The Hershey CompanyBy: Chelsea Boles, Elizabeth Burrows, Jessica Edwards,

Melinda Nguyen, & Rachel Parrish

• The Hershey Company is the leading North American manufacturer of quality chocolate and candies.

• Future Vision: To expand into more categories beyond candies, finding new ways to bring goodness to people

everywhere.

Business Level Strategy

Best-Cost Provider

More Value for Money

Satisfy Expectations

Resources & Capabilities

Value Conscious Buyers

Target Market & Demographics• Target Market: North America

<$20,000

$20,000- $29,999

$30,000- $39,999

$40,000-$49,999

$50,000- $59,999

$60,000- $74,999

$75,000-$149,999

$150,000+0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Household Income

% of Consumption

Age 18-24

Age 25-34

Age 35-44

Age 45-54

Age 55-64

Age 65+

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%

% of Consumption

External Analysis: 5 Competitive ForcesOverall – Moderately high

Suppliers

Moderately High

Buyers

Moderate

New Entrants

Weak

Rivals

Moderately High

Substitutes

Moderate

External Analysis: Strategic Group Map

Financial Analysis

2011 2012 20130

0.1

0.2

0.3

0.4

0.5

0.6

Company Profitability

Hershey'sMondelezNestle

Gro

ss P

rofit

Rati

o

2011 2012 20130

0.20.40.60.8

11.21.41.61.8

2

Company Liquidity

Hershey'sMondelezNestle

Curr

ent

Ratio

Financial Analysis

2011 2012 20130

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Hershey's LeverageD

ebt-

Equi

ty R

atio

2011 2012 201301234567

Company Inventory

Hershey's Mondelez Nestle

Inve

ntor

y Tu

rnov

er

SWOT Analysis

SWOT Analysis

(IBISWORLD, 2014)

The Central Problem

• The central issue is not maximizing available resources as a company as well as limited

international involvement in the marketplace.

(Hershey’s Food HSY)(Lawerence, 2013)

Rejected Solution:Expanding plants and increasing # of employees

• Total of approximately $300 million to open a single manufacturing plant

• Approximately 700 employees to run a single plant• Costs may outweigh the benefits

The Best Solution: Concentrate on growth in Chinese chocolate

market

How we get there:• Introduce 2 new products

• Ongoing research for product innovation• Increase advertising budget

• Expand availability of Hershey products in Asian market

Results will include:• Competitive advantage

• Heighten buyers interest in the new market• Increase market share in Asian market

Strategy Defense

• Innovating and producing new candies that appeal to the Asian culture will ensure that Hershey can increase their market share to compete with their rivals (Murphy, 2013).

• The timeline for this project would be within the next five years since Hershey plans to increase sales by a variable of seven in China during that time frame (Murphy, 2013).

Strategy Defense• The costs that are associated with this strategy would be the sunk cost

of $250 million to complete the new plant in Johor, Malaysia, which is scheduled for completion in 2015 and any additional research costs that would be related to inventing new candies (Hershey expands, 2013).

• This new plant’s vital geographic area empowers delivery access to over 25 markets across Asia where Hershey has assertively attempted to develop its presence in recent years (Hershey expands, 2013).

• The only issue that we could potentially face would be overspending on additional production facilities and on research for the innovation of new candies in order to increase brand awareness and brand recognition.

Chinese Chocolate Industry2013

8% increase = $1,200,000,000

Market Shares

Mars 43.30% $519,600,000Nestle 12.50% $150,000,000Mondelez 1.00% $12,000,000Hershey’s 2.20% $26,400,000

20148% increase = $1,296,000,000

Market Shares

Mars 47% $609,120,000Nestle 14% $181,440,000

Mondelez 1% $18,144,000

Hershey’s 7% $90,720,000

20158% increase = $1,399,680,000

Market Shares

Mars 52% $723,634,560Nestle 15% $215,550,720

Mondelez 2% $21,555,072

Hershey’s 14% $195,955,200Hershey’s wants to increase retail stores

by 32% and sales force by 60%.

Projected Income Statement

Projected Income Statement

References• Castner, H. (2012, December 7). Hershey’s Market and Competitors Analysis.

http://www.youradvantagemarketing.com/HersheysMarketandCompetitorAnalysis.pdf

• Company Profile. (2014, May 19). In The Hershey Company. Retrieved July 23, 2014, from http://www.thehersheycompany.com/investors/company-profile.aspx

• Hershey. (2014, May 1). Forbes. Retrieved July 17, 2014, from http://www.forbes.com/companies/hershey/

• Hershey's. (n.d.). The Hershey Company. Retrieved July 20, 2014, from http://www.thehersheycompany.com/newsroom/news-release.aspx?id=398319

• Hershey's Company. (2014, July 15). Newsroom. Retrieved July 20, 2014, from The Hershey's Company: http://www.thehersheycompany.com/newsroom/news-release.aspx?id=1947687

• Hershey expands footprint in Asia. (2013, October 4) Baking Business. Retrieved July 23, 2014, from http://www.bakingbusiness.com/articles/news_home/International/2013/10/Hershey_expands_footprint_in_A.aspx?ID={9311187A-EAE1-4443-9E0E-A98A568A5A88}&cck=1

• Hershey Foods (HSY). (n.d.). Stock:. Retrieved July 24, 2014, from http://www.wikinvest.com/stock/Hershey_Foods_(HSY)

• IBISWORLD. (2014). . Retrieved July 24, 2014, from http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=230

• Lawerence, S. (2013, December 22). Bar Wars: Hershey Bites Mars (Fortune, 1985). Fortune Bar Wars Hershey Bites Mars Fortune1985 Comments. Retrieved July 19, 2014, from http://fortune.com/2013/12/22/bar-wars-hershey-bites-mars-fortune-1985/

References• MarketLine. (2013, November 1). Chocolate Confectionary in the United States. Retrieved July 20, 2014, from

MarketLine Industry Profile: www.advantage.marketline.com

• Melby, C. (2012, September 25). Hershey Invests $300 Million In Future Of American Manufacturing. And Consumption. In Forbes. Retrieved July 23, 2014, from http://www.forbes.com/sites/calebmelby/2012/09/25/hershey-invests-300-million-in-future-of-american-manufacturing-and-consumption/

• Murphy, C., & Burkitt, L. (2013, May 20). Hershey Keen for Piece of China. The Wall Street Journal. Retrieved July 23, 2014, from http://online.wsj.com/news/articles/SB10001424127887323463704578495003498121378

• Nieburg, O. (2013, October 4). Hershey marks biggest outlay in Asia with $250m Malaysia plant. ConfectioneryNews.com. Retrieved July 17, 2014, from http://www.confectionerynews.com/Manufacturers/Hershey-marks-biggest-outlay-in-Asia-with-250m-Malaysia-plant

• Saleem, R. (2009, May 11). Hershey Foods Corporation Swot Analysis. Scribd. Retrieved July 17, 2014, from http://www.scribd.com/doc/15196558/Hershey-Foods-Corporation-Swot-Analysi

• Scully, C. Z. (2014, January 31). 2014 Global Top 100: Candy Industry's exclusive list of the Top 100 confectionery companies in the world!. In Candy Industry. Retrieved July 23, 2014, from http://www.candyindustry.com/articles/86039-global-top-100-candy-industrys-exclusive-list-of-the-top-100- confectionery-companies-in-the-world?page=5

• Thompson, A. T. (2014). Strategic Management. East Carolina University.

• Yahoo! Finance. (2014, July 20). HSY Competitor's. Retrieved July 20, 2014, from Yahoo! Finance: http://finance.yahoo.com/q/co?s=HSY+Competitors