Lindt, Callebuat And Hershey Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

COMPETITION

Hershey’s hold a strong position in the North America and particular markets in the Latin America as Hershey’s compete with top brands all around the world and holds worldwide consumer acceptance among top brands.

Hershey’s is not only popular in its own local regions of US but is also very popular in other regions competing with other local grown brands as Hershey’s it not only holds an edge over them it also competes at the highest level with all international brands, some of these companies are much greater in size and hold much bigger operations, but in this market a customer wants innovation and high quality at an affordable price, if any company can achieve that it gives it a competitive advantage but then there are companies using highly effective marketing techniques to counter act that divert and develop the desire of the consumer to their own product and ensure loyalty and preference.

COMPITITOR COMPARISION

The competitor analysis is conducted among two other companies that is Callebuat and Lindt, the analysis is conducted on the basis of ratio analysis, where Lindt being the strongest company in the lot on the bases of its share price in the market which is $5075 next to Callebuat whose share price holds at $1116 and then finally Hershey’s whose share price stands at $91.8.

Hershey’s holds the highest debt to equity ratio of the three companies which stands at 58% compared to the 46% and the 22% of Callebuat and Lindt means Hershey has higher gearing and is more inclined to use debt option for financing its operations and would have higher interest cost compared the other two companies, but the company has reduced its finance cost in the last year means the company would have paid off some of its debt, meaning it has reduced its gearing for the year 2013.

The gross profit ratio among the three companies’ stands at 46%, 15% and 66% that is Hershey, Callebuat and Lindt respectively, Hershey holds a higher gross profit margin, then Callebuat through a substantial margin and is very close to the margin of Lendt, making it a very competitive company among the group of three that even though it is smaller in size it still holds a strong cost control giving it competing margins as that of others.

The return on sales ration stands at 19%, 7% and 14% for Hershey, Callebuat and Lindt respectively, Hershey holds a higher return margin its sales means it has a very efficient cost control method which gives it the edge over the other companies.

The return on the Shareholders equity stands at 0.051%, 4% and 11%for Hershey, Callebuat and Lindt respectively this shows even though the company has very efficient cost control and it generating high gross profit margins it is still not generating an adequate margin over the investment made in the company which is a disappointing factor at the moment, but with the potential the company is showing and due the fact company has made two acquisition in the last two years heavy investment has been made it will require time to show results on the financial statements of the company.

The Earnings of the company per share stand at $3.76, $42.66 and $1339 for Hershey, Callebuat and Lindt respectively. Hershey has the lowest earnings per share which is not a surprise since the company has very low return on shareholders’ equity which just shows the company still has a potential to reach a very high share price.

The P/E ratio of the three companies stand at 24, 26 and 0.3 for Hershey, Callebuat and Lindt respectively this shows Hershey’s has a high expectancy to grow as does Callebuat but Lindt has reached its saturation level it also means that the investor is willing to pay $24 for every $1 dollar of earning of Hershey which shows high demand for share and willing high capital gain if invested in that share.

The dividend yield and payout ratios shows how much the company has paid out dividends compared to the price per share and dividend payout compared to the total earnings of the company.

RECOMMENDATION

Hershey’s Company has showed great growth over the last 5 years, is showing it is able to compete in any market with any company focuses heavily on product innovation, quality and standards, it is immensely committed to social work and social responsibilities and a sound healthy and safety regulations for its employees and is no compromise for either the customer or the supplier.................................

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