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CASE ANALYSIS
OF
SUBMITTED TO:
Ms. Nadira Ma’am
SUBMITTED BY:
Atul Jain (69)
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 1
TABLE OF CONTENTS
EXECUTIVE SUMMARY 5
OBJECTIVE 6
CHAPTER. 1. INTRODUCTION
1.1 BACKGROUND 7
1.2 GROWTH 8
1.3 GROWTH GLOBALLY 9
CHAPTER. 2. PRODUCTS 10
3.1 STRENGTHS 11
3.2 WEAKNESSES 11
3.3 OPPORTUNITIES 12
3.4 WEAKNESSES 12
CHAPTER. 4. FINANCE
4.1 FINDINGS 13
4.2 RECOMMENDATION 14
CHAPTER. 5. MARKETING
5.1 FINDINGS 15
5.2 RECOMMENDATION 16
CHAPTER. 6. PRODUCTION
6.1 FINDINGS 17
6.2 RECOMMENDATION 18
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 2
CHAPTER. 7. ORGANIZATION STRUCTURE
7.1 FINDINGS 19
7.2 RECOMMENDATION 20
CHAPTER. 8. CONCLUSION
RESULT OF STUDY 21
BIBLOGRAPHY 22
ANNEXURE .1.
ANNEXURE .2.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 3
TABLE OF PLATES
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 4
EXECUTIVE SUMMARY
Chocolate Town, USA, the air in this city actually smells like chocolate.
Hershey has grown from a one product, one plant operation in 1894 to a $ 4.4
billion company producing as array of quality chocolate, nonchocolate and grocery products.
Hershey market share is less than 10 percent, lowest among its competitor. So,
Hershey should come up with new strategies in finance, marketing, production department
and in organization structure to increase the market share and compete globally.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 5
OBJECTIVE OF THE STUDY
To Analysis the Hershey Food Corporation situation and suggest certain strategies
Suggest the certain techniques and strategies to increase the market share and to
compete globally.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 6
1.1 BACKGROUND
Hershey has grown from a one-product, one plant operation in 1894 to a $4.4. Billion
company producing as array of quality chocolate, non chocolate, and grocery products. The
company markets confectionery and grocery products in over 60 countries worldwide, down
from 90 countries a few years ago.
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. The legendary Milton Hershey died in 1945.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 7
1.2 GROWTH
In the year of 1901, the Hershey company sales were only $662,000 and within the
span of 10 years the Hershey sales reached $ 5 million in 1911. Thereafter Hershey’s sales
increased 4 to 5 percent annually as we can see in the Figure .1.
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005
Source: www.hersheys.com
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 8
1.3 GROWTH GLOBALLY
The global chocolate market is forecast to reach a value of US$12.9bn by 2011. This
represents an increase of more than 85% in value terms compared with present levels, and
provides an indication that the market in many parts of the world has only just started to
develop towards its potential.
Growth
16
14 2015, 14
12
10
8
6
4
2
0
2000 2002 2004 2006 2008 2010 2012 2014 2016
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 9
2. PRODUCTS
Hershey’s North America operations produce an extensive line of chocolate and non
chocolate products sold in the form of single bars, bagged goods, and boxed items. These
products are marketed under more than 50 brands names and sold in over 2 million retail
outlets in North America.
In 2004; Hershey introduced the following new products: Hershey’s Kisses filled with
caramel milk chocolates; Ice Breakers Liquid Ice mints; Hershey’s Snack Barz rice and
marshmallow bars; Hershey’s Smart Zone nutrition bars; Take5 candy bars; Hershey’s
Almond Joy, York, and Reese’s cookies; Reese’s Piece candy with peanuts; and Reese’s Big
Cup, etc.
Hershey's
Hershey's
Bliss
Reese's
Jolly
Rancher
Kisses
Twizzlers
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 10
3. SWOT ANALYSIS
3.1 STRENGTHS:
Huge man power approx. 13,700 full-time and 2,300 part-time employees.
3.2 WEAKNESSES:
Less than 10 percent of Hershey’s sales are generated outside the United States.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 11
3.3 OPPORTUNITIES:
3.4 THREATS:
International Competitors.
Change in Consumer’s life style towards low fat and healthy food.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 12
4. FINANCE
4.1 FINDINGS
Income
700000
600000
500000
400000
300000
200000
100000
0
1998 1999 2000 2001 2002 2003 2004 2005
Sales
Hershey Nestle M&M Mars
3%
22%
75%
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 13
Figure No.3, is defining the income of Hershey’s food, the figure is clearly showing
the growth of Income in Hershey’s Food after 2001. Hershey’s net income was $590.9
million in 2004 compared to $457.6 million in 2003.
Now from the Figure No.4, we can easily identify the Nestle is leading with 75
percent of sales from its competitors because it is the largest food company in the world.
Nestle sells products in over 360 countries on all seven continents.
But if we talk about Hershey Food Corporation, it has the minimum percentage of
sales i.e. 3 percent which is very low comparatively other two competitors because it has only
limited branches worldwide, the company markets its products in over 60 countries
worldwide and it generates only 10 percent sales from outside the United states.
4.2 RECOMMENDATIONS
To overcome from the problem means to increase the sales Hershey should adopt
certain strategies like,
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 14
5. MARKETING
5.1 FINDINGS
Expense Chart
900
800
Expense in million $
700
600
500
400
300
200
100
0
1998
1.00 2002
2.00 2003
3.00 2004
4.00
Advertisement 187.5 162.9 145.4 137.9
Selling, Marketing Expenses 868.7 833.4 816.4 847.5
Income 410.2 403.5 457.5 590.8
This Figure is indicating the Expense of Hershey Food Corporation and Income also,
by the help of this figure we can identify that in which year Hershey invested more amount
on Advertisement and Other Expenses then we can relate with the Income and find out the
Expenses was worthwhile or not.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 15
As per the figure Hershey decreased its expenses, in the year of 1998, Hershey
invested $ 187.5 million on Advertisements and $ 868.7 million in Selling, Marketing and
other expenses, total $ 1056.2 million in 1998. But in 2004, Hershey invested only $ 137.9 on
Advertisements and $ 847.5 million in Selling, Marketing and other expenses, total $ 985.4
million in 2002.
But on the other hand Income is increasing. In 1998, Hershey income was 410.2
million and it increased about 44 percent in 2004.
5.2 RECOMMENDATIONS
They have to invest in advertisement, if they have to have to maintain the market
share/increase the market share.
They have to find out the new channels of distribution and adopt the new channels to
increase the sales.
Go international advertisement to promote the product.
Use Multinational channel to increase the sales.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 16
6. PRODUCTION
6.1 FINDINGS
Kraft
Ferrero
Hershey
Nestle
Mars
Source: www.investis.com
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 17
6.2 RECOMMENDATIONS
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 18
7. OGANIZATION STRUCTURE
7.1 FINDINGS
VP for Strategy and
Innovation
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 19
Hershey does not make public an organization chart, but titles of executives suggest
that Hershey operates from a centralized, functional structure with no divisional presidents.
This type of structure would be somewhat unusual for an organization of Hershey’s size,
since the more common design would be decentralized in some manner.
7.2 RECOMMENDATION
Chairman of
the Board
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 20
RESULT OF THE STUDY
The results from the SWOT analysis indicate that Hershey Foods Corporation has
great strengths and opportunities but also has significant weaknesses and faces potential
threats.
This study focused on the formulation of global product strategies for Hershey’s
future expansion.
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 21
BIBLOGRAPHY
1. Case: Hershey Foods Corporation – 2005 Fred R. David (Francis Marion University).
Case Analysis – Hershey Food Corporation by Atul Jain [FOSTIIMA Business School] Page 22