Hershey Company. Kate Anderson. Jackie Hernandez. Vincent LaPlante. Jennifer Lewin. Michael Sanzari. Thomas Tremblay. Management 480. Dr.

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1 Hershey Company Kate Anderson Jackie Hernandez Vincent LaPlante Jennifer Lewin Michael Sanzari Thomas Tremblay Management 480 Dr. Gene Baten December 5, 2011

2 Table of Contents Introduction... 3 Mission Statement... 4 Revised Mission Statement... 5 Input Stage... 6 External Factor Evaluation (EFE) Matrix... 6 Internal Factor Evaluation (IFE) Matrix... 7 Competitive Profile Matrix (CPM)... 8 Matching Stage... 9 Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix... 9 Strategic Position and Action Evaluation (SPACE) Matrix Boston Consulting Group (BCG) Matrix Internal-External (IE) Matrix Grand Strategy Matrix (GSM) Data Collection Matrix Decision Stage Quantitative Strategic Planning Matrix (QSPM) Recommendations Epilogue... 22

3 3 Introduction It all started with a decision by a man named Hershey, which ended up becoming one of the world s best known chocolate brand and well-known theme park. Milton S. Hershey, the founder and creator of the Hershey chocolate bar, started his journey in 1876 with his first candy bar. Hershey started the Lancaster Caramel Company which produced not chocolate, but a caramel candy. By the 1900s, after the great success of his caramel recipe, Mr. Hershey experimented with chocolate and finally the Hershey Milk Chocolate bar America knows and loves was born. The Hershey Chocolate Company, a subsidiary of Milton s Lancaster Caramel Company, became a worldwide brand and company. It was in the year of 1894 that Milton Hershey made the decision to try adding chocolate coating to his caramel candy. This created the enterprise of the Hershey Chocolate Company, located near his hometown, Derry Township, Pennsylvania. By 1905, with milk from the nearby dairy farms and local workers, his new factory was born along with the delicious milk chocolate bars. He later went on to produce more types of chocolates and products. Hersey did not stop at just chocolate and candy bars, though. Many are familiar with great theme park called Hershey Park located in Pennsylvania. Hershey Park was opened on April 24, 1907; it was created to be a leisure park for the employees of the Hershey Company, but later was opened to the public. Today the park covers over 110 acres of land including over 60 rides and attractions. Another great success of the Hershey Company was as early as the 1909, when Mr. Hershey and his wife Catherine established the Hershey Industrial School, a school for orphan boys which is now known as the Milton Hershey School. Now it is open to both boys and girls of all diversity. The school provides free education and residential services including meals and health care to almost 17,000 kids in need. Hershey has come a long way and still has been growing and evolving even after the passing of the man who started with a decision to make candy. Hershey s product lines have evolved to encompass far more than the original caramel and chocolate. As part of the confectionery industry, their products range from candy to gum to baking products. Some of these products include: Reese s Almond Joy/Mounds York Peppermint Patty Kit Kat Kisses Mr. Goodbar Bubble Yum/Ice Breakers/Carefree Chocolate chips/baking chocolate Cocoa Syrup/Dessert topping With Hershey s vast variety of products, it is easy to see why they are such a popular brand.

4 4 Mission Statement Hershey s mission statement can be found below; the numbers represent a key of components that should be included in a company s mission statement. (7) Bringing sweet moments of Hershey happiness to the world every day. To our stakeholders, this means: (2)(7)Consumers: Delivering quality customer driven confectionery experiences for all occasions. (6)(9)Employees: Winning with an aligned and empowered organization while having fun. (1)(5)Business Partners: Building collaborative relationships for profitable growth with our customers, suppliers, and partners. (5)Shareholders: Creating sustainable value. (8)Communities: Honoring our heritage through continued commitment to making a positive difference. Key: 1. Customers 2. Products or Services 3. Markets 4. Technology 5. Concern for Survival, Growth, and Profitability 6. Philosophy 7. Self-concept 8. Concern for Public Image 9. Concern for Employees Hershey s original mission statement is strong and only missing a few key points. In their mission statement, they left out the Markets component, which is where the firm competes geographically, as well as the Technology component, which states whether or not the firm is technologically current. In our revised mission statement, we included these two components to make a strong statement that allows a range of feasible alternative objectives and strategies. Hershey is the largest chocolate product distributor in North America; in order to stay ahead of the competition, the mission statement should remind people that this is where the firm competes. Hershey also has a strong internal Research and Development team as well as an

5 5 external R&D team. This gives them control over new innovations in the chocolate market because they can decide what to focus on with their internal R&D department. Our additions to Hershey s mission statement can be seen in red. Revised Mission Statement (7) Bringing sweet moments of Hershey happiness to the world every day. To our stakeholders, this means: (2)(7)(3)Consumers: Delivering quality customer driven confectionery experiences for all occasions from the largest chocolate producer in North America. (6)(9)Employees: Winning with an aligned and empowered organization while having fun. (1)(5)Business Partners: Building collaborative relationships for profitable growth with our customers, suppliers, and partners. (5)Shareholders: Creating sustainable value. (8)Communities: Honoring our heritage through continued commitment to making a positive difference. (4) Hershey s direct research on consumer preferences ensures we satisfy every taste bud. Key: 1. Customers 2. Products or Services 3. Markets 4. Technology 5. Concern for Survival, Growth, and Profitability 6. Philosophy 7. Self-concept 8. Concern for Public Image 9. Concern for Employees By incorporating the Markets and Technology components, Hershey now has a complete mission statement.

6 6 Input Stage External Factor Evaluation (EFE) Matrix Key External Factors Weight Rating Weighted Score Opportunities 1. Dark chocolate health benefits Marketing of holidays Joint ventures outside of U.S Organic food market growing Acquisition of companies outside of U.S Technological advancements lower manufacturing costs Changing tastes=new products (richer products, coffee flavoring) Threats 1. Price of cocoa rising Price of sugar rising Easily substitutable products Health conscious consumers/obesity epidemic Health concerns (peanut allergies) Unfavorable currency exchange rate Natural disasters affecting growth of products Total Hershey s External Factor Evaluation, EFE, consists of opportunities and threats within their industry. These help evaluate the economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive factors that can affect them. By identifying opportunities and threats within the confectionery industry, Hershey can assess how well they are responding to the key factors. Each factor is assigned a weight according to importance, and the entire weights total 1. Each factor is then rated according to how well Hershey is responding to that factor (1=poor response 4=superior response). The weight is multiplied by the rating to give a score, and the scores are totaled. The opportunities and strengths identified combine to give Hershey a weighted EFE score of Hershey is just under, but close, to the average weighted score of 2.5 which shows that they can capitalize more on opportunities and do more to avoid external threats.

7 7 Internal Factor Evaluation (IFE) Matrix Key Internal Factors Weight Rating Weighted Score Strengths 1. Strong brand name/image recognition Diverse product offerings Strong partnerships (Kraft, Nabisco) Largest chocolate producer in North America Sales up 5.9% Own R&D, as well as external Strong social responsibility/environmental sustainability One-of-a-kind amusement park Weaknesses 1. Downsizing High dependence on U.S. market (86%) High long-term debt Tumultuous relationship with shareholders (Milton Hershey Trust) Heavy reliance on brand loyalty Outsourcing to reduce costs-->inefficient communication Large CEO bonus in time of recession/downsizing (40% bonus) Total Hershey s Internal Factor Evaluation, IFE, consists of several strengths and weaknesses in the functional areas of the business. After identifying strengths and weaknesses specific to Hershey s company, each factor is weighted according to importance. Each strength must be rated as a 3 (minor strength) or 4 (major strength), and each weakness must be rated as a 1 (major weakness) or 2 (minor weakness). The weight is multiplied by the rating to tally the weighted score, which are then summed to achieve total weighted score. The combined weighted score for Hershey s IFE is This places Hershey slightly above the average position of 2.5.

8 8 Competitive Profile Matrix (CPM) Hershey Nestlé Mars Critical Success Factors Weight Rating Score Rating Score Rating Score Advertising Product Quality Price Competitiveness Management Financial Position Customer Loyalty Global Expansion E-commerce Variety of Product Line Total The Competitive Profile Matrix (CPM) identifies Hershey s competitors and its particular strengths and weaknesses in relation to a sample firm s strategic position. Hershey s main competitors are Nestlé and Mars. The critical success factors that make up the CPM are advertising, product quality, price competitiveness, management, financial position, customer loyalty, E-commerce, and variety of product line. These factors are weighted according to importance and must total 1, and each company is rated on whether the factor is a strength or weakness (1=major weakness 4=major strength). The weight is multiplied by the rating to tally the score, and scores for each company are totaled. Hershey has significantly higher scores in advertising, product quality, and customer loyalty. However, Nestle dominates in the areas of price competitiveness, global expansion, and variety of product line. Mars is also similarly close in scores to Hershey and has an advantage in the area of E-commerce. Hershey s weighted score is 2.93, Nestlé is 2.75, and Mars is 3.0. These numbers do not necessarily mean that Hershey is not as good as Mars, but it can be used so that Hershey can focus on what needs to be done to gain competitive advantage in this specific industry.

9 9 Matching Stage Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix Strengths Weaknesses 1. Strong brand name/image 1. Downsizing recognition 2. Diverse product offerings 2. High dependence on U.S. market (86%) 3. Strong partnerships (Kraft, Nabisco) 3. High long-term debt 4. Largest chocolate producer in North 4. Tumultuous relationship with America shareholders (Milton Hershey Trust) 5. Sales up 5.9% 5. Heavy reliance on brand loyalty 6. Own R&D, as well as external 6. Outsourcing to reduce costs-->inefficient communication 7. Strong social 7. Large CEO bonus in time of responsibility/environmental recession/downsizing sustainability 8. One-of-a-kind amusement park Opportunities SO Strategies WO Strategies 1. Dark chocolate health benefits 2. Marketing of holidays 1. Joint advertising in commercials (S3, O2) 3. Joint ventures outside of U.S. 2. Product development with coffee flavors (S2, 07) 4. Organic food market growing 3. Market dark chocolate health benefits (S4, O1) 1. Increase market share in Mexico (W2, O5) 2. Reduce costs due to technological advancements (W6, O6) 3. Offer Dagoba Organic line in large retail stores (W5, O4) 5. Acquisition of companies outside U.S. 6. Technological advancements lower manufacturing costs 7. Changing tastes=new products (richer products, coffee flavoring) Threats ST Strategies WT Strategies 1. Price of cocoa rising 2. Price of sugar rising 1. Offer 100-calorie bar (S1, S2, T4) 1. Monitor bonuses to executives until global economy stabilizes (W7, T6) 3. Easily substitutable products 2. Develop peanut-free processing facility (S4, T5) 2. Increase advertising outside U.S. (W2, T4) 4. Health conscious consumers/obesity epidemic 3. Acquire own land to grow resources (S7, T1, T2) 5. Health concerns (peanut allergies) 6. Unfavorable currency exchange rate 7. Natural disasters affecting growth of products

10 10 The SWOT Matrix is an important matching tool that uses factors from both the Internal Factor Evaluation (IFE) and the External Factor Evaluation (EFE) to develop four types of strategies: SO (strengths-opportunities) Strategies, WO (weakness-opportunities) Strategies, ST (strengths-threats) Strategies, and WT (weakness-threats) Strategies. Strengths and weaknesses are taken from the IFE while opportunities and threats are taken from the EFE. From there, various internal and external factors are matched together to come up with the four different types of strategies mentioned before. SO Strategies are ones that use internal strengths to take advantage of external opportunities. Our group found that it would be beneficial for Hershey to focus mainly on intensive strategies. With such diverse product offerings and changing tastes of consumers, product development can be an attractive SO Strategy. Furthermore, with the recent news of dark chocolate health benefits and Hershey being the largest chocolate producer in North America, they should market the dark chocolate health benefits in which a market penetration would be another attractive SO Strategy. WO Strategies are ones that aim at improving weaknesses by taking advantage of external opportunities. Two out of our three WO Strategies are seen as intensive strategies. With such a high dependence on the U.S. market (86%), and Hershey s recent acquisition of Grupo Lorena in Mexico, we think Hershey should increase their market share in Mexico. In this case, market development can be an attractive WO strategy for Hershey. Another WO Strategy that could be beneficial for Hershey involves their Dagoba Organic line. With such a heavy reliance on brand loyalty from consumers (which is not always a good thing), they might get tired of seeing candy as their only option from Hershey. Recently, Hershey s organic food market has been on the rise. With that opportunity, they should consider offering their Dagoba Organic line in large retail stores. Therefore, product development could be attractive WO Strategy to play out. ST strategies are ones that use strength s to avoid or reduce the impact of external threats. A big threat to Hershey since they are such a large chocolate producer is the obesity epidemic that faces America. Because of this, we thought it would be advantageous for Hershey to use their strong brand name and diverse product offerings and come out with a 100-calorie bar for the health conscious consumers. With this strategy, product development can be an attractive ST Strategy. Something Hershey s recognized for is their strong social responsibility and environmental sustainability. They can use this to their advantage and try to acquire their own land to grow resources on. Hershey can greatly benefit from this because they would no longer have to worry about the price of both cocoa and sugar rising. Finally, WT Strategies are directed at reducing internal weaknesses and avoiding external threats. One thing that a lot of Hershey s shareholders had a problem with was the

11 11 large bonus that the CEO received. With both the recession and Hershey s recent downsizing, a lot of people didn t agree with this. In addition, the exchange rate wasn t doing well either. We believe that Hershey could monitor their bonuses to executives until the global economy stabilizes. Once it stabilizes, people won t have as much of a problem with this. Another WT Strategy we thought Hershey should pursue is to increase their advertising outside of the U.S. Something Hershey falls back on is their high dependence on the U.S. market. However, with more and more health conscious consumers in the U.S., the market might not be as favorable in the future as it is now. Therefore, Hershey could be proactive about this and try to increase their advertising in other countries. They should first try to make them aware of their brand name, and eventually introduce their product. Although this SWOT Matrix shows Hershey s current snapshot in time, it shows them a lot about their company: things they re good at, things they can fix, what they should look out for, what they can capitalize on, and most importantly, what their current options are as of right now. It is important for this SWOT Matrix to continually be monitored and modified since things are constantly changing.

12 12 Strategic Position and Action Evaluation (SPACE) Matrix Rating Financial Position Long-term debt is $1,505,900, an increase of 17.6% from Earnings per share is $1.41, up.45 from Net income is $311,405,000, up 45.4% from Net sales are $5,132,768, up 3.8% from Industry Position Prices of sugar, cocoa, milk, gas, and nuts are up. 1 Confectionery industry grew by 3.6% in Chocolate accounts for 55.8% of market value in confectionery 6 industry. Seasonal sales are growing Stability Position Exchange rates are fluctuating. -3 Natural disasters are affecting the growth of resources. -4 Hershey has weathered recession well according to outside critiques. -1 Hershey has easily substitutable products Competitive Position Hershey has strong brand recognition. -2 Hershey is North America's largest chocolate producer. -1 Hershey's sales were up 5.9% in Hershey offers a one-of-a-kind amusement park Conclusion SP Average is -12/4 = -3 IP Average is +16/4 = 4 CP Average is -7/4 = FP Average is +16/4 = 4 Directional vector coordinates: x-axis: (+4) = 2.25 y-axis: -3 + (+4) = 1 Hershey should pursue Aggressive strategies.

13 13 Conservative FP 1. Backward, forward, horizontal integration 2. Market penetration 3. Market development 4. Product development 5. Diversification (related or unrelated) Aggressive +2 CP +1-2 (2.25, 1) IP -3-4 Defensive -5-6 SP Competitive The SPACE Matrix is designed to help determine a company s overall strategic position. The y-axis assesses financial and stability positions, while the x-axis looks at competitive and industry positions. The SPACE Matrix is a useful tool because it looks at both internal (financial, competitive) and external (stability, industry) factors simultaneously. To develop Hershey s SPACE Matrix, key factors that make up each dimension are selected. The financial and competitive positions should be compared to competitors, while the industry and stability positions should be compared to the industry. The financial and industry variables are rated from 1 (worst) to 7 (best), while the stability and competitive factors are rated from -1 (best) to -7 (worst). Then, average scores for each dimension should be determined. Lastly, the position on the graph is a result of adding the averages of the competitive and financial positions on the x-axis, and the financial and stability positions for the y-axis. Hershey ends up with an x-coordinate of 2.25 and a y-coordinate of 1, which places Hershey in the Aggressive Quadrant. Based on where a company lands in the SPACE Matrix helps the company determine what strategies they should employ. In Hershey s case, they should consider all types of integration, all intensive strategies, and all diversification strategies.

14 14 Boston Consulting Group (BCG) Matrix Relative Market Share High +20 High 1.0 Medium.50 Low 0.0 Stars Question Marks Industry Sales Growth Rate (1, 3.6) Medium 0 Backward, forward, horizontal integration II Market penetration Market development P d t d l t Cash Cows III I Dogs IV Low -20 The BCG Matrix is designed to how well different divisions of a company are doing in relation to each other. However, Hershey did not have divisional information available, so the BCG Matrix was constructed looking at Hershey as a whole. The x-axis looks are relative market share, while the y-axis looks at industry sales growth. Hershey is the industry leader in the confectionery industry, so their market share is 1. The latest industry sales growth rate available put the industry growing at 3.6%. With a coordinate of (1, 3.6), this places Hershey in the Star quadrant. With high market share and a somewhat high industry growth rate, Hershey should pursue integrative and intensive strategies to maintain or strengthen their position.

15 15 Internal-External (IE) Matrix (2.57, 2.28) Quadrant V Strategies: Hold & maintain market penetration, product development The Internal-External (I/E) Matrix uses both the IFE and EFE total weighted scores. The weighted scores are taken directly from the IFE and EFE. The IFE total weighted score (represented on the x-axis) is 2.57, while the EFE total weighted score (represented on the y- axis) is Therefore, the plot on the matrix would be (2.57, 2.28). To interpret this, with 2.57 as their IFE total weighted score, Hershey has an average (a score of 2.0 to 2.99) internal position. In addition, with 2.28 as their EFE total weighted score, Hershey is considered medium (a score of 2.0 to 2.99). After plotting the point (2.57, 2.28), Hershey falls into cell V. Cells III, V, or VII can be managed best with hold and maintain strategies. Typically, market penetration and product development are two common strategies that are used for divisions that fall in these cells. Because we didn t have the division information available to us, we couldn t construct an I/E Matrix for the divisions.

16 16 Grand Strategy Matrix (GSM) The Grand Strategy Matrix (GSM) has become a popular tool for formulating alternative strategies. With this matrix, organizations can fall into one of the four strategy quadrants. The GSM is based on both the competitive position and market (industry) growth. Referring back to our Competitive Profile Matrix (CPM), Hershey s total competitiveness score was 2.93 compared to our competitors Mars (score of 3) and Nestle (score of 2.75). With these scores, we can say that Hershey is in a relatively strong position in comparison to their competitors. Hershey s market (industry) growth rate is currently at 3.6%. Therefore, we are considered to have a slow market growth rate. In the GSM, the competitive position lies on the x-axis while the market growth lies on the y-axis. As mentioned before, our competitive position is 2.93 and the industry growth rate is 3.6%. However, because the confectioner s industry growth rate is below 5%, it is considered to have a slow market growth rate which would make 3.6 negative. Plotting that as a point would be (2.93, -3.6) which would fall into Quadrant IV. This means that Hershey has a relatively strong competitive position, but they are in a slow-growth industry. Firms that fall into Quadrant IV typically have high cash-flow levels and limited internal growth needs. Therefore, Hershey can try to pursue related or unrelated diversification, and joint ventures.

17 17 Data Collection Matrix SWOT SPACE BCG I/E GSM Total Intensive Market penetration X X X X 4 Market X X 2 development Product X X X X 4 development Integration Forward X X X 3 Backward X X X 3 Horizontal X X 2 Defensive Retrenchment 0 Divestiture 0 Liquidation 0 Diversification Related X X 2 Unrelated X X 2 The Data Collection Matrix looks at each matrix from the Matching Stage and compares the strategies recommended by each matrix to all of the available strategies a company can undertake. The strategies recommended by each matrix are tallied and summed to determine the most common strategies suggested. In Hershey s case, market penetration and product development are the most common strategies throughout all of the matrices in the Matching Stage. This information is used to determine the alternative strategy options in the QSPM.

18 18 Decision Stage Quantitative Strategic Planning Matrix (QSPM) Strategic Alternatives Increase joint advertising within the U.S. Increase advertising outside of the U.S. Key Factors Weight AS TAS AS TAS Opportunities 1. Dark chocolate health benefits Marketing of holidays Joint ventures outside of U.S Organic food market growing Acquisition of companies outside U.S Technological advancements lower manufacturing costs Changing tastes=new products (richer products, coffee flavoring) Threats 1. Price of cocoa rising Price of sugar rising Easily substitutable products Health conscious consumers/obesity epidemic Health concerns (peanut allergies) Unfavorable currency exchange rate Natural disasters affecting growth of products Strengths 1. Strong brand name/image recognition Diverse product offerings Strong partnerships (Kraft, Nabisco) Largest chocolate producer in North America Sales up 5.9% Own R&D, as well as external Strong social responsibility/environmental sustainability One-of-a-kind amusement park 0.05 Weaknesses 1. Downsizing High dependence on U.S. market (86%) High long-term debt Tumultuous relationship with shareholders (Milton Hershey Trust) 5. Heavy reliance on brand loyalty Outsourcing to reduce costs-->inefficient communication Large CEO bonus in time of recession/downsizing

19 19 The QSPM is designed to determine the feasibility of actions that can be taken by a company to improve its overall position. Information from the Input and Matching stages should be considered when establishing the two potential alternatives. In Hershey s case, we chose to evaluate whether Hershey should increase its joint advertising within the U.S. or increase advertising outside of the U.S. The QSPM is designed by listing the opportunities, threats, strengths, and weaknesses and their weights from the IFE and EFE matrices. Then, each factor is considered in relation to both alternative strategies. If the factor is relevant to one strategy but not the other, a score cannot be given for either. Furthermore, if a factor is deemed relevant, the strategies cannot receive the same score for the same factor. The Assigned Scores (AS) are rated 1 (not attractive) to 4 (highly attractive), and the score is multiplied by the weight to determine the Total Attractiveness Scores (TAS). After each factor has been considered, the TAS for each strategy is summed; whichever strategy receives a higher total is the more feasible option. In Hershey s case, increasing advertising within the U.S. outshone increasing advertising outside the U.S., with scores of 2.44 and 1.75, respectively. However, this does not mean that Hershey should not consider increasing advertising outside of the U.S.; it just shows that, in this particular matrix with these particular factors, increasing advertising in the U.S. is a more feasible option.

20 20 Recommendations To maintain and even strengthen Hershey s position in the confectionery industry, we provide the following recommendations: Increase joint advertising to market their major products o Hershey can use joint advertising to add profit. This will also allow Hershey to instantly gain more customers based on the trust consumers may have with their business partner. Having a joint venture is also beneficial when it comes to advertising capital when they promote Hershey; Hershey is tapping into that valuable investment. The additional revenue streams will not require a large amount of additional effort as well. Hershey s Syrup/Ice Cream- Hershey should take advantage of their syrup market and add it to the popular ice cream market. Promoting these together as a sundae ice cream strategy would be beneficial. Hershey s Chocolate/Graham Crackers (s mores) - Hershey could go family- oriented with this and promote s mores by taking their premium chocolate and combining it with a graham cracker and marshmallow businesses. During a cool summer night, why not show a family around a campfire making s mores with Hershey chocolate? Hershey s Syrup/Milk- There are many different chocolate milks in the market; Hershey could compete with these competitors by advertising their syrup in conjunction with milk to make chocolate milk. Maintain strong brand image to retain customers o Branding is a very powerful component in business. Brands should have a logo that is easily identifiable by consumers. The consumers decide if they will buy a product or use a service based on how they view the brand. The brand itself tells us or lets us imagine how good or bad the product is even if we have never tasted it before! Hershey has established a very strong brand image and has retained a majority of its customer over the years as well as gained new ones. Hershey must continue to maintain their image and uphold it to the highest integrity because once you lose it, it is hard to get it back. Expand product offerings to address wants/needs of health-conscious consumers o Organic line Hershey s organic line includes Dagoba Organic; however, it is only offered in specialty organic stores. By expanding into larger retail stores like Stop n Shop and other major grocers, the line will be more easily accessible to consumers seeking organic products. They should use their

21 21 strong R&D to determine the types of products customers are looking for in organic sections. o 100-calorie bar While Hershey currently produces 100-calorie bars, they are available in limited variety and locations. Hershey should consider expanding these lines to reach more consumers. Have R&D department look into advertising and increasing market share outside the U.S. o Hershey should take advantage of the global market and all the possible profits outside the United States. Hershey needs to keep getting their name out there even though it is already well-known. Advertisements should center on their premium chocolate, along with the new lines that come from research and development. In order to have Hershey s new products become successful and known outside the U.S., they need to advertise which would include: commercials, online advertising, billboards, and print ads. Get finances under control; downsizing yet giving large CEO bonus o It is a very hard time right now in the United States and globally since we are in a recession. Times are tough and a lot of people are unemployed. It would look bad for the brand if the company was continuously giving the CEO and other executives extremely high bonuses, so Hershey should be very careful and take the economy into consideration when compensating employees.

22 22 Epilogue In 2008 MSNBC had announced that several Hershey chocolate products were reformulated to replace cocoa butter with vegetable oil as an emulsifier. As it stood, the FDA does not allow a product to be called "chocolate" if the product contains such ingredients. Hershey stood by the change stating that it was done in order to keep production costs down so they would have to raise prices or, worse, decrease sizes. For hardcore chocoholics this was a low blow; some of their favorite treats no longer contain milk chocolate. Consumers even complained about the Almond Joy enough that Hershey s had to put the milk chocolate back in it. Hershey, as well as other competitors in the industry, is acquiring nonprofit and nutritional products to complement their existing ones. Hershey uses tons of sugar but a poor sugar harvest caused prices to increase in the second part of 2009 from their main suppliers, Brazil and India. Wholesale sugar prices were up 70% in the first 8 months of 2009, reaching a new high of cents per pound. Some research analysts expect international wholesale sugar prices will reach 40 cents a pound. India, which up until 2 years ago was a net exporter of sugar, is becoming a net importer of sugar because of two straight poor harvests. Brazil s sugar cane harvest has been suffering because of too much rain. Brazil produces nearly half of the world s sugar, but they have been converting up to half of its supplies into ethanol instead of refined sugar. By entering into other markets that do not use as much sugar, Hershey can hope to offset its losses due to price increases of their resources. One of the products Hershey was selling was known as Hershey Kissables, which were miniature Hershey Kiss shaped candies coated with a sugary shell. The candies came in a rainbow of colors and were even created in holiday versions for Easter, Valentine s Day and Christmas. Hershey s even introduced a dark chocolate version called Kissables Dark. But by July 2009, only four years after their introduction, Hershey s ceased production of the Kissables for reasons which they are unwilling to disclose. Other recent Hershey products includes Hershey Drops, which are bite-size versions of their more popular candy bars, such as their signature chocolate bar and their cookies n cream bar. They also created miniature versions of the Reese s peanut butter cup and, as well as bitesize sugar coated pieces to mimic candy bars like Almond Joy. Most recently, they released Hershey s air-whipped chocolate, which is noticeably different because of the tiny air bubbles in the chocolate bar. On November 9, 2011, Hershey s introduced the launch of Cookie Headquarters, the one-stop holiday baking destination for personalized expert advice and recipes. The holidays are officially in full swing and who couldn t use a little extra help conjuring up those mouthwatering holiday treats? Hershey's Cookie Headquarters is an online resource full of recipes and tips and access to a team of experts to answer consumers' baking questions during the busy holiday baking season through consumer posts on HersheysKitchens.com, Hershey's Kitchens Facebook pages and Twitter. "When it comes to baking, timing is everything," said Hershey's Kitchens baking expert Linda Stahl. "For the first time ever,

23 Hershey's is inviting consumers to connect and get customized tips and advice - directly from the experts and each other - to help bakers in the kitchen this holiday season." 23