2. The topic I have chosen is important to me because I grew up one hour west
of The Hershey Company. Every summer I would go to Hershey Park and Chocolate
World with my friends and family. I have always looked up to The Hershey Company
and admired how they took care of the community around them. This research
paper serves the purpose of discussing the company history, what outsourcing is,
why the company chose to outsource, where they decided to outsource to, and the
benefits thereof.
1890 was the year Milton Hershey had successfully got his Lancaster Carmel
Company up and running at full speed. (Hershey Community Archives ). The
Lancaster Carmel Company worked out well for Mr. Hershey and allowed him to put
more time and energy into new challenges in the horizon. Milton Hershey had the
privilege to see a complete Columbian Exposition in Chicago. There, he saw the
complete chocolate making and manufacturing process (Hershey Community
Archives ). This process was very appealing to Milton Hershey and he made
arrangements to purchase the whole chocolate assembly and have it shipped to
Lancaster, PA shortly after the Exposition closed down. The chocolate making
equipment was set up in the Carmel wing of the Lancaster Carmel Company
(Hershey Community Archives ).
In 1894, Milton S. Hershey founded the Hershey Chocolate Company, located
in Hershey, PA (Baruch College, 2013). Hershey began to experiment with making a
variety of chocolaty good products. The food industry saw a new product from
Milton Hershey called milk chocolate. The Swiss first introduced milk chocolate in
1876 as a luxury grocery item (Hershey Community Archives ). However, Milton
3. Hershey was the first to make it commercially with mass production techniques and
by using fresh milk. It is the complexity of the formula that makes milk chocolate
difficult to produce. (Hershey Community Archives ). After many years of ups and
downs, Milton Hershey decided he had the perfect chocolate formula, and Hershey’s
milk chocolate was finally introduced in 1900. When milk chocolate first became
available it was only made in wafers, croquettes and bars (Hershey Community
Archives ). Today, the Hershey Company has many top products on the market, for
example, 5th Avenue Bar, Almond Joy, Reese’s, Mr. Goodbar, Rolo, Take5, Kit Kat,
Symphony, and Mounds. Hershey’s chocolate accounts for 42.5% of the US market
(Green America , 2010).
“What is outsourcing?” you may wonder. Outsourcing is getting goods or
services from a company in the United States but most often associated with
companies outside of the United States (Cambridge Dictionary, 2015). Outsourcing
is very beneficial for many companies. For example, the United Kingdoms business
service productivity has grown over 20% in the last 7 years and their employment
rate has increased by 20% as well from outsourcing. The process of outsourcing
helps with propelling productivity in regard’s to specialization, standardization, and
consolidation of company procedures (Oxford University Press, 2006).
Companies making its employees do all the work rather than sending it to
other countries to be done is insourcing. (Cambridge Dictionary , 2015) The
correlation between these two is that outsourcing allows the lower paying jobs to go
overseas, while insourcing keeps the higher paying jobs here in the United States
allowing the American people to have better quality jobs (Debate Organization ,
4. 2013). There have been 6.4 million jobs insourced to the United States in 2001
(Bartlett, 2004). While you may think there are more jobs leaving the United States,
that’s not the case. There is actually only a 23% job increase of outsourcing an 82%
increase of insourcing (Bartlett, 2004). As we can see, the insourcing of jobs far out
weights those being outsourced. Also insourced jobs pay 16.5% more than
outsourced jobs. By the United States companies outsourcing it helped to open up
good quality and higher paying jobs (Bartlett, 2004).
Hershey Company decided to outsource in order to increase international
revenue by 10 billion, which is 54% by 2017. (Baruch College, 2013) Also, they
wanted to increase their sale growth to 50% for the international market. There
are three places they wanted to rapidly expand to: Mexico, China and Canada. These
three are the main focus because of the potential sale growth. By outsourcing to
these locations, The Hershey Company hoped to create partnerships through
mergers, joint ventures with foreign markets, and acquisitions. Intel from foreign
counterparts will help the Hershey Company better understand the global markets
around them (Baruch College, 2013). The brands the Hershey Company marketed
were Hershey’s Jolly Ranchers, Reese’s, Ice Breaker and Kisses. The Hershey
Company will also be outsourcing in the Middle East, Southeast Asia, North Africa,
and Brazil. The company’s long-term goal is to spread to India, West and South
Africa, and Eastern Europe (Baruch College , 2013). The Hershey Company has
already outsourced to many locations around the globe: Guadalajara, Mexico;
Stuarts Draft, Virginia; and Robinson, Illinois, to name a few. One of Hershey’s
biggest markets is in China, where Hershey Kisses have grown 97% since 2007. The
5. Hershey Company localized products in China to take advantage of the huge market
at reach (Baruch College , 2013).
One of the benefits of the Hershey Company outsourcing is that the name and
brand have added more global exposure to a wide consumer base. They have seen
increased revenue since they have established globally. They have also established
more foreign partnerships(Baruch College , 2013). Also, outsourcing benefits the
United States and the citizen’s. We can get the work done cheaper over seas
because the countries have a lower labor cost. This, in return, allows the US to get
cheaper products and sell them cheaper to the US customers. (Debate Organization ,
2013) Many companies have gone to outsourcing because the people in the United
States do not want to do the manufacturing jobs. If corporate America did not do
any outsourcing at all, we would simply be placing limitations on ourselves by not
reaching other markets outside of the United States. With globalization, we can
meet higher demands of consumers for overall satisfaction (Debate Organization ,
2013).
We live in a very different world than 50 years ago. Now, people want the
jobs that involve technology and no manufacturing at all, but the work and the
demand have to be met some how, some way. That’s when companies turn to
outsourcing to other countries and create infrastructure and job opportunities for
those citizens. I feel that outsourcing helps to make dreams become reality for
many individuals in the United States. By participating in outsourcing, US citizens
can focus on receiving an education, acquiring a job that interests them, and
achieving the American Dream.
6. I am thankful I have the opportunities and the resources I have in the United
States. If I didn’t have them, I could be working in factory with the responsibility of
making some product and going through the normal functions of life. I am very
appreciative for outsourcing and the chance to reach my dreams and goals in life.
That simply would have not been possible if outsourcing didn’t happen to raise the
bar for good quality American jobs with higher pay and more benefits. Through my
research and what I have learned, I have concluded outsourcing is very beneficial.
7. Bibliography
Bartlett, B. (2004, 7 27). How Out Sourcing Creates Jobs for Americans . Retrieved 3
30, 2015, from National Center for Policy Analysis :
http://www.ncpa.org/pub/ba480
Baruch College . (2013, 4 4). International Strategy Part 1. (IW113345, Producer, &
World Press) Retrieved 3 27, 2015, from Baruch College Blog:
http://blogs.baruch.cuny.edu/mgt4880hershey/2013/04/04/international-
strategy-part-1/
Baruch College. (2013, 4 4). The Hershey Company . (MGT4880, Producer, &
WordPress) Retrieved 3 20, 2015, from Blogs at Baruch Site:
http://blogs.baruch.cuny.edu/mgt4880hershey/2013/04/04/the-hershey-
company/
Cambridge Dictionary . (2015, 1 1). Cambridge Dictionaries Online. (Cambridge
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http://dictionary.cambridge.org/us/dictionary/business-english/insourcing
Cambridge Dictionary. (2015). Cambridge Dictionary . (Cambridge University Press)
Retrieved 3 20, 2015, from Cambridge Dictionary Online:
http://dictionary.cambridge.org/us/dictionary/american-english/outsource
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American Economy . Retrieved 3 27, 2015, from Debate Organization :
http://www.debate.org/opinions/is-outsourcing-having-a-positive-impact-on-the-
american-economy
Green America . (2010, 9 1). The Real Corporate and Social Responsiblity for The
Hershey Company . Retrieved 3 27, 2015, from Green America Today Organization :
http://www.greenamerica.org/pdf/HersheyReport.pdf
Hershey Community Archives . (n.d.). Hershey's Milk Chocolate: Bar Wrappers over
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Community Archives :
http://www.hersheyarchives.org/exhibits/default.aspx?ExhibitId=20
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