Hershey Company in Canada - Case Study Example

Hershey Business Plan in Canada Hershey Business Plan in Canada Hershey Company in Canada is a subsidiary company of the Hershey Company in North America, which was until 2005 formerly known as the Hershey foods corporation. It particularizes in the manufacture of confectionery, snacks, refreshments and grocery products. Since its introduction in Canada, the company has undergone industrial and social changes in order to adapt and fit the Canadian market. The first location of the company was Smiths falls which the pioneer selected because of adequate labor, direct connection to rail lines and plenty supply of milk and water. At this time, the main markets were Toronto and Montreal but it has grown over the years and is among the largest confectionary company in Canada. The production has grown significantly from as low as producing 200,000 chocolate bars in a day to millions of chocolate bars every day. The company has also diversified in the products they produce in order to capture more customers and increase on their sales that directly lead to greater profits. However, it’s the desire of every company to keep growing since the limits of expansion in business are infinite. The Hershey company wishes to continue expanding and boosting their sales and hence the reason for this marketing research. Internal Environment Each and every company undergoes the uncertainties of the macro environment such as high unemployment rates, volatile markets and significant debts. In line with this, consumer expectations are changing at a high rate and hence the product lifecycles are at risk. The Hershey Company is therefore expected to be proactive and fight back the uncertainty and volatility through demand-driven supplies as opposed to supply-driven approaches. This kind of approach is characterized with focus on market and consumer for the planning processing and production and hence it has the capability of putting a leg up on the competition. This approach will be beneficial to the company since they will be in a position to adjust to ordering, production and shipping depending on the levels of demand. Operating a demand-driven supply will give the Hershey both tangible and intangible benefits such as bigger market share and increased revenue (Luther, 2001). Relevance with customers is maintained through product development, cost avoidance, and free cash flow is maintained by reducing inventories and managing shortages (Luther, 2001). Employees and suppliers will be in a position to work together and hence the problem of misaligned objectives will be eliminated. In order for these benefits to be realized, the organization and its suppliers will have to exercise the virtues of coordination, communication, capacity and commitment. The organization will have to ensure they involve the customers and suppliers and develop a partnership whereby they share information and respond appropriately to environmental shifts. The supply chain will have to be more reactive and have more agility (Sandhusen, 2000). This will be done by ensuring that formal meeting are held, and formal communication channels are established so that any demand signal receives a counter response. The company must invest on capacity so that they have the necessary resources to implement the demand-driven supply. The supply involves a lot of data storage and hence the company must invest on IT capacity for their data to be stored, transferred and accessed and ay time. The employees at managerial level must also have sufficient knowledge to deal with the business environment and to react in the right direction. With this in place, the demand-driven supply will have full potential and will bear positive fruits to the organization. Apart from the demand-driven supply, the organization will also be required to modify its products to fit the current market trends or else develop new products to satisfy the needs of the market. Promotions and personal selling will also be influential since direct contact with customers and appreciating them installs product loyalty in them. After sales services and price variations are tools of marketing within the internal environment which the company should take advantage. The company should also invest on a conducive and attractive environment that suits the market and lifestyles of their customers. External environment Often, businesses irrespective of their size are affected by external environmental factors which they have little or no control over. The marketing team, therefore, needs to make certain crucial decisions to cope with environmental factors in such a way that the company maintains its growth and profitability. One of this factors is the economy and in this case the Canadian economy which is not stable since at certain times, it favors the business and at other times it downfalls it. The Hershey Companies products are mainly luxury products and hence will always be largely affected by the economic changes as opposed to necessities that face minimal changes during the economic pitfalls. The marketing managers should therefore be in a position to predict economy trends in order to alter the production levels according to the prevailing Canada economy. Legal changes such as alterations in the government laws and regulation concerning business operations are likely to affect the business. Laws such as tax introduction or increased taxes can affect the production of the company. The business should therefore have sufficient knowledge about the Canadian business laws so that they can be able to adjust positively and maintain or improve their production and supply level. The most important component in business is their customers since they are the people who keep the business in operation. It is therefore important to be culture-cautious in their production and supply methods. A business that selects supply and manufacture methods that are culture cautious will be likely to have a higher percentage of the market share. Apart from the people’s culture, the business should have enough knowledge on the market culture so that they fit well and adapt to it. Hershey Company is not the sole manufacturers of confectionery products in china and must be ready to stand up high against their competitors who produce similar products. There are various methods of competing with the competitors which include price and non-price methods. However, the company should be very cautious when using price changes to fight competition. They should ensure that they still remain profitable even after reducing prices and also be aware that some customers will consider reduced prices as reduced quality. With these two considerations, the business will be able to make the best decisions when it comes to implementing price method of fighting competition. Non-price methods such as location, customization of products among others can be deployed, and the business will still thrive under competition. Entry Mode Selection Market entry is defined as the act of launching new ventures by either staring up firms, through an existing firm or through an internal corporate venturing and can be in the form of establishing new products or expanding on the existing goods and services. Before entering into the market, the managers should take consideration of the three rules of entry mode selection which are the naive rule, pragmatic rule and the strategy rules (Sandhusen, 2000). Depending on the nature of the business and the nature of the market they are expanding to, the managers will have to make a decision on which strategy to employ. One type of entry mode is the export mode whereby the products of the firm are manufactured in the domestic market and transferred to the host market (Sandhusen, 2000). Export mode of market entry can be done in three modes that are direct, indirect and cooperative exports. The company will have to evaluate these three forms and select on the one that favors them in terms of profits. A company may decide to give license to another company to export their commodities, and this method is called licensing. The company may also decide to use franchising methods whereby the company gives rights to another company to export their products but under their name. The company could also resolve on joint ventures and contract manufacturing, but care should be taken so that the interests of the company remain paramount during the process. International functions Every customer has their own needs, and they differ from person to person and from nation to nation. International marketing therefore involves realizing that every country have different needs and by understanding these varying needs they can adapt a production and marketing strategy that is suitable. Factors such as different values customs and languages need to be considered during the company’s expansion plans. An extensive research on a target market should be done before a decision to move is made, and such research will be essential in establishing the market size, competition degree, prices, cultures and values alongside other business factors. The managers of the organization also need to carry out research on the financial status of their target market. Crucial information will be obtained from these since the firm will be in a position to establish sources of finances and the capability of the purchasing power of the population (Czinkota & Ronkainen, 2013). A research on development of the target market will be essential in making a decision on whether to invest or not to. The development level of a country or a location influences the business and has an impact on its chances of succeeding or failing. The technologies available in target markets and the operations in these markets can predict the sales to be expected and hence a research on available technologies is important. For example, the products manufactured by the Hershey Company require preservation and hence investing in an area without the ample supply of electric power is inappropriate. The business should also be located in a place where the raw products can be accessed readily to reduce on transportation costs. Cost/Benefit Analysis According to the cost-benefit analysis principle, an action should be taken only if it has an extra benefit other than the extra cost. Cost benefit analysis helps the business evaluate the monetary social costs and benefits of the project over a given period (Czinkota & Ronkainen, 2013). Hershey Company should do a project appraisal analysis and have a clear idea whether the investment in Canada has any financial returns to its mother projects in USA. The expansion project should be approved if and only if the current investment has provided any financial benefits the Hershey Company in the USA. The environmental impact of the project should also be considered to help the company realize whether the current economic time favors the investment or not. The cost-benefit analysis will help the company calculate the social benefits, and the tangible/intangible benefits and costs In conclusion, the Hershey Company in Canada requires should perform an extensive research on marketing in order to make good decisions. Many factors should be considered so that the risk of investing will have a higher probability of succeeding and benefiting the company in Canada, as well as the mother company in the USA. References Czinkota, M. R., & Ronkainen, I. A. (2013). International marketing. Mason, OH: South-Western Cengage Learning. Luther, W. M. (2001). The marketing plan: How to prepare and implement it. New York: Amacom. Sandhusen, R. (2000). Marketing. Hauppauge, N.Y: Barrons. Read More