Strenghts: *Hershey established The Milton Hershey School for orphan boys because of giving important of social and

environmental responsibility so that public image increases. *Hershey started firstly the chocolate manufacturing renaissance. *Hershey has strong name and brand image because of becoming the largest pasta manufacturer. *Hershey produce diversified products like gum and chocolate. * Hershey focus on many industry segment(entertainment, resorts,restaurant,commercial) so that Hersheys name easily spread on large market areas. * Hershey is very cooperative with students and professors; Hershey has a toll-free number (1-800-468-1714) that students or professors can call to obtain additional information about the company. This suituation make a difference for company. *Hersheys facility was designed to include housing, parks and schools for employees so that Hershey motivate employees. *Hershey predecessor have a more contentious relationship with the board of directors. Weaknesses: *Hershey has more long term debt than key competitors *Company is hard put to do company control because of entering different geographic market. *Advertisement expenses increased by 46 % Opportunities: 1.Customers want to richer products/changing tastes 2.Hershey serve dark chocolate for health benefit 3.To eliminate child labor laws for African countries, Hershey involved International Cocoa Initiative Foundation. 4.Efficiency improvements for distribution 5.Hershey has power communication both customers and suppliers 6.The company products cocoa in new areas (i.e. India) 7.Company has a lot of different market area because of increasing in global trade. 8.Hershey has strong customer loyalty. Threats: 1.Nestle, Mars and Cadbury are primary power competitors. 2.Hershey s product demand decrease because of increasing diabetes. 3.Society expect to aware greater environmental concern so that Hershey establish treatment facility which has high cost. 4.Increasing base price for chocolate raw materials change according to different geographic areas. 5.Lack of government support to developing countries (poor education of new technologies) 6.Increase cost of manufacturing technology process because of always improving of technology 7.Steady increase of minimum wage of employees for future years. 8.Steady price increase of milk and sugar. 9.Decreasing agricultural areas because these areas use for establishing factory, buldings. 10.Natural disasters (i.e. hurricanes) are disrupting growth of chocolate ingredients. 11.Increasing fluctuation of exchange rates. 12.Nestle and Mars have different divisions such as beverages,drink How Can We Contribute The Hersheys Company? Hershey can establish a chocolate making hobby center for every age of people who want to create a different design of chocolate and this strategy can be costly but public image inrease thanks to this strategy. Hershey can establish factories in close to growing up cocoa region for reducing transportation cost. Hershey can produce drink beverage such as schweppes of Cadburry. This strategy can be costly because it have to buy different technological machine and hire employees. Hershey needs to continue to focus on the global market.Hershey currently has a limited presencein many areas of the world.They have,however begun to expanded into many new areas and they must integrate into each countrys culture. Hershey should continue to provide new cholocolate flavored coffee products in supermarkets and coffee stores ( i.e Starbucks,Joe Mugs).Consumers have grown to appreciate specialty coffees and overall coffee shops experiencein recent years.Further,Hersheys name holds a great deal of clout with many consumers.This allows Hershey to market to new segments,more consumers and participate in new trends.Further,it provides Hershey the oppourtinity to colloborate with the coffee manufacturing industry and other food industries. Long Term Objectives Company can come up with variety of Gum product and chocolate to increase the market share. Increase the production capacity of Chocolate and Candy Motivate and inspire employee behavior that incentive high performans in different business areas. They have to find out the new channels of distribution and adopt the new channels toincrease the sales Company provide better customer service than competitors. http://hersheycompany.wordpress.com/category/2-swot-analysis/ ___________ _____________ http://www.scribd.com/doc/15196558/Hershey-Foods-Corporation-Swot-Analysis Hershey Foods Corporation History:

Milton Hersheys love for candy making began with a childhood apprenticeship under candy maker Joe Royer of Lancaster, Pennsylvania. Mr. Hershey was eager to own a candy-making business. By 1901, the chocolate Industry in America was growing rapidly. Hersheys sales reached $662,000 that year, creating the need for a new factory. Mr. Hershey moved his company to Derry Church, Pennsylvania, a town that was renamed Hershey in 1906. The new Hershey factory provided a means of mass-producing a single chocolate product. 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 orphanage. In the 1990s, Hershey acquired Ronzoni Foods Corporation from Kraft General Foods Corporation for $80 million. The purchase include the dry pasta, pasta sauces, and cheese business of Ronzoni Foods, which strengthened Hersheys position as a branded pasta supplier in the United States. The latest Mission Statement of Hershey Foods is: To be a focused food company in North America and selected International markets and a leader in every aspect of our business. Hershey spent most of 1994 and 1995 reorganizing and today is comprised of Four Divisions: (1) Hershey chocolate North America, (2) Hershey Grocery, (3) Hershey International, and (4) Hershey Pasta Group. Case SWOT Analysis Strengths: Hershey Foods has grown from a one-product, one plant operation to a $4 billion company with many U.S. and international plants providing an array of quality chocolate and confectionery products and services. Hershey entered 1996 as the largest candy maker in the United States with 30.7 percent market share. Hershey is the largest pasta manufacturer in the United States with 28.4 percent market share. Hershey Foods Corporation is committed to the values of its founder Milton S. Hersheythe highest standard of quality, honesty, fairness, integrity, and respect. The firm makes annual distribution of cash, products, and services to a variety of national and local charitable organizations. The corporation operates the Milton Hershey School for socially disadvantaged children and is the sole sponsor of the Hershey National Track and Field Youth Program. Hershey also makes contributions to the Childrens Miracle Network, a national program benefiting childrens hospitals across the United States. Hersheys main chocolate factory, for example, occupies more than 2 million square feet, is highly automated, and contains much heavy equipment, vats, and containers. It is the largest chocolate plant in the world. Hershey is an exemplary organization in terms of business ethics and social responsibility; a significant part of Hershey Foods profits go toward operating the Milton Hershey School for Orphaned Children. Hershey is very cooperative with students and professors; Hershey has a toll-free number (1-800-468-1714) that students or professors can call to obtain additional information about the company. Weaknesses: Hersheys global market share in the chocolate confectionary industry in only 10 percent, lowest among its competitors. Concern for the natural environment is an issue Hershey should address before competitors seize the initiative. The average price of Cocoa beans rose 25.8 percent in 1995, following a 28.9 consumption. The price per pound in 1995 was $0.72 and is expected to continue percent rise in 1994. World production is not keeping pace with increased increasing. This is a major problem for Hershey because even a small price increase at the retail level severely restricts consumer buying. +Some analysts contend that Hershey International as a separate division producing and selling diverse products is an ineffective organizational design. Opportunities: China and India are huge untapped markets. Malaysia, Indonesia, Vietnam, and Thailand also are untapped, So, Hershey has the opportunity to gain a foothold in those Countries. There is another opportunity for Hershey to develop environmentally safe products and packages, reducing industrial waste, recycling, and establishing an environmental audit process are strategies that could benefit Hershey. Another opportunity is that Hershey diversifies more into non-chocolate candies because that segment is growing most rapidly in foreign countries like U.S & U.K. Threats: The main competitors of Hershey Foods are Mars and Nestle. Mars is already a threat for Hershey, because Mars has a stronger presence than Hershey in Europe, Asia, Mexico, and Japan. Unlike Hershey, Mars has historically relied upon extensive marketing and advertising expenditures to gain market share, rather than on product innovation. 25 percent of Nestls revenues and profits come from coffee, and adverse economic occurrences in South America, particularly Brazil, affect the company. Nestle plans to continue to play to its strengths, international markets outside the United States, to combat Hershey.

http://www.slideshare.net/johnangelooquiana/savedfiles?s_title=casestudyhersheyfoodcorporation&user_login=nnaoj_10 1. Introduction The Hershey Company is famously known for being the biggest manufacturer of chocolates and confectionery products in USA, having hired over 15,000 employees worldwide and exporting their products to ninety different countries over the world.

The Hershey Company has several popular brands, some of most notable ones being Hersheys Chocolate Bar, Kit Kat, Hersheys Kisses, Reeses, York Peppermint Pattie, Rolo and Krackle Bar. With the help of these brands, Hershey gained success and popularity, making the companys net worth over $4 billion dollars. Hersheys products include chocolates, confectioneries, food and beverage related products such as baking ingredients, toppings etc. The company lives by its mission statement, Undisputed Marketplace Leadership (www.hersheys.com). Hershey continues to preserve a higher position by successfully converting consumer desires into reality.

2. Brand Research 2.1 Detailed History Milton Hershey was fascinated with the process of making chocolate, and his interest began at an early age under candy maker Joe Royer of Lancaster, Pennsylvania. Milton was an entrepreneur who was keen to own a candy-making business. His first successful business was the Lancaster Caramel company and it was only in 1893 that Milton expressed interest in making Chocolates. Soon after, Milton began producing chocolate coated caramels that eventually led to the founding of Hershey Chocolate Company in 1894. After much experimentation, Milton discovered the famous Hersheys Chocolate recipe and sold his caramel business in 1900 for the sum of $1 million. In 1903, Milton built his company at a place called Derry Township in Pennsylvania, which was later renamed Hershey, Pennsylvania in 1906. This was the first step towards the companys expansion since this city had a large population, was easily accessible to ports that would supply sugar, cocoa beans etc, and had a vast amount of dairy farms. As quoted on the corporate website, In a long and useful life, Milton S. Hershey proved himself to be a courageous entrepreneur, a determined builder and a compassionate humanitarian (www.thehersheycompany.com) 2.2 Company Mission statement The Hershey Companys mission statement, according to their corporate website, read as follows, Our mission is to be a focused food company in North America and selected international markets and a leader in every aspect of our business. Our goal is to enhance our #1 position in the North American confectionery market, be the leader in U.S. chocolate-related grocery products, and to build leadership positions in selected international markets (www.hersheys.com) This statement is further broken down into five categories to ensure leadership in the marketplace. 1. Hershey values creation of their products. 2. Encourage and promote healthy living. 3. Continuously note consumer desires for their product. 4. Maintain high levels of ethics and conduct. 5. Sustain a strong result oriented approach to business. 2.3 Corporate Expansion In 1968, the company was renamed as Hershey Foods Corporation. During this time, Hershey sought to expand its product line by partnering up with several related companies and even created different brands for their own products. Some famous partnerships include San Giorgio Macaroni Foods(1966), Y&S Candies, makers of Twizzlers liquorice(1977), Peter Paul/Cadburys U.S. th Confectionery operations(1988) and Ronzoni Foods(1990). Hershey Foods Corporation became the industry leader by the end of the 20 century. The company continued diversifying and soon acquired Joseph Schmidt confections in 2005 and a year later, in 2006, acquired Dagoba Organic Chocolates. This maintains Hersheys top position in the North American market. (www.hersheys.com) 3. P.E.S.T. Analysis 3.1 Political/Legal Analysis Chocolate producers unable to distribute products to certain countries. Major issue is child labour in cocoa farms Mostly affected areas in Africa where child labour runs rampant. The Chocolate Manufacturers Association(CMA) and the World Cocoa Foundation(WCF) created the Harkin-Engel Protocol,which is an agreement that focuses on child labour practices on cocoa farms in West Africa (U.S. Labour, 2006). Result opened new channels to export and distribute cocoa to international countries. 3.2 Economic Analysis In 2006, due to hurricane impact, the price of refined sugar decreased from $0.38 to $0.31 per pound (Hersheys 10-K, 2009). This allowed companies to cut retail costs and redistribute the savings. A lot of waste material is produced, and companies spend thousands of dollars on disposing it. However, there is a new opportunity born due to recent developments in biofuel. Since 2007, Lovell discovered a new method of production that can use the by-product of chocolate manufacturing companies. 3.3 Sociocultural Analysis Consumers want a larger variety of chocolates and healthier alternatives to the traditional chocolates. Dark chocolates provided several health benefits by adding a flavonoid in the chocolate that prevents various cardiovascular problems (Chocolate Trading Co., 2005). 3.4 Technological Analysis The chocolate and cocoa industries lack supports of Non-Government Organizations (NGO), which restrict the farmers access to business guidance, funding, and continuing education.

4.

Farmers cant learn new technologies making them less efficient. This prevents the chocolate manufacturers from gaining cocoa efficiently to create more chocolates for the consumer.

Target Audience The primary consumers of Hershey Chocolates include a vast audience ranging from children, teenagers and adults. But mostly, Hershey targets its consumers ranging from age 13-30 years old. The chocolate bar is considered a snack or is part of a daily diet in case of some athletes. The chocolates are available in most grocery stores, gas stations, malls etc. Consumers primarily buy chocolates according to their price. They also prefer if the chocolates fit their health and nutritional requirements, although there is a very low margin of difference between selecting according to price and according to health.

5.

S.W.O.T. Analysis for Hershey Food Corporation

5.1 Strengths Hershey has grown from one product one plant to a $4 billion company with various quality chocolates. Its a strong brand name and has a strong image. By 1996, Hershey was largest candy maker in U.S. with 30.7% market share It is also the largest pasta manufacturer in U.S. with 28.4% market share Worlds largest chocolate plant in U.S., with more than 2 million sq. feet. Powerful partnerships (Starbucks, Kraft, Coca-Cola etc) Major profits go to Milton Hershey School for Orphans. Also donates to Red Cross, UNICEF, and Habitat for Humanity etc. Cooperative with students and professors. Toll free number 1800-468-1714, to access additional information on request.

5.2 Weaknesses Hersheys Global market share is very low, around 10% Concern for natural environment needs to be expressed. Cocoa production rates are rising, and even a small price increase at retail level affects consumer buying. Poor decision making as company relies on brand loyalty and has reduced advertising expenditure.

5.3 Opportunities Potential to expand range of Dark/Sugarfree products for health benefits. Use partnership ventures to create chocolate flavoured coffee products. Produce cocoa in new areas other than Africa Produce bio-fuel from the chocolate by-products Develop environment friendly packaging, recycling industrial waste China, India and majority of SouthEast Asia are untapped markets.

5.4 Threats -

Consumer demanding healthier substitutes. Steady rise in prices of cocoa, milk and sugar. Main competitors are Mars and Nestle. 25% of Nestle revenues profits come from coffee. Nestle plays its strengths in international markets. Hershey is more focused on just local markets. Mars uses extensive marketing and advertising expenditures to gain market share. Hershey just uses product innovations

6. Five forces 6.1 Threat for new entrants There is very little threat for new entrants in the chocolate industry because of the current economy, the various differences in products, and the constant need for large capital requirements. Also, since there is a lack of distribution channels and with the strict FDA regulations kept in place for food manufacturers, the threat for new entrants is almost non-existent (Michael et al, 2007) 6.2 Bargaining powers of buyers As stated by Michael et al, 2007, the bargaining powers of buyers increase by two factors: a number of large volume buyers and the buyers relatively low profits from the product. But since the industry as so many different products, the presence of different costs, the bargaining power of the buyers is low to moderate at best. 6.3 Bargaining power of suppliers The bargaining power of suppliers has decreased since the chocolate industry is an important customer for the suppliers. But the power is moderate to high since the suppliers are concentrated; there are no substitute products available. 6.4 Pressures from substitute products

The chocolate companies compete with various substitutes that threaten the industry. There are various flavours that are used as a substitute for chocolate. These include vanilla, butter, mint, rose, lemon, etc. Many consumers readily switch to these as they also consider chocolate to be unhealthy. 6.5 Rivalries amongst competitors Among the chocolate industry, there are intense rivalries amongst the highest competitors. There are numerous strong chocolate manufacturers giving out various varieties of chocolates at different prices, resorting to creative advertising schemes, constantly giving out new products and high quality chocolates to satisfy the consumer needs. 7. Marketing mix

7.1 Product The new Hershey Slim dark chocolates will have a flavonoid substance added which helps protect the cardiovascular system and is efficient until three hours upon consumption (Chocolate Trading Co., 2005) Produced for health conscious consumers to ensure that Hershey favours healthier alternatives. Hershey will also assure people with health issues such as diabetics, that their chocolates are a safe and healthy alternative. The core strategy is to reinvent the image of chocolates from being a source of a lot of sugar and calories therefore making people fat and/or diabetic, to an image where chocolates are considered an aid for protecting the consumers from heart disease and enhancing the rate of metabolism, by using flavonoids in their products. 7.2 Price To keep the chocolates reasonably affordable, keeping current financial trends in mind. To have a promotion campaign in part with the contest Currently chocolate bars are priced at $2.50 each. As part of the contest promotion, the chocolate will be sold at $2.00 each. 7.3 People Target Audience would primarily be consumers from age range of 13-30 years, particularly health conscious individuals. The most bought products are chocolate bars, which some consider as a snack, while others as part of their daily diet. 7.4 Place The chocolates will be available in grocery stores, malls, supermarkets, gas stations, coffee shops, airports, and at the main outlets. Major Channel Distributors Supermarkets Department Stores Pharmacy Duty Free Outlets Grocery store Gas Stations Main outlet Secondary Channels Commercial stores (7-11, Cheers) Amusement areas (cinemas, parks)

7.5 Promotion The chocolates will be marketed through an interactive contest. Also, some promotional programs could be held under joint sponsorships through gyms/spas. 8. Objectives and Strategies 8.1 Product To reinvent Hershey Chocolates as a health conscious low calorie dark chocolate. To reassure health conscious consumers to purchase this new product by providing all the necessary nutritional information 8.2 Objectives To promote the health benefits of the new Hershey Dark Chocolate Help the consumers change their mind-set that chocolates are unhealthy. To spread awareness and increase sales of the product. 8.3 Strategy To increase sales using promotional materials such as an interactive contest.

We can use one of the three proposed strategies. 1. Hershey Dark Chocolate Mascot Strategy Each chocolate has a code which in the package Unlocks part of a character. A total of 25 unique parts allowing consumers to create 120 variations of characters. Customers can go online and create the character of choice online and submit to the contest Winning character will be the new mascot for the Hershey Slim. Winner will also receive gift vouchers and a 1 month membership to California Fitness Gym Healthy mind, healthy body with Hershey Strategy

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In the chocolate packaging are instructions to visit website Consumers have to play a classic memory game which has five levels of difficulty. Cards show healthy foods, and Hershey products Winners who complete the final score under a specific time limit win a one day all access pass to California Fitness Gym WrapperCash Strategy Each Hershey Slim wrapper contains points These points can be collected under an online account Purchases can be made from the Hershey shop using these points. There would be a limit to the number of points one can input per day, per account. The more you save, the bigger better things you can buy. Products would mostly include exercise equipment. Possible to buy products at half their retail price using the point system.

References Books/Papers/ Journals th th Chocolate is good for you Chocolate Trading Co. July 13 , 2005. Retrieved January 15 , 2011 Hershey Co. Form 10-K, The Hersheys Company, December 31 , 2009. th Retrieved January 14 , 2011. http://www.thehersheycompany.com/assets/pdfs/hersheycompany/2009AnnualReport.pdf th th Lovell, Jeremy. Eat More Chocolates and Help the Environment PlanetArk.com November 7 , 2007. Retrieved January 14 , 2011. th Michael et al. The Hershey Company Introduction the World of Chocolate, 2007. Retrieved January 10 , 2011. U.S. Labour Department Funds Project to Evaluate Effectiveness of Anti-Child-Labour Efforts in the Cocoa Industry. Worlds Technology News. th th October 4 ,2006. Retrieved January 14 , 2011. Websites. www.hersheys.com www.thehersheycompany.com Other Lot of information received directly from Hershey Company via Student and Teacher Resources http://www.hersheys.com/discover/resources.asp
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