bar
Hershey's Bliss
Hershey's Drops
Hershey's Miniatures
Hershey's Pot of Gold

Hershey Products..
Kit

Kat
Hershey's Nuggets
Hershey's Kisses
Reese's Peanut Butter Cups
Pieces
Whoppers
York Peppermint Pattie
Hershey Canada
Non-Chocolate Candies

Strategy Formulation
Input Stage

EFE
IFE
CPM

External Factor Evaluation (EFE) Matrix:

Sr.#

Opportunities

Weight

Rating

1
2
3

Increasing demand of organic products

Global expansion / emerging market
Escalating demand for weight conscious people
Inclination towards environment friendly
organizations
Increasing awareness regarding Child Labor issues
New opportunities for using varied media
Multiplicity among consumer tastes
Threats
Slow economic growth

0.11
0.12
0.05

3
3
2

Weighted
Score
0.33
0.36
0.1

0.04
0.04
0.10
0.10

2
2
3
3

0.08
0.08
0.3
0.3

Increase in conversion of sugar to ethanol

0.06
0.14
0.13
0.11

2
4
3
3

0.12
0.56
0.39
0.33

Total Weighted Score

1.00

4
5
6
7

1
2
3
4

Increase in prices of main ingredients

An increase in Health conscious consumer

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

2.95

Internal Factor Evaluation (IFE) Matrix:

Sr.#

Strengths

Weight

Rating

Weighted
Score

Brand Recognition

0.16

0.64

Socially Responsible Image

0.15

0.60

Research and Development

0.14

0.42

Strategic acquisitions and joint ventures

0.12

0.36

Innovative and reliable workforce

0.10

0.30

Weeknesses
1

Need of independent Board Members

0.09

0.18

Heterogeneity of supplier is missing

0.08

0.16

Manufacturing cost is high

0.06

0.06

Future contract hedging

0.05

0.05

Less variety of organic snacks

0.05

0.05

Total Weighted Score

1.00

major weakness (1), minor weakness (2), minor strength (3), major strength (4)

2.82

Competitive Profile Matrix:

Hershey
Critical Success
Factors

Nestle

Mars

Weight

Rating

Score

Rating

Score

Rating

Score

Brand recognition

0.13

0.52

0.39

0.39

Product Quality

0.13

0.52

0.39

0.39

Price Competitiveness

0.14

0.42

0.42

0.56

Financial position

0.12

0.36

0.48

0.36

Management

0.13

0.39

0.52

0.39

Customer Loyalty

0.11

0.44

0.33

0.33

Global Expansion

0.17

0.51

0.68

0.51

Market share

0.07

0.14

0.28

0.21

Total

1.00

3.30

3.49

3.14

Matching Stage

Strengths:
1. Brand Recognition
2. Socially Responsible Image
3. Research & Development
4. Strategic acquisitions and joint
ventures
5. Innovative & reliable workforce

Weaknesses:
1. Need of Independent Board
Members
2. Heterogeneity of supplier is
missing
3. Manufacturing cost is high
4. Future contract hedging
5. Less variety of Organic
Snacks

Opportunities:

SO Strategies:

WO Strategies:

1.

1.

1.

SWOT Matrix:

2.
3.
4.
5.
6.
7.

Increasing demand of organic

products
Global expansion / emerging
markets
Escalating demand for weight
conscious people
Inclination towards environment
friendly organizations
Increasing awareness regarding
Child Labor issues.
Use of varied media
Multiplicity among consumer
tastes

2.

3.

4.

Can produce organic / sugar

free products by using R&D
dept. (S3,O1,O3)
Hershey must portray its brand
through marketing the ethical
ways they do business
(S1,O5)
Hershey can promote its
image using varied media.
(S2,O6)
Design new products from
employee ideas.(S5,O7)

2.

3.

Trust may divest shares.

(W1,O2)
Costs may be lowered of
manufacturing products in
countries where they are
purchased. (W3,O2)
Conduct survey to get
feedback of consumer
preferences to improve taste .
(W5,O6,O7)

Threats:

ST Strategies:

WT Strategies:

1.
2.

1.

1.

3.
4.

Slow economic growth

Increase in prices of main
ingredients
Increase in Health Conscious
consumer
Increase in conversion of sugar

2.

Sales may be increased

through new partnerships with
NGOs. (S2,S4,T1, T2)
Can produce products
specially designed for health
conscious consumers by using

2.

To reduce risk and price

uncertainty use hedging.
(W4,T2)
Introducing new range of
organic items to cater health
conscious segment.(W5,T3)

The Strategic Position and Action Evaluation (SPACE)

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

Total

Rating:
5
4
4
---13

3
3
4
---10

-3
-4
-4
----11

-2
-1
-2
----5

Space Matrix:
Conclusions:
FP Average = 13/3 = 4.33
IP Average = 10/3 = 3.33
SP Average = -11/3 = -3.7
CP Average = -5/3 = -1.66
Space Matrix Coordinates:
X-axis: CP+IP or (-1.66 + 3.33) = 1.67
Y-axis: FP+SP or (4.33 + -3.7) = 0.63

FP

Aggressive:
Market Development
Market Penetration
Product Development

(1.67,0.63)

C
P

IP

SP

BCG Matrix:
High

Medium

Low

Stars:

Question Marks:

Breath freshener market

share
33.6%

Non chocolates market

share
14.8%

Cash Cows:

Dogs:

Chocolate market share

34.3%
Confectionary market share
28.7%

Gum market share 2.5%

Medium

Low

The Grand Strategy Matrix:

Rapid Market Growth

Market Development
Market Penetration
Product
Development
Weak
Competitiv
e Position

Slow Market Growth

Strong
Competitive
Position

Output Stage

Quantitative Strategic
Planning Matrix (QSPM)

Presence in Asian Market

Producing New
(China, Bangladesh)
Products for Health &
Weight Conscious
Consumers

QSPM Matrix:
Sr. No. Key Factors:
Opportunities
1
Increasing demand of organic products
2
Global expansion / emerging markets
3
Escalating demand for weight conscious people
4
Inclination towards environment friendly organizations
5
Increasing awareness regarding Child Labor issues
6
New opportunities for using varied media
7
Multiplicity among consumer tastes
Threats
1
Slow economic growth
2
Increase in prices of main ingredients
3
An increase in Health conscious consumer
4
Increase in conversion of sugar to ethanol

Weight

AS

TAS

AS

TAS

0.06
0.06
0.03
0.02
0.02
0.05
0.05

1.00
4.00
1.00
3.00
1.00
1.00
0.00

0.06
0.24
0.03
0.06
0.02
0.05
0.00

4.00
0.00
4.00
0.00
0.00
0.00
3.00

0.24
0.00
0.12
0.00
0.00
0.00
0.15

0.03
0.07
0.07
0.06

3.00
0.00
0.00
0.00

0.09
0.00
0.00
0.00

1.00
0.00
3.00
0.00

0.03
0.00
0.21
0.00

0.08
0.08
0.07
0.06
0.05

3.00
4.00
3.00
3.00
0.00

0.24
0.32
0.21
0.18
0.00

2.00
0.00
4.00
0.00
2.00

0.16
0.00
0.28
0.00
0.10

0.05
0.04
0.03
0.03
0.03
1.00

2.00
1.00
2.00
1.00
0.00

0.10
0.04
0.06
0.03
0.00

0.00
0.00
0.00
0.00
3.00

0.00
0.00
0.00
0.00
0.09
1.38

Strengths
1
Brand Recognition
2
Socially Responsible Image
3
Research and Development
4
Strategic acquisitions and joint ventures
5
Innovative and reliable workforce
Weeknesses
1
Need of independent Board Members
2
Hetrogenity of supplier is missing
3
Manufacturing cost is high
4
Future contract hedging
5
Less variety of organic snacks
Total

1.73

Conclusion:

As per QSPM Hershey must adopt the Intensive

Growth strategy (Aggressive strategy) and go for
Market Development - Global expansion ---

Presence in Asian Market (China, Bangladesh). This

strategy is recommended as the TAS is 1.73 which is
more than the alternative strategy.

Thank You