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Implications Of Economic Indicators Forecasts Essay

3052 words - 12 pages

Implications of Economic Indicators ForecastsOverviewThe Hershey Company is a principal snack food company and the leading North American manufacturer of quality chocolate and non-chocolate candy products. Hershey earns revenues of more than $4 billion employing more than 13,000 people worldwide. The company sells the well-known brands, Hershey's, Reeses, Hershey's Kisses, Kit Kat, Almond Joy, Mounds, York Peppermint Patty, Jolly Rancher, Twizzlers, Ice Breakers, and Bubble Yum as well as new products such as Swoops and Hershey's S'Mores. It also markets Hershey's cocoa, Hershey's syrup and other branded baking ingredients, toppings, and beverages.The Hershey Company is seeking to grow in the years ahead. The company's success or failure to reach the desired goals will have an economic impact on local and world economies. This paper will present the overview of the company's goals, trends of past sales and past economic indicators. The indicators this paper will look at are the past trends in the company's cash flow, profit margins, strategic planning, retail sales, and costs of commodities.PlansThe Hershey Company announced record profits on October 20, 2005. In a press conference, Richard H. Lenny, Chairman, President, and Chief Executive Officer, stated, "Attention to cost control, new product innovation, and strong seasonal sales account for the 9% increase in profits." He forecasts income and profits for 2005 will be higher than predicted.Hershey's plans include continuing to increase U.S. market share while broadening its international presence. The Hershey Company has recently taken the steps of announcing a reorganization of management. The reorganization merged the functions of selected international and domestic departments. By capitalizing on the brand identity, and combining some marketing departments, Lenny stated, "…we're better positioned to broaden our international presence both within existing global markets and in selected new markets." (PR Newswire, 2005). According to Reuters (2005), the Hershey Corporation will establish a new organizational structure focusing on confectionary growth that will have an impact on market both internationally and in the United States.Hershey's plans for new products include further development of healthier snack food products. Organically grown ingredients are popular sellers in the United States. According to the Candy Industry Magazine, sales of conventional candies in the past twelve months fell by 31.7% while organic candies and snacks rose by nearly 25% in the same period. Although the supply of organic nuts is limited, and increases costs significantly, snack food and candy manufacturers are able to charge higher prices, thus offsetting the higher supply costs. (Vreeland, 2005).Economic IndicatorsThe Hershey Company (2005) notes net sales increased $256.7 million, or 6 percent, from 2003 to 2004. Net sales were favorably impacted by increased sales volume, especially within the...

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