External Analysis of My Company & PEST Analysis - Research Paper Example

Economic Factors People’s level of income to choose from cheaper substitutes, prices of raw material Social Factors Taste and demand for chocolates in a particular region Technological factors Introduction of new processes and methods of production The company’s environmental analysis can be undertaken by the help of PEST analysis. Since Hershey operates globally, it is important to emphasize that the local factors affecting the company differ in various regions. However, there are general environmental factors which include political factors.

These factors can affect the operations of the company as, for instance, the government of the region where Hershey operates amends its policy relating to export and import strategy or may introduce any other changes ultimately affecting the operations of the company. On the other hand, laws, such as labor or consumer goods laws, in any region can also affect the company. To better illustrate the aforesaid with example, it has to be noted that today Hershey has developed its presence in Canada and Mexico due to NAFTA (Smith 132).

Economic factors like any changes in the economy, such as prices of sugar, harvest of cocoa etc., can affect the company as well (Smith 132). The standard of living and the income of the people in the region will also affect the company’s sales; it means that people in less developed countries may consume less chocolate than they used to do before economic changes. Social factors, such as people’s taste (for instance, higher demand for dark chocolate over white chocolate), will affect company’s target in some particular market.

Finally, technological factors, such as advancements in technological process and new ways of chocolate manufacturing, can also affect the company (“Annual Report” 4, 7). Industry Analysis FORCES INTENSITY Threats of new entrants Low Bargaining power of suppliers High Bargaining power of customers Low Pressure from substitute products High Rivalry High Nowadays the chocolate industry seems to be stagnant with insufficient number of powerful players entering the market because of the large capital requirements and strict regulations; however, the existing major players have captured their markets well.

There is severe competition among existing giants. High dependency on the suppliers for cocoa beans, which are mostly found in Africa (70%), makes the position of a supplier within the industry stronger. On the other hand, the customers are usually dealt with via retail chains, which doesn’t give them an opportunity to take a strong enough position to control prices (“Annual Report” 5). Competitor Analysis The competition within the industry is highly intense. In order to win a market share the competitors try to independently expand their markets.

In addition to the direct competition from within, the industry has to face indirect competition from outside. Snack foods, cereal, ice cream manufacturers are quite successful in grabbing the same market as well. Some of the competitors of Hershey are Mars, Nestle, General Mills, Hain Celestial Group, and Kraft etc. (Michman and Mazze 205). Market Analysis GLOBAL MARKER SHARE OF DIFFERENT COMPANIES Company Market share Cadbury and Kraft 14.8% Mars 14.6% Nestle 7.8% Hershey 4.6% Ferrero 4.5% Others 4.9% (“