GROUP MEMBERS: ESONA, ATHENA

ESONA, EMERALD
FLOR, JELYN
MESA, CEDRIC

CASE STUDY: BEN AND JERRY’S HOMEMADE

I. Brief Background of the Case

Ben & Jerry’s Homemade founded in Burlington, Vermont by Ben Cohen and
Jerry Greenfield in 1978 is a leading distributor of super-premium ice creams. It was
known for its socially progressive and commitment to community. In 2000, it was
already a major ice cream producer with over 170 stores in United States and overseas.
Its mission statement comprises three objectives namely, product, economic and social
objectives. However, these objectives weren’t always in harmony. Also, the increase in
manufacturing costs due to production of high-quality products and increase in
competition resulted to a decline in their financial performance through the years.
As a result of heightened competitive pressure and declining financial
performance, takeover offers were taken into the table for consideration by the board of
directors. Joint venture/merger partners were also proposed to the members of the
board. Henry Morgan, one of the board of directors, believed that the survival of the
company is probable at the cost of its social mission.

II. Point of View

The analysis of this case should be at the board of directors’ point of view as they
are the ones having full visibility of the business. There should be an
initiative/management effort to conduct certain analysis on the company’s performance
even if it means hiring professionals or experts. This analysis or evaluation is not only
for all the units/processes involved within the company but also external factors that
may affect their position in the market. This way, management may discover another
approach that could elevate their competitive advantage at the same time aligned with
their mission statement.
III. Statement of the problem
The main problem addressed in this study was Ben & Jerry’s maintenance on
implementing their standards in their supply chain – from suppliers to distributors to
manufacturing operations – to ensure their customer’s satisfaction and to adhere with
their mission statement which emphasizes product quality, economic reward, and
commitment to the community.
In addition, low shareholder value caused by lack of dividends can result to
investors pulling out. This is clearly a disadvantage especially when competitors whose
resources are in a much wider scope. Also, the company does not make use of its full
international potential. Ben & Jerry’s should venture expanding business activities other
than the current countries they already have.

IV. Areas for consideration

The non-fat (Sorbet) ice-cream market in the United States and the
superpremium ice-cream business in Europe are both still in their infancy. In Europe,
Haagen-Dazs has earned a competitive advantage. However, in terms of the availability
of superpremium ice cream, the markets in Europe and Asia are still underdeveloped.
New distribution methods, as well as new markets, could be created. B&J will be able to
reclaim production control and enhance productivity at their manufacturing plants as a
result of the increased production capacity. The data does not indicate if B&J is well-
represented in American supermarkets. If not, additional expansion in that area is
possible. Super-premium ice-cream industry, this poses a challenge to B&J, especially
as B&J is dependent on this segment.
As Ben & Jerry’s overall operation is centered in upholding their company’s
culture, they should take into consideration that changes or improvements they plan on
implementing will always have an effect on their usual operations. Changes can be a
good thing in a growing company and a slight shift on how they usually do things should
not stop them in proceeding on implementing these changes.
V. Alternative Courses of Actions
Ben & Jerry’s can choose from a wide range of solutions. Both domestic and
international activities can be considered. It can either expand internationally to profit
from market growth, or it can focus on the domestic market to avoid the dangers and
increased costs of international expansion. Other company-wide decisions will be
required. To improve the competitive position, there is still room to reduce sales costs.
The information presented gives little indication of the composition of the cost of sales,
particularly the structure of the administration costs. However, a few remarks about
labor costs are appropriate. Because the company's leadership believes in labor-
intensive production, labor expenditures are a significant portion of the overall cost
structure. Below are some of the steps needed to reduce the cost:
 Reduce the number of employees and deploy more labor-saving production
methods.
 As long as manufacturing capacity exceeds market demand, reduce working
hours.
 Maintain wages until the company reaches the industry standard.

More focus might be placed on the following aspects of production and sales:
 Demand for superpremium, high-fat flavors is rising.
 Expansion or discontinuation of specialty flavors (Peace Pops)
 Flavors of non-fat sorbet

VI. Conclusion and Recommendation

Choosing to sacrifice short-term profits for social gains may contribute in building
up the company’s brand however, may not be as effective as it used to be while the
company continues to progress. A well-planned single approach will only be effective at
a specific time-frame as the world continues to evolve. There will always be multiple
optimal solutions under different conditions and can only be effectively done with so
many things at risk and possibly go against the norm. Choosing what that optimal
solution would be depends on the management’s risk appetite.
Recommendation:

Labor Cost
 B&J should stick to its social objective and keep manual labor, but shift to less
labor-intensive production in the long run. Benefits should be maintained, but
wages should not be increased until they reach the industry average.
Communication between management and staff may weaken as B&J grows
larger. It is critical to keep personnel informed about organizational changes and
company strategy.

Production and Sales

 The majority of B&J's consumers are over forty and are becoming increasingly
health concerned. The concentrate of the advertising strategy for this group of
people should be on marketing its low and non-fact products. B&J needs to
rethink its marketing strategy, such as changing the packaging design to reflect
contemporary consumer preferences. Since the super-premium ice-cream sector
is becoming more competitive in terms of price. To entice more customers, B&J
might give coupons and discounts.

 B&J can grow the market by identifying and advertising new uses for the product;
for example, they could encourage ice cream consumption at any time of year.
Cultural factors contribute to the seasonal desire for ice cream. Consumer
behavior can be influenced by careful advertising. B&J should abandon less
profitable territory, such as 'Peace pops,' and devote efforts to more profitable
ones, such as 'Frozen Yoghurt,' and 'Low fat/Fat free' items. B&J would solidify
competitive strength in the market and concentrate mass in strategic places
using this method.