(Tiểu luận) individual assignment topic analysing the hershey organization

Ho Chi Minh University of Technology
School of Industrial Management
Strategic Managements
Semester 212 – Class: CC02
Lecturer: Prof. Lai Van Tai

Individual Assignment
Topic: Analysing the Hershey Organization

Student Name: Pham Tran Dang Khoa
Student ID: 1952787
Ho Chi Minh city, Vietnam

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2021- 2022

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I Introduction about Strategic Managements course
Strategic Management is a postgraduate course of two-years involving advanced

lessons in psychology, sociology, and economics with the aim to develop an analytical
approach in students which is an important factor of strategic issues management. The
course is divided into four semesters, each for a period of six months.
The course teaches about how managers must employ the formal and informal
relationships that exist between various organisations in an industry, originate
solutions for various problems encountered by an organisation, and effectively
formulate and implement an organization's key strategies, the results of which shapes
the structure and functioning of an organization.
Strategic management trains the eligible candidates in developing functional and
managerial skills, building relationships with organisations, providing the recruitments
in corporate management and strategy along with providing a platform for students,
teachers, and industry experts to exchange leadership and management concepts.
A strategic management student is required to use his/her knowledge from other
domains and fields including business administration, finance and marketing, risk
management, negotiation, statistics and human resource. There are various universities
and colleges for business and economics which offer strategic management as
specialization or a concentration track for a business management degree.

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II Acknowledgement
My name is Pham Tran Dang Khoa, a member in class CC02, course: Strategy
Managements, leading by prof. Lai Van Tai. I am over helmed in all humbleness and
gratefulness to acknowledge my depth to all those who have helped me to put these
ideas, well above the level of simplicity and into something concrete.

I would like to express my special thanks of gratitude to my teacher as well as our
principal who gave me the golden opportunity to do this wonderful project on the
topic Analysing Organization and I choose Hershey Organization to give the best
analysis, which also helped me in doing a lot of Research and I came to know more
about so many new things. I am really thankful to them.
Thank you very much, prof. for what you have taught to us in this semester.
Best regards,
Pham Tran Dang Khoa – 1952787

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Table of Contents
I Introduction about Strategic Managements course.....................................................ii
II Acknowledgement.................................................................................................... iii
Table of Contents......................................................................................................... iv
1 Introduction about the company.................................................................................1
1.1 Overview about Hershey......................................................................................1
1.2 Hershey History – A History of Goodness...........................................................1
1.3 Hershey Products.................................................................................................2
2 Situation of Hershey organization in nowadays.........................................................2
3 Hershey’s Vision/ Mission/ Core Values....................................................................3
3.1 Vision statement................................................................................................... 3
3.2 Mission Statement...............................................................................................4
3.3 Core Values..........................................................................................................4
3.3.1 Deliver........................................................................................................... 4

3.3.2 Collaborate....................................................................................................4
3.3.3 Develop.........................................................................................................5
3.3.4 Question........................................................................................................5
3.3.5 Innovate......................................................................................................... 5
3.3.6 Inspire............................................................................................................ 5
4 Hershey’s SWOT analysis (SFAS, IFAS, EFAS, CPM matrix)..................................5
4.1 SWOT analysis.................................................................................................... 5
4.1.1 Strengths Analysis.........................................................................................5
4.1.2 Weaknesses Analysis.....................................................................................6
4.1.3 Opportunities Analysis..................................................................................7

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4.1.4 Threats Analysis............................................................................................8
4.2 SFAS Analysis.....................................................................................................9
4.3 IFAS – EFAS Analysis.......................................................................................12
5 Hershey Five Forces Analysis..................................................................................12
5.1 Threat of New Entrants......................................................................................13
5.2 Threat of Substitutes..........................................................................................13
5.3 Bargaining Power of Customers........................................................................14
5.4 Bargaining Power of Suppliers..........................................................................14
5.5 Competitive Rivalry...........................................................................................15
6 The Hershey Company’s Competitors......................................................................15
6.1 CPM matrix.......................................................................................................16
7 Hershey’s Strategic Formulation..............................................................................17

7.1 Corporate level strategy.....................................................................................17
BCG Matrix..........................................................................................................18
7.2 Business level strategy.......................................................................................21
8 Conclusion...............................................................................................................22
III Appendix................................................................................................................ 23
IV Reference list.........................................................................................................24

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1 Introduction about the company
1.1 Overview about Hershey
Hershey Company, also known as (1894–1927) Hershey Chocolate Co., (1927–
68) Hershey Chocolate Corporation, and (1968–2005) Hershey Foods Corporation,
American

manufacturer

of food products,

chiefly chocolate and

sugar-based

confections. Hershey’s Milk Chocolate, in its brown-and-silver wrapper, was perhaps
the best-known American candy bar of the 20th century. Company headquarters are

in Hershey, Pennsylvania.
The Hershey Company traces its origins to the 1880s, when Milton S.
Hershey founded the Lancaster Caramel Company in Lancaster, Pennsylvania. After
seeing German-made chocolate-processing machinery at the World’s Columbian
Exposition of 1893 in Chicago, Hershey decided to go into the chocolate business.
During the 1960s Hershey bought the manufacturer of Reese’s Peanut Butter Cups and
two pasta businesses. In recognition of its diversification, the company was renamed
Hershey Foods Corporation in 1968. Two notable changes came shortly afterward.
After many decades at 5 cents, the price of the standard milk chocolate bar went up to
10 cents (bar size had diminished over the years). And in 1970 the company
responded to increased competition—most notably from Mars, Inc.—by advertising to
consumers for the first time.
1.2 Hershey History – A History of Goodness
Milton Hershey’s love for confection started at a young age and flourished when
he established The Hershey Chocolate Company in 1894. By 1900, we sold our very
first candy bar. Today, Hershey’s portfolio of brands has expanded beyond the beloved
and iconic HERSHEY’S Milk Chocolate Bar.
 1894: Lancaster Caramel Company: Milton Hershey incorporates the Lancaster
Caramel Company and establishes Hershey Chocolate Company as a
subsidiary.
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 1900: Milk Chocolate bars: Launch of Hershey’s Milk Chocolate bars

 1907: Hershey’s Chocolate Kisses: Hershey begins manufacturing Hersey’s
Chocolate Kisses.
 1963: H.B. Reese Candy Company: Hershey acquires H.B. Reese Candy
Company
 1971: Hershey’s Tropical Bar: Hershey’s Tropical Bar sent to the moon with
Apollo 15 Astronauts
 1973: Hershey’s Chocolate World: Hershey’s Chocolate World, the first retail
center, opens
 1979: $1 Billion Achieved: Hershey achieves $1 billion in annual sales
 2000: World Cocoa Foundation: Founding member of the World Cocoa
Foundation and begins investment in West Africa to support cocoa farmers and
improve cacao agriculture.
 2008: $5 Billion in sales
 2018: Michele Buck becomes CEO: first female CEO
 2019: #35 on Diversity Inc: The Hershey Company recognized as #35 on
Diversity Inc Top 50 Companies for Diversity
 2020: #21 on Diversity Inc
 2021: #10 on Diversity Inc
1.3 Hershey Products
Hershey is best known for their chocolate products: Hershey’s Brand Chocolate
Products: Hershey’s Extra Dark, Hershey’s Symphony, Hershey’s Drops, Hershey’s
Miniatures, Hershey’s Pot of Gold, Hershey’s Nuggets. Hershey’s Kisses Reese’s
Brand products

2 Situation of Hershey organization in nowadays
In August 2021, the Hershey Company established a new health & safety policy
requiring full vaccination for all corporate employees working in our 19E corporate
office, Tech Centre, U.S. commercial sales offices, customer teams, Hershey's
Chocolate World Salaried Employees, Amplify, One Brands and Lily’s offices by
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October 4, 2021. To support this, the company sponsored multiple vaccination clinics
and allowed employees to seek accommodations for religious or medical reasons. The
company has engaged in an interactive process with our employees to evaluate when
an accommodation is needed.
Nearly 98 percent of the teams covered by this policy have become vaccinated. Over
recent weeks, separations for a small number of teammates, less than two percent of
our corporate and commercial teams who did not get vaccinated, have occurred.

Our manufacturing and retail employees have worked safely on the front lines since
the start of the pandemic with heightened health and safety protocols, including
masks, physical distancing, sanitizing and on-site vaccination clinics
To date, The Hershey Company has committed over $2 million in cash and product
donations to support COVID-19 response efforts around the world. Our corporate
giving team is working closely with our community non-profit partners to ensure they
are supported during this time. Our support and community response efforts continue
to evolve as needs change throughout the pandemic.
Additionally, our Hershey Company Employees 1st Fund is actively supporting
Hershey employees and their families who experience severe economic hardship as a
result of this situation.

3 Hershey’s Vision/ Mission/ Core Values
3.1 Vision statement

Hershey’s vision is “We not only offer the best merchandise at the best prices,
but we’re always working to make your shopping experience enjoyable.” The
company aim at delivering the best services to its customers at affordable prices.
Hershey is not only committed to offering healthy products but also changing the
perceptions that people have about chocolate brands being unhealthy (Hershey
Company, 2019).

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The key components of the vision statement are: Offer the best merchandise at the
best prices, Make your shopping experience enjoyable. The “offer best merchandise at
the best prices” component focuses on all the customers and potential consumers of
the Hershey products. The company has operations in more than 90 countries, and
they aim to expand the services by delivering the products to a price that everyone can
afford. Their products are affordable, which makes them popular amongst the
corporate and the customers.
“Make your shopping experience enjoyable” is focused on making sure that customers
get value for their money. In this component, Hershey aims at ensuring the customers
get the best products at competitive and affordable prices. The Hershey Company has
also invested in supporting the underprivileged such as setting up Hershey Trust
Company to help disadvantaged children.
3.2 Mission Statement
Hershey companies corporate mission statement states, “Proceeding with Milton

Hershey’s heritage of responsibility regarding shoppers, group and youngsters, we
give high calibre HERSHEY’S items while directing our business in a socially
mindful and earth practical way.”
3.3 Core Values
3.3.1 Deliver
The idea is to seek solutions by putting our prototypes to test. This method
resolves our problems quickly and helps us learn more. To do so, we proactively
connect with our colleagues and resources when seeking an answer. We always make
sure that our decisions positively impact our community and are acted upon sooner,
rather than later.
3.3.2 Collaborate
We believe in accomplishing together by building global partnerships. Our
approach towards collaboration includes the desire to learn from others, value their
opinions, and appreciate their skills and expertise. Irrespective of having different

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perspectives, we listen to each other and voice our opinions. Once a decision has been
made, we commit ourselves to achieve the goal.
3.3.3 Develop
At HERSHEY’S, we encourage everyone to learn and keep growing. We nurture
an environment where everyone is allowed to experiment with ideas, invite diverse
perspectives, celebrate successes and share learnings from our own mistakes. We also

keep an open window of feedback that will help us learn from others.
3.3.4 Question
We encourage everyone to question ideas, keeping in mind the processes,
problems, and opportunities. Everyone is welcomed to challenge or improve the
existing norms and conventions of the system. We take this thoughtful approach to
ponder around questions and seek inspiration from the world around us. We then put
the gathered data to a resourceful use.
3.3.5 Innovate
We consistently urge everyone to suggest new and unconventional ideas and
approaches. At HERSHEY’S, one can show discontent towards an existing norm and
bring fresh perspectives to ask, “How can we change or innovate…”. And thus,
exchange new insights on how to open the door to new possibilities.
3.3.6 Inspire
We thrive on our individual passions and also get inspired by others. Our values
include housing an atmosphere where people feel empowered and encouraged to
create a plethora of new possibilities. We also believe in speaking with conviction and
listen closely to our co-workers. This allows us to pursue a clear vision for one and all.

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4 Hershey’s SWOT analysis (SFAS, IFAS, EFAS, CPM matrix)
4.1 SWOT analysis
4.1.1 Strengths Analysis

As one of the leading organizations in its industry, Hershey has numerous
strengths that enable it to thrive in the market place. These strengths not only help it to
protect the market share in existing markets but also help in penetrating new markets.
 Highly successful at Go to Market strategies for its products.
 Successful track record of developing new products – product innovation.
 Reliable suppliers – It has a strong base of reliable supplier of raw material thus
enabling the company to overcome any supply chain bottlenecks.
 Automation of activities brought consistency of quality to Hershey products
and has enabled the company to scale up and scale down based on the demand
conditions in the market.
 High level of customer satisfaction – the company with its dedicated customer
relationship management department has able to achieve a high level of
customer satisfaction among present customers and good brand equity among
the potential customers.
 Strong dealer community – It has built a culture among distributor & dealers
where the dealers not only promote company’s products but also invest in
training the sales team to explain to the customer how he/she can extract the
maximum benefits out of the products.
 Strong distribution network – Over the years Hershey has built a reliable
distribution network that can reach majority of its potential market.
 Good Returns on Capital Expenditure – Hershey is relatively successful at
execution of new projects and generated good returns on capital expenditure by
building new revenue streams.

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4.1.2 Weaknesses Analysis
Weakness are the areas where Hershey can improve upon. Strategy is about
making choices and weakness are the areas where a company can improve using
SWOT analysis and build on its competitive advantage and strategic positioning.
 There are gaps in the product range sold by the company. This lack of choice
can give a new competitor a foothold in the market.
 Limited success outside core business – Even though Hershey is one of the
leading organizations in its industry it has faced challenges in moving to other
product segments with its present culture.
 Organization structure is only compatible with present business model thus
limiting expansion in adjacent product segments.
 Days inventory is high compare to the competitors – making the company raise
more capital to invest in the channel. This can impact the long-term growth of
Hershey
 High attrition rate in work force – compare to other organizations in the
industry Hershey has a higher attrition rate and have to spend a lot more
compare to its competitors on training and development of its employees.
 The marketing of the products left a lot to be desired. Even though the product
is a success in terms of sale but its positioning and unique selling proposition is
not clearly defined which can lead to the attacks in this segment from the
competitors.
 Financial planning is not done properly and efficiently. The current asset ratio
and liquid asset ratios suggest that the company can use the cash more
efficiently than what it is doing at present.
4.1.3 Opportunities Analysis
 The new technology provides an opportunity to Hershey to practices
differentiated pricing strategy in the new market. It will enable the firm to

maintain its loyal customers with great service and lure new customers through
other value-oriented propositions.

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 Lower inflation rate – The low inflation rate brings more stability in the
market, enable credit at lower interest rate to the customers of Hershey.
 New customers from online channel – Over the past few years the company has
invested vast sum of money into the online platform. This investment has
opened new sales channel for Hershey. In the next few years, the company can
leverage this opportunity by knowing its customer better and serving their
needs using big data analytics.
 Government green drive also opens an opportunity for procurement of Hershey
products by the state as well as federal government contractors.
 New environmental policies – The new opportunities will create a level playing
field for all the players in the industry. It represents a great opportunity for
Hershey to drive home its advantage in new technology and gain market share
in the new product category.
 Opening up of new markets because of government agreement – the adoption
of new technology standard and government free trade agreement has provided
Hershey an opportunity to enter a new emerging market.
 The new taxation policy can significantly impact the way of doing business and
can open new opportunity for established players such as Hershey to increase

its profitability.
 The market development will lead to dilution of competitor’s advantage and
enable Hershey to increase its competitiveness compare to the other
competitors.
4.1.4 Threats Analysis
 Increasing trend toward isolationism in the economy can lead to similar
reaction from other government thus negatively impacting the international
sales.
 Intense competition – Stable profitability has increased the number of players
in the industry over last two years which has put downward pressure on not
only profitability but also on overall sales.

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 The company can face lawsuits in various markets given - different laws and
continuous fluctuations regarding product standards in those markets.
 The demand of the highly profitable products is seasonal in nature and any
unlikely event during the peak season may impact the profitability of the
company in short to medium term.
 Rising pay level especially movements such as $15 an hour and increasing
prices in the China can lead to serious pressure on profitability of Hershey
 Imitation of the counterfeit and low-quality product is also a threat to Hershey’s
product especially in the emerging markets and low-income markets.

 Growing strengths of local distributors also presents a threat in some markets
as the competition is paying higher margins to the local distributors.
4.2 SFAS Analysis
Key Strategic
Factors
Strengths
Successful track
record of
developing new
products
Reliable
suppliers

Weight Rating Weighted
Score

Duration
I II III

Comments

0.1

4

0.4

X

Product innovation

0.05

3

0.15

X

It has a strong base
of reliable supplier
of raw material thus
enabling the
company to
overcome any
supply chain
bottlenecks.

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High level of
customer
satisfaction

Weaknesses
The marketing
of the products
left a lot to be
desired

Limited success
outside core
business

Opportunities
Lower inflation
rate

0.1

4

0.4

X

0.1

3

0.3

X

0.1

2

0.2

X

0.1

5

0.5

The product is a
success in terms of
sale but its
positioning and
unique selling
proposition is not
clearly defined
which can lead to
the attacks in this
segment from the
competitors.
Hershey is one of
the leading
organizations in its
industry it has faced

challenges in
moving to other
product segments
with its present
culture.
X

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0

the company with
its dedicated
customer
relationship
management
department has able
to achieve a high
level of customer
satisfaction among
present customers
and good brand
equity among the
potential customers.

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The low inflation

rate brings more
stability in the
market, enable
credit at lower
interest rate to the


New customers
from online
channel

0.05

3

0.15

Opening up of
new markets

0.1

3

0.3

0.1

3

0.3

The company
can face lawsuits
in various
markets given

0.1

4

0.4

X

Growing
strengths of
local distributors

0.1

3

0.3

X

Total Score

1.00

Threats
Intense
competition

X

X

X

3.4
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customers of
Hershey.
The company can
leverage this
opportunity by
knowing its
customer better and
serving their needs
using big data
analytics.

The adoption of new
technology standard
and government free
trade agreement has
provided Hershey
an opportunity to
enter a new
emerging market.
Stable profitability
has increased the
number of players in
the industry over
last two years which
has put downward
pressure on not only
profitability but also
on overall sales.
Different laws and
continuous
fluctuations
regarding product
standards in those
markets.
A threat in some
markets as the
competition is
paying higher
margins to the local
distributors.

4.3 IFAS – EFAS Analysis

Internal Factors
(IFAS)
External Factors
(EFAS)

Opportunities
- Lower inflation
rate
- Online customers
- Government
green
- Market
development
Threats
- Intense
competition
- Face lawsuits
- Rising pay level

Strengths
- Market strategies for its
products
- Developing new products
- Reliable suppliers
- Customer satisfaction
- Strong dealer community
- Strong distribution network

- Good returns on capital
expenditure
Strength Opportunities (SO)
Strategies
Leveraging brand recognition
in new segments

Weaknesses
- Gaps in the product range
- Limited success outside
core business
- Only compatible with
present business
- High days inventory.

Weakness Opportunities (WO)
Strategies
Investing into customeroriented services and supply
chain

Weaknesses Threats (WT)
Strategies
Get out of the business and
focus on growth areas

Strength Threats (ST)
Strategies
Investing into R&D to
thwart Consumer/NonCyclical industry
disruptors.

5 Hershey Five Forces Analysis
Porter’s Five Forces Analysis of Hershey's covers the company’s competitive
landscape as well as the factors affecting its sector. The analysis focuses on measuring
the company’s position based on forces like threat of new entrants, threat of
substitutes, bargaining power of buyers, bargaining power of suppliers and
competitive rivalry.

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Hershey's Five Forces analysis helps to analyse its current position in the market
based on factors like competitors, customers, suppliers, financial strength & alternate
solutions.
5.1 Threat of New Entrants
The threat of new entrants in the Hershey's Porter Five Forces Analysis can be
explained as follows: The Hershey Company, popularly known as Hershey’s, is one of
the leading chocolate manufacturers in the world. It produces chocolate and nonchocolate confectionery as well as baked sweets. The confectionery market is roughly
206 billion USD currently and is projected to reach up to 225 billion USD in the next
couple years.
The target market of Hershey’s, as also elaborated in one of their marketing slogans
(“There is something for everyone”) is basically everyone. They offer a wide range of
products from chocolates, candies, and mints, to spreads and beverages to cater to
different income and age groups. Hershey’s operates in more than 70 countries

worldwide. For any new entrant, it is very difficult to maintain competitive prices due
to the economies of scale that works in the favour of Hershey’s and the other larger
players in the market. Additionally, these incumbent players enjoy well-established
supply chain and distribution channels, as well as a well-maintained brand image. Any
new entrant will have to compete with these players for shelf spaces and other shared
resources, which adds up to create an overall high entry barrier. Hence, on a global
level, the threat of new entrants is low.
5.2 Threat of Substitutes
Below are the threats of substitute products of Porter’s Five Forces analysis of
Hershey's: The chocolate confectionery industry offers highly differentiated products.
The industry offers chocolate spreads, bars, and candies and while other sweets and
baked goods are close substitutes, these are not true replacements for chocolate
products. These sweets and confectionery items are produced by large companies and
restaurants, as well as local eateries and shops at different price points and varieties.
So even though the number of substitutes is limited, the customers do not face any
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switching costs in shifting to a substitute product. Hence, the threat of substitutes is a
moderate force within the industry in which the Hershey Company operates.
5.3 Bargaining Power of Customers
In the Hershey's Porter Five Forces Analysis the bargaining power of the
customers can be explained as:
The volume of customers for the confectionery industry is very high. The industry size

is more than 200 billion USD, with some of the leading players like Mars and
Hershey’s with worldwide sales in tens of billions of USD. With respect to the total
sales, the sales value per customer is small, which means that the bargaining power of
customers is relatively low.
Further, the products offered by the industry are differentiated in terms of the taste and
composition of the products. Some of the products are exclusive to the companies and
are highly popular among the consumers, which further indicates to low bargaining
power of customers. The customer segment, too, is very broad, and even though the
low- and middle-income group segments can be price sensitive, the overall customer
volume dilutes the force. However, there is no switching costs to customers and there
are many customers available, there can be some bargaining ability for customers in
that context. But, overall, it is a weak to moderate force for the confectionery industry.
5.4 Bargaining Power of Suppliers
Following is the bargaining power of suppliers in the Porter’s Five Forces
analysis of Hershey's:
Hershey’s sources its primary raw material i.e., cocoa from local farmers in West
Africa. The other raw materials are obtained from a wide range of suppliers. Due to
the large number and low concentration of suppliers, their bargaining power is low.
Further, none of the suppliers provide any exclusive or largely undifferentiated
product, which means that they cannot affect production by withholding supplies. The
companies can easily switch to alternative suppliers without incurring major costs of
switching.
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