SHR Test Two Study Guide
Question 1: Hershey’s Business Level Strategy
1a. What are the five generic business-level strategies that a company may employ for
each product/service it offers?
Business-level strategy is an action plan the firm develops to describe how it will
compete in its chosen industry or market segment. An effective business-level strategy
has a clear statement of the value to be created for customers.
1. Cost leadership
3. Focused cost leadership
4. Focused differentiation
5. Integrated cost leadership/differentiation
Key dimensions: competitive advantage & competitive scope
1b. List three different products that Hershey offers and describe its current business-
level strategy for each. Please note that you are expected to justify your answer with an
explanation as opposed to just listing the products and listing the strategies.
1. Hershey Kisses
• Integrated Cost leadership and differentiation strategy
• Kisses are very reasonably priced and as we learned with our guest
speaker, Hershey is a cost leader among other “chocolate” suppliers
because many chocolate candies are not truly milk chocolate. Hershey has
an advantage, being real milk chocolate and at a reasonable cost.
• Kisses are a unique, signature product of Hershey and are recognized by
many people in the US.
2. Dagoba Chocolate
• Differentiation strategy focused on uniqueness rather than cost
• Hershey uses Dagoba to target the more health conscious consumers,
seeing as Dagoba is marketed as a natural, organic dark chocolate.
3. Ice Breakers
• Broad Differentiation Strategy
• This is a contrasting product to attract customers to the brand itself
without going against the usual competitors. Ice Breakers gum was the
first proven to whiten teeth and the mints are the only one of their kind
with tiny breath crystals in each mint. The strong and intense flavor of all
Ice Breakers Products is what makes them unique in their class, giving Hershey an advantage.
4. Eat. Think. Smile.
• Focused Differentiation Strategy?
• Eat. Think. Smile. Is one of Hershey’s newest product line that they have
created to target the health conscious population in our society. They have
chose to market the high amount of antioxidants found in natural cocoa
that they are using in their new granola, chips, and snack bars. Hershey
has created a separate label even because they do not want people to see
Hershey on the bag and think unhealthy chocolate. They feel by targeting
the natural, antioxidant ingredients more people will buy these products.
1c. Given the opportunities that we have discussed as being present for Hershey in the
environment and the internal resources that the firm has, choose 3 new products that it
would make sense for Hershey to offer and describe the business-level strategy you
would use for each product and why. Please note that I am looking for an integrative
answer that demonstrates your thorough knowledge of the topics we have discussed
related to Hershey.
1. Hershey Stackables
• Integrated Cost Leadership/Differentiation Strategy?
• This would be various types of Hershey’s chocolate such as Hersey’s Milk
Chocolate, Milk Chocolate with Almonds, Cookie’s n Cream, etc. but the
catch is that rather than being in a bar form and breaking off pieces, the
pieces will be in a stack similar to Rolos.
• This will differentiate Hershey from typical chocolate bars and make it
more convenient to eat on the go. Hershey will also be a cost leader with
this product just as they are with their current chocolate bars.
2. Dark Chocolate & Berries Energy Pack
• Focused Differentiation Strategy
• This Dark Chocolate and Berries Energy Pack will be a focused
differentiation strategy targeting the active adult. This pack is full of rich
antioxidants and will give people the energy they need to get through the
day as well as be a delicious treat. Hershey will have to separate itself
from being a chocolate company in order to successfully sell this product.
It will be necessary to create a name that is more focused on the type of
product and what its purpose is.
3. Hershey’s Straws
• Differentiation Strategy
• Hershey’s straws will be a fun product marketed for children to enjoy a
glass of milk to get all the vitamins they need. These straws will be in
many different Hershey flavors such as Reese’s peanut butter cup,
Hershey milk chocolate, Hershey dark chocolate berry (with antioxidants,
etc. Question 2: What are Hershey’s corporate-level strategies?
2a. What are the corporate-level strategies that a company may employ?
Low levels of diversification:
• Single business – more than 95 percent of revenue comes from a single business
• Dominant business – between 70 and 95 percent of revenue comes from a single
Moderate to high levels of diversification:
• Related constrained – less than 70 percent of revenue comes from the dominant
business and all businesses share product, technological, and distribution linkages
• Related linked – less than 70 percent of revenue comes from the dominant
business and limited links exist between businesses
High levels of diversification:
• Unrelated/Restructuring - less than 70 percent of revenue comes from the
dominant business and no link exist between businesses
2b. What are the means of applying these strategies?
A company applies a single business strategy by just having one product that they are
known for; this is only really relevant to truly “small businesses.”
A company applies a dominant level strategy by using one product in most of their
products and making it their signature, such as Hershey’s uses chocolate.
A related constrained strategy is applied by having multiple types of products but they
all use similar products, technology, and distribution Hershey sort of uses this with
their snack products and their refreshments that don’t both have to do with chocolate but
are probably made in the same factory and distributed similarly.
A company applies a related link strategy by having many products that are made,
packaged, and distributed in different places.
A company can create new products that are “unrelated” to what their company already
has; for instance, Hershey came out with a brand of pasta, which was different from their
usual chocolate products.
2c.What corporate-level strategies is Hershey currently utilizing and how? (pleas