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Pros and Cons of Hershey Company`s Strategies

Prosand Cons of Hershey Company’s Strategies

Prosand Cons of Hershey Company’s Strategies

ForwardIntegration

Inthe press release made on September 20, 2016, the management ofHershey Company announced that it would engage in the retailtakeaway. This means the company would expand its retail outlets andchain stores. The benefit of this strategy is that it will expand thecompany’s market share. The wider the company’s retail network,the more dominant it becomes. The increase in the number of itsretail outlets will make the company increase its dominance, salesvolume, and profit margins. However, the cons of forward integrationare that it can be costly, and miscalculated decision can negativelyimpact on the progress of the company(Ruigrok &amp Wagner, 2003).It may require a lot of time to implement and fully roll out thestrategy. Besides, it increases responsibilities and burden to themanagement and makes it difficult to manage the organization in anefficient and effective manner.

OnOctober 18, 2016, the company announced that it would adopt productdevelopment as its latest strategy. Here, it was revealed to thepublic that the company would introduce new products such asHershey’sKitchensSea Salt Caramel Baking Chips. The advantage of this strategy is thatit will enable the company to meet the diverse needs of its clients.Besides, it will appeal to a new market segment, increase its salesvolume, and profitability. However, the disadvantage of introducingnew product line is that the introduction of many products canconfuse clients. Besides, it requires a lot of efforts in conductingmarketing research, adopting modern technologies, and producing anacceptable brand(Asmussen, Larsen &amp Pedersen, 2016).It can be an expensive development that might require a lot ofsacrifice from the management, and might end up hurting the existingbrands.

References

Asmussen,C. G., Larsen, M. M., &amp Pedersen, T. (2016). OrganizationalAdaptation in

Offshoring:The Relative Performance of Home-and Host-Based Learning Strategies.

OrganizationScience,27(4),911-928.

Ruigrok,W., &amp Wagner, H. (2003). Internationalization and performance: Anorganizational

learningperspective. MIR:Management International Review,63-83.