Strategic Management, A Competitive Advantage Approach:Concepts, 16th edition Read this Cohesion Case Study and evaluateThe Hershey Company, 2015. Headquartered in Hershey,Pennsylvania, Hershey Company is the largest chocolate producer inNorth America and a confectionary leader worldwide, with over 80brands, annual revenues over $7 billion, about 20,000 employees,and operations in about 80 countries. Hershey offers chocolates aswell as other candies, mints, and chewing gum. notable productsinclude Hershey Kisses, Mr. Goodbar, Twizzlers, Jolly ranchers, iceBreakers, and, what may be the best-selling candy bar on theplanet—Reese’s, a Hershey brand that recently became an officialsponsor of ESPN college football game day. Hershey is currentlyexpanding globally with strategic emphasis on markets in china andMexico, but the company still derives more than 85 percent of itsrevenue from the United States. In 2015, Hershey introduced thefollowing new products: Kit Kat white Minis, Hershey’s caramels,ice Breakers cool Blast chews, Reese’s Spreads Snacksters, andgraham Dippers. Hershey’s net income for the first quarter (Q1) of2015 declined 3.1 percent to $244 million from Q4 of 2014.Hershey’s Q1 2015 revenues in china declined 47 percent. Inresponse to this downturn, Hershey shifted its strategy in china tocombat slower consumer spending by focusing on smaller rather thanthe largest cities, increasing its e-commerce offerings, anddecreasing its reliance on hypermarkets. Also for Q1 of 2015,Hershey’s advertising expenses increased 8 percent, but it’sselling and marketing expenses increased about 15 percent. Analystshave turned pessimistic about Hershey meeting its 20 percent salesgrowth guidance in china for calendar year 2015. The company’ssales rose 3.5 percent to $1.94 billion for Q1 of 2015. Hershey hasretail stores in New York City, Chicago, Niagara Falls, Shanghai,Dubai, Singapore, and Hershey (Pa). Hershey’s sales are generallyhigher in the third and fourth quarters of the year, due toholiday- related sales patterns. About 25 percent of Hershey’ssales are made to McLane Company, Inc., one of the largestwholesale distributors in the United States to convenience storesand mass merchandisers such as Walmart stores. Hershey hasincreased its overall candy, mint, and gum market share in theUnited States in 2014 to 31.4 percent, an increase of 0.3 sharepoints compared to 2013. Hershey’s selling, marketing, andadministrative (SM&A) expenses decreased $21.5 million, or 1.1percent, in 2014. Since consumption patterns of confectioneryproducts are becoming more similar worldwide, one strategic optionmoving forward would be for Hershey to report financial informationby product, rather than by region, and alter the firm’s structureaccordingly. Hershey accounts for about 44 percent of the U.S.chocolate market, 21 percent of the U.S. nonchocolate candy market,and 5 percent of the world chocolate and nonchocolate candy marketshare. Elevated and volatile commodity costs, particularly forcocoa, sugar, and dairy, may hurt Hershey’s profitability goingforward. In particular, dairy costs—which can’t be hedged—have beentrending higher in light of the prolonged drought in California.Hershey has recently embarked on a multiyear joint venture with 3DSystems, makers of 3-D printing technology, to start producing newconfectionary products using this technology. 3D Systems currentlyproduces two 3-D printers capable of making chocolate. The firm’schefJet is priced around $5,000 and prints single-colored candymuch like a plain Hershey candy bar. The chef Jet Pro, priced ataround $10,000, can produce multicolored candies. Both printers arecapable of printing complex candy designs at a rate of one inch perhour and sizes up to 8 inches by 10 inches by 14 inches. Someanalysts, however, do not believe 3-D printing is an option forconfectionaries until 2020 due to slow production and high costfactors. The technology will be affordable enough to producespecialized candies for Valentine’s Day and other holidays aroundthat time but still not affordable enough for mainstreamproduction. Recently, Hershey purchased Brookside-branded candy,famous for its dark-chocolate–covered candies with fruit-juicecenters such as pomegranate and blueberry. Hershey purchasedShanghai golden Monkey food in 2014. In that year, Hershey begandistribution of acquired confectionery and protein-based bean curdsnacks into the china modern trade. For all of 2014, Hershey’schocolate sales in various countries grew, including china (12% vs.7% prior year), Mexico (2% vs. 7% prior year), and Brazil (1% vs.5% prior year). With the Krave acquisition in 2015, and with thecompany’s vision statement, Hershey’s strategy is to broaden itsproduct line more by adding healthful snacks to complement itsnumerous types of chocolate and nonchocolate candies. Since proteinsnacks are growing rapidly in popularity globally, the Kraveacquisition may be the first of many for Hershey in that line ofbusiness. The acquisition represents one of the first times Hersheyhas taken a big step outside confectionery. Hershey’s 2014international net sales increased nearly 15 percent, including anet sales contribution of approximately 7 percent, or $54 million,from Shanghai golden Monkey food Joint Stock co., Ltd. (SGM).Excluding SGM and the unfavorable foreign currency exchange impact,Hershey’s international net sales increased approximately 10percent in 2014. Hershey’s primary operations and markets are inthe United States. The percentage of total Hershey net salesoutside of the U.S. was 17.5 percent for 2014, 16.6 percent for2013, and 16.2 percent for 2012. The percentage of totalconsolidated assets outside of the U.S. was 35.4 percent as ofDecember 31, 2014, and 19.4 percent as of December 31, 2013.Although Hershey does not report sales and income by productcategory, the company keeps internal records by three productsegments: chocolate, Sweets and refreshments, and Snacks andadjacencies. The chocolate category consists of fancier optionssuch as acquired Cadbury, traditional products such as Mr. Goodbarand Hershey’s Kisses, and Dagoba organic chocolates. Twizzlers,Jolly rancher, PayDay, and others are included under theconfectionary Products umbrella. Breath Savors, Bubble Yum, andicebreakers fall under Sweets and refreshments, and Hershey’sbaking chocolates and syrups are included under Snacks andadjacencies. Hershey also offers a full line of sugar-freeproducts. Many Hershey products are naturally gluten free andkosher in nature. Hershey’s sales and income by geographic regionare given in exhibit 2. North America accounted for 85.6, 86.8, and87.5 percent of the company’s sales in 2014, 2013, and 2012,respectively. Hershey’s income from outside North America hasdeclined steadily. All sales and income from Hershey stores areincluded in the international and other segment. Developed inpartnership with 3-D Systems (stock symbol = DDD), Hersheycompany’s new 3-D printing gives consumers nearly endlesspossibilities for personalizing their chocolate. Hershey has a new3-D exhibit and 3-D chocolate printer (the most advanced model inoperation today) on display at Hershey’s chocolate world attractionin Hershey, Pennsylvania. An analyst once said that “strategicplanning is more about deciding what strategies not to pursue thanit is about deciding what to do.” this may be especially true forHershey company, which has many good options. Most nations of theworld would be pleased to see Hershey extend their product linesinto their country. Even in the United States, customers desire tosee new Hershey products introduced annually. Hershey couldcontinue to acquire firms in the healthful snacks business such asKrave, or acquire firms in the candy business, such as tootsie rollindustries, or simply grow more organically by buildingmanufacturing plants and distribution facilities globally. Thereare more than 150 countries on the planet where Hershey productsare still not available. Most people in those countries wouldwelcome chocolate.

Comment on Hershey's markets and strategies, bothcurrently and what you would expect for them in the future.Explain

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Hersheys Markets and Strategies A Balancing Act Current Markets and Strategies Dominant US Presence Hershey enjoys a strong position in the US holding ... View the full answer