Summary of Case Study 3

Company Introduction:
The Hershey Company is a leading chocolate manufacturer in the global chocolate confectionery
market, with a focus on bringing goodness to the world through its iconic brands and corporate
values rooted in founder Milton Hershey's vision.
Contemporary Issues Faced:
Hershey faced challenges related to its global supply chain, including issues with labor certification,
deforestation, and social expectations. The company also struggled with its ESG performance, falling
short of being recognized as a top ESG company in 2020.
Proposed Solution:
To address these challenges, Hershey needed to improve its supply chain transparency, compliance
with human rights, and sustainability efforts. Implementing a more robust corporate social
responsibility strategy, focusing on eradicating child labor, and enhancing its environmental and
human rights policies were crucial steps towards demonstrating real change and commitment to
social responsibility.
Summary
Hershey's, a well-known American chocolate company built by Milton Hershey, is

facing challenges regarding its global supply chain. The company known for its
iconic candies like Hershey's Kisses and Reese's faces criticism for its reliance on
cocoa beans potentially harvested with child labor in West Africa. This lack of
transparency and ethical sourcing has led to consumer concerns, negative publicity,
and potential legal issues.
To navigate these challenges, Hershey's CEO, Michele Buck, needs to find solutions
that demonstrate a real commitment to change. This could involve increased
transparency in sourcing, partnering with organizations to combat child labor, and
ensuring fair wages for cocoa farmers.
 Michele Buck became the CEO of Hershey Company in 2017, but the
company had a poor record on child labour practices.
 Hershey ranked low on Green America's 2019 Chocolate Company
Scorecard.
 Public pressure for ethical sourcing and human rights compliance was
increasing.
 Hershey faced a lawsuit for child labour practices in its cocoa supply chain.
 Michele Buck needed to decide how to address these challenges
Important findings of the text on Hershey's company origins:
 Founded in the 1880s by Milton S. Hershey, initially as Lancaster Caramel

Company.
 Entered chocolate business in 1894 after inspiration from German machinery.
 By 1900, Hershey became the main focus, leading to the world's largest
chocolate factory in Derry Township, PA (later Hershey, PA).
 Known for innovative products like Hershey's Kisses (1907), Mr. Goodbar
(1925), and wartime emergency ration bar.
 Grew through acquisitions like Reese's in the 1960s and Cadbury USA in the
1980s.
 Diversified into non-chocolate snacks like Skinny Pop popcorn (2018), but
also divested some businesses like pasta.
 Faced increased competition in the 1970s, leading to a shift from Milton's
principle of relying solely on quality for promotion.
 Started advertising to consumers and transitioned company tours to
Hershey's Chocolate World museum with interactive exhibits.
Milton Hershey and his values:
 Values: Fairness, worker well-being, generosity.

 Learned from experience: Faced failures early on, learned from them (fresh
milk in candy).
 Reliance on others: Supported by others during tough times (Henry
Lebkicher providing help).
 Innovation: Pioneered fresh milk in caramels (Hershey Crystal A).
 Entrepreneurial spirit: Persistent and adaptable, starting multiple
businesses.
 Philanthropy: Established the Milton Hershey School and M.S. Hershey
Foundation through trust.
 Voting rights: Trust ensured control over Hershey Company through minority
stake with majority voting rights (80%).
 Famous quotes: Emphasized the importance of helping others (children) for
happiness and a fulfilling life.
Hershey's Values :
 Founder's vision: Milton Hershey's vision of making chocolate accessible to

everyone continues to inspire the company's mission.
 Core values: Togetherness, integrity, making a difference, and excellence.
 Values in action: Caring for employees and communities, environmental
responsibility, supporting children, and offering high-quality affordable snacks.
 Legacy of values: These values have guided the company for over 125
years and are seen as core to its future growth.
Hershey's Portfolio in bullet points:
 Hershey has a portfolio of over 80 global brands.

 It is the number one chocolate producer in North America.
 Well-known chocolate and candy brands include Hershey's Kisses, Reese's,
Twizzlers, Mounds, Almond Joy, York, and Kit Kat.
 Hershey also offers grocery goods like baking products, toppings, and
beverages.
 The company has expanded into popcorn and other savory snacks.
Hershey's Marketing Strategy:
 Distribution: Focus on North America, with McLane Company being a major

distributor.
 Market Share: Strong presence in the US with high household penetration
rate.
 International Expansion: Adapts product portfolio with regional brands like
Pelon Pelo Rico in Mexico.
 Marketing Strategy:
o Strong brand recognition
o Product innovation
o Consistent product quality
o Advertising and promotions
o Spending on advertising (e.g., $517 million in 2020)
 Vision:
o Capture more snacking occasions
o International expansion
o Best-in-class operations and partnerships
o Investment in people and communities
 Brand Protection:
o Signed Cocoa Forest Initiative against deforestation
o Invested in Cocoa For Good
o Earned fair trade certifications
Hershey's Financial Performance:

 Increased revenue and net income from 2017 to 2020 (Buck's tenure as
CEO).
 Marginal investment in research and development.
 Reliance on marketing and acquisitions for competitive edge.
 Innovation through digital transformation:
o Utilizing consumer insights from digital channels.
o Improving efficiency in merchandising and supply chain.
o Higher average selling prices in e-commerce compared to physical
stores.
 Increased cash reserves from 2017 to 2020.
 Overall, strong financial performance during Michele Buck's leadership.
Hershey's CEO, Michele Buck:
 Background: Working-class family, ambitious, self-made ("bootstrapper").

 Education: MBA graduate, strong analytical, creative, and interpersonal
skills.
 Career Path: Joined Hershey in 2005 as CMO, rose through the ranks to
CEO.
 Focus: Maintained and enhanced brand power, value, and reputation.
 Results:
o Increased brand value (intangible assets tripled from 2017 to 2020).
o Strong financial performance during her tenure.
 Leadership Style:
o Values reputation through brands, people, and purpose.
o Focuses on consumer insights and digital transformation.
o Believes in collaboration with diverse board members.
 Social Responsibility:
o Launched Cocoa For Good initiative with $500 million investment.
o Committed to updating environmental and human rights policies.
Supply Chain, Societal, and Legal Challenges Faced

by Hershey
Supply Chain Challenges:
 Child Labor: Hershey has been criticized for using cocoa beans harvested
with child labor in West Africa, specifically Côte d'Ivoire and Ghana.
 Lack of Transparency: Hershey has become secretive about its cocoa bean
sourcing, making it difficult to track labor practices.
 Fragmented Farming System: The cocoa farm system in West Africa is
highly fragmented, making it difficult to monitor working conditions across all
farms.
Societal Challenges:
 Consumer Concerns: Consumers are increasingly concerned about ethical

sourcing and labor practices in the chocolate industry.
 Negative Publicity: Reports about child labor in Hershey's supply chain have
damaged the company's reputation.
 Potential Boycott: Hershey faces the risk of a consumer boycott if it doesn't
address child labor concerns.
Legal Challenges:
 Increasing Regulations: Governments around the world are enacting stricter

laws to combat child labor and promote ethical sourcing.
 Lawsuit Threats: Hershey could face lawsuits for failing to address child
labor in its supply chain.
 Loss of Market Access: West African regulators threatened to bar Hershey's
sustainability programs if the company doesn't comply with regulations.
Overall Impact:
 These challenges threaten Hershey's core business model and could lead to
financial losses and reputational damage.
Additional Notes:
 Hershey has made pledges to address child labor (Harkin-Engel Protocol) but
has not demonstrably achieved its goals.
 Michele Buck, Hershey's CEO, needs to find solutions to these challenges to
protect the company's future.

Summary of Case Study 3

Uploaded by

Copyright:

Available Formats

Summary of Case Study 3

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Summary of Case Study 3

Uploaded by

Copyright:

Available Formats

Company Introduction:

Contemporary Issues Faced:

Hershey's, a well-known American chocolate company built by Milton Hershey, is

Important findings of the text on Hershey's company origins:

 Founded in the 1880s by Milton S. Hershey, initially as Lancaster Caramel

Milton Hershey and his values:

 Values: Fairness, worker well-being, generosity.

 Founder's vision: Milton Hershey's vision of making chocolate accessible to

Hershey's Portfolio in bullet points:

 Hershey has a portfolio of over 80 global brands.

Hershey's Marketing Strategy:

 Distribution: Focus on North America, with McLane Company being a major

Hershey's Financial Performance:

Hershey's CEO, Michele Buck:

 Background: Working-class family, ambitious, self-made ("bootstrapper").

Supply Chain, Societal, and Legal Challenges Faced

 Consumer Concerns: Consumers are increasingly concerned about ethical

 Increasing Regulations: Governments around the world are enacting stricter

You might also like