Table of contents
List of content
2.0 Background of the company
8.0 Future planning
Hershey`s kisses were introduced to the market in 1907 and manufactured by
The Hershey`s Company. These chocolates got its name by the machine that makes
them. This is due to the machine which made kiss sounds and appeared to kiss the
conveyer belt onto which the chocolate is dispensed. Kisses appears to be one of the
most popular candies in the world since 1989 when Hershey`s kisses were the fifth
most famous chocolate in 1989 in United States and the sales topped to $ 400 million.
Now, about 60 million to 80 million kisses are produced every each day at their
factories. Actually, a Pennsylvania chocolatier , H.O. Wilbur & Sons Chocolates
Company, had been making about the same product that named Wilbur Buds in 1984.
The shape and size of those chocolates had inspired the Hershey`s company to make a
new brand named as Hershey`s Kisses chocolates.
At the beginning the Hershey`s Kisses were wrapped by hand. The automated
wrapping the packaging began in 1921. The machine also introduced a little slip of
paper inside the chocolates for the packaging which is still been used until now. The
purpose of introducing the slip because to make sure that customers get the genuine
Hershey`s products and more likely the trademarks of the company. However, the strip
became a register trademark for the Hershey`s in 1924. These products have been
produced continuously from 1907 to now except the years between 1942 and 1949.
This is because the aluminum for the wrapping became insufficient due to World War II.
The only available wrapper for the Hershey`s Kisses is in silver wrappings until
1962. But in 1962, few colour of wrappers were introduced such as green and red for
Christmas. Then, Easter wrappings were made in 1968 and during 1986, Valentine`s
Day wrappers began being manufactured.
Originally, Hershey`s Kisses chocolates were wrapped with the silver color foil
and long-lasting for few decades. Until 1962, Kisses chocolates were marked with
different colour foiled wrappers such as green, red and silver coincidently with the Merry
Christmas season. Then, pastel blue, pink and green wrappers were introduced for
Easter Day in 1968 and Valentine`s Day themed wrappers were introduced in 1986 with
pink, red wrappers as well with little heart on it.
Nowadays, there are varieties of color wrappers introduced by Hershey`s
company that depend on the seasonal events. However, there was controversy within
the organization regarding aluminum wrappers since people demand and requested to
replace it with more environmentally- friendly packaging which is biodegradable
Hershey`s kisses had introduced seven its main product lines which is kisse milk
chocolates, kisses hugs, kisses dark chocolates, kisses with caramel, kisses meltaway
centre, kisses with almonds and kisses air delight. In addition, they also had introduced
several products that are available during seasonal day only. For example Hershey`s
Kisses Halloween with pumpkin flavor, Hershey`s Kisses Valentine`s Day and Easter
2.0 Background of the company
Hershey`s company have four stages for the development of their company and
line of products. At the first stage, it was called as getting started stage and duration
takes for this stage were from 1984 to 1916.
It all started with a decision
Its all started with a decision that was made by candy-manufacturer named
Milton Hershey`s in 1894. His aim was to produced sweet chocolate as a coating for his
caramels. The company is located in Lancaster, Pennsylvania and were named as
Hershey`s Chocolate Company. The company began to produce milk chocolate in bars,
wafers and other shapes of chocolates in 1900. Hershey`s was able to lower the per
unit cost and make milk chocolate with the mass production. Hershey`s also managed
to make once a luxury item for the white collars and affordable for all people. One early
advertising slogan described this new products as “ a palatable confection and a most
nourishing food.” (http://www.hersheys.com/ )
A company on the move
Due to immediate success gained by Hershey`s company, caused the owner to
consider in increasing his production facilities and he decided to build a new chocolate
factory in the middle of farmland in south-central Pennsylvania in Derry Township,
where he had born. The location of the new factory was perfect since it was surrounded
with dairy farms that can provided the milk required yet also it was closed to the ports
of new York and Philadelphia that supplied the imported sugar and cocoa needed.
Besides, the local labor that were honest and hardworking people. The new factory was
well established by the summer of 1905.
The second stage for the Hershey`s development was between 1917 and 1938 and this
stage was called as expanding & innovating stage.
A kiss for the whole world
In 1907, the company decided add a new line of products by producing a conical
milk chocolate candy with a flat-bottomed that named as Hershey`s Kisses chocolates.
At the beginning, the chocolates were wrapped with silver foil by hand made. However,
the automated machine wrapping was introduced in 1921. The technology also started
to add a paper strip at the top of the kisses to signify the customers that was a genuine
Hershey`s products. In 1924, the strip had became a register trademarked for the
New products, hard times
Within two decades, Hershey`s were added even more products to the
company`s offerings. Some of the products included Mr. Goodbar Candy Bar in 1925,
Hershey`s syrup (1926), Hershey`s chocolate chips in 1928 and the Krackel Bar in
1938. These new products had helped the company to maintain its profitability and
avoided from any worker layoff during the Great Depression in 1930s. nevertheless, a
group of workers staged a six-day strike that were supported by the CIO labor union
that ended being forcibly removed by the local farmers and loyal workers.
From 1939 to 1948, this was the stage where the world War II had began and this stage
was named as going to war.
Hershey`s chocolate goes to war
The Hershey`s Chocolate Corporation were going to start producing s survival
ration bar for the military use since they were also provided milk chocolate bars to the
American doughboys in the first war. By the end of the war, more than a billion Ration D
bars had been produced and the company also earned awards for the exceptional
contributions to the war effort. In fact, the company machine shop also turned out to be
parts of the Navy`s antiaircraft guns.
Reese`s Candy Company had been collaborated with Hershey`s chocolate
company since 1928. Hershey`s helped them by supplying the coating for Reese`s
penny cups since Reese`s had been involved in the making chocolate –covered peanut
In 1968, Hershey`s had renamed the company with Hershey`s Foods
Corporation and expanding its product lines and had diversified related companies into
other food products. For example, San Giorgio Macaroni and Delmonico (1966), Y&S
Candies, Makers of Twizzlers licorice (1977), Dietrich Corp. confectionery operations
(1986), Peter Paul/ Cadbury`s U.S. confectionery operations (1988) and Ronzoni Foods
And today, The Hershey`s Chocolate Company is the leading manufacturer of
chocolate and non-chocolate confectionery and grocery products in North America. The
Hershey`s Company also continues to produce new products regularly and take
advantage of economic growth in the millennium era. Hershey`s products are well
known all over the world and enjoyed by every people.
The Hershey Company (NYSE: HSY) is the largest producer of quality chocolate
in North America and a global leader in chocolate and sugar confectionery.
Headquartered in Hershey, Pa., The Hershey Company has operations throughout the
world and approximately 14,000 employees.
With revenues of more than $6 billion, Hershey offers confectionery products
under more than 80 brand names, including such iconic brands as HERSHEY'S,
REESE'S, HERSHEY'S KISSES, HERSHEY'S BLISS, HERSHEY'S SPECIAL DARK,
KIT KAT, TWIZZLERS, JOLLY RANCHER and ICE BREAKERS. Hershey also offers
premium and artisan chocolate products under such brands as SCHARFFEN BERGER
and DAGOBA through the Artisan Confections Company, a wholly owned subsidiary.
The company is focused on growing its presence in key international markets such as
China and Mexico while continuing to build its competitive advantage in the United
States and Canada.
For more than 100 years, The Hershey Company has been a leader in making a
positive difference in the communities where its employees live, work and do business.
Corporate Social Responsibility is an integral part of the company’s global business
strategy, which includes goals and priorities focused on fair and ethical business
dealings, environmental stewardship, fostering a desirable workplace for employees,
and positively impacting society and local communities.
Milton Hershey School, established in 1909 by the company's founder and
administered by Hershey Trust Company, provides a quality education, housing, and
medical care at no cost to children in social and financial need. Students of Milton
Hershey School are direct beneficiaries of The Hershey Company's success.
Hershey`s had developed many products such as chocolate bar, cookies, chocolate
syrup , kisses, nuggets, cocoa, baking pieces, candy bar, baking chocolates, milk &
milkshakes and dessert topping.
But for this assignment, the products that I choose is Hershey`s Kisses. Hershey`s
kisses had produced seven main types of its brands such as kisses AIR DELIGHT ,
kisses milk chocolate, kisses milk chocolates with almonds , kisses meltaway centre
milk chocolates , kisses milk chocolates with caramel, kisses special dark chocolates,
and kisses hugs.
kisses AIR DELIGHT
feel each bubble melt smoothly in the mouth as the air
delight aerated milk chocolate. The wrapper has polka
dot on it.
kisses milk chocolates with almonds
these type of Hershey`s Kisses brand milk chocolate
with almonds were introduced in 1990. It became an
instant success and was the first permanent brand to
Hershey`s kisses brand family.
Kisses milk chocolates with caramel
Taste creamy caramel and milk chocolate melt in your
mouth that you want to experience again and again.
Kisses Hugs were introduced to the Hershey`s family in
1993 with the combination of Hershey`s milk chocolate
hugged by sweet white cream. It had been everybody
favorite ever since.
kisses meltaway centre milk chocolates
Hershey`s Kisses Meltaway Milk Chocolates feature
with smooth meltaway center surrounded by a creamy
milk chocolates shell. It is perfect for those looking for
an extra creamy indulgence. These are available at
retail and wrapped with silver and amber colored foil
topped with a meltaway center inscribed plume.
kisses milk chocolate
the original Hershey`s Kisses brand milk chocolates
have been a favourite American since 1907. It is made
of creamy milk chocolate and had been enjoyed after
generation. Everyday deserves a kiss.
kisses special dark chocolates
originally introduced as a Limited Edition flavor but it
was really a hit among chocolate lovers. Hershey`s
Kisses brand special dark chocolates is a natural
source of cocoa falvanol antioxidants.
Other flavors for occasionally such as Valentine`s day, Easter Day , Halloween Day and
Packaging the brands
Timeline of the packaging brands
• the packaging originally in silver foil wrapper by hand
made with milk chocolates
• 1921 - automated machine wrapping were introduced
with strip paper which marketed as genuine Hershey`s
• kisses chocolates marked with different colour of foil
such as green, red and silver for Christmas season.
• pastel blue, pink and green wrappers were introduced for
Easter Day in 1968 and Valentine`s Day themed wrappers
were introduced in 1986 with pink, red wrappers as well
with little heart on it
1968 - until
• varieties of wrappers were introduced for seasonal
events. but there are seven main products that had
specified wrappers for it.
• replace it with more environmentally- friendly
packaging which is biodegradable materials.
Price is used as the market tools of the marketing objectives. Hershey`s
company changes the prices and weights when it is necessary to accommodate the
changes in costs, competitive environment and profit objectives. But, at the same time
maintain the consumer value. The prices increases and weight changes helped to
offset increases in the company input costs including raw materials, packaging
materials, fuel, utilities, transportation and employee benefits.
In March 2011, the company had announced a weighted-average increase in
wholesale prices of approximately 9.7 % across the majority of United States, Puerto
Rico and export portfolio. The price increases were applied to the instant consumable,
multi-pack, packaged candy (including Kisses) and grocery lines.
Generally there is a time lag between the effective date of list price increases and
the impact of the price increases on the net sales. This is because the company prefer
to serve previous commitments to planned customer and consumers promotions and
this had caused the impact of price increase is always been delayed.
Since the Hershey`s Kisses are well known product, the price is still affordable
and reasonable to everyone. These Hershey`s kisses brand have high quality of milk
chocolates therefore the prices for the brand is quite reasonable. The price for this
product is not expensive as compare to Van Houten, Tudor Go.
In addition, Hershey`s promote their prices (especially for Hershey`s Kisses ) so
that the regular customer will stick to them and even can increases the number of the
customers. Since Hershey`s Kisses are worldwide product, all the prices are not the
same depending on the economics of one’s country. For prices example are shown
below in the table 4.1
A promotion strategy consists of the specific blend of promotion tools that the
company uses to persuasively communicate customer value and build customer
relationships. (Principle of Marketing by Philip Kotler, Gary Armstrong, 14th edition,
(2012), Pearson education, U.S.)
There are several ways of how Hershey`s Kisses promoting their products in
order to achieve objective for their sales targets. For example through the
advertisement. This advertising are including broadcast, print, internet, outdoor and
other forms. Hershey`s Kisses have their own website for the customers to get the
information about their products and achievements. People who loves chocolates and
anything that related to chocolates can get the information about Hershey`s Kisses
through this website below:
Besides, Hershey`s Kisses brand promote their products through public relations
(PR) which is includes press releases, sponsorships, special events ad web pages. For
holiday seasons, Hershey`s Kisses brand have introducing some holiday products
especially for the kids. Some example of their holiday products are Giant Hershey`s
Kisses milk chocolates, Hershey`s Kisses milk chocolates Cane, Hershey`s Kisses milk
chocolates Santa Hat and lots more. In addition, Hershey`s Kisses have introducing
Hershey`s Kisses Baking recipes.
Another recipes that are available for the Hershey`s Kisses products such as
Kisses Bread and Muffin Recipes, Kisses Brownies and Bars Recipes, Kisses Cakes
and Frosting Recipes, Kisses Candies and Snacks Recipes, Kisses Cheesecakes
Recipes, Kisses Cookies Recipes, Kisses Dessert Recipes, Kisses Garnishes and
Decorations Recipes and Kisses Pies & Tarts Recipes.
Hershey`s Kisses brand also created some events to attract more people so that
customers will enjoyed and feel it is worthy to buy Hershey`s Kisses products. For
example, designing a message to share your happiness and spread your love to your
beloved ones. This event is named as Kiss from me 2 U.
Other than that, Hershey`s Kisses brand used direct marketing that includes
catalogs, the internet, telephone marketing, kiosks and lots more. In order to promote
this products, this company also introduced some other products that have Hershey`s
Kisses name on it. People can easily get these products since it was introduced
throughout internet and people nowadays are easily access to the internet. Some of the
products are stationery; Kisses brand keychain, Contemporary Kisses Magnet set,
Kisses chocolates-shaped lip gloss, shirts, sweaters, educational books and lots more.
Hershey`s Kisses have try their best in order to make sure the entire marketing
mix always be coordinated for greatest impact to their company.
At first, the Hershey`s company was located in Lancaster, Pennsylvania in 1984.
However, Hershey`s decided to add his production facilities. So, they had move out to
Derry Township, south-central Pennsylvania, North America. The location was strategic
since it was closed to the ports of New York and Philadelphia that supplied the imported
cocoa beans that they needed and surrounded with dairy farms yet the local labor and
local farmers that were hardworking and loyal.
Hershey`s Kisses had distributed their products in approximately 70 country
worldwide. They segregate their operating segments into geographic regions base on
their similar economic characteristics, products and services. They combine their
operations in the United States and America which is including Canada, Mexico, Puerto
Rico, Brazil and their global exports business for segmented reporting purpose.
While for the other countries than America and United States, such as Middle
East, Africa , Asia and Europe, they combine these countries and form one reportable
segments based on their characteristics.
Hershey`s Kisses brand distribute their products from the main factories in
Pennsylvania, America to the Hershey`s retail stores in New York City, Chicago,
Niagara Falls (Ontario), Shanghai, Dubai and Singapore. They operated under the
reporting structure designed so that their can focus on North America and ongoing with
the transformation to be a global company
7.0 Marketing environment
A company`s environment depends on the factors and forces outside the
marketing that will affect the marketing management`s ability to build and maintain
successful relationships with targets customers. There are two types of marketing
environment which is microenvironment and macro environment.
7.1 Microenvironment challenges
The microenvironment consists of the actors close to the company that affect its
ability to service its customers. Microenvironments are divided into five categories.
There are the company itself, competitors, publics, suppliers and marketing
7.1.1 The company
The Hershey`s Company marketing environment are affecting by their top
management and operations. Their goal is to become no 1 position in the North
American confectionery market and be the leader of for the chocolate-related grocery
and to put up leadership positions in selected international markets. This is done by
their top management in order to manage the company in every aspect of their
business. Hershey`s would like to have organizational capabilities that can compete in
both present and future business. Their management also tried to encourage and
promote healthy living to publics. They also constantly transform their products depend
on the consumer`s desire so that the customers would love to buy again and again.
Apparently, the Hershey`s Company want to maintain a high level of ethics and
conducts. It is vital for Hershey`s Company to develop a strong people orientation and
employee that truly care about each other. Hershey`s are advance because they put
extra efforts to attract customers and sponsorships with of high quality and excellence
Hershey`s Chocolates company became the first in marketed products because
the owner, Hershey`s had chosen to build his factories on 40,000 acres near with dairy
farmland in Pennsylvania. Since the location near the dairy farmland, Hershey`s
obviously can obtain a large quantities of the fresh milk and produced very fine milk
This location was strategic since it is located near New York`s ports that supplied
the sugars and cocoas that they needed for the products. That is why Hershey`s
products are highly in good quality and consists of genuinely milk chocolate.
7.1.3 Marketing intermediaries
The Hershey`s company has many factors that help the company to become
powerhouse among chocolate manufacturers in the world. Hershey`s has very excellent
quality of their products, customer service, brand innovation, technologies and strategic
alliances. Hershey`s had expanded its confectionery products and obtain related
companies and change or diversified it into other food products. For example San
Giorgio Macaroni and Delmonico Foods (1966), manufacturing and marketing rights to
English candy company Rowbtree MacKintoshi`s products (1970); Y & S Candies ,
makers of of Twizzlers licorice (1977); Dietrich Corp confectionery operations (1986);
Peter Paul/ Cadbury`s U.S. confectionery operations (1988) and Ronzoni Foods (1990)
Hershey`s had strengthening their position through powerful alliance with
Starbucks. Starbucks, a well known beverage company that famous with their
uniqueness experience, provides coffees (includes mocha, cappuccino, milk coffee),
teas, fruits and herbs. They had collaborated with Hershey`s ( Artisan Confections
Company ) to be paired with Hershey`s premium chocolates and produced delicious
Hershey`s is the vice president of the North American commercial group while
the President is owned by Christopher J. Baldwin. He said that “ Starbucks is the no one
in the world for leading brands among consumers. Hershey`s chocolate expertise,
distribution and selling capabilities combined with the strength of the Starbucks brand
In the July 19, 2007, Baldwin had been release to announce the agreement
between Starbucks and Hershey`s will be prolong to maintain and share their
sustainable growth and equity practices.
Besides that Starbucks, Hershey`s also had collaborated with other partnerships
in order to advertise and introduced their market products such examples Nabisco, Kraft
and Coca-Cola companies. Both Nabisco Honey Maid Graham Crackers and Kraft Jetpuffed had permitted Hershey`s to introduced and market their products with the classic
Hershey`s Chocolate Bar for the campfire dessert. (www.hersheys.com).
Coca-cola company had joined up with the Hershey`s product Reese is Peanut
Butter Cup to market both their products together as a buy one get one for free deal
220.127.116.11 Financial publics
A public is any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives. In this context, financial publics had
influence the company`s ability to obtain funds. Recently (before 2010), Hershey`s had
get into a credit agreement which is allow them to borrow up to $ 300 million. They
describe the agreement is a new short-term credit agreement to create an unsecured
revolving credit facility to borrow up to $ 300 million. This agreement had expired on
August 22, 2008. This money could be used for general corporate purposes
Based on their history, Hershey`s not actually can managed their long-term
investments. For example, Hershey`s had involved in long-term debt agreement in order
to restructuring of their supply-chain technology during year 1998. Sales and profits are
lost and dropped by a large percentage. Hence, Hershey`s management practice needs
to be changed, otherwise they will repeat the same mistake and lose more money from
18.104.22.168 Local publics
Hershey`s is dedicated to help by making a difference in other`s lives. A way to
show this commitment is by supporting varieties of community organizations. Things
that can be done is by donating some corporate financial, employee time (volunteer
and talents are given enthusiastically. for example such organizations the
American Red cross, UNICEF, the YMCA, Habitat For Humanity, the Partnership for a
Drug-Free America, Children`s Miracle Network, the United Way, Various AIDS Funds,
a number of environmental conservation and protection groups and the Young
Survivor Coalition; an international, non-profit network of breast cancer survivors and
Hershey`s also supported some minority based groups such as the NAACP, the
(www.thehersheycompany.com). They address their support as collection of practices
from emphasizing , recycling in a way to reduce emissions for working to protect the
tropical forests. (www.thehersheycompany.com).
Hershey`s had recycled 90 % of their waste products and in return, used
cardboard and recycle paper in their packaging process.
factories use efficiently their water systems and energy saving lighting and appliances
in each day operations.
Finally, Hershey`s has awareness to their suppliers and vendors to follow their
strict standards in order to do business with them.
22.214.171.124 internal publics
The Hershey`s employee has a work environment that is positive. Their
employees are hard working, loyal, and always focused and passionate. Hershey`s
always promotes their high ethical values and has excellent reputation for fairness,
honesty in doing the right thing.
They always openly welcomes and embraces from different viewpoints as they
can establish itself as a diverse company. They also had practiced the promotion from
within which means by acknowledging the people who know the business.
For the Hershey`s family itself, they try to give compensation or reward to their
common stockholders by offering annual dividends. For last ten years, Hershey`s has
been able to offer dividends ranging from $ 0.42 per share to $ 1.13 per share. The
126.96.36.199 International markets
The world today is considered as globally flattened as their international
performance is so poor. This can be explained by borderless nations that actually are
easily can produced their products and distributed it around the world and the
competitors are not limit to local companies only.
As the largest North American of
chocolate manufacturer, Hershey performs
poorly in the international community. presently, Hershey`s factories existence is limited
to Brazil, Canada, Mexico, and the United States (www.investopedia.com).
For the past decades, Hershey`s company has experienced weak relationship
between Mexican operations and United States operations. In fact, Hershey`s has
become progressively more dependent on Mexican production. This is due to the
growing manufacture expenditure associated with United States production.
188.8.131.52 Reseller markets
Hershey`s main customers are, the grocery stores,
wholesale distributor, dollar stores, department stores and vending companies. The
succeed of the Hershey`s company due to the customer relationship that Hershey`s
maintains with these customers. Hershey`s company keeps giving good performance
and effective service plus timely manner to their customers. This has led Hershey`s to
achieve higher achievement in chocolate industries.
Strong customer service department is the key to the success of the Hershey`s
company. Over past decades, Hershey`s continues to make improvement to the
customer service. Currently, Hershey`s appeared to improved their technologies to be
more competitive in the markets of high challenges and demands.
7.2 Macro environment
The macro environment consists of larger societal forces that affect the
microenvironment. This macro environment can divided into six categories which are
environment, economic environment and technological environment.
7.2.1 Cultural environment
The cultural environment is made up of institutions and other forces that affect a
society’s basic values, perceptions, preferences, and behaviors. Core beliefs and
values persist because they are passed on from parents to children and are reinforced
by schools, churches, business, and government. Secondary beliefs and values are
more open to change. Marketers want to predict cultural shifts in order to spot new
opportunities or threats. ( Principle of Marketing ,Gary Armstrong, Philip Kotler, (2012),
14th edition, Pearson education, U.S.)
Consumer always changes their preferences for all products. It is not a surprise if
consumers want for chocolates products have changed into a desire products which
means bakeries producing goods by using high quality of chocolates and cocoa
products. Moreover, consumer wants varieties of chocolate products. This allowed the
chocolate industry to expand their product lines and offered opportunities for better
sales of the latest products. The chocolate and cocoa industries can joint venture with
other retails in other industries to produce new varieties of products. For instance,
chocolate and coffee manufacturers collaborate to create new chocolate flavored coffee
products . While food industries cooperate with chocolates product industries to produce
better products such as milk flavored chocolates.
In recent studies, it shows that dark chocolates have several benefits to our
health. The latest research reveals that the flavonoid-rich substance in dark chocolates
can provide protective effect on the cardiovascular system and reduce the chances of
getting cancer on adults. (Chocolate Trading Co. 2005). In addition, dark chocolates
actually can help to decrease our blood pressure because dark chocolates itself had
increased our glucose metabolism.
Nowadays, many people are allergies towards peanut and automatically can give
side effect the cocoa and chocolates products as the main ingredient in chocolate
manufacturer is the peanut oil. Individual with the peanut allergies would not consume
any foods that contain peanut due to the health risks. It will give negative impact on the
sales of the peanut products plus will affect the chocolate production as many people
are developing to have these allergies.
Besides, the increasing of individual with the obesity endemic has made people
more conscious with they eat as to avoid any health problems in future. So, this had
made them to avoid from eating chocolate that contain high calories and high fat
products. This is because if the obesity person do not alert with what they eat , this can
lead to the any severe disease such as heart attack, diabetes , high blood pressure and
In addition, people nowadays are very alert with what they eat. They might be
looking for more healthy foods and organics to maintain their health in good position
and avoid from any severe disease. People would not buy chocolates as they know
chocolates contains unhealthy ingredients for them. In consequently, the sales of the
chocolates products would be decreasing.
7.2 .2 Political environment
Some chocolates producers’ from some area in the world cannot distribute their
goods to industrialized countries due to controversial issues. One great issue that had
been debated over years is the used of child for the labor work. Presently, some
countries do not permit cocoa to be traded from African countries. This is because they
believe these African countries had used children for the labor work which is very not a
very good ethic manner.
Some of the industrialized countries are threatening to reduce and eliminate
purchases the goods from African countries. But the African countries said that they
believe the used of child labor is similar concept as the American farmer`s children who
are used on farms to help out their family. However, Western Governments believe this
is not true at all.
Consequently, the Chocolate Manufacturer Association (CMA) and World Cocoa
Foundation (WCF) had created the Harkin-Engel Protocol, which is an agreement that
addresses instances of abusive child labor practices on cocoa farms in West Africa and
ways to remove the worst forms of child labor in the cocoa sector (U.S. Labor, 2006).
The Harkin- Engel Protocol`s idea has formed results that will give positive effect
on the cocoa and chocolate industries. One of the results is the formation of the
International Cocoa Initiative foundation alliance with non-governmental organization
(NGOs) to offer social protection programs in West Africa. This will allowed for the
opening more new channels for the distribution of cocoa and chocolates
international community who are currently restrict or prohibit buying cocoas from African
In recent years, government had been under pressure either to provide or not for
tax breaks of some goods in order to favor low-income brackets. This has lead to many
countries to agree an elimination of sales tax for foods item. Someday, many states will
follow this trend since many consumers hope there would not be tax on all food in
Recently, healthy eating habits had became the industrialized world target. Since
the increasing of some chronic and severe disease such as diabetes, heart disease and
cancer due to poor eating habits. This had given great impact to the cocoa and
chocolate industry. Thus, the Food and Drug Administration (FDA) has made laws for
the food manufacturer to post their health information and ingredient contents on their
products packaging. These laws had made the consumer to be more aware with the
unhealthy foods such as chocolates. These laws also had helped the consumer to make
the right decision for choosing their foods products.
Besides, FDA also wants food manufacturer to display new information about
new ingredient contain in the products to the public. With these laws also, the
manufacturer had be given two options. First, do not provide healthy alternative food
and take a larger loss or introduced new healthy foods and take a lot of cost but have
greater sales number of their products in future. Both are giving side effect to te
manufacturer`s financial departments.
7.2 .3 Technological environment
Milks are really important for the chocolates and cocoa industries and they really
relying heavily on it. in this era, technology had been used to create the modern milking
machine to milk cows efficiently, more safely and more hygienic. The main purpose for
introducing this technology is to reduce the cost production as well as reduces labor
cost. Besides, less time could be spent compare to traditional methods.
mechanical improvement and innovations could actually reduce manufacturing costs for
chocolates and cocoa industries.
advancements that will centre on less waste and more well-organized distribution and
logistics channels. For example, some programs like Six Sigma, lean on manufactured,
and 5s are continuously making improvements in these areas to boost their efficiency.
In many industries, some of the implemented technologies and programs such as
Radio Frequency Identification (FRI) had been introduced for a better track inventory
and equipment. similar technological advancements could be introduced for the
chocolate and cocoa industry to improve the efficiency of tracking and transfer
operations. But it is also can cut down the labor costs in those areas.
Innovations in the telecommunications had given an opportunity to the cocoa and
chocolate industry. These advances helped these industries to expand its business and
increase their customer outside of their developed regions. For example, the internet
had made more individuals easily get access to chocolate product advertising and
enable the consumer to gain more details about the products throughout the company`s
website without visiting retail stores.
7.2.4 Economic environment
Cocoa beans are grown mainly in Far Eastern, West African and South American
equatorial regions. However, the world largest cocoa-producing country, Ivory Coast
has resulted in volatile prices. So, it would be great opportunity to produce cocoa in
other countries. For instance, the Ministry of Agriculture in Jamaica has newly allocated
million dollars to let the several production of Jamaican`s crop to expand its
Furthermore, most of the cocoa supply is provided from West African that have
controversy issues regarding child labor.
This is an opportunity to expand cocoa
production since the new development will need more supplier options. Since the
refined sugar prices is decreasing from year 2006 until now, this will cut the costs for the
distribution of cocoa and chocolates industries. In turn, the savings will be going for
research & developments (R& D), reward for the investors and product distributions.
One problem for the cocoa and chocolates industries is the deposition of the
waste which is requires a lot of money. Recent development has showed that bio-fuel
production can give a lot of benefit to all industries. Bio-fuel is the bio-product that used
corn to create fuel (it is actually ethanol that is used as fuel for the environmentalfriendly industries). Thus, will reduce the cost for the deposition of the waste products
as well as can save our environment.
8.0 Future planning
In future, Hershey`s Kisses brand will continue with the distribution of its product
lines. The company are planning to expand the brand will a new taste and varieties
types of Hershey`s Kisses color wrappings.
The company will continue to remain
focused on building brand in both United States and all around the world to become no
1 chocolates manufacturer.
They will make essential investments to ensure that they are positioned to grow
their brands and manage the challenges that are going to come. They have planned
merchandising and programming events throughout years and work closely with retail
customers and watch their brand performance given the higher price points for seasonal
They also expect the advertising to boost low double digits in future and volume
to be slightly up for the next year. Thus, results in the net sales growth which is about 5
% to 7 % which means including the impact of foreign currency exchange rates.
Hershey`s Company had announced the next Century Program as a part of their
ongoing efforts to create an advantaged supply chain and competitive cost for all of their
products including Hershey`s Kisses brand products.
Hershey`s Kisses hope more options contracts are available so that they can cut
the risk of future price increases and future cost productions.
Hershey`s Kisses brand will develop their products through research &
development (R& D) to improve their products to be a better products in future. They
also will try to develop new chocolate taste to make varieties types of chocolates so that
people or customers will always choose them as no 1 chocolate manufacturer in the
Hershey`s is a good example of a successful company that managed to maintain
its business for more than 100 years. This is really rare for a chocolate industry to
achieve until this stage but Hershey`s shows that he can do it without having any heir.
Hershey`s company shows that they are very innovative since there are more than 85
brands that had been produced to the markets. This company also has developed their
products for more than 70 countries worldwide.
Hershey`s Kisses is one of the most popular candies produced by the Hershey`s
company. This candies were the 5th most popular chocolates in United States in 1989.
Today more than 60 million kisses candies were produced every day.
Their marketing strategies had made them reach a point where they already
reach to stage two in economic scale( theory of production) but if they are not aware
with their surrounding, they will fall and bankrupt.
From what I see, Hershey`s had made some mistakes where they are involved in
the long-term debt in 1998. However, they managed to overcome these problems by
showing some achievements years by years.
Overall, Hershey`s is in a good positioning in its markets and continue to make
new improvements and get more achievements not only in local markets but also in
Hershey Expands and Accelerates Responsible Cocoa Community Programs in
Hershey Wins PR News CSR Award for Best Sustainability/CSR Report
Environmental protection and Natural Resources of Mexico CSR
Recognition in 2010
Wins “Socially Responsible Company “ from the Mexican Center for
7-eleven`s Retailer Initiative Awards 2009