Hershey's: Bitter Times in a Sweet Place Essay

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HERSHEY FOODS CORPORATION: BITTER TIMES IN A SWEET PLACE

INTRODUCTION

Born into a poor, lower-class family, Milton S. Hershey dropped out of school before reaching the fourth grade. He developed an interest in becoming a confectioner. He believed there would be great demand for affordable, mass-produced chocolate, and thus he built the Hershey Chocolate Company. Hershey’s is now the largest producer of quality chocolates in North America and a global leader in chocolate and sugar confectionery. Although he enjoyed making money, Milton S. Hershey was intent on using his vast fortune for philanthropic purposes. He decided to surround his enterprise with a model town and personally financed the building of roads, utilities, …show more content…
However, can we ever imagine a circumstance in which diversification may be detrimental? Our analysis reveals that in this particular case, diversification is indeed detrimental for several reasons. Case in point, the Hershey Trust Company owned close to 77% of the controlling stake in the Hershey Foods Corporation. When the board of trustees of the Hershey Trust Company first approached Hershey Foods Corporation CEO Richard Lenny, he opposed the idea of selling and proposed several alternative solutions for the board to consider. Determined that selling was their best option available, the Hershey Trust Company informed Richard Lenny that they were going through with the sale. Investment diversification is advisable only if it is likely to have a beneficial impact for all existing stakeholders. In this unique case, the only stakeholders that we foresee could have benefitted from this sale would have been the Hershey Trust Company and the eventual new owner of Hershey Foods Corporation. The Hershey Foods Corporation, its employees, and the community of Hershey, Pennsylvania would not have profited substantially from the sale. In 2002, the Hershey Foods Corporation stock represented more than 50% of the Hershey Trust's $5.4 billion dollar endowment fund. The Hershey Trust Company’s board of trustees could have pursued diversification by selling only a
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