strategic-management

194 ANNE WALSH AND ELLEN MANSFIELD
support both weight management and heart health. Due to increased consumer preferences
for healthy and organic products, the company portfolio of healthy snacks has expanded to
include Payday Pro energy bars and sugar-free products such as Twizzlers
(www.marketline.com).
Human Resources
Hershey employs about 12,800 full-time and 1,600 part-time employees, and approximately
47 percent of the workforce is covered via collective bargaining agreements. Due to
global supply initiatives, the company projects a reduction of 1,500 positions over the next
three-year period. Hershey recently closed their Reading, Pennsylvania, plant in 2009,
eliminating 300 jobs, and provided a severance package of two weeks of pay for each year
of service up to 65 weeks for plant workers.
David West, named chief executive officer in 2007, received a 40 percent increase in
his compensation in 2008. Company officials believe that West’s renewed emphasis on
marketing is responsible for the increase in Hershey sales during the past year. His predecessor,
Richard H. Lenny, had a more contentious relationship with the board of directors
and resigned in 2007 over frustration with the trust that controls Hershey. Exhibit 1
describes key company executives and their various functional roles within The Hershey
Company.
Finance
As illustrated in Exhibit 2, Hershey’s sales increased by 3.8 percent from $4,946,716,000
in 2007 to $5,132,768,000 in 2008. The company’s net income in 2008 was $311,405,000,
or $1.36 per share diluted, compared with $214,154,000, or $0.93 per share diluted for
2007. Higher energy and input costs were associated with increased costs along with the
full cost of operation for Godrej Hershey in 2008. Selling, marketing, and administrative
costs were attributed to higher incentive compensation expenses for employees, expansion
of international markets, and increased retail coverage in the United States (Form 10K
2008). Hershey projects a net sales growth of 2 to 3 percent in 2009 due to a decline in core
brand sales as well as unfavorable currency exchange rates.
Exhibit 3 shows that Hershey has more long-term debt than key competitors such as
Cadbury and Nestle. The company’s long-term debt increased from $1,279,965 in 2007 to
$1,505,954 in 2008. Hershey’s other assets declined to $151,561 in 2008 from $540,249 in
2007, and this decline was primarily associated with a change in the funded status of
Hershey pension plans, which resulted in a significant reduction in the fair value of the
pension plan assets (Form 10K 2008).
EXHIBIT 1 Key Hershey Executives
David J. West President and Chief Executive Officer
Humberto P. Alfonso Senior Vice President, Chief Financial Officer
C. Daniel Azzara Vice President, Global Research and Development
John P. Bilbrey Senior Vice President, President Hershey North America
Charlene H. Binder Senior Vice President, Chief People Officer
Michele G. Buck Senior Vice President, Global Chief Marketing Officer
George F. Davis Senior Vice President, Chief Information Officer
Javier H. Idrovo Senior Vice President, Strategy and Business
Development
Thaddeus J. Jastrzebski Senior Vice President, President Hershey International
Terence L. O’Day Senior Vice President, Global Operations
Burton H. Snyder Senior Vice President, General Counsel and Secretary
Source: Hershey Company’s 2008 Form 10K.