Strengths and Weaknesses of Nestle and Hershey in a Weak Japanese Financial Market

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The fact that Japan’s economy has been suffering from a recession for the last five years has not had much bearing on Hershey and Nestlé chocolates wanting to break into the Japanese market. Japan is no longer the third-largest economy in the world; Japan’s economic woes began in 2008 (Irwin, 2013). To break into the Japanese market these companies must understand the government and economic climate of Japan, while being aware of the taste and culture of the Japanese people. The Chocolate and Cocoa Association of Japan (CCAJ) reported in 2009 that Japan is the largest buyer of chocolate in Asia. “Japan produced 196,553 tons of chocolate with a manufacturer’s value of $38 million. About 19,375 tons were imported from the U.S., Australia, Belgium, China, South Korea, France, Italy, and Switzerland in order to meet the domestic demand of 212,657 tons” (World Cocoa Foundation [WCF], 2011). Even though, Japan is going through a downturn in their economy their appetite for chocolate has not wavered.
The decrease in business investment and global demand for the country’s exports in 2008 was the beginning of Japan’s hardships. The economy was on the way to a recovery in 2009 and 2010, but an earthquake hit the country 2011 this threw the manufacturing industry in to disarray. The country was on an upturn in 2012 by a surge of recovery spending, but slow economic global growth in the middle of that year took a toll on the demand of their exports. This decrease in the demand of their exports was further compounded by the fact that electricity supplies are a fraction of what they once were because the country shut down almost all of their nuclear plants; this was one of the aftermaths of the earth quake and tsunami that damaged the Fukus...

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...me for these companies to get in and claim their niche. Furthermore, Japanese consumers are willing to pay a top dollar for quality foods that come with the added benefit of healthy ingredients; Japanese consumers place a high importance in their health. For this reason Japan can be a goldmine for any company that markets high-quality chocolates. The per capita chocolate consumption rate of 1.67 kilos with an expenditure of about $82 per person is the largest in Asia. Pensioners in Japan (retired 55+) are the largest consumers of confectionery products and account for about 28 percent of consumption (World Cocoa Foundation [WCF], 2011, p. 1). Entering into a profitable relationship with the people of Japan is possibility for both Hershey and Nestle if researched correctly the ROI could prove bring a high return for both company’s external and internal stakeholders.

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