Hershey Co. is a company that manufactures and distributes food products. The company is in the food industry where it concentrates on grocery products, snack, dessert shops, refreshments and other food supplies in Canada. The company deals with various food products that include Allergens, Kosher, and sugar-free food products and Gluten-free dietary food products.Theproduct that the company will be selling is the candy products. The company has entered into new competitive market emerging with new products to increase the continued success.As per Hershey Company’s financial analysis it is stated that it faces stiff competition from Cadbury, Bridgford Foods Corporation and Cosan Limited.
The company enjoys competitive advantage since it enjoys excellent planning and quality of the company’s products. The sales team of the company are trained to listen to customers and through good relationships with the customers the company can design products that consumers enjoy.In selling the candy products of the company, the company will need to perform a comprehensive market analysis to ensure that the product succeeds in the market.
Market structure of candy product.
Candy products are a great deal to the company, and the company intends to have a monopolistic competition market structure of the company’s product.To ensure a competitive market and success of the candy products the company needs to evaluate the products of competitors and also consider the general experience and flavor of the candy products. In a monopolistic competition market structure, there is freedom of entry and exit into the market and companies in the market deal with homogeneous products. In this case, many companies in the food industry manufacture candy product and therefore the Hershey must come up with a unique strategy that will assist the firm in maintaining its reputation in the food industry.
In monopolistic competition, the firms present in the market sell goods that are homogeneous but there is imperfect competitions since the branding and quality of the products are not the same therefore no perfect, or close substitute products will be found in this kind of market. Hershey Co. will be dealing with this kind of market since the products in the food industry are the same, but the quality of the candy products differ from one company to another.
Since the candy product is a homogeneous product, the company will compete perfectly with other manufacturers. Hershey will be benefiting from entrance to the market because the competitors in the market will make zero financial benefit which expresses the measure of theimpact that the company will have due to brand reliability. Since the company is already known for the quality and reliability of its products, it can raise the price of candy products without necessarily losing potential customers.
Another key factor that might affect the demand and supply of the product is the introduction of substitutes in the market. If products such as chocolates and other substitute products are introduced in the market, the demand of the candy products will significantly reduce and therefore the supply.Finally, the last factor is an expectation of change in prices. If consumers project an increase in the price of candy products in the future, there will be increased demand and supply of the products.
Factors that will affect total Revenue and productivity of Hershey Co.
Hershey company get most of its revenue from purchased orders by merchants, wholesalers, and distributors of the company’s products.The company relies heavily on the financial success of its products in the different sectors that the company operates.The company total cost will depend on monetary conditions, incorporating and licensing costs. Unfavorable monetary conditions for the company will reduce the total revenue. High incorporating and licensing costs will also adversely affect the total costs of the company.
As per Economics Assignment Help, the price elasticity of demand is a key concept that affects a company’s revenue. It is essentially an element that affects the total revenue of a company, especially if operating in a monopolistic competition market structure. The Gross profit for instance change from one financial year to another. The factors that affect the gross profit that company posts include the cost of raw materials, product blend among others. In the candy business, Hershey Company’s total revenue will be affected by the cost of the ingredients of making candy, for instance, the cost of sugar.
Another factor that affects the total revenue of Hershey Company is access to monetary services. General monetary conditions in the country affect the total revenue of the company. The productivity of the company depends on access to financial services and outside funding. In the absence of liquidity in the company,general productivity of the company will reduce and also reduce the total revenue cost of the company.
Measures of costs and opportunity cost.
The measures of cost are crucial to any organization. Cost measures, in this case, will assist Hershey Company in planning. There are different cost measures that will be used in the analysis of future production and pricing decision making in any organization. Opportunity cost it the cost of what is foregone. Opportunity cost requires a company to forego certain products to acquire new products or improve the services being rendered by a company. Various costs will be considered in the case of Hershey Company. The important measure of cost, in this case, include total costs of the company and the profits that the company realizes. Other important cost measures for the company includes production costs, implicit and explicit costs and all other important costs that are important to Hershey Company.
Externalities and government policy and their effect on marginal cost and revenue.
Government public policies and externalities on prices of products may have positive or adverse conditions to the products.The government may force companies to cut down on costs of products offered to the public. Such public policies from the government have a direct impact on market structure. For instance, in a monopolistic competition market structure, there is no government involvement, but in case the government offers such a directive that affects the price of the commodities the market structure will be altered.
Such policies have an effect on the marginal costs and marginal revenue of the company.For instance, in a monopolistic competition market structure, the kinked-demand theory establishes that firms and provides that other firms should follow suit to ensure no firm will be favored in the industry.The marginal cost and revenue will be affected as the firm should consider the demand and supply curve before a reduction in price. Government policies will in this case negatively affect the products as the quality of the products may reduce to keep up with the price set by the government.
Recommendations on how Hershey Company can maximize its profits and still increase market presence.
There is need to increase the company’s market presence and also increase maximize the profits. Hershey Company can increase its potential in making profits by the products through increased advertising on the products. The company also needs to come up with a better marketing strategy that will increase the awareness of the company’s products in a wider geographical area. The company should avoid a fall in demand of the company due to lack of popularity of the products. In increasing the popularity of the products, the company will be required to use the best advertising techniques to market its new products like candy products.
Another way that the company can maximize its profit and market presence is by designing complementary goods. Complementary goods are goods used with other goods. With complementary goods, the company will also need to market one product, and since it is used together with other products, the company will reduce the marketing costs thereby maximize profits.
The company should also motivate its employees and avoid losing their teams to the competing firms. If the company does not motivate the team to its success, the productivity of the team goes down, and the quality of the products will be reduced which will result in the company losing customers. It is, therefore, important to motivate employees to increase productivity, and with increased productivity, the demand for the products will increase. Increased demand for the company’s products would translate to increased sales and therefore increased profits for the company.
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