EXam Qn 3

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1 Question 3 SWOT Analysis for Hershey’s The SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis on Hershey is a strategic inquiry into the factors that influence the position and the future circumstances that describe the company (Buchanan & Huczynski, 2019). The analysis is concerned with a set of positive and negative factors in the external and internal environments of the firm. Strengths The strengths are internal factors in the environment that are applied to positively influence the existence and presence of the company within its industry (Buchanan & Huczynski, 2019). They include aspects such as valuable and rare resources owned by the firm or other advantageous business processes. 1. Strong Brand Portfolio Hershey’s company portfolio establishes that the company has been in existence for a considerable period of time since 1897. During the expanded period of its operation, the company has nurtured and established reputable brands within the confectionery industry. Examples of such brands include Hershey’s, Reese’s, Kit Kat, and York. The number of brands is an instance of a diverse portfolio, with each growing into a household brand independently. The strong brand portfolio is a strength as it diversifies the revenue streams for Hershey. The diverse brand portfolio shields Hershey from significant losses in the case of brand rescinding or declining sales. 2. Market Leadership Market Share

2 The length and scale of operation by Hershey’s establish the company as a leader within its industry. Leadership as a strength factor is coupled with the fact that Hershey has various brands competing within the market. This factor counts as a strength as a market leader since the company can tweak factors and product trends to gain an intended market advantage against rival firms. 3. Large size, Economies of Scale and Wide distribution network The scale of operations that describes Hershey is a strength. Owning one of the largest distribution networks, spanning over 60 countries, gives the company leverage against uncertain economic times. Additionally, a broader scale of operation implies that unprecedented changes in a single market of distribution channel may be recovered through a counter-trend in other markets. Weaknesses Weaknesses are negative factors within the internal environment of a company that adversely affect its position and competitiveness within its market (Buchanan & Huczynski, 2019). The following factors are weaknesses that face Hershey. 1. Overreliance on the U.S. domestic market Despite the diversified market structure, Hershey mainly concentrates on the U.S. as its primary market. The strategy counts as a weakness since economic and market uncertainties within the U.S. domestic market threaten the dominance and market share of the company relative to competing firms. 2. Increased Geographic Coverage

3 The approach towards increasing coverage is a weakness for Hershey. The company seeks to succeed in each of these markets against competitors who have a narrow scale of operation. The weakness in this strategy is the dilution of resources. The company is unable to commit resources towards a single geographical region as it needs to have a significant market share in all the regions for the strategy to be impactful. 3. High Operation Costs attached to advertising and other Marketing costs . The large scale of operation coupled with a diverse brand portfolio orients the marketing strategy of Hershey. The company spends a significant amount of money on advertising costs across multiple regions while adhering to local regulations on advertising. The resultant effect is that the company experiences a thinning profit margin since it has to account for such costs. Opportunities. 1. An innovative approach to the competition by the Brand Hershey’s engages with the latest technology in its product research, design and analysis of the market forces. The approach is poised to give the company an edge over its less innovative and tech-savvy competitors. According to Zhivkova (2022), technological input in the manufacturing phase, as implemented by Hershey, was one of the reasons behind its rise as the dominant brand in the confectionery industry. In this way, this factor is an opportunity that the company may capitalize on to further strengthen its brand identity. In this way, a technological-based strategy counts towards the strength of any organization, as evidenced by Buchanan and Huczynski (2019). 2. Customer and Brand Loyalty

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4 The brand and customer loyalty that describes Hershey’s customer base makes it easy for the company to introduce new products. The factor is an opportunity that the company can further use to gain from the advantages of a diversified brand portfolio. 3. Increasing International Market Structure An increasing international market is an opportunity that could be capitalized in increasing the global brand identity of Hershey’s. The company is seeking to make use of its dominance in already established member countries to extend into entire regions. The above presents an opportunity for the company to be a pioneer brand in countries in the global south which are recording an increasing proportion of the middle-class population. Items et al. (2020) give an instance of varied climatic conditions and calamities as factors that weaken the global strategies of firms such as Hershey in the selected region. Threats 1. Intense Competition both Internationally and Globally The market strategy of Hershey’s is a source of its biggest threat. The company engages in multi- tier competition in both its international operation and the individual countries in which it has established its operations (Bateh & Sofianopoulou, 2019). The above creates external pressure on its managerial decision, and the risk of uncertainties such as collusion among the multi-tier competitors may devastate the local markets and market share of the firm. 2. Global Economic Fluctuations Financial risks and regional recession are continuous threats that Hershey has to live through as a multinational. Events such as weakening currencies, exchange rates and inequitable accessibility

5 to raw materials across the different regions affect the ability of the companies operating on a global scale, such as Hershey to break even (Trojanowski, 2021). 3. Regulation and Compliance Hershey’s strategy of increasing its global print is faced with the threat associated with legal regulations and compliance with a variety of local laws. This factor threatens the position of the firm in these individual markets, as failing to fully agree with either of such laws leads to penalties and possible closure. Section B An analysis of Hershey’s SWOT (Strengths, Weaknesses, Opportunities and Threats) identifies the diversified brand portfolio as the most significant benefit to the company. The creation of the portfolio is a long-term gain, an implication that it is a rare, valuable and non-imitable factor that orients the company’s strategy. Other strengths and opportunities, such as brand loyalty and economies of scale, are indirect consequences of the company’s portfolio. On the other hand, the biggest risk that the company has to face is intense competition. The significance of this risk is attached to the multi-tied structure, consisting of local and international markets of the company’s operation. Hershey has to contend with the cumulative pressure that amasses from competition in each tier and the potential risk from an inability to withstand the competitive forces.

6 References Atems, B., Maresca, M., Ma, B., & McGraw, E. (2020). The impact of El Nio-Southern Oscillation on US food and agricultural stock returns. Water Resources and Economics , 32 , 100157. https://doi.org/10.1016/j.wre.2020.100157 Bateh, J., & Sofianopoulou, S. (2019). Organisational growth through operational change. International Journal of Business Performance Management, 20(3), 278. doi:10.1504/ijbpm.2019.102026 https://doi.org/10.1504/IJBPM.2019.102026 Buchanan, D., & Huczynski, A. (2019). Organizational Behaviour (10th ed.). Pearson. Trojanowski, T. (2021). Swot analysis of sustainable marketing mix of food industry enterprises. WSEAS Transactions on Environment and Development , 17 , 997. https://www.wseas.com/journals/ead/2021/b865107-1399.pdf Zhivkova, S. (2022). Sustainability in the companies practices. European Journal of Marketing and Economics , 5 (1), 44-56. https://sciendo.com/pdf/10.26417/169cbl93

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