Confectionary is an interesting industry to study. This industry is made up of small firms (e.g., Tootsie Roll [TR]), chewing gum giant Wrigley (WLY), larger candy firms (e.g., M&M Mars [private], Hershey

[HSY]), and major food companies such as Nestlé (NSRGK.PK)

and Cadbury (CSG). As a private firm, M&M Mars is quite secretive about its operations and its financial performance. Traditionally, Hershey has held strong market positions in North America but weak positions in European markets. In terms of market positions, Cadbury and Nestlé are opposite to Hershey—they hold strong positions in Europe but weak ones in North America. In recent years, these four large firms (Wrigley, M&M Mars, Hershey, and Cadbury)

have acquired a number of other companies with the purpose of broadening their product lines and becoming more diversified geographically. To learn about some of the acquisitions Wrigley has made, read the early parts of Chapter 6’s discussion of types of corporate-level strategies. These companies are also emphasizing using their own R&D labs to develop new products.

Far more intense competition, in terms of product and geographic variety, is resulting from these efforts. A real “war” for market supremacy has yet to break out, and in fact it may not be in the larger firms’ interests to escalate competition. In the meantime, smaller firms such as Tootsie Roll are also growing by increasing the diversity of their product lines. Viewed collectively, these firms’ actions are increasing the intensity of rivalry among competitors in the confectionary industry.

In this exercise, you will examine the way in which the competitive scope of the firms mentioned above has changed through product line extensions and by increasing their geographic diversity. As a part of your analysis, you will be able to summarize how competitive dynamics are changing. Refresh your memory of the contents of Figure 5.1 to recognize the nature of competitive dynamics.

Most importantly, to complete this exercise you will be asked to use this information to project future changes in the competitive environment.You will need to access several resources as part of your challenge is to analyze a private firm and two firms headquartered outside the United States. Standard reports to shareholders that firms with stock traded on U.S. exchanges provide will not be available to you for these three firms. Furthermore, some of these firms (e.g., Nestlé) are larger food companies of which confectionaries are but one segment. However, studying competitors such as the firms competing in the confectionary industry will demonstrate the complexity of competitive dynamics on a global scale or in a global context.

In Groups Assemble the members of your group and integrate each person’s company-specific information. Share the group’s collective information to recognize how the firms have increased their product and geographic diversity. Using the materials in the chapter, as graphically summarized in Figure 5.1, develop the group’s expectations about how the firms’ product and geographic decisions will affect competitive dynamics in the confectionary industry in the future. What future competitive actions do you think might be taken by a U.S.-based firm relative to firms headquartered outside the United States? What competitive responses might be launched by the firms headquartered outside the United States? Combine your conclusions into a presentation that you could make to a group of investors about the competitive dynamics they could expect to see in the confectionary industry in the future.