Case Analysis Hershy Food Company Marketing Essay

Case Analysis Hershy Food Company Marketing Essay The evolution of global chocolate industry presents many interesting details. Chocolate industry on a global scale is a huge. Chocolate, given its tempting qualities is a huge marketable product for many reasons. Hence, the industry itself is huge we can speculate. As we are aware, chocolate is made out of cocoa seeds. In the initial periods, chocolate was expensive to be manufactured. It was only after the industrial revolution in Europe that a remarkable shift in chocolate industry can be seen. Chocolate also comes in a variety of taste. (Allen, 2010 , p. 21)According to the international cocoa organization, chocolate industry on a global scale is a multi-billion industry. During the year 2006 chocolate industry and manufacturer made tremendous gains from sale. Some of the forerunner or top manufacturing companies in accordance to their sales during 2006 were Hershey Foods Corporation, Mars Inc, and Cadbury Schweppes PLC who topped the list. (ICCO) During 2002 and 2001, the chocolate industry can be concurrently be classified in terms of their sales itself. According to the report available with IOCC, it is mentioned that during the year 2000/2001, the world cocoa industry witnessed a remarkable jump in terms of their share, be it production, consumption and sales. Most importantly, for year 2000/2001 production of world cocoa or chocolate was estimated to be 2,825,000 tonnes. (ICCO, Annual Report for 2000/2001 , 2001 , p. 13) However, for the year 2008/2009, which is the last available report published by ICCO, cocoa production was estimated to be 3.5 million tonnes. (ICCO, Annual Report 2008/2009, 2009, p. 3) From these data we can assume that world chocolate industry is a huge business globally. Hence, it would be interesting to analyze the case also related to Hershey Food Company, a chocolate manufacturing giant, which is discussed as follows. Hershey Food Company: Performance Audit Report 2002 and 2011 Starting the year 2002, Hershey Food Company faced many challenges. Some challenges that were brought to the notice of the audit board were competition from competitors, namely Nestle and Mars that has increased manifold. The global market shares of Hershey Food Company also fell sharply during the said year. Another challenge facing the company CEO then was the factor covering value enhancing to its customers worldwide. As the case is, competition from Nestle and Mars are such that it gave a sense of fear for the company management and its board of director. Hence, the company report that came henceforth was to make a strategic shift to enhance its products, which necessarily raise a question of investment. In that regard, what the company CEO then in the year 2002 recommended was to include realignment plan of US$275 as a shift towards reduction of the workforce in the company that will go towards voluntary compensation. Such a plan was really for a company that is known to have been a people champions for long enough. Yet it was probable, and the case can be looked to the declining market share and unpredictability, given the fierce competition from Nestle and Mars. As reported by ICCO, Hershey Foods Company for the year 2005 was dismal to say so, given that it an annual sale was estimated to be US$ 4881 million dollars, four places below its competitors namely, Nestle, Mars, Cadbury and Ferrero. (ICCO, The Chocolate Industry ) So considering these developments the voluntary realignment plan was a necessity felt the company CEO, Richar d H, Lenny. Audit that was carried out for the year 2001 to 2011 brought into face the many unknown facts and figures about Hershey Food Company. The investigation carried out by Attorney general brought to the notice the most unfamiliar case. What is interesting to note is that audit carried out in the company shows that majority of shares in the company was owned by single large shareholder. This is very unlike and came as a surprising factor for auditors as well given the complexity in shareholder and their ownership, besides the links of the company to many charitable initiatives, which posed many questions for auditors. Somewhat Hershey Food Company represents a community shareholder. This is what the audit report showed about Hershey Food Company. Then Strategic Development from 2001 to 2011 The strategic development starting March, 2001 till September, 2002 saw many proposals being raised in a span of one year as a factor to push the sales and revenue generation initiatives of the company. Given the board of director meeting it was figured that Lenny, who was the CEO of the company then and his management styles, was not received by the company stakeholder properly. It is said that Lenny management was somewhat out of the boundary, which brought to fore disagreement amongst employee and co-managers in the company. In March 2002, the company strategic team decided to explore upon the sales factor of the company, however, the company CEO was reluctant and was trying to seek alternative to such a decision being made. As a matter of fact, competition also the market was not only posing many pressure on the company management, but also brought into contention the test of time that raised a conflict amongst stakeholder and director of the company. Such happening was a pre-cursor to the overall episode encompassing Hershey Food Company. The conflict of idea and recommendation regarding sales objectives between the board of the company and the trust was really interesting to note. Part of the strategic development from 2001 to 2011 also saw many forms of protest, within and outside the company management realms. Such case is sad indeed for a company of repute. The development that came about also somewhat show an increase of 10% sales for Hershey Food Company in 2002, that also in a span of 3 months under the leadership of Lenny, the company CEO. The success in that regard was accorded to the cost cutting measure initiated by Lenny in context of the realignment plan. However, somewhat the case of conflict as can be seen is that the vision of Lenny and that of the company founder was not match-able in any regard. Such development in parts within Hershey Food Company and its strategic development starting the year 2001 to 2011 brought into contention the very conflict that is reported between the trust and board of directors, which is central to the issue facing the company at the most critical time, and reason enough for the conflict to erupt. Board Meeting Outcome Given the audit that was developing in the company, sales of the company was brought to an injunction or ban by a panel of judges. However, following the year 2002 during September, the injunction was cleared and granted. This development saw the introduction of Candy Swoops Slices in 2003, which was listed by Productscan as the most innovative product of the year itself. Following the board meeting, the outcome also saw the acquisition of Joseph Schmidt by Hershey Food Company in 2005. (Malhotra, 2009, p. 395) Company Status Today The company status today as we have maintained earlier is one amongst the major manufacturers of global chocolate. Many innovative products were introduced by Hershey Food Company in a span of five years. Moreover, to gain its market share lost to its competitors, Hershey Food Company decided to become a fearless product innovator. These somewhat paid dividends, which brought Hershey Candy Slices Swoops which was received highly in the market. (Malhotra, 2009, p. 395) Hence, today Hershey Food Company is a major competitor in the chocolate industry. The battle for the company was won in actuality, and today Hershey and Mars are fighting for the number spot in the global industry, which to some analysts is a $73 billion industry annually. (Malhotra, 2009) Hence, these figures itself present many interesting facts about Hershey and where it stands today after the internal turmoil since 2001. Recommendation What we learned from the case study and its analysis is that governing issue was one formidable background that can be read and make out. Given the presence of huge number of shareholders in the company and unbending management further ignite the pressure that the company is facing. Hence, it is recommended that corporate govern ace of the company should:- Be held by a body of authority that is designated to take decisions and dismantle complex issues in organized way. Bring into contention effective leadership. Finally, production and Operational Management overall should be streamlined for enhanced process of the company. SWOT Analysis of Hershey Food Company Hershey main strength as can be analyzed lies with its innovative approach to introduce products that are to the taste of consumers. In the history of the company, advertising also have been the main strength that Hershey [posses to outdo its competitors. Being a chocolate manufacturing giant, Hershey the board also was one factor which posed many dangers for the company. For instance organizational weakness was one feature overall of Hershey. Yet the opportunities for the company lays within the competitive leader that the company has strive for many years. Given that Mars is on the number spot the factor of it also presents Hershey with an opportunity like never before to reclaim its place as the number one manufacturer in the industry. Yet the threat was always there, and recurring as can be seen to the stiff financial audits and leadership of Lenny, which to the boards is not a feasible one as far as Hershey Food Company strategy goes.