THE HERSHEY’S COMPANY
Newton Prajapati
University of Bridgeport Introduction
Company Background:
The Hershey Company is one of the largest chocolate manufacturers in North America. The company’s name has been a synonym for chocolate in North America. Hershey’s was founded Milton S. Hershey in 1894 in Derry Township, Pennsylvania. It has secured the position of 22nd in the list of top 100 food processing company of USA (Foodprocessing, n.d.). It used to be named as Hershey Food Corporation until April, 2005. The journey of this company started with the production of caramel products and it was a big hit at the end of nineteenth century. Later, Milton Hershey decided to produce chocolate products and kept on tasting the success
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Findings
Types of Cost Drivers for The Hershey’s Company:
The different types of cost drivers that are associated with The Hershey’s company can be listed as below:
A. Structural Cost Drivers:
It is more related to the selection of the location of plant, technology to be used, and office layouts. The company must have a lot of research on these things because these decisions are very crucial for the cost management and effectiveness of the operation that the company conducts. So the management has to be very careful about these long term decisions in order to save their large amount of dollar to their company.
B. Organizational Cost Drivers:
Generally these costs occur after the structural costs. They are related to the reorganizing of office equipment, working with a limited number of suppliers, providing the information of cost to its employees and giving them the authority to make decisions. These decisions have a moderate level of difficulty to change.
C. Activity Based Cost Drivers:
Generally, every activity that a company does has costs. So all the activities like placing an order for its production, inspection of the raw materials, hiring of employees, training for the new employees, packaging of the products, shipment of the products, advertisements etc.
Identification of different costs:
Different types of costs for The Hershey’s company can be as following:
1. Variable Costs:
These are the cost that varies
Hershey’s and Cadburys are moving towards the premium chocolate market through the acquisition or upmarket launches (Zietsma, 2007). The profit potential present in this sector supported by its 20% annual growth rate make it very attractive for large organizations to come forward and avail this opportunity. There is a low threat of new entrants prevailing in this chocolate industry because of the high capital requirements and expected retaliation by current manufacturers. Current players in the industry also possess some barriers to entry for new entrants by maintaining economies of scales with their large production capacity and keeping their product differentiation with their specialized and novelty chocolate products. Even though there are low switching costs and easy access to distribution channels, but still the brand loyalty of the customers including the Rogers’ Chocolate itself make it harder for new firms to come into the competition.
It’s always good to start investing money at an early age, however, it’s a hard start. Many banks have improved interest rates as well as no opening fees to start a savings account. Stocks, such as health and technology are also currently going up. Billy should start by saving small amounts of money per week for two years and placing it in a savings account. He should also buy health and tech stocks, such as Johnson & Johnson (JNJ) and International Business Machines Corporation (IBM), and keep a diversified portfolio, along with buying bonds.
The Hershey Company and Tootsie Roll Industries, Inc. have weathered the ”Great Depression” with a history of more than one hundred years in the confectionary candy making industry. Their vision and longevity have pushed them into the twenty first century to meet the needs of the community, consumer, affordability, environment and healthy control portions. Both companies have made available, reduced sugar, sugar free, nut free, peanut free and gluten free products that is reflected in their candies, gum and mints. The two companies are worth investing in, but may be better than the other.
Cost drivers can be identified for each activity or cost category based on observation, discussions with management, simulations and statistical studies. The key is to determine the behavior of indirect costs with respect to activity or resource usage in each activity center (Leslie, 2009). These efforts have identified the eight cost drivers shown in Table 3.
The Hershey Company is the leading North American manufacturer of quality chocolate, non-chocolate confectionery, and chocolate-related grocery products. The company is also a leader in the gum and mint manufacturer category as well. In this paper, I will discuss the history of the Hershey Company and the impact it has on the United States and the rest of the world.
“The Hershey Company” was founded by Milton Hershey in 1909. In 1894 they decided to produce a sweet chocolate as a coating for his caramels. The company was originally located in Lancaster Pennsylvania. The company is now headquartered in Hershey, Pennsylvania and is a global confectionary leader. They are known for their chocolate, sweets, mints and other snacks.
To facilitate the valuation aspect of the analysis, free-cash-flow forecasts are provided in case Exhibit 10 for Hershey as a stand-alone entity. Most students should find it easy to calculate a value for Hershey using the discounted-cash-flow (DCF) method and industry-comparable multiples, which also are provided. As with any valuation case, students must make judgments about the appropriate capital structure, the weighted average cost of capital (WACC), sales growth, and the terminal growth rate. Once students have explored the value drivers for Hershey though sensitivity analysis, they may then evaluate the bids from both Nestlé S.A.–Cadbury Schweppes PLC (NCS) and the Wm. Wrigley Jr. Company. They will want to examine whether the bids are fair from the perspective of HFC shareholders and whether the synergies assumed by the bidders in their offer prices are reasonable.
M&M’s biggest competitor is Hershey’s brand like M&M candies. The competition is fierce among the chocolate industry. Hershey and Mars are rivals and want the opportunity to gain more of the market share. In 1954, Hershey-ettes were introduced to compete against the similar M&M’s. However, they were not successful and are generally only available for consumers around the Holiday season. By the millennium, Hershey extended the popular Hershey Kisses brand in creating the Kissables. Hershey intended for direct competition to M&M small candy coated round tablet of chocolate in multitude of colors. The candy factories started in standard size packs and by the 70’s moved into standard size candy boxes. In the current year and season, you will find M&M’s in candy canes to small snack sizes and inside ornamental objects. The chocolate world becomes difficult to present as it becomes difficult to come up with new ideas in the candy business. As more companies release products similar to the M&M’s, it will become increasingly difficult for Mars to continue to command the level of market share in the chocolate candy industry and the product has a potential to get lost in the supermarket aisle.
Hershey’s primary strength is its powerful, trustworthy brand image. Currently, Hershey is the market leader for the United States chocolate market with 44.3% market share, followed by Mars at 29.8%, for a combined 74.1 % of the market (Pogharian, 2013). Hershey’s dominant market leadership position allows it the leverage to build its own brands with minimal opposition. If competitors were to respond with similar products to Take 5, Hershey would have the resources to protect against loss of market share. Hershey’s Take 5 bar is not only unique in the combining of five ingredients (milk chocolate, peanuts, caramel, peanut butter and the rare incorporation of pretzels) but it has done so with
From the standpoint of the original Hershey milk chocolate bar, Milton Hershey is the original creator of developing an efficient chocolate manufacturing process during the late 1800s. Milton Hershey developed a method to produce chocolate that tasted delicious, could be created in bulk, and sold to consumers at competitively affordable price. This process begins with obtaining ingredients used to create a chocolate base. Though Hershey’s main factory is in Pennsylvania, the cacao bean is the main ingredient used that needs to be imported outside of the United States. The cacao beans from cacao trees only thrive in tropical climates. These trees grow in tropical rain forests of Brazil and Indonesia. Once the trees produce a significant amount of cacao beans, Hershey hires farmers to pick the cacao beans off of trees. When
The industry that I chose is the chocolate industry. Growing up in Pennsylvania the Hershey Company is well know throughout the state and is a factory I have visited on multiple occasions. While the chocolate tycoon has made some negative headlines over the past few years with outsourcing and layoffs, they have done a good share of philanthropy work for the state and the Dauphin County area.
The purpose of this Market report is to present a study of the different opportunities for The Hershey Company to be able to expand its business globally and to make an initial proposal that Hershey’s pursue opportunities in France.
The Hershey Company, known until April 2005 as the Hershey Foods Corporation and commonly called Hershey 's, is the largest chocolate manufacturer in North America. Its headquarters are in Hershey, Pennsylvania, which is also home to Hershey 's Chocolate World. It was founded by Milton S. Hershey in 1894 as the Hershey Chocolate Company, a subsidiary of his Lancaster Caramel Company. Hershey 's products are sold in about sixty countries worldwide. In addition, Hershey is a member of the World Cocoa Foundation. The company has been topped to 384, compared with the previous rank 404, in 2013 (CNN, 2013). This paper is going to show the company’s international environment,
The hershey food cooperation is a confectionery kind of industry that was founded in 1894 by Milton Hershey who is a candy-manufacturer who decided to try adding chocolate to his caramels; transforming the name of his enterprise the Hershey Chocolate. This new factory was located strategically near dairy farms and surrounded by the spirits of hardworking people , by 1900 production of the delicious mil chocolate took place. Followed that, the launch of so many
In 1894, the Hershey Chocolate Company began in Lancaster, Pennsylvania when Milton Hershey decided to begin producing chocolate coating for his caramels. In 1900, Hershey expanded their business by producing more goods. Once Hershey began mass production, they were able to minimize production costs and make high-quality milk chocolate. After this new production model was established, Hershey began to expand its facilities throughout the northeastern United States. They also increased their supply chain efficiency by building a new facility in close proximity to ports and dairy farms that supply Hershey with its raw materials.