Introduction
Founded in 1894, the Hershey Company had grown to become one of the biggest retailers in the chocolate industry.
The company is strongly committed to its vision statement, which revolves around spreading goodness in every direction. The company is also greatly committed towards its mission, which is to happiness though sweet moments to their target audience, worldwide. (What We Are Made of, 2016)
The company has divided its stakeholders into seven different categories, which are: investors, business partners, consumers, employees, interest groups, regulators, and communities and local government. Out of these seven, the company holds the following to be their primary stakeholders and takes a huge amount of interest in satisfying their desires:
Their investors: their main aim is to keep them satisfied by providing them with the expected return, and more.
Business partners: the company greatly relies on them to help them provide their industry with the right type of solutions to its needs.
Consumer: They are kept at a very high pedestal as it is their customers who have helped them achieve the market status that they stand with today.
Employees: having satisfied and dedicated employees help them succeed in their business.
It is the recipe of these three factors listed above that has helped turn the company into one of the biggest and most loved sweet manufacturers all over the world. With their ability to think out of the box and to direct their resources towards their mass market, they have managed to become a success in a short span of time, and remain to be one of the top, almost unbeatable, companies around the world.
5 forces of competition
Hershey Company has managed to deal with the threat of competitors for a very long time. Despite it all, they have managed to keep themselves on top and as one of the most recognized companies. Digging in deeper into their competition:
Threat of new entrants:
The Company faces a relatively low threat in this segment as the coca industry has many rules and regulations, with immense costs attached to it, which needs to be followed. Many potential companies are either unable to bear the costs associated with the capital, or do not have the right distribution channel, or cannot keep up with the economies of scale.
Bargaining power of buyers:
This lies between low to moderate on its own scale. Since there are not many options for the buyers to switch between, and the loyal customers are true to the brand, the company is in the clear. Many of the existing categories of different types of candies already are created by the Hershey Company, which is considered to be of premium quality.
Bargaining power of the buyers:
Since there are only a few suppliers for the company, they have a moderate to high effect on the bargaining power. The company heavily relies on its suppliers and its quality; hence, they hold a greater stance in the company’s strategy.
Threat of substitute products:
The company faces a high threat from the product side, as the threat is not limited to and from the chocolate or coca industry only. They must also compete with the other flavors, like vanilla and lemon, and other products as well including flowers, gifts, etc. As many of the audience is becoming more health conscious, they do not see chocolate as a healthy snack, hence the popularity of substitute products is also increasing, and is something the Hershey Company must combat against.
Intensity of rivalry among competitors in an industry: the rivalry is at an all time high. With such high costs associated with the making of the products, the company are at a constant war with each other, be it in price, advertisements or products itself. The company remains on its toes at all times in order to retain its market position and compete head on with its established competitors (Gelder, 2005).
SWOT Analysis
Strengths:
The Hershey Company holds a strong brand image and name, hence giving it a high recall rate.
The company not only serves chocolates, but holds a wide array of products, this helps them cater to a wider target market and gain market share in different categories.
The company banks upon many other segments to help the achieve brand visibility.
The company focuses on doing well for the people in terms of CSR and other initiatives, which has established them as a company that can be relied upon.
Hershey also focuses on employee satisfaction, ensuring that they are highly motivated and gain the best of whatever they may need, from their employer.
The company had established its name all over the world and is one of the leading companies of its kind.
Weaknesses:
The company faces a high amount of advertisement expenses to keep up with the market and stay on top of its competitors.
Hershey has managed to enter many other geographical areas, which have put up certain barriers against them.
The company still faces a lot of debt and it will be a while it is able to repay it.
The company holds a low market share when comparing it on a world wide scale.
Coca beans are becoming difficult to find and are getting more expensive as time is passing, which is a matter of concern for the company.
Opportunities:
The target audience keeps increasing and changing their taste and requirements, giving the company a chance to explore new segments.
The fact that the company has dark chocolate is a huge opportunity with the ever changing need and health benefits of dark chocolate.
The company involved the International Cocoa Initiative Foundation to help them rid to the child labor laws in the African countries.
The communication the company hold between its customer s and its suppliers if strong, giving them the opportunity to build up on it.
Hershey market has many loyal customers.
The company has the opportunity to explore different market area due to the increase in its global trade.
The company has a chance to explore different other products as well aside from chocolate.
Threats:
The company faces hard competition from various other market players, such as Mars, Nestle, and Cadbury.
Diabetes is a disease that is prevalent all over the world, and increasing. It is one of the biggest threats to the company.
The price of raw materials tends to vary, depending on the geographical area that it is located, causing ups and downs in the manufacturing costs.
The ever evolving technology means staying updated with the latest advancements, adding to the cost of production.
The ever increasing fluctuation in the increase of exchange rates can also impact the company in either a negative of a positive manner.
With the frequent occurrence of natural disasters, chocolate ingredients are at a risk of being destroyed.
The company faces many different aspects when it comes to each category in the SWOT analysis. Each strength is compensated for the weakness and every opportunity does so for the threat. With the right strategy the company can overcome the challenges laid down by the weaknesses and threats (Hartline, n.d.)
Company Strategy
Establishing a center that would allow people of all ages to “create their own chocolate” would capture the attention of audiences all over the world. It would give them a chance to experience the world of Hershey and help the company ensure their vision and mission. Even though the stunt might be costly, but the future potential in terms of increasing sales and ascertain a loyal customers will be worthwhile in the end.
The company can also benefit from exploring different markets and products. It can reduce its transportation cost and in turn it’s manufacturing cost by setting up factories or manufacturing facilities nearer to the regions where they get their ingredients, especially cocoa.
Entering into the market of other products, such as other candies, jellies, beverages, the company can increase its market share and sales further and cater to a much wider need of its customer base.
The company still can positively impact itself from entering into new market places, globally. By exploring the untapped markets, they can establish the right strategy to enter a new market place and gain the market share globally. There are yet many countries where the demand for chocolate is high and the company hasn’t entered the market.
Partnering up with various coffee makers to provide a chocolate flavored coffee holds a great opportunity as many people are regular drinkers of coffee and appreciate exploring different types to suit their taste requirements.
Maximizing competitiveness and profitability
The best way for Hershey to increase its profitability is by increasing its revenue. Increasing revenue means increasing sales. Even though gaining the market with its current products is possible with intensive marketing, it would be lesser costly for the company to expand their range of products into non chocolate ones and by expanding their operations into other global areas. The other way is by reducing manufacturing costs which can be achieved by building factories in a more desirable geographical area.
An increase in discounts of various product promotions will also help the company achieve a competitive edge over its competitors. Effective retail displays will also have a positive impact on the customer and help create a higher brand recall rate.
Communications Plan
The communication plan if Hershey should be divided into two different categories, namely the microenvironment marketing plan and the macro environment marketing plan (cultural environment). Both of these plans target different sets of people and device the strategy accordingly to their requirements. The micro plan should consist of everyone, including the customer, the suppliers, and the company itself (Hartline, n.d.) Targeting those various aspects of their plan, which will also eventually come into the eye of the stakeholders, the company needs to advertise its strategies via billboards, digital media and TVC’s, and devise BTL activities, such as free sampling of chocolate, or handing out a chocolate surprise on a special occasion to their customers. This will in turn increase their interest and covert them into loyal customer base.
The best way to target suppliers would be by handing them deals and packages, for example a vacation trip to their favorite place, or a gift box full of Hershey’s best products.
Having a satisfied supplier, company and employee base with effective communications plan will help the company develop a stronger foundation for itself and increase its revenues.
Corporate governance
Blessed with the top people in their board of directors, the Hershey Company makes sure to follows their basic belief of integrity within the company and its people. The company reviews its corporate governance guidelines annually and makes sure that everyone from the top till the bottom follows those rules (Good Companies - Business 30, 2014).
Tenure: the company serves and values its board of directors well, as can be seen by their corporate governance guidelines. The company does not assign term limits to its directors. Those how wish to leave may send a resignation letter to the chairman who will accept the letter . And directors will mostly not be reelected after they turn 72. This shows how the company values its seniors and their experience, as they believe that it is their knowledge that will come in handy for them and help them through tough situations the company may face.
Board Meetings: It is decided that the company shall hold 6 different meetings every year and the agenda of the meetings will be decided by the chairman, even though the other directors are free to give their input as well. This shows that the company matters, no matter how big or small, are not overlooked by the BOD. It makes the company stay updated with every matter of the company and take appropriate actions to overcome it.
Effectiveness of Leadership:
The responsibilities of running the company are divided among various senior managers who collaborate with each other to establish the right strategy that should be implemented in running the company. The leaders let their subordinates work with some decision making power, in order to provide them with free will and the deep sense of responsibility for working for the company.
The company values integrity and discipline, keeping it as its core foundation and building up on it (Business Wire, 2013).
The company needs to give their employees a bit more decision making power as well and help them succeed in their work.
Responsible Corporate Citizen
The Hershey Company holds a deep sense of responsibility to its society and works towards helping them in any manner possible.
Its corporate responsibility has been divided into 4 different areas: Marketplace, environment, workplace and community. They have carried out numerous activities to preserve and help succeed their society. One of their most commendable works has been their cooperation towards teachers and students. They have dedicated a number for them to allow them to call on and obtain any information that they require on the company, helping them in their studies, reports or thesis. (What are we made of, 2016)
References
Business Wire. (2013). The Hershey Company Enhances Executive Management Team.
Hartline, F. (n.d.). Marketing in today's economy. Retrieved June 11, 2016, from https://www.cengagebrain.co.uk/content/9781133719915.pdf
Gelder, S. V. (2005). Global brand strategy: Unlocking branding potential across countries, cultures & markets. Sterling, VA: Kogan Page.
Hershey. (n.d.). This is Hershey. Retrieved from The Hershey Company: https://www.thehersheycompany.com/en_us/this-is-hershey/a-visionary-future.html
Queensland Government. (2014). Strategies to Improve Profit. Retrieved from Queensland Government : https://www.business.qld.gov.au/business/running/making-and-managing-money/making-your-business-more-profitable/strategies-to-improve-profit
What We Are Made of. (2016, February 26). Retrieved June 11, 2016, from http://3blmedia.com/News/Campaign/What-Were-Made
