a.

Financial Ratio Analysis

Ratio 2008 2007 2006
Liquidity Ratios
Current Ratio

Quick Ratio

Leverage Ratios
Debt-to-Total-Assets Ratio

8604

Debt-to-Equity Ratio

Long-Term Debt-to-Equity Ratio

Times-Interest-Earned Ratio

Activity Ratios
Inventory Turnover

-
Fixed Assets Turnover

Total Assets Turnover

Account Receivable Turnover

= 8.57
-
Average Collection Period

Profitability Ratios
Gross Profit Margin

Operating Profit Margin

Net Profit Margin

Return on Total Assets

-
Return on Stockholders Equity

Earnings Per Share

1.36
0.93 2.34

The financial analysis for Hershey will be provided giving by liquidity ratios, leverage ratios, activity ratios, and profitability ratios.
All liquidity measures showed an increase for Hershey between 2007 and 2008. This is largely due to its ability to generate Hershey larger
amount of operating cash flow in both years, as seen in the adequacy of cash flows. The increase in current ratio and quick ratio indicates a
better ability to pay short-term debt with current assets, which also suggests that future payments of long-term debt will possible. The average
collection period shows the same situation. Initially Hershey itself has enough liquidity to meet its obligation during operation such as the
ability to pay up credit suppliers, current taxation or other current liabilities or dividends.
While, the entire leverage ratio for Hershey improved during the period under review with an exception. This indicates that the risk
Hershey has decreased overall. Several reasons exist for this decreased risk. Shareholders' equity increase and interest expense decrease.
There is improvement was seen in Hersheys activity ratios over the evaluation period. Declined was seen in the accounts receivable, which
also affected the average collection period ratio. Improvements were seen in inventory and asset turnover ratios. Hershey assets decreased in
value then revenues increased resulting in a more efficient use of assets.
Moreover, improvement was observed from Return on Asset (ROA), sales margin, and Return on Equity (ROE) of Hershey. Revenues
and costs goods sold increased proportionally, thus not affect the profitability measures. This increase can be attributed to a decrease selling,
marketing and administrative costs, and a decline in business restructuring and cost of assets between 2007 and 2008.
Finally, all financial measures show improvements in many areas between 2007 and 2008. Their overall profitability improved due to
lower expenses, particularly selling, marketing and administrative costs (SM&A) and business restructuring costs. Liquidity has also improved in
all areas where can be attributed to their ability to generate a greater amount of operating cash flow. Due to increase their liquidity, Hershey
shows that they are in a better position to pay their debts and are able to distribute their income to shareholder easier.
b. Organizational Chart
President and Chief Executive Officer
John P. Bilbrey
President,
International
Humberto P.
Alfonso
President,
North
America
Michele G.
Buck
Senior VP,
Chief Supply
Chain Officer
Terence L.
O'Day
VP, Chief
Research
and
Development
Officer
William C.
Papa
Senior VP,
Chief
Financial
Officer
David W.
Tacka
Senior VP,
General
Counsel and
Secretary
Leslis M.
Turner
Senior VP,
Chief Human
Resources
Officer
Kevin R.
Walling
Senior VP,
Chief Growth
and
Marketing
Officer
D. Michael
Wege
Senior VP,
Chief
Corporate
Strategy and
Adminstrativ
e Officer
Waheed
Zaman
As we can know that Hershey Company does not make public an organizational chart.
The organizational chart above created based on the executive titles. According to
the Hershey Company Annual Report 2013, they operate under a matrix structure
that designed to ensure continued focus on North America and on continuing to
transform into a more global company. Hershey is operating by geographic regions
which are accountable for reporting purposes. The matrix structure groups
employees in the fields of function and product which focused around individual
products or product lines.
This type of structure is the most complex compared to others. This is costly
because it creates more management positions and requires excellent vertical and
horizontal flows of communication. It requires also mutual trust and confidence.
Other disadvantages include that dual lines of budget authority, dual sources of
rewards and punishment, and shared authority reporting. Despite its complexity,
employees can clearly see their work result, and easily accomplished to shut down a
project. Functional resources are shared instead of duplicated as in a divisional
structure and the facilities uses of special equipment are the advantages of this
structure. Those with a high degree of expertise can divide their time as needed
among the projects, and in turn to develop their own skills and capabilities more
than in other structures. U.S. businesses frequently used this structure.

c. Recommended Organizational Chart
Now, we are suggesting the new organization structure to Hershey Company. The
above organizational chart is recommended to use divisional structure by geographic
area.
In this structure, we have suggested continental president by regional, which
can help to widespread globally or to increase the market share globally because
they will have the experience of the particular continents and they will work
according to different market conditions. This creates career development chances
which allows local control of situations, leads to competitive climate internally, and
easily to add new businesses and products. On the other hand, the accountability is
clear which the divisional managers can be held responsible for sales and profit
levels. This structure is more suitable for the larger organization that they can
simpler to manage and gives clearer lines of control.

President and Chief
Executive Officer
Chief
Research
and
Developme
nt Officer
Chief
Financial
Officer
Chief
Human
Resources
Officer
General
Counsel
and
Secretary
Chief
Growth
and
Marketing
Officer
Chief
Corporate
Strategy
and
Adminstrat
ive Officer
President,
North
America
President,
Asia-
Pacific
President,
Europe
d. Market Positioning Map with Firm and Competitors
Price (High)

Cadbury
Mars

Nestle

Hershey Company


Brand Loyalty Brand Loyalty
(Low) (High)





Price (Low)
Diagram: Market Positioning Map

Nestle, Cadbury, and Mars are the main competitors of Hershey. They compete with
each other for the top spot. With its strong resource of Hershey, they have the ability
to still provide competition to Mars and Nestle although Mars and Nestle have many
more products lines and markets. Hershey has to investigate the local competitors in
different countries and adjust their marketing strategies. Nestle, Mars and Cadbury
brand products prices unchanged for geographical reasons. Additionally, their
products competitors have less diabetes products than Hershey's. The strategy is to
increase sales potential through promotion programs planned throughout the year.
Next, repackage it so it looks new Hershey will appeal to consumers, as it will be
marked as low calorie. This Hershey offers unique products and services for different
types of customers. By offering a variety of different products and services, this
Hershey will be able to achieve a competitive advantage. Hershey has developed
strong brand recognition and loyalty. To do this Hershey need to find the right
balance of quality and price for each market they enter.
e. Marketing Strategy
Hershey principle of marketing strategy is strong brand equities, product innovation,
consistently superior product qualities, expertise manufacture and distribution of
mass. Hershey is also a great source deliver to identification, development, test,
manufacture and marketing of new products. They have various promotional
programs for customers and advertising programs and promotions for the product
users. Hershey use sales promotion programs to stimulate certain products at
various times throughout the year.
Hershey is well-known brand in chocolate industry. They provide many good
quality products to customers and there is a consistency of quality product supplied.
Besides that, the package and design of their products is simple but interesting, such
as the chocolate can be wrapped in many different sizes and made easy for
customers to split. Even though the package is small, all the useful ingredients
information is provided to customers to control nutritional intake.
On the basis of place, Hershey's the first plant outside Hershey in
Pennsylvania opened on June 15, 1963 For the competitors such as Cadbury
produces chocolate more than 200 countries so that they have a chance to enjoy it
as well and make a profit. Next is Mars Inc. which is very popular at the global level.
It has factories in 68 countries worldwide. Furthermore, Nestle when entering new
markets will not be alone, but it looks for friends and mergers. Hershey distributes
their products worldwide to make it convenient and available for consumer to buy.
On the basis of price, Hershey pricing strategy is to perpetuate the price
stage at consistently high levels. For competitors, Cadbury price is an important
element in the marketing mix. Besides that, Mars chocolate products have been
marketed as a big market, targeting childhood, teens and adults who work. In
addition, Nestle again decided on the basis of price competition. The best think
about reputable Nestle was that he was very flexible and it can come with a price
that is very fast.
The main competitors are Mars and Nestle. Mars is a threat to Hershey,
because Mars has a stronger presence than Hershey. Hershey needs to pay special
attention to the marketing of products in this area. Not like Hershey, Mars has
historically reliable marketing and advertising expenses wide to gain market share
rather than on product innovation. Taking a lesson from this, Hershey also needs to
increase the advertising budget. There is another opportunity for Hershey to develop
products and environmentally safe package, reducing industrial waste, recycling, and
create environmental audit process strategies that could benefit Hershey.
f. Map Locating


Value Chain Analysis Chart
Some major changes have been down in the Hershey to maximize value chain and
drive customer sales. Overhaul in several different areas can take credit for
converting the raw materials into a delicious candy for customers to enjoy. The areas
Primary Activities
Service
Marketing
Outbound Logistics
Operations
Inbound Logistics
Support Activities
Firm Infrastructure
Human Resource Management
Technological Development
Procurement
to be addressed are the production, marketing, information systems, and also
research and development.
For the production, a major restructuring designed to cut costs and excess
production capacity. Money saved in the cost of production will be cut partially into
marketing where market competition has impacted significantly Hershey business
and as a result, have been required to increase expenditures for advertising and
promotion and to continue to develop and create new products. On an information
system, the Hershey Company has implemented a three-year plan for the
development and implementation of global supply chain technology revolutionary.
Transforming the supply chain will use some of the data collection and the
reorganization core that will make the global supply chain network in a more efficient
and flexible. Finally, research and development, the Hershey has a strong tradition of
creating quality products and successfully pursues these products into new lines and
new ventures. Hershey's goal is to redefine the future of snacking by offering
consumers products that provide proven health benefits and superior taste they
expect from Hershey. The companies said they would cooperate in various research
and development activities with a focus on driving innovation in new chocolate taste
experiences, health and wellness, ingredient research and optimization.

g. Firms website and Facebook page in terms of good and bad points
compared to rival firms
The firms website and Facebook page is important to the company which represents
the image of the company and population among the industry. Website and
Facebook page probably used as advertising and promoting their businesses to the
world. The Internet has allowed businesses to break through the geographical
barriers and become accessible and virtually from any country in the world by
potential consumers who have Internet access.
Hersheys website is more attractive of its rivals website which compared to
Nestle, Cadbury, and Mars. The website of Nestle and Mars is unattractive and
boring, while there is competitive with Cadbury. Hershey and Cadbury website is
obviously telling consumer that what products and services they provide. Besides,
website and Facebook page serves a great place for customers can be easily and
quickly give any feedback about companys products and services, and also a great
place for company to give feedbacks efficiently.
Their website and Facebook page have the way for consumers to interact.
The interactivity keeps people on the webpage longer and also encourages people to
come back to the site multiple times as they look to see if there is anyone responded
the feedback. Cadburys Facebook should have new content added to it regularly,
ideally multiple times a week at least like Hershey, Nestle, and Mars did to improve
consumers freshness. Hershey, Nestle, and Mars make their business come alive on
Facebook and make customer find interesting and inspiring.
Furthermore, Hersheys website and Facebook page is more reliable because
they do update the information on a regular basis to ensure that they are providing
the accurate and new information of its competitors. Hersheys credibility is improved
because Hershey gives the opportunity to tell the potential customers what they are
about, so they deserve customers trust and confidence.


h. Value of the Firm Analysis
i. List up to 20 of the firms strengths and weaknesses
No. Strengths Weaknesses
1 Iconic brand recognition Complex organization structure
2 Positive consumer good will Hedged futures contracts necessary
3 Strategic acquisitions and joint
ventures
Diversity among suppliers and
shippers
4 Creativity in research and
development
Lower manufacturing costs
5
Employee empowerment
Increase in healthy snacks
subdivisions
6 Diversified products High debt to equity ratio
7 Increased inventory turnover Increased long term debt
8 Good quality recipes
9
10


j. Internal Factor Evaluation (IFE) Matrix
Key Internal Factors Weight Rating
Weighted
Score
Strengths
1. Brand recognition 0.15 4 0.60
2. Consumer good will 0.10 3 0.30
3. Strategic acquisitions and joint
ventures
0.07 3 0.21
4. Research and development 0.08 3 0.24
5. Employee empowerment 0.04 2 0.08
6. Diversified products 0.06 4 0.24
7. Increased inventory turnover 0.05 3 0.15
Weaknesses
1. Complex organization structure 0.10 2 0.20
2. Hedged futures contracts necessary 0.05 2 0.10
3. Diversity among suppliers and
shippers
0.08 2 0.16
4. Lower manufacturing costs 0.08 1 0.08
5. Increase in healthy snacks
subdivisions
0.04 2 0.08
6. High debt to equity ratio 0.07 2 0.14
7. Increased long term debt 0.03 2 0.06
Total 1.00 2.64

The weight ranges from 0.0 (not important) to 1.0 (all-important). The rating to each
factor represents rating = 1 as a major weakness, rating = 2 as a minor weakness,
rating = 3 as a minor strength and rating = 4 as a major strength.
Overall, this company receives a 2.64 total weighted score which on a 1 to 4 scale is
exactly average or halfway that above 2.50. It is indicating that Hershey has a strong
internal position. Hershey is also appropriate to maintain profits, increase sales and
expand globally. They sell the majority of their products in body mass merchants and
supermarkets.