Integrated Business Challenge - Assignment PDF
Added on 2021-05-31
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Running head: INTEGRATED BUSINESS Integrated BusinessName of the Student:Name of the University:Author Note:
1INTEGRATED BUSINESS Hershey’s Case:Porter’s Five Forces AnalysisThe extensive demands of chocolates around the world are quite profitable for thechocolate manufacturing companies. It is reported that every year, almost 3 million tons of theCocoa beans are consumed by the larger number of population worldwide (Chocolate Class,2014). Hershey’s is one of the renowned chocolate manufacturing brands that offer the highquality and deliciously tasted chocolates to the consumers all across the world. However, it isassumed that in next few years, there is the probability of the supply shortage in the global cocoaindustry. The challenge is quite significant for Hershey’s as well. The following study wouldpresent the clear ideas about the external scenario in terms of defining the competitive landscape.Michael Porter observed five main forces in the external business scenario that create thesignificant impact on the profitability and creates the considerable scenario based on which thefirm develops their functionalities (Mierzwa & Zimmer, 2017). These five major forces are asfollows:Bargaining Power of the Suppliers (High)It is noticed that majority of the companies belong to Confectioners industry deal with anumber of suppliers. Hershey’s is not an exception in such context. It is to be stated that themargin of earned profitability can be decreased if the suppliers hold the dominant position. Thepowerful suppliers in this sector have the ability to negotiate for the higher prices (Djekic et al.,2016). This high level of supplier bargaining capacity may affect the profitability parameter of
2INTEGRATED BUSINESS Hershey’s. The development of the more efficient supply chain with the multiple suppliers wouldbe beneficial for the company to avoid such situation. Bargaining Power of the Buyers (High)Buyers usually tend to receive the better offerings by paying the minimum prices. Hershey’smay feel pressure since the customer base is smaller and the demands of the buyers are quitehigher. It might affect the long term profitability of the company in a significant way. Thesmaller yet powerful customer base may seek the increasing offers and discounts (Moorhead,2016). Hershey’s needs to concentrate on building the larger customer base that would providethem the opportunity to streamline the production process as well as the sales level. Threats of New Entrants (High)The new entrants in the Confectioners are much inclined towards developing moreinnovations and strategic movements to attract a larger amount of customers. The low costs,value propositions, and reduction of the product prices may increase the challenges for Hershey’s(Omsa, Abdullah & Jamali, 2017). It is thus necessary for the company to create moreinnovations for safeguarding the competitive edge. In fact, investing more on the research anddevelopment would also be helpful for the company to deal with such external challengesimposed by the new entrants. Threats of Substitutes (High)The industry profitability mainly suffers when a new service or products meets theexpectation or needs of the customers in a diverse way. In spite of the larger chocolate productvariations in Hershey’s, the company still faces the challenges from the substitute products like
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