Published by MBA Skool Team, Last Updated: April 27, 2020
PESTLE Analysis of Hersheys analyses the brand on its business tactics. Hersheys PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Hersheys, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Hersheys PESTLE Analysis can be explained as follows:
Hersheys is a popular food & beverage company having global operations. Every company needs to be very careful while dealing with government of the countries in which it is working. Tax rates, ease of doing business, labour reforms etc all are very important for the company’s perspective and it is control by the government. so, maintaining good relationship with the government can help the company. Hersheys is spending a lot of money lobbying with the government to build a positive image and keep government on its side. Moreover, working in a country or merely association with it which is known to violate human rights can put the company in a lot of trouble. Hersheys in 2011 created a lot of controversy when it was found that it was sourcing cocoa from Ivory coast which is known for using child labour.
Below are the economic factors in the PESTLE Analysis of Hersheys:
The country’s GDP, inflation, per capita income and purchasing power of the people has a major impact on the performance of the company.
In developing countries like India, China, Vietnam, Indonesia, etc. many of the Hersheys products are premium which people cannot afford easily. While in USA, people mostly afford its premium product, company saw decline in its sales in 2015 as people are not buying the chocolates for many reasons which the company is not able to identify and blame it on the consumer for not purchasing the chocolates like they used to purchase.
Following are the social factors impacting Hersheys PESTLE Analysis:
Hersheys is always been a favourite brand to many people. It is a very well-known and established brand. Nowadays, new tradition has started of giving confectionary items as a gift on special occasions which create a lot of opportunity for the company to expand its business. The people are becoming more conscious and concern regarding their health and they started avoiding eating products having sugar contents. This has created a lot of problem for the Hersheys company as its every product has high sugar content. The sales of the company decreasing rapidly as more and more people becoming health conscious. In 2015, the company blamed the consumers for not buying enough chocolates especially Americans.
The technological factors in the PESTLE Analysis of Hersheys are mentioned below:
Hersheys is constantly improving its technology to give better treat to its customers. It has invested 300 million dollars of amount on building the world’s most technological advanced chocolate making facility, which will make 70 million Hersheys Kisses chocolates a day. It has improved its supply chain significantly by making the process fully automated and establishing real time diagnostic systems. The company is working with Wild Blue Technologies to drive the consumer down the grocery aisle. The company uses Affictiva-powered kiosk (reads and analyses human emotions from a single expression) to capture the smile of the users.
This is proving very beneficial for the company as retails store are seeing more foot traffic than before.
Following are the legal factors in the Hersheys PESTLE Analysis:
Hersheys main raw material are sugar and cocoa, issue in sourcing any of it can cause a lot of problem for it. In 2018, the UK government has levied tax on sugar for beverage makers and it is possible that soon the government will levy tax on sugar for confectionary companies up to 20%. If this happens then definitely it will increase the price for the company and could be detrimental factor for it. It is alleged that Hersheys is sourcing cocoa from the countries known for child labour of which company said that it will source 100% cocoa from certified source by 2020 from 75% presently.
In the Hersheys PESTLE Analysis, the environmental elements affecting its business are as below:
Hersheys takes its environmental impact very seriously and constantly trying to reduce its carbon footprint and make its supply chain more sustainable. It has signed a new environmental policy called Our Shared Goodness Promise, which will create a framework to guide the future business decisions that impact the environment.
It has decided to work in a manner that will align with Paris Agreement and UN Sustainable Development Goals. The new plant which is opened in West Hershey is a zero waste to landfill plant and have features like getting energy from renewable sources and water harvesting system. The Hershey company in 2013 was recognized as one of America’s best Corporate Citizens in Corporate Responsibility magazine.
To conclude, the above Hersheys PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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