Company Vision and Mission
The Hershey Company is an influential participant in the US and international confectionery market. The company has been functioning since 1927 as a chocolate and snack manufacturer, with the organization’s headquarters located in Pennsylvania, United States. The Hershey company manufactures and distributes over 90 brands in 85 countries (The Hershey Company, 2021). According to the company’s annual report, Hershey is “the largest producer of quality chocolate in North America, a leading snack maker in the United States, and a global leader in chocolate and non-chocolate confectionery” (The Hershey Company, 2021, p. 102). Thus, the company occupies a solid leading place in the American and international confectionery industry, providing a competitive advantage.
The company’s vision and mission reflect the overall business strategy of The Hershey Company. The company’s mission is to bring goodness to the world following the principle of the company’s founder, Milton Hershey, who believed in “Doing Well by Doing Good” (The Hershey Company, 2017, p. 3). The company’s vision is “to be an innovative snacking powerhouse” (The Hershey Company, 2021, p. 46). These mission and vision statements align with the manufacturer’s values, prioritizing continuous improvement and growth marked with quality and innovation.
The company broadens its global presence and diversifies the range of products to promote sustainable, high-quality, affordable candy and chocolate to diverse and numerous customers worldwide. In particular, within the scope of workforce management, the company strives for pathways to join, which include strategies to build a diverse talent team within the manufacturing and selling operations. Moreover, The Hershey Company chooses the paths to grow and pathways to reach out, implying talent development and scholarship for young employees (The Hershey Company, 2021). In addition, it ensures its social responsibility throughout the supply chain management process, enhances the loyalty of the customers, and reinforces the legacy of a renowned century-old brand name.
SWOT Analysis of The Hershey Company
When analyzing an organization’s business strategy, the use of a SWOT (strengths, weaknesses, opportunities, and threats) analysis proves to be one of the most effective and illustrative instruments capable of incorporating both internal and external factors and categorizing them into positive and negative impact types. In particular, when applied to The Hershey Company’s case, the SWOT analysis might be performed on its strategic planning, operations, social responsibility, and corporate governance. These elements are reviewed to identify possible weaknesses and threats for further addressing using the identified strengths and opportunities. The SWOT analysis results are presented in Table 1, with particular elements presented in respective sections of the table.
According to the conducted SWOT analysis, there are multiple strengths the company displays, which are based on the company’s structure, culture, financial performance, and functioning within the competitive environment. In particular, the brand creates a cultural relevance and value for the American society as an iconic confectionery product maker (Kurie, 2018). As for the weaknesses, the limited number of stores in the international market leads to the dependence on the US market, which might not be a long-term competitive solution. Furthermore, the reliance on climate in terms of raw materials, limited digitalization efforts, and a fixed product range reflect the company’s fragility. On the external factor side, the company faces such threats as competition, environmental law advancement, advancement of online stores, and probable lawsuits. However, despite the threats, the organization has multiple opportunities for development and further growth, including store opening overseas, online marketing, innovation for in-store experience, digitalization of production, and sustainability efforts.
The Five Forces of Competition
The Five Forces of Competition analysis allows for a precise and evidence-based competitor assessment which is essential for the company to plan its strategy in the highly competitive market environment. In the particular case of The Hershey Company, the understanding and adequate evaluation of the potential pressure of the competitors and other stakeholders on the organization’s competitive advantage will help adjust the strategic goals to balance the brand-based values with the tentative competition issues (Isabelle et al., 2020). Table 2 demonstrates the five forces that have a different pressure level on the competitive advantage of The Hershey Company.
When identifying the specific competitive pressures associated with each of the five forces, it is necessary to define the scope of influence within each force and the particularities of the impact on Hershey’s competitive strategy.
Supplier Bargaining Power
Suppliers’ bargaining power is manifested in suppliers’ ability to regulate the prices for raw materials that ultimately impact the company’s manufacturing costs and overall cost management. In this regard, since The Hershey Company engages in cooperation with multiple suppliers, the threat is insignificant but evident. When searching for suppliers, the company currently prioritizes sustainability issues and focuses on such supplied materials as “cocoa, dairy, sugar, palm oil, and pulp and paper” (The Hershey Company, 2021, p. 15). In addition to the currently implemented practices, the organization should increase the number of potential suppliers, enhance the cooperation with small businesses in foreign markets, and diversify the suppliers to obtain leverage when it comes to a sudden change in prices for raw materials. Moreover, innovative technologies and new production procedures might be initiated to develop recipes involving different products, which would limit the risks of dependence on a limited number of suppliers.
Buyer Bargaining Power
The rapidly changing business environment boosts the competition in all markets, with more and more companies striving to offer their products for the lowest price possible. Buyers are the moving force of business since their purchasing decisions about marketing initiatives of the corporations contribute to the profit and ultimately predetermine the competitive advantage. Thus, in the confectionery industry, the buyers want to purchase products of the highest quality possible for the lowest possible price. For The Hershey Company, the power of buyers’ bargaining might be influential since the market is filled with competitive entities that might impose a risk of limited customer loyalty for the sake of lower prices. To address this threat, the company might implement a flexible pricing policy, initiate loyalty programs, and advance innovative solutions for cost reduction to pursue the decrease in the strength of buyer bargaining power.
Rivalry among Existing Competitors
Many companies compete with The Hershey Company in the confectionery market. Among them, Mars is one of the most influential competitors “because of Mars family’s greater commitment to the company, its long-term investment horizon, and the amenity potential associated with a traditional family name” (Patalinghug, 2016, p. 30). Overall, the abundance of snacking and confectionery brands both online and in brick-and-mortar stores creates significant competitive pressure for Hershey when pursuing its leading competitive position. While the company is a leading confectionery manufacturer globally, it is still in second place in the snack industry in the USA (The Hershey Company, 2021). Therefore, the company should ensure its stable competitive advantage by investing in innovation and development and increasing its online presence through specifically developed marketing strategies.
Threat of Substitution
The threat of substitution is manifested by potentially eliminating the produced goods from the market due to the lack of necessity, demand, or irrelevance to the cultural environment. In the case of the confectionery industry, the emergence of the trends in healthy lifestyles and dieting that limit sugar consumption, the company might be exposed to a risk of substitution by alternative brands. Although the organization is exposed to a threat of substitution, it might be mitigated by a strong confectionary promotion campaign pertaining to traditional values of sweets associated with happiness. Moreover, the production might shift toward healthy snacks providing products with a vegan and eco-friendly range to ensure that a diverse population of customers remains loyal to the brand and continue consuming The Hershey Company’s products.
Threat of New Entrants
The rapidly developing innovation and technologies industry allows new companies to emerge and provide products with competitive prices and quality. As a company with a long history of functioning in the confectionery industry, The Hershey Company’s legacy-oriented and product-dependent mode of operations might be exposed to the threat of new entrants. Therefore, the company should invest in promoting and advancing new technologies to ensure the ability to offer a shopping experience and consumption quality to the customers.
Implications of the Five Forces of Competition
As identified in Table 2, the levels of competitive force vary from weak in supplier bargaining power and the threat of substitution to moderate in buyer bargaining power to strong in threat of new entrants and fierce rivalry among existing competitors. Given the specifics of the industry, market, and the evaluated forces of competition, the collective strength of the five forces is moderate. Nonetheless, The Hershey Company should consider the issues that present the highest risk to mitigate them.
Analysis of Growth and Sustainability Strategy of the Company
In terms of strategy, the company is directed at obtaining a sustained leading position in the market. For that purpose, the company continuously invests in developing production, product quality and diversity, sustainability, long-term profitability, and return on investments (The Hershey Company, 2021). These elements are present in the company’s corporate culture since The Hershey Company particularly prioritizes the founder’s legacy and promotes positive social change through customer satisfaction, employee accomplishment, and social responsibility goals. Growth is a particularly important element of the entity’s business strategy, which validates its global presence and advancement. Moreover, the sustainability and social responsibility issues are of great importance to the organization, promoting a sustainable supply chain and engaging in environment-protection efforts.
Recommendations
Based on the conducted overview of the company’s performance, its SWOT analysis, and the Five Forces analysis, the following list of recommendations might be proposed:
- To eliminate the weaknesses of the lack of physical stores in regions other than North America and the dependence on the US market, and the threat of local competitors in foreign markets, The Hershey Company should open new stores in Europe and Asia;
- To address the weakness of dependence on climate in cocoa supply and the threat of new entrants joining the industry, the company should enhance its brand reputation and implement digitalization for more cost-efficient technology-driven manufacturing;
- The company should increase its customer base through online platforms and stores and increase efforts in finding innovative solutions for the in-store experience. It will help reduce the pressure of new entrants’ competition and rivalry with existing competitors.
- To eliminate the threat of environmental legislation’s impact, healthy, eco-friendly, and sustainable production means should be invested into;
- To address supplier force, the organization should advance acquisition opportunities and diversify supply chain stakeholders;
- Hershey should diversify new product categories, launch new loyalty programs, and cooperate with sustainability-interested investors to ensure continuous growth and overall competitive advantage.
References
The Hershey Company. (2017). Code of conduct. Web.
The Hershey Company. (2021). Notice of 2021 annual meeting and proxy statement. Web.
Isabelle, D., Horak, K., McKinnon, S., & Palumbo, C. (2020). Is Porter’s Five Forces framework still relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6), 28-41.
Kurie, P. (2018). In chocolate we trust: The Hershey Company town unwrapped. University of Pennsylvania Press.
Patalinghug, J. C. (2016). A case study of organizational form: Hershey versus Mars. e-Journal of Social & Behavioural Research in Business, 7(2), 29-48.