In the current corporate world, there are various businesses that operate in the production of similar products. This has resulted into a lot of competition within their various industries. For a business firm, to compete favorably, it has to identify its own strengths, weaknesses, opportunities, and threats. This paper discusses the SWOT analysis of the Hersey Candy Company.
Hersey Company is one of the world’s greatest companies in the candy industry today. Among the top companies in this industry are Kraft Foods, Mars, and Nestle. Kraft Foods is located in Illinois, USA and it has formed the world’s largest candy company with a net sale of USD 19.96 billion in the year 2011. Mars, located in Virginia, USA is the second largest company in the candy industry; it has realized net sales of USD 16.20 billion in the year 2011.While Nestle is the third largest company; it is located in Vevey, Switzerland. It has had net sales of USD 12.80 billion in the year 2011 (Deprez, 2009).
According to Datamonitor (2011), Hersey is a big candy company that has various strengths in order to compete favorably in the industry. These strengths include the wide market coverage of about sixty countries in the world. This has achieved large volumes of sales due to a large number of consumers to which it is exposed. The company also has good marketing strategies. The market segmentation and the use of various marketing institutions have been put in charge of particular segments. These marketing units include Hersey North America, Hersey International, and the Global Marketing Group.
Datamonitor (2011) further notes that Hersey has a website accessible to every potential customer, hence a good advertising and selling tool. The company also offers a wide variety of chocolate and confectionery. This helps ensure that there is a wide market and possibilities of sales even if one of the products lacks demand. Finally, the firm has invested in research and development which has enabled it to come up with healthier and customer preferable goods. This has been done through the establishment of the Hersey Center for Health and Nutrition (HCHN).
Despite its strengths, the company has some weaknesses. The first one is its over-reliance on the American market. The US market provides the largest number of revenue that exceeds all the other markets combined. This is dangerous for the company because, in case of negative market forces, its sales can be adversely affected. It is noted that the firm has many intermediaries such as the McLane distributers. This has cut down the profits that could possibly be obtained if the products were directly sold to the customer outlets. Finally, Datamonitor (2011) reports that the company’s product distributors are fewer compared to its competitors’. This has led to low supply to the market.
Even though the company faces such weaknesses, it has a potentiality of improving on its operations and sales due a number of opportunities. First, the company is able to increase its presence in the market through the acquisition of other similar firms or license agreements. Second, due to its large market coverage, the company has the opportunity to increase its sales through an intensive advertisement. This is possible since its products are already known in the market. Another notable opportunity to grow is the general increase in demand for the premium chocolates which is one of the companies’ products (Datamonitor, 2011).
Datamonitor (2011) also notes a number of threats facing the company. The first one is the highly intensified competition from the substitute product manufacturing companies such as Mars and Kraft Foods. These competitors are increasingly expanding their scales of operation and may be able to win more customers in the future. The steady coming up of smaller private firms that offer substitute products at cheaper prices is also another threat that Hersey has to deal with as they can detract attention of the customers. Finally, there is a general increase in the raw materials prices like that of cocoa liquor and sugar. This can lead to the increase in cost of production which in turn may lead to the increase in cost of the products and hence fall in demand.
In conclusion, it is worth noting that for prosperity of Hersey, it has to maintain its strengths, work on its weaknesses and threats, and explore much into its opportunities.