This was a final exam paper for the Strategic Management course. We analyzed Hershey Company from mission and vision through most important matrixes and gave some recommendations regarding the alternative strategies.

1. 1
Name Surname: Kujtim Hameli
Number: 2502190615
CONTEMPORARY STRATEGIES AND BUSINESS NETWORKS FINAL PROJECT
08.06.2020 – 03.07.2020
1. Please evaluate the mission statement and make component analysis. Propose a mission and vision
statement if needed.
Mission is a statement that justifies the existence of a business, even if business strategists do not write it in a
formal way. The mission answers the question of what business is and the mission is needed before any
alternative strategy can be formulated and implemented. The mission statement attracts consumers who give
meaning to the organization.
The Hershey Company’s mission statement is “Bringing sweet moments of Hershey’s happiness to the world
every day.” At first glance, this statement sounds quite promising and innovative. This statement justifies the
existence of the Hershey Company, i.e. providing pleasant moments through the taste of its chocolates, moments
which in principle reflect happiness within the company. This is not at all surprising, because if we analyze it
from one aspect of social activities, Hershey Company has invested in people’s happiness in different ways.
Initially, in 1999, it opened the Milton Hershey School for orphan children, founded Chocolate World theme park
for fun, and actively seeks to satisfy its customers with regular chocolates and “healthy” flavorful chocolates. The
latter includes not only consumers in Pennsylvania, but consumers around the world.
Hershey’s mission statement to consumers means offering satisfying moments through high quality chocolates,
regardless their demographics or geographic constraints. As Colgate’s CEO Reuben Mark points out, the mission
is to make people feel good, to feel part of something. For employees, the mission means an attractive job where
everyone has fun but also earns good salaries. This is especially important because as F. David put it in his book,
profit, as the first corporate motivator, is not enough to motivate employees, and in some cases is even perceived
negatively by employees because profit is something that is accomplished by employees and then used by
management and eventually distributed to shareholders. Therefore, mission and vision are necessary to motivate
employees. With regard to business parties, the mission promises cooperative relations where all engaged parties
win. For shareholders, it promises a lasting value and for communities it promises positive change in
communities. In general, we can conclude that the Hershey Company’s mission statement has been carefully
formulated. It is wide in scope and does not include monetary amounts, numbers or percentages. It has less than
250 words and is inspiring. It clearly states what the company’s products are and the relationships it has with
communities, which makes it socially and environmentally responsible. Above all, it means that it does not offer
things, but it offers values, it offers sweet moments with which it makes people feel good. Even a smile as a result
of tasting chocolate or other confectionery products, is a value offered by the company. However, it is necessary
to do an analysis of the mission components, as recommended by F. David, that a genuine mission statement
should include nine components:
Does the mission contain it?
1. Customers Yes
2. Products or services Yes
3. Markets No
4. Technology No
5. Concern for survival, growth and profitability Yes
6. Philisophy Yes
7. Self-concept Yes
8. Concern for public image Yes
9. Concern for employees Yes

2. 2
I think the company’s mission lacks two components: that of market and technology. It states that the mission of
Hershey is to bring sweet moments to the world, which can be understood that the market of Hershey is the
worldwide. But that is too claiming as world is a very big market, almost impossible to reach it as a whole. At the
same time, Hershey does not operate in all countries of the world. Furthermore, its competitors like Nestle and
Mars operate in more countries than Hershey. Hence, market component is not clearly included in the mission
statement. In the terms of technology, mission does not provide any information related to the technology it uses
or the process of production.
If we were to examine the existing components, Hershey’s mission is to bring sweet moments from Hershey’s
happiness (7) to the world every day. Delivering quality customer driven confectionery experiences (1)(2).
Winning by having fun (9) in a harmonized and empowered organization (6). Building collaborative relationships
for profitable growth with our customers, suppliers and partners and creating a lasting value (5) and honoring the
heritage through continued commitment to make a positive difference in the community (8). We can see that the
market component is not stated and “the world” is a very broad concept. Technology was not mentioned at all.
Creating a mission and vision statement is not an easy task. As F. David points out, establishing a mission should
never be made on plausibility alone, should never be made fast, and should never be made painlessly. He goes on
to suggest that in order to develop the mission and vision statement, some articles about these statements should
first be selected and then passed on to all managers. In some cases, organizations use discussion groups with
managers to formulate these statements. However, based on the information provided by the case study, if we
need to propose a new mission and vision statement, we do it as following:
Mission statement:
Delivering the best confectioneries (2) in North America (3) for all those who love sweetness and want to
consume sweet and healthy (1). Our products are made with natural ingredients grown on the beautiful
plantations of West Africa and South America and Far East (4). We are committed to working with other parties
(5) to share sweet moments (7) of an empowered organization (6). In doing so, we take care not to damage the
environment from waste and we use lighter recycling materials as well as recycled water for our plants (8). We
are successful thanks to the commitment of our employees who are the primary contributors to the sweet taste (9).
This mission statement would be appropriate for Hershey Company because it includes all the characteristics that
a genuine statement should have according to F. David and includes all the components of the mission.
With regard to vision, it is a shorter statement that expresses where business wants to be in the future. In this case,
given that the largest sales are made within the United States, I think the vision of Hershey’s Company should
include global expansion in as many countries as possible, in addition to the current ones. In a modest way, I
would propose the following vision statement:
“Hershey’s vision is to reach all the people in the world who want to consume high quality and healthy
chocolates and other sweet products.”

3. 3
2. CPM Analysis
Critical Success
Factor
Hershey Nestle Mars
Weight Rating Score Rating Score Rating Score
Advertising 0.18 4 0.72 2 0.36 3 0.54
Product Quality 0.15 4 0.60 3 0.45 3 0.60
Price
Competitiveness
0.07 2 0.14 4 0.28 2 0.14
Management 0.10 3 0.30 2 0.20 3 0.30
Financial Position 0.13 1 0.13 3 0.39 3 0.39
Customer Loyalty 0.17 3 0.51 2 0.34 3 0.51
Global Expansion 0.15 2 0.30 3 0.45 3 0.45
Market Share 0.05 2 0.10 3 0.15 3 0.15
Total 1.00 2.80 2.62 3.08
The Competitive Profile Matrix (CPM) provides useful information on a firm’s major competitors and their
particular strengths and weakness in relation to firm’s strategic position.
I think Hershey’s biggest competitors are Nestle and Mars. Cadbury Company is best known for its beverages
such as Dr. Pepper, Canada Dry, Snapple, etc., therefore, in the profile matrix of competitors are taken the
company Nestle and Mars.
Factors that affect the success of a firm in this industry are advertising, product quality, price competitiveness,
management, financial position, customer loyalty, global expansion, and market share. Of all these factors, I think
advertising has the greatest weight in the success of a business. Because the products are similar, through
advertising tactics, companies can manage to differentiate themselves from competitors. Through advertising,
Hershey continued to promote its iconic brands such as Hershey Kiss and Reese’s. After that, the other important
factors for success in this industry are customer loyalty, followed by product quality and global expansion.
Financial position, management, and market share, I think have lower weight. Of all these, I think the market
share is the least competitive factor, with the 50 largest industry firms controlling less than 40 percent of the
market. In a market with so much competition, it is very difficult to compete with prices, so firms in the
competitive market follow the prices of other firms. However, the quality of products has a critical importance in
gaining customers and through advertising, a firm can manage to defend its competitive position.

4. 4
With regard to advertising, I think Hershey does more advertising than the two companies, and that’s a big
advantage for it. Because some of Nestle’s ads have not been welcomed by consumers in some of the more
conservative countries and are perceived as counter-value, I think advertising is a minor weakness for it.
Advertising for Mars, on the other hand, is a minor strength.
Product quality is a major strength for Hershey, such as the quality of Hershey Bar, Hershey Kisses and Reese’s,
which are quite well known in the market. Also, dark chocolates with flavanols is a big advantage. The quality of
Nestle and Mars products represent a minor strength.
Despite the quality of the products, Hershey cannot compete with prices like Nestle. Hershey has had problems
with consumer outflows, as consumers have switched to lower priced products, such as Nestle products that have
more affordable prices for the consumer budget. Also, Mars has higher prices than Nestle, therefore, price
competitiveness is a minor weakness for Hershey and Mars and a major strength for Nestle.
Management is a minor strength for Hershey because there it has had some problems with former chief executive
H. Lenny and the management of the board of directors in this matter. Nestle, due to the problems with the
management of raw materials produced on farms which employ children and other marketing problems, I think
that this situation represents a minor weakness for it. Mars management is in the same position as Hershey’s.
Due to low price competitiveness and customer switches, Hershey has had a lower profit, compared to the other
two companies. At the same time, this represents Hershey’s greatest weakness. Nestle and Mars have more
advantages in terms of the financial position.
Since some of Hershey’s consumers have switched to lower price products, customer loyalty is a minor strength
for Hershey. However, consumers who seek quality and sweet healthy products continue to maintain their loyalty
to Hershey’s products. This factor is more problematic for Nestle. Referring to the impact of advertising and
speculation on raw materials produced on farms that employ children, self-aware consumers cannot stay loyal to
such a brand.
In terms of global expansion, Nestle and Mars operate on more continents and countries than Hershey. Even the
most of total sales for these two companies is realized abroad their home countries. Hershey, meanwhile, is
expanding more slowly than the two companies through mergers and joint ventures. Global expansion therefore
represents a minor weakness for Hershey and a strength for Nestle and Mars.
Finally, the market share represents a minor weakness for Hershey and a minor strength for Nestle and Mars. All
this because of their expansion in many countries. However, due to the large number of firms in this industry and
the perfect competition, market share is not a significant success factor.
The weighted score of Hershey if 2.80, for Nestle is 2.62 and for Mars is 3.08. All of these values are above 2.5
indicating that all three firms are operating above average. Hershey is the strongest in Advertising and Product
Quality, Nestle in Price Competitiveness, and Mars is relatively strong in all factors. The Mars company is the
strongest, as shown by the value 3.08. These numbers reveal the relative strengths of firms, but their implied
precision is an illusion.

5. 5
3. External Factor Evaluation (EFE) Matrix
Key External Factors Weight Rating Weighted
Score
Opportunities
1. Increase requirements for dark chocolates with flavonoids
0.09 2 0.18
2. Increasing demand for organic products
0.07 2 0.14
3. Promotions to increase holiday sales
0.12 4 0.48
4. Expand the product line including energy bars and sugar-free products
0.06 2 0.12
5. Joint ventures outsides of USA
0.08 3 0.24
6. Acquisitions outside of USA
0.08 3 0.24
7. Products of special editions
0.02 3 0.06
Threats
1. Switching customers to lower price products
0.09 3 0.27
2. Cocoa prices rising from $ 0.86 to $ 1.50
0.08 2 0.16
3. Increasing in the price of sugar
0.08 2 0.16
4. Poor sugar harvesting
0.10 1 0.10
5. Change in the level of consumer awareness regarding the health
0.05 1 0.05
6. Unstable currency exchange rates
0.08 2 0.16
TOTAL 1.00 2.36
The External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social,
cultural, demographic, environmental, political, governmental, legal, technological, and competitive
information.
Based on the information provided on the case study, seven opportunities and six threats were identified.
One of the most important opportunities is the increased demand for dark chocolates which contain
flavonoids. Recently, consumers have begun to become aware of the things they consume, including regular

6. 6
sugary chocolates. Therefore, chocolates with flavonoids and other organic products present a high
opportunity for Hershey. Hershey, as well as, through promotions tries to increase sales during holidays and
special occasions, such as Halloween or Valentine’s Day. To stay competitive, Hershey can expand its
product line by offering other products in the chocolate and chewing gum category. Another good
opportunity for Hershey is acquisitions and joint ventures outside the United States, in addition to current
ones in countries such as India, China, Korea, Mexico, etc. Finally, special edition products, such as for the
launch of a movie or other festive events, present an opportunity for Hershey.
Of all these, promotions to increase holiday sales have the largest weight, as sales during this time represent
10 percent of total sales in the industry and Hershey’s sales are higher during the third and fourth quarters,
when most of holidays happen at this time. Given a number of other social and environmental factors,
chocolate is a product that is most likely consumed during these months. It is no wonder that chocolate is
consumed less during the summer months, when a chocolate you buy at the market will start to melt from
the summer heat as soon as you leave the market. Therefore, this is the greatest opportunity that Hershey can
capture, and Hershey can respond to this opportunity more effectively with its advertising programs. In
addition, the demand for healthy chocolates and other organic products presents a high weight opportunity.
Global expansion through acquisitions and joint ventures outside the US presents another opportunity which
also has a significant weight in seizing opportunities. Expanding the product line is also an option that
should not be ignored. Meanwhile, the products of special editions represent the least weight in the matrix of
opportunities, because as such they are limited to events and in time. Of all these, Hershey can respond more
effectively to promotions of festive sales, can respond above average to mergers and joint ventures outside
the US and on average to chocolate requirements with flavonoids and product line expansion, since
competition is following the last two strategies too.
Among the most serious threats to Hershey is poor sugar harvests in manufacturing countries such as Brazil
and India, as sugar is the basic component of sweet products; and costumer switching to lower-price
products. These two factors have the greatest weight in the list of threats. In addition, the increase in the
price of cocoa and the increase in the price of sugar pose significant threats to the company, which cannot be
controlled by the company. Also, the currency exchange rates is another risk that can affect the company’s
portfolio. Another danger, less than the above-mentioned risks, but not insignificant for the chocolate
industry, is the increased awareness of consumers to the consuming chocolates with sugar, which are
considered unhealthy. Such a risk can reduce Hershey’s sales of sugary chocolates and other sugar-
containing products. Of all these threats, Hershey can respond effectively to the risk of consumer switching.
This is because, firstly, Hershey is a strong brand and quality-seeking customers are loyal to Hershey’s
products. Secondly, Hershey may consider lowering the prices of its products. Hershey can respond
moderately to rising cocoa and sugar prices through deals with suppliers and that sugar sales are controlled
by the US government. Hershey, however, cannot control the environmental conditions to have plentiful
sugar harvests and cannot stop consumer awareness about not consuming ordinary chocolates.
A total weighted score of 2.36 indicates that Hershey is responding under or almost on average to existing
opportunities and threats in its industry. In other words, the firm’s current strategies on average take
advantage of existing opportunities and on average minimize the potential adverse effects of external threats.

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4. Internal Factor Evaluation (IFE) Matrix
Key Internal Factor Weight Rating Weighted
Score
Strengths
1. The largest producer of chocolate in North America
0.07 4 0.28
2. Sales increase by 5.9%
0.09 3 0.27
3. Strong well-known brand name
0.10 4 0.40
4. High corporate social responsibility
0.06 3 0.18
5. Chocolate World theme park
0.05 4 0.20
6. Expansion of product offerings such as healthy snacks, including Payday
Pro energy bars and sugar-free products like Twizzlers
0.07 3 0.21
7. Good relationships with distributors 0.04 3 0.12
8. Promoting the health benefits of flavonoids in dark chocolate 0.03 3 0.09
Weaknesses
1. High dependence on domestic markets with about 86 percent of revenue
generated within the United States
0.07 2 0.14
2. High reliance on customer loyalty
0.06 2 0.12
3. Closing businesses and ending partnerships
0.08 1 0.08
4. Bad relationships with shareholders
0.06 2 0.12
5. Increasing sales, marketing, and administrative costs
0.05 1 0.05
6. High reliance on long-term debt
0.10 1 0.10
7. Reduction of 1500 employees
0.04 2 0.08
8. Severance package of two weeks of pay for each year of service up to 65
weeks for plant workers
0.03 2 0.06
TOTAL 1.00 2.50

8. 8
Internal Factor Evaluation (IFE) Matrix summarizes and evaluates the major strengths and weaknesses in the
functional areas of a business, and it also provides a basis for identifying and evaluating relationships among
those areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific
approach should not be interpreted to mean this is an all-powerful technique. A thorough understanding of the
factors included is more important than the actual numbers.
Among Hershey’s greatest strengths we have identified are: Hershey is the largest chocolate producer in North
America, sales growth of 5.9% in the last quarter reported for 2009, the strong brand name it has, corporate social
responsibility activities, amusement park, product line expansion, good relations with distributors and promotion
of the health benefits of flavonoids in dark chocolates.
From the weaknesses of the company we have identified are high reliance on the domestic market, high reliance
on customer loyalty, downsizing of factories and discontinue of partnerships, bad relations with shareholders,
increased sales, marketing and administrative costs, high long-term debt, employee reduction and financial
support packages for plant workers.
The brand reputation has the greatest weight in the list of strengths. The reputation of the brand offers stability
and continuity in this industry. The brand offers customers continuous quality, value, confidence, and comfort.
Increasing sales and being the largest producer of chocolate in North America is a high priority for the company,
which ensures customer acceptance. The company also strengthens its continuity in the future by expanding the
offer of healthy products, Payday Pro energy bars and sugar-free products such as Twizzlers. Corporate social
responsibility activities, such as protecting the environment from production waste, use of recycled water,
engaging in philanthropic activities, such as donating scholarships for orphan children, membership in non-
governmental organizations in order to eliminate child labor in cocoa producing regions etc., represent an
important advantage that affects the strengthening of brand reputation. Amusement park, relationships with
distributors and promotion of healthy products are several other advantages with less weight.
Among the biggest risks of the company is reliance on long-term debts. This means that the current assets do not
belong to the company, but to the creditors. Therefore, this factor has the highest weight in the list of weaknesses.
Other major weaknesses in the list include closing businesses (such as the Reading factory) and discontinuing
partnerships with other brands, such as Cacao Reserve and Starbucks chocolates. Also, high reliance on the
domestic market where 86 percent of revenues are realized within the United States, shows that the company is
not benefiting enough from the possibility of expansion outside the United States. High reliance on customer
loyalty is another weakness, which has resulted in consumers fleeing to lower-price brands. Increasing sales and
marketing costs mean that the company must constantly invest in communicating with customers, to continuously
promote its iconic brands. Reducing workers by closing factories and packages to support them for up to 65
weeks presents two other weaknesses because of closing businesses.
The total weighted score of 2.5 indicates that the Hershey company is moderately strong internally, which
indicates that there is space for improvement in the firm’s strategies, policies, procedures and operations.

9. 9
5. Draw SPACE Matrix
Before drawing the final shape of SPACE matrix, we firstly need to define the financial position (FP),
competitive position (CP), stability position (SP), and industry position (IP) of the company, and then complete
other steps.
To identify the financial position of the company, we calculated some main financial ratios for the three years.
Although, without calculating we can see important changes from financial sheets: i.e., sales an increased in 2008
from 2007, net income is increased in 2008 from 2007, total assets have decreased in 2008 from 2007, current
liabilities have decreased in 2008 from 2007, however, long term liabilities have increased in 2008 from 2007,
and stockholders’ equity has decreased in 2008 from 2007. But we think that calculating some financial ratios,
will give a better view and more accurate view of the financial position.
Financial ratios 2008 2007 2006
Current ratio = current assets/current liabilities 1,05 0,88 0,97
Debt to equity ratio = total debt/total stockholders’ equity 10,42% 6,16% 5,08%
Inventory turnover ratio = sales/inventory of finished goods 8,66 8,24 7,62
Net profit margin ratio = net income/sales 6,06% 4,32% 11,3%
Return on total assets (ROA) = net income/total assets 8,56% 5,04% 13,44%
Return on equity (ROE) = net income/total stockholders’ equity 97,86% 36,11% 81,80%
Interpretation for the year 2008:
Current ratio = current assets/current liabilities = 1,344,945 : 1,270,212 = 1,05. This shows that the Hershey is
able to pay for its current liabilities 1.05 times over.
Debt to equity ratio = total debt/total stockholders’ equity = 3,316,520 : 318,199 = 10,42%. This shows that
10,42% of the stockholder’s equity is founded by creditors.
Inventory turnover ratio = sales/inventory of finished goods = 5,132,768 : 592,530 = 8,66. This means that the
Hershey company completely sells and replaces its inventory 8,66 times every year.
Net profit margin ratio = net income/sales = 311,405 : 5,132,768 = 0,0606*100 = 6,06%. For 2008, the net profit
margin is 6,06%, so there was quite an increase in their net profit margin compared with 4,32% in 2007.
Return on total assets (ROA) = net income/total assets = 311,405 : 3,634,719 = 0,0856 * 100 = 8,56%. For 2008,
the ROA is 8,56%. The increased return on assets in 2008 reflects the increased sales, reduced costs, and much
higher net income for that year.
Return on equity (ROE) = net income/total stockholders’ equity = 311,405 : 318,199 = 0,9786 * 100 = 97,86%.
For 2008, the return on equity was 97,86%.
Relating to the example in the book, we selected only four factors for financial position.
After we calculated the financial ratios, we selected some of them, as the most important to describe financial
position. Then, for financial position (FP) and industry position (IP) we assigned numerical values ranging from
+1 (worst) to +7 (best) to each item. For stability position (SP) and competitive position (CP) we assigned
numerical values from -1 (best) to -7 (worst) to each item. We computed their averages by summing the values
given to each item and then by dividing by the number of items included in the respective dimension.
We plotted the average scores for the four dimensions, then added the two scores on the x-axis and plotted the
resultant point on X, and the two scores of the y-axis and plotted the resultant point on Y. The intersection of the
xy point was (1,59 and -1).

10. 10
Financial Position (FP) Ratings
Current ratio increased from 0,88 in 2007 to 1,05 in 2008. 4
Debt to equity ratio increased from 6,16% in 2007 to 10,42% in 2008. Similarly,
the long-term debt increased from 1,279,965 in 2007 to 1,505,945
1
Net profit margin ratio increased from 4,32% in 2007 to 6,06% in 2008. 6
Return on total assets increased from 5,04% in 2007 to 8,56% in 2008. 5
16
Industry Position (IP)
Prices of cocoa in 2008 significantly increased from 2007. 1
Chocolate accounts for 55.8 percent of the market’s overall global value. 4
Organic foods products are one of the fastest growing sectors in the United
States with a projected value of $26.3 billion by 2011.
6
Hershey remains heavily dependent on its domestic markets with about 86
percent of revenues derived from operations in the United States.
2
13
Stability Position (SP)
Poor harvest of the sugar from producers. -5
Some of Hershey’s premium products of have faltered lately as customers
switched to lower price products.
-6
The company overall has weathered the economic recession quite well -1
Unfavorable currency exchange rates. -3
-15
Competitive Position (CP)
The largest producer of chocolate in North America. -1
Hershey’s iconic brands such as Hershey Bar, Hershey Kisses, and Reese’s are
instantly recognized within the domestic market.
-2
Hershey appeals to consumers with its premium line of dark chocolates that
promote the antioxidant benefits of flavonoids found in these products.
-2
-5
Conclusion
SP Average is -15 : 3 = -5 IP Average is +13 : 4 = 3,25
CP Average is -5 : 3 = -1,66 FP Average is +16 : 4 = 4
Direction Vector Coordinates: x-axis: -1,66 + 3,25 = 1,59
y-axis: -5 + 4 = -1

11. 11
Comment: We think that Hershey Company should pursue a Competitive Strategy. In competitive quadrant, integration strategies
such as backward, forward or horizontal integration and intensive strategies such as market penetration, market development and
product development are available. In detail, from integration strategies we suggest that Hershey pursue forward integration by
expanding in more countries and using franchising to distribute their products. In this way, business can expand more rapidly and
costs and opportunities will be spread among many individuals. In align with this strategy, market development strategy is
suitable for introducing its products into new geographic areas, such as more Asian or Europe countries, besides India, China and
Korea.

12. 12
6. Draw Grand Strategy Matrix
The Grand Strategy Matrix is based on two evaluative dimensions: competitive position and market (industry)
growth.
Comment: Considering the competitive position of Hershey which was calculated as 2,80 in relation with the Nestle
competitive position which was 2,62 and Mars competitive position which was 3,08, we can say that Hershey has a
relatively strong position. First, this value is over 2,5 and compared to the great number of companies in this industry,
Hershey stands better. Also, from the SPACE matrix, we suggested that Hershey should pursue competitive strategies, as
it better answers to the four position dimensions. However, we think that the market growth rate is slow for Hershey.
Hershey’s sales increased only by 3.8 percent in 2008 and increased 0,05 percent (4,946,719 ‒ 4,944,230 / 4,944,230) in
2007 from 2006. Therefore, Hershey is positioned in Quadrant IV, with a strong competitive position, but in a slow-
growth market. This is also supported by the information of where the major 50 firms in the industry, control less than 40
percent of the market. In a such perfect market, rapid market growth is already a difficult situation for any company. The
firms in Quadrant IV have the strength to launch diversified programs into more promising growth areas: Quadrant IV
firms have characteristically high cash-flow levels and limited internal growth needs and often can pursue related or
unrelated diversification successfully. Quadrant IV firms also may pursue joint ventures. Therefore, we suggest Hershey
follow related and unrealted diversification, especially related diversification, according to the six guidlines when this
strategy is effective. Hershey is already pursuing joint ventures and acquisitions and we recommend continuing with it.

13. 13
7. Draw IE Matrix
The Internal-External (IE) Matrix positions an organization’s various divisions in a nine-cell display. The IE
Matrix is based on two key dimensions: the IFE total weighted scores on the x-axis and the EFE total weighted
scores on the y-axis. The IE Matrix can be divided into three major regions that have different strategy
implications. First, the prescription for divisions that fall into cells I, II, or IV can be described as grow and
build. Intensive (market penetration, market development, and product development) or integrative (backward
integration, forward integration, and horizontal integration) strategies can be most appropriate for these
divisions. Second, divisions that fall into cells III, V, or VII can be managed best with hold and maintain
strategies; market penetration and product development are tw
o commonly employed strategies for these types of divisions. Third, a common prescription for divisions that
fall into cells VI, VIII, or IX is harvest or divest. Successful organizations are able to achieve a portfolio of
businesses positioned in or around cell I in the IE Matrix (David, 2011: 189).
The IFE Total Weighted Scores
Strong
3.0 to 4.0
Average
2.0 to 2.99
Weak
1.0 to 1.99
TheEFETotalWeightedScores
High
3.0to4.0
I II III
Medium
2.0to2.99
IV V
(2,50; 2,36)
VI
Low
1.09to1.99
VII VIII IX
Comment: Since we don’t have information on the Hershey’s divisions, we constructed the IFE Matrix for the
Hershey as a consolidated. As this matrix is constructed from the IFE and EFE scores, we took the scores from the
previously constructed IFE and EFE matrixes. The IFE total weigted score was 2,50 and the EFE total weighted
score was 2,36. Hence, the value on x-axis is 2,50 and on y-axis is 2,36. Both these values fall in the quadrant V.
Hershey has an average (2.09 to 2.99) IFE position and a medium EFE position (2.0 to 2.99). Hershey can be
managed best with hold and maintain strategies; market penetration and product development. These strategies are
in line with the previous suggested strategies from previous matrixes.

14. 14
8. QSPM
Market penetration within
the USA
Market development
outside the USA
Key Factors Weight AS TAS AS TAS
1. Increase requirements for
dark chocolates with
flavonoid
0.18 4 0.72 3 0.54
2. Increasing demand for
organic products
0.14 3 0.42 2 0.28
3. Promotions to increase
holiday sales
0.48 4 1.92 3 1.44
4. Expand the product line
including energy bars and
sugar-free products
0.12 - -
5. Joint ventures outsides of
USA
0.24 1 0.24 4 0.96
6. Acquisitions outside of
USA
0.24 1 0.24 4 0.96
7. Products of special editions 0.06 2 0.12 1 0.06
Weight AS TAS AS TAS
1. Switching customers to
lower price products
0.27 - -
2. Cocoa prices rising from $
0.86 to $ 1.50
0.16 - -
3. Increasing in the price of
sugar
0.16 - -
4. Poor sugar harvesting 0.10 - -
5. Change in the level of
consumer awareness
regarding the health
0.05 3 0.15 2 0.10
6. Unstable currency
exchange rates
0.16 - -
TOTAL 2.36
1. The largest producer of
chocolate in North America
0.28 - -
2. Sales increase by 5.9% 0.27 - -
3. Strong well-known brand
name
0.40 4 1.60 2 0.80
4. High corporate social
responsibility
0.18 3 0.54 4 0.72
5. Chocolate World theme
park
0.20 - -
6. Expansion of product
offerings such as healthy
snacks, including Payday Pro
energy bars and sugar-free
products like Twizzlers
0.21 4 0.84 3 0.63

15. 15
7. Good relationships with
distributors
0.12 - -
8. Promoting the health
benefits of flavonoids in dark
chocolate
0.09 3 0.27 2 0.18
1. High dependence on
domestic markets with about
86 percent of revenue
generated within the United
States
0.14 - -
2. High reliance on customer
loyalty
0.12 3 0.36 1 0.12
3. Closing businesses and
ending partnerships
0.08 - -
4. Bad relationships with
shareholders
0.12 - -
5. Increasing sales, marketing,
and administrative costs
0.05 4 0.20 3 0.15
6. High reliance on long-term
debt
0.10 - -
7. Reduction of 1500
employees
0.08 - -
8. Severance package of two
weeks of pay for each year of
service up to 65 weeks for
plant workers
0.06 - -
TOTAL 2.50 7.62 6.94

16. 16
9. Write a Recommendation. And explain why you choose that strategy regarding to all the analysis
you made.
The QSPM is a tool that allows strategists to evaluate alternative strategies objectively, based on previously
identified external and internal critical success factors. Like other strategy-formulation analytical tools, the QSPM
requires good intuitive judgment (David, 2011: 192).
The top row of a QSPM consists of alternative strategies derived from the SWOT Matrix, SPACE Matrix, BCG
Matrix, IE Matrix, and Grand Strategy Matrix. These matching tools usually generate similar feasible alternatives.
However, not every strategy suggested by the matching techniques has to be evaluated in a QSPM. Strategists
should use good intuitive judgment in selecting strategies to include in a QSPM (David, 2011: 192).
To build QSPM, after we pasted the data from EFE and IFE matrixes, we grouped the alternative strategies we
proposed in Stage 2. We summarized as follows:
➢ From SPACE matrix, we proposed that Hershey follows a competitive strategy. Market penetration,
market development and product development and backward, forward, and horizontal integration
strategies were proposed. Strongly, we proposed the market development as a major strategy by
introducing its products into new geographic areas. Just, as the biggest competitors, such as Nestle,
Cadbury, and Mars have been expanding in many countries in the world.
➢ In Grand Strategy Matrix, we proposed that Hershey follows related diversification and joint ventures.
Related diversification means when business’ value chains possess competitively valuable cross-business
strategic fits. In a slow-growth industry, related diversification would be an appropriate movement
expanding the business through joint ventures or franchising.
➢ In IE matrix, the EFE and IFE matrixes suggested that Hershey should hold and main strategies, where
market penetration and product development were typical strategies in that quadrant.
Based on this information, we decided to analyse two strategies:
1. Increase market penetration for present products within the USA (which means increasing number of
salespersons, increasing advertising, offering sales promotion items, or increasing publicity efforts (David,
2011: 141).
2. Increase market development outside of the USA, through joint ventures.
We chose those strategies as they are within the same set. Any number of sets of alternative strategies can be
included in the QSPM, and any number of strategies can make up a given set, but only strategies within a given
set are evaluated relative to each other. For example, one set of strategies may include diversification, whereas
another set may include issuing stock and selling a division to raise needed capital. These two sets of strategies
are totally different, and the QSPM evaluates strategies only within sets (David, 2011: 193).
After we evaluated the attractiveness scores for the applicable items, we calculated the total attractiveness scores
(TAS) and the sum total attractiveness scores (STAS). The STAS of 7,62 versus 6,94 shows that the Hershey
should expand its market within the USA, considering all the relevant external and internal factors that could
affect the strategic decision. However, this does not mean that the market development outside USA is a less
important strategy, but according to current external and internal factors, concentrating on inside market seems
more suitable for now.
Therefore, we can recommend some points on where Hershey could concentrate. In regard to market development
within USA, Hershey:
➢ Should increase advertising for its products. This will allow to gain new customers and maintain the
current customers. Through advertising it can raise awareness and brand loyalty. We think that it is

17. 17
important, that besides iconic brands such as Hershey Bar, Hershey Kisses etc., Hershey should focus on
the promotion of other products as well, especially the organic products and chocolate with flavonoids.
Although, in general, we argued that the market growth in this industry was slow, the market of organic
products and healthy chocolates is increasing, and Hershey should catch this opportunity by promoting its
products.
➢ In addition to advertising, Hershey should maintain its competitive position and follow competitive
strategies, as we recommend in SPACE matrix. Hershey should keep competing with its product line and
with the new products of healthy chocolates. But we also believe that, despite the quality of chocolates,
Hershey should compete with prices. In a competitive market, firms are recommended to follow the
market price, therefore, lowering the prices would be an alternative strategy. If the aim is positioning the
brand in mind of customers as a quality and expensive chocolate brand, we then recommend using
promotion or make holiday discounts.
➢ As chocolate industry is fully of chocolate varieties and companies, innovation that adds value to the
products would make a difference. Just as an instant example, following a Coca-Cola example,
customizing the chocolates with the names of customers, would be an interesting advertising tactic. As
chocolate is often bought as a gift for people, especially the lovers, buying a chocolate with the name of
boyfriend/girlfriend, mother/father, grandmother/grandfather or just a friend, we believe it would have an
impact on sales. No matter that is a similar strategy to Coca-Cola, the products are different, and it can be
adjusted with different features, to differentiate from Coca-Cola advertising. But would offers customers a
personal value which carries meaning when gifting a chocolate to someone.
➢ Maintain the brand name and continually makes satisfaction studies with costumers. Brand is the most
important asset of a company and Hershey should main its brand name. Research and development
department should be functional and develop further the brand name. In many cases, the ideas gathered
from customers can be a key to a better product development. In surveys with customers, asking
customers “How do you want your chocolate”, or “What is your dream’s chocolate”, marketing managers
can have a customer perspective, which can bring new ideas on how to design products or how to present
to them.
➢ Send chocolates in supermarkets and convenient stores as much as possible in South America and
establish your presence there. Using the upper-mentioned advertising strategies, this way, Hershey can
continue to penetrate market in America.