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
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.
Hershey concentrates on a variety of chocolate products ranging from powder form to an assortment of candy bars, including the famous Hershey Kiss®, to the wholesaling of large decadent chocolate products for other smaller chocolate candy manufacturers.
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.
Under an ABC system, the allocation of costs to products is achieved through at least four analytical steps. Firstly, costs are grouped into activity levels. Secondly, cost drivers are
In 1900, “Hershey” Company started making milk chocolate bars, wafers, and other shapes. He was able to lower the unit cost and produce milk chocolate bars in mass production. Chocolate was only affordable by the wealthy; However Milton Hershey made it affordable to all. One of “Hershey 's” earlier slogans was "a palatable confection and a most nourishing food.
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.
In 1907 the Hershey Chocolate Company started producing a flat bottomed milk chocolate candy which Mr. Hershey decided to call the Hershey Kiss. In early production the Hershey Kisses were individually wrapped in little squares of silver foil. In 1921 when the wrapping machine was invented Hershey decided to give the Hershey Kiss a “plume” like appearance that we recognize today. This was to signify to consumers that this was a genuine Hershey’s Kiss Chocolate. This was eventually trademarked in 1913. Over the next two decades the Hershey Chocolate Company would produce several more products. These products were Mr. Goodbar (1925), Hershey’s Syrup (1926), chocolate chips (1928) and the Krackel bar (1938). During the Great Depression of the 1930’s these products made it possible for employees to keep their jobs and the company was able to sustain profitability. During even harder times, WW II, The Hershey Company provided survival rations of chocolate bars for military use. By doing this The Hershey Chocolate Company earned no less than five Army-Navy “E” Production Awards for its exceptional contributions to the war effort. In fact, the company’s machine shop even turned out parts for the Navy’s antiaircraft guns.
The Hershey Company is one of the most renowned chocolate-manufacturers in North America and its empire is quickly spreading across the globe. Armed with its delicious secret recipe and passion to help the less fortunate, its determination for success is a product of their past struggles, and only motivates future corporation growth. Along with their success comes inevitable failures that have had undeniable effects on the company’s reputation. Their need for growth has pushed the company to seek new areas of production and this desire has led them to West Africa, where they are still present today, reigning their horrific, inhumane, and unjustifiable policies on innocent Africans.
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 chocolate is known as one of the world’s most popular chocolate brands. For 118 years, the Hershey brand remains a favorite chocolate treat in over 90 different countries. Beginning only manufacturing milk chocolate, the company today manufacturers over 100 different varieties of candy. Many people are familiar with the traditional Hershey milk chocolate bar, Reese’s peanut butter cups, and bite sized Hershey kisses. The process behind producing these famed treats is a fascinating process. By evaluating the company’s manufacturing process and business dynamics, consumers can gain a better perspective of the science behind the candy the enjoy most.
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
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,
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.
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