Hershey Foods Case Study
The case study of Hershey Foods offered a different perspective on the effects of a company’s strategic plan or lack of one. Usually it just affects that company, employees and/or that specific industry. However, in this case, Hershey Foods and the decisions the CEO and board of directors make effect an entire town and economy. Even a school was involved. Hershey Foods is so integrated into the town of Hershey, PA that it was important that they made the right decision and not a decision that was only motivated by profit.
As the candy market changed and competition increased by 2002 Hershey was forced to come up with a strategic plan. Mars and Nestle had expanded their business in markets beyond candy; however Hershey’s profits are heavily reliant upon their chocolate sales. After taking this into account I can see why the board of directors of HTC was looking for a way to diversify its holdings and find a buyer to get rid of Hershey Foods. However, it appears that they were looking for the easy way out rather than the ethical and more socially responsible solution.
This is evidenced by the fact that they did not consult the town in any of their meetings or discuss the issue of an impending sale with community members. I also feel like Hershey and its management did not have the same vision as the founder Milton Hershey. The board directors were not really from the community anymore. Milton Hershey successfully integrated the business with the community and the relationship was one of mutual beneficence. The current leadership was mainly concerned about money and not leadership.
Not to say that money is not an important factor, but the special relationship between the survival of the town and Hershey Foods required strong consideration. The Attorney General had it right in declaring that HTC needed to make changes. Still, selling Hershey foods was not the answer. Now, I think big companies are beginning to realize that they need to involve the communities and towns they are doing business in when making big decisions. If they don’t they run the risk of being met with increased opposition and a PR nightmare. Take Walmart for example.
During their boom they managed to cause pandemonium in small towns by not doing their research, putting local mom and pop businesses under and refusing to take into account local customs. This really came back to bite Walmart and hurt their reputation as a company. From what I saw on a recent documentary, they are now eagerly trying to shed this bad image and making necessary steps to do so. Obviously, Hershey Foods was not sold, which was the best decision. Hershey foods didn’t need a sale, they needed a strategic plan and new management. This case study illustrates how Hershey’s breakdown in communication left it helpless.
