Hersheys - 1 Running Head STRATEGIC ANALYSIS OF HERSHEY University of the Cumberlands Summer 2018 BADM 638 Strategic Decision Making Table of

Hersheys - 1 Running Head STRATEGIC ANALYSIS OF...

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1 Running Head: STRATEGIC ANALYSIS OF HERSHEY University of the Cumberlands Summer 2018 BADM 638 – Strategic Decision Making Table of Contents EXECUTIVE SUMMARY .................................................................................................................... 2 BACKGROUND ................................................................................................................................. 3
2 SITUATIONAL ANALYSIS ................................................................................................................... 4 PESTLE ANALYSIS ............................................................................................................................. 4 Michael Porter’s five forces ............................................................................................................ 9 The Firm’s Current situation ......................................................................................................... 11 Current Vision and Mission Statement ......................................................................................... 11 Current performance .................................................................................................................... 13 Corporate Structure ...................................................................................................................... 13 Corporate culture/Management Philosophy ................................................................................ 14 Organizational Structure ............................................................................................................... 14 THE PRODUCT ............................................................................................................................... 15 SWOT ANALYSIS ............................................................................................................................ 16 FINANCIAL ANALYSIS ..................................................................................................................... 20 PROBLEM STATEMENT .................................................................................................................. 22 STRATEGIC PLAN ........................................................................................................................... 24 SUMMARY .................................................................................................................................... 28 Conclusion .................................................................................................................................... 28 REFERENCES ................................................................................................................................. 29 EXECUTIVE SUMMARY Hershey Foods Corporation has grown from a one-product, one-plant operation in 1894 to a $ 4.4 billion company producing an array of quality chocolate, non-chocolate, and grocery
3 products. The company markets confectionary and grocery products in over 60 countries worldwide, down from 90 countries a few years ago. Hershey market products under more than 50 different brands, such as Hershey’s milk chocolate, Mr. Good bar, Reese’s, kit Kat, kisses and mounds. Less than 10 percent of Hershey’s sales are generated outside the United States. Mars, Borden, nestle, and other competitors all have a growing and effective presence in international markets. Analysts question whether Hershey foods can continue to survive as a domestic producer of candy while its competitors gain economies of scale and learning in world markets. HISTORY: Milton Hershey’s love for candy making began with a Childhood apprenticeship under candy maker Joe Royer of Lancaster, Pennsylvania. Mr. Hershey was eager to own a candy-making business. After numerous attempts and even bankruptcy, he finally gained success in the caramel business. By 1901, the chocolate industry in America was growing rapidly. Hershey’s sales reached $662,000 that year, creating the need for a new factory. Mr. Hershey’ moved his company to Derry Church, Pennsylvania, a town that was renamed Hershey in 1906. In 1909, the Milton Hershey School for Orphans was founded. Mr. and Mrs. Hershey could not have children, so for years the Hershey Chocolate Company operated mainly to provide funds for the orphanages. In 1927, the Hershey Chocolate Company was incorporated under the laws of the state of Delaware and listed on the New York Stock Exchange. That same year, 20 percent of Hershey’s stock was sold to the public. Between 1930 and 1960, Hershey went through rapid growth; the name “Hershey” became a household word. SITUATIONAL ANALYSIS Political Factors that Impact The Hershey Company
4 Political factors play a significant role in determining the factors that can impact The Hershey Company's long-term profitability in a certain country or market. The Hershey Company is operating in Confectioners in more than dozen countries and expose itself to different types of political environment and political system risks. The achieve success in such a dynamic Confectioners industry across various countries is to diversify the systematic risks of political environment. The Hershey Company can closely analyze the following factors before entering or

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