Presented By: Aliya & Andleeb

Hershey Company

2009

Introduction:

Hershey is one of the oldest chocolate companies in the United States, and an American icon for its chocolate bar.

It is one of a group of companies established by Milton Hershey. Other companies established by Milton Hershey include: Hershey Trust Company, Hershey Entertainment and Resorts Company, which runs

Hershey park, a chocolate-themed amusement park, the Hershey Bears minor professional hockey team, Hershey park Stadium and the GIANT Center.

Most of the employees for the factory come from the surrounding counties, towns, and boroughs, such as Lebanon County, Hummelstown, South Hanover, and Harrisburg.

Mission: Bringing sweet moments of Hershey

happiness to the world every day.

Proposed Mission: Hershey is pledged to provide high

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

Hershey Products:

Hershey produces a variety of products that are chocolate or candy based, and The Hershey Company also produces gum.

Some of these products began production over 100 years ago such as the Hershey Kiss and Hershey Bar.

Hershey Products:

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

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

Strategy FormulationInput Stage

EFEIFE

CPM

Sr.# Opportunities Weight Rating Weighted Score

1 Increasing demand of organic products 0.11 3 0.332 Global expansion / emerging market 0.12 3 0.363 Escalating demand for weight conscious people 0.05 2 0.1

4Inclination towards environment friendly organizations 0.04 2 0.08

5 Increasing awareness regarding Child Labor issues 0.04 2 0.086 New opportunities for using varied media 0.10 3 0.37 Multiplicity among consumer tastes 0.10 3 0.3 Threats 1 Slow economic growth 0.06 2 0.122 Increase in prices of main ingredients 0.14 4 0.563 An increase in Health conscious consumer 0.13 3 0.394 Increase in conversion of sugar to ethanol 0.11 3 0.33 Total Weighted Score 1.00 2.95

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

External Factor Evaluation (EFE) Matrix:

Sr.# Strengths Weight Rating Weighted Score

1 Brand Recognition 0.16 4 0.642 Socially Responsible Image 0.15 4 0.603 Research and Development 0.14 3 0.424 Strategic acquisitions and joint ventures 0.12 3 0.365 Innovative and reliable workforce 0.10 3 0.30 Weeknesses 1 Need of independent Board Members 0.09 2 0.182 Heterogeneity of supplier is missing 0.08 2 0.163 Manufacturing cost is high 0.06 1 0.064 Future contract hedging 0.05 1 0.055 Less variety of organic snacks 0.05 1 0.05 Total Weighted Score 1.00 2.82

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

Internal Factor Evaluation (IFE) Matrix:

Hershey Nestle MarsCritical Success

Factors Weight Rating Score Rating Score Rating Score

Brand recognition 0.13 4 0.52 3 0.39 3 0.39

Product Quality 0.13 4 0.52 3 0.39 3 0.39

Price Competitiveness 0.14 3 0.42 3 0.42 4 0.56

Financial position 0.12 3 0.36 4 0.48 3 0.36

Management 0.13 3 0.39 4 0.52 3 0.39

Customer Loyalty 0.11 4 0.44 3 0.33 3 0.33

Global Expansion 0.17 3 0.51 4 0.68 3 0.51

Market share 0.07 2 0.14 4 0.28 3 0.21

Total 1.00 3.30 3.49 3.14

Competitive Profile Matrix:

Matching Stage

SWOT Matri

x

SPACE Matri

x

BCG Matri

x

IE Matri

x

GSM

SWOT Matrix:

Strengths:1. Brand Recognition2. Socially Responsible Image3. Research & Development4. Strategic acquisitions and

joint ventures5. Innovative & reliable

workforce

Weaknesses:1. Need of Independent

Board Members2. Heterogeneity of supplier

is missing3. Manufacturing cost is high4. Future contract hedging5. Less variety of Organic

Snacks

Opportunities:1. Increasing demand of organic

products2. Global expansion / emerging

markets3. Escalating demand for weight

conscious people4. Inclination towards

environment friendly organizations

5. Increasing awareness regarding Child Labor issues.

6. Use of varied media7. Multiplicity among consumer

tastes

SO Strategies:1. Can produce organic /

sugar free products by using R&D dept. (S3,O1,O3)

2. Hershey must portray its brand through marketing the ethical ways they do business (S1,O5)

3. Hershey can promote its image using varied media. (S2,O6)

4. Design new products from employee ideas.(S5,O7)

WO Strategies:1. Trust may divest shares.

(W1,O2)2. Costs may be lowered by

manufacturing products in countries where they are purchased. (W3,O2)

3. Conduct survey to get feedback of consumer preferences to improve taste . (W5,O6,O7)

Threats:1. Slow economic growth2. Increase in prices of main

ingredients3. Increase in Health Conscious

consumer4. Increase in conversion of

sugar to ethanol

ST Strategies:1. Sales may be increased

through new partnerships with NGOs. (S2,S4,T1, T2)

2. Can produce products specially designed for health conscious consumers by using R&D dept. (S3,T3)

3. The company must find the alternative of sugar by using R & D. dept.(S3,T2,T4)

WT Strategies:1. To reduce risk and price

uncertainty use hedging. (W4,T2)

2. Introducing new range of organic items to cater health conscious segment.(W5,T3)

3. Hershey may increase its supplier base to overcome the dependency on suppliers by backward integration.(W2,T2)

The Strategic Position and Action Evaluation (SPACE) Matrix:

Financial Position:•Leverage•Working Capital•Cash Flow

Total

Rating:544

----13

Industry Position:•Growth Potential•Profit Potential•Financial Stability

Total

334

----10

Stability Position:•Price range of competing products•Competitive Pressure•Price elasticity of demand

Total

-3-4-4-----11

Competitive Position•Market Share•Product quality•Customer loyalty

Total

-2-1-2-----5

Space Matrix:Conclusions: FP Average = 13/3 = 4.33 IP Average = 10/3 = 3.33 SP Average = -11/3 = -4 CP Average = -5/3 = -1.66 Space Matrix Coordinates: X-axis: CP+IP or (-1.66 + 3.33) = 1.67 Y-axis: FP+SP or (4.33 + -4) = 0.33

CP IP

FP

SP

Aggressive:Market DevelopmentMarket Penetration

Product Development

(1.67,0.33)

BCG Matrix:High Medium Low

Medium

Stars:

Breath freshener market share33.6%

Question Marks:

Non chocolates market share14.8%

Low

Cash Cows:

Chocolate market share 34.3%Confectionary market share28.7%

Dogs:

Gum market share 2.5%

The Grand Strategy Matrix:

Strong Competitive Position

Weak Competiti

ve Position

Rapid Market Growth

Slow Market Growth

Market Development

Market PenetrationProduct

Development

Output Stage

Quantitative Strategic Planning Matrix (QSPM)

Presence in Asian Market (China,

Bangladesh & India)

Producing New Products for Health &

Weight Conscious Consumers

Sr. No. Key Factors: Weight AS TAS AS TASOpportunities

1 Increasing demand of organic products 0.06 1.00 0.06 4.00 0.242 Global expansion / emerging markets 0.06 4.00 0.24 0.00 0.003 Escalating demand for weight conscious people 0.03 1.00 0.03 4.00 0.124 Inclination towards environment friendly organizations 0.02 3.00 0.06 0.00 0.005 Increasing awareness regarding Child Labor issues 0.02 1.00 0.02 0.00 0.006 New opportunities for using varied media 0.05 1.00 0.05 0.00 0.007 Multiplicity among consumer tastes 0.05 0.00 0.00 3.00 0.15

Threats 1 Slow economic growth 0.03 3.00 0.09 1.00 0.032 Increase in prices of main ingredients 0.07 0.00 0.00 0.00 0.003 An increase in Health conscious consumer 0.07 0.00 0.00 3.00 0.214 Increase in conversion of sugar to ethanol 0.06 0.00 0.00 0.00 0.00

Strengths 1 Brand Recognition 0.08 3.00 0.24 2.00 0.162 Socially Responsible Image 0.08 4.00 0.32 0.00 0.003 Research and Development 0.07 3.00 0.21 4.00 0.284 Strategic acquisitions and joint ventures 0.06 3.00 0.18 0.00 0.005 Innovative and reliable workforce 0.05 0.00 0.00 2.00 0.10

Weeknesses 1 Need of independent Board Members 0.05 2.00 0.10 0.00 0.002 Hetrogenity of supplier is missing 0.04 1.00 0.04 0.00 0.003 Manufacturing cost is high 0.03 2.00 0.06 0.00 0.004 Future contract hedging 0.03 1.00 0.03 0.00 0.005 Less variety of organic snacks 0.03 0.00 0.00 3.00 0.09 Total 1.00 1.73 1.38

QSPM Matrix:

Conclusion:

As per QSPM Hershey must adopt the Intensive Growth strategy (Aggressive strategy) and go for Global expansion --- Presence in Asian Market (China, Bangladesh & India). This strategy is recommended as the TAS is 1.73 which is more than the alternative strategy.

Thank You