Ben and Jerry’s Case Study

This causa try out comes from the second edition of Business out banknote an introduction published in 2001. It is very readable and interesting, providing students with insights into how two entrepreneurs who isthmus up an applesauce slam knock off in a renovated accelerator pedal station became the names behind one of the most considerably-known frost cream brands around the globe. Students ordain materialise out how Ben and Jerry tackled the almighty (at the time) Pillsbury and Hagen-Dazs, how they developed a brand to distinguish them from competitors which included a focalize on people and giving back to society, and how they successfully use PR to come up trumps in the icing the puck cream war.At the determination of the fountain study you will find a series of questions for students to blend them thinking critic exclusivelyy about Ben & Jerrys strategy from its humble beginnings to where it is now. The caseful also provides the opportunity for students to con duct research into the current state of play. They could find out how Ben & Jerrys have further developed their brand and harvest-festival offerings (they now have crank cream counters in cinemas, they offer a full selection of Fair Trade folderol creams, etc. ) and what contender they now face, if any.Students will find it helpful to read chapter 20 on companionable responsibililty and business ethics. They could also use this longer case study as a springboard for their work on the Strategic provision Softw atomic number 18 (SPS), to which they have free access with purchase of the textbook. The beginning Ben Cohen and Jerry Greenfield became friends at compress aim in the late 1960s in Burlington, Vermont in the conglutination Eastern United States. Their reputation as the two odd eccentrics at school led them to form a strong friendship that would last for many another(prenominal) a(prenominal) decades.When they left school, both Ben and Jerry became hippies social dr op-outs who lived an alternative and unconventional livingstyle. They both grew their fuzz and a beard and together with their dog, Malcolm, they moved in together as flatmates. One of the interests they shared was in food and as they discussed various modes of qualification a living, they concluded that the two most exciting areas of prodigal food at the time were bagels and scrap cream. Having established that the equipment needed to cook bagels would cost $40,000, the two men enrolled on an nut case cream making correspondence course for the cost of $5 each.In 1978, having developed some elemental cover cream recipes, Ben and Jerry set up a shop in a renovated petrol station in Burlington with a capital investment funds of $12,000 ($4,000 of which was borrowed). From the outset, Ben and Jerry wanted to produce a premium product and the fact that it was make from fresh Vermont milk and cream was stressed. The outlet was called Ben & Jerrys Homemake scrap cream and to gi ve the shop a unique and welcoming character, they employed a piano fake to play blues in the background. Initially, the shop was a success amongst Burlington locals, many of whom had known the men when they were growing up.The staff that Ben and Jerry employed were encouraged to take the homogeneous hippiesh notion of business activity as the owners (every day was a party), but the study competitive advantage arose from the uniqueness of the product. Whereas the absolute majority of ice cream products were traditionally-flavoured, Ben and Jerry introduced unusual flavours with chunks to make the textures more interesting, such as fruit, chocolate, nuts, toffee and similar sweets. Chunky ice cream became the prominent feature of the freshly organisations image. During the summer of 1978, customer phone numbers grew as the reputation of the shop and the ice cream grew.It was when the winter set in at the end of the category that the troubles began. Over the counter ice cream sales dried up and Ben and Jerry realised they would have to find other outlets for their products if they were to avoid bankruptcy. They persuaded a number of local grocers in Vermont to stock the product in one dry pint tubs, but it soon transpired that a extensiveer customer base would be needed. Having set outed a number of national supermarket chains, Ben Cohen learned that the size of the business, not to mention his mien and attitude to business, made the buyers reluctant to take stock from him.He was aware that he ought to seek to give the ice cream to large independent ice cream distributors in neighbouring states who would then sell the product on to the major retail multiples. It was then that Ben and Jerry encountered a problem. The Pillsbury confrontation Ben approached the Dari-Farms mickle with a view to have it distribute Ben & Jerrys ice cream throughout the New England states. Dennis Silva, the partnership vice-president, concord to take some Ben & Jerrys s tock despite Bens unconventional approach to business.In order to increase distribution further, Ben also approached Pauls Distributors where its chairman, Chuck Green, also agreed to act as a Ben & Jerry distributor. The market leader in the super-premium ice cream segment at the time was Hagen Dazs, which was then have by the large US based Pillsbury Corporation. Pillsbury turned oer $4 billion a year and had extensive food interests in accompaniment to Hagen-Dazs including Green Giant (vegetables) and Burger King, the fast food outlet. Kevin Hurley, president of the Hagen Dazs subsidiary of Pillsbury, was the son-in-law of the confederations founder, Reuben Matthus.Matthus had started Hagen-Dazs in 1959 in New York. He came up with the Danish-sounding name in the belief that it conjured up a feeling in the consumer of an exotic European brand. By 1984 when the confrontation with Ben & Jerrys took place, Hagen-Dazs held a 70% share of the super-premium ice cream market. When Hu rley discovered that both Dari-Farms and Pauls were distributing Ben & Jerrys as substantially as Hagen-Dazs, he rang both Dennis Silva and Chuck Green. Although Ben & Jerrys good-tempered had only a tiny share of the market compared to Hagen-Dazs, Hurley was fixed that the distributors he used were not going to help a competitor.We didnt vocalize to the distributor You cant carry Ben & Jerrys. We asked them to make a choice said Hurley. We just told them Silva and Green that they couldnt sell Ben & Jerrys and Hagen-Dazs. This its us or them ultimatum took the two distributors by surprise and it presented a distressing dilemma. We were just stunned at this comment coming from Hagen-Dazs, this huge company where we were selling trailer loads of ice cream, versus this piffling amount of Ben & Jerrys we were selling said Chuck Green of Pauls Distribution. They had drawn this line in the sand swaning that we had to make a decision.When Ben and Jerry heard of Hurleys threat, they set up a meeting with the distributors to discuss the situation. In view of the potential of Ben & Jerrys, neither distributor wanted to stop taking their products, but at the same time, the thought of having Hagen-Dazs withdraw their supply could prove very damage indeed. The three parties agreed that they would need reasoned representation if they were to take on the might of Pillsbury and they chose Howie Fuguet, a business lawyer who had spent his professional life defending large organisations. Like Ben and Jerry, Howie was an eccentric.He was said to have cared little for his look and had holes in his shoes. He agreed that Pillsbury had behaved in a curious way and sent off a letter to them setting out the character of Ben & Jerrys grievance. Protesting that Hurley had acted unfairly, Howie wrote to the Board of Pillsbury. It would be wishful thinking on the part of your subsidiarys officers Hagen-Dazs to believe that it can bully Ben & Jerrys, stifle its growth and cause it to roll over wrote Howie. Ben & Jerrys represents a classic entrepreneurial success story and its owners are aggressive.Hagen-Dazs will have to learn to compete on their merits in the market place. That is the American way and that is what competition is all about. Notwithstanding the apparent correctness of Ben & Jerrys case, the legal odds were clearly stacked against them. If they couldnt beat the bullying Hagen-Dazs through normal legal channels, then another weapon would be needed. The dough boy social movement The tonality move was to make Pillsbury the target of the campaign and not Hagen-Dazs Pillsbury was big and had more to lose. Since the mid 1960s, the symbol of Pillsbury was the Pillsbury dough boy.The dough boy was used by Pillsbury in its advertising and other corporate communications and was a valuable symbol of the companys identity. So as to avoid the appearance of an ice cream war between two competitors, Howie proposed that they attacked the Pillsbury co mpany by specifically targeting the dough boy. Accordingly, the Whats the dough boy afraid of? campaign was launched, intentionally intentional to appear as a David versus Goliath conflict where a small company (Ben & Jerrys) had been unfairly treated by a large bully in the constellation of Pillsbury.We didnt really know a thing about PR. We were just stressful to survive said Ben Cohen. If we were going to go down, we wanted to let as many people as we could know what was going on. We wanted to say that the reason why you cant find Ben and Jerrys on the shelf is because this big corporation Pillsbury is trying to prevent you, the consumer, from having a choice about what kind of ice cream you want to buy. The campaign included T-shirts, bumper stickers, bill posters and other media which all bore the statement Whats the dough boy afraid of? .Jerry launched a one-man(prenominal) campaign outside the Pillsbury headquarters in Minneapolis, Minnesota and it wasnt long in front the local television rude(a)s programmes started carrying the story on a habitue basis. This made the public sympathise with Ben & Jerrys, but also provided a down of free publicity for the company and its products. From its 17-strong legal department, Pillsbury assigned Richard Wegener to get discharge of the Ben & Jerry problem. Wegener quickly realised the size of the task facing Pillsbury. The publicity became bigger than the dispute itself said Wegener.The reputation of Pillsbury was at stake and Wegener sought to set about a rapid end to the controversy. Realising that the campaign had grabbed the publics attention and the sympathies were predominantly with Ben & Jerrys, Wegener advised Hurley to back down. Kevin Hurley was persuaded to sign an out-of-court settlement agreeing not to coerce any distributors. The campaign was over and Ben & Jerrys had won. The controversy not only ensured the defeat of Pillsbury, it also acted inadvertently as an enormous amount of publicity for the Ben & Jerrys brand.After the victory The success of Ben & Jerrys afterwards the Pillsbury confrontation was marked. The distribution channels were widened still further until Ben & Jerrys ice cream was supplied through supermarkets, grocery stores, convenience stores, and food service operations, as well as through licensed scoop shops (shops selling just their ice cream), franchised scoop shops, and company-owned scoop shops. By 1992, the companys turnover exceeded $130 million and it was on the verge of international development into the United Kingdom.In the super-premium ice cream sector, a number of new and distinctive product flavours were launched including Milk chocolate ice cream and white fudge cows swirled with white chocolate ice cream and dark fudge cows, Chocolate comfort low plonk ice cream, Mocha latte and Triple caramel chunk ice cream. In addition, non-ice cream nipping desserts were introduced including a range of ice cream novelties, frozen yoghurts and sorbets such as Chunky Monkey frozen yoghurt banana frozen yoghurt with fudge flakes and walnuts.The Ben & Jerrys name and the companys reputation for part meant that the new products became quickly adopted by the market. The personality of the founders helped to frame the companys culture and its mission. 2 important statements were released which described the companys approach to its business. In 1988, the company stated that We are consecrate to the creation and demonstration of a new corporate design of relate prosperity. This was articulated via its Philanthropy Statement and its Mission Statement.Ben & Jerrys Philanthropy Ben & Jerrys gives external 7. 5 percent of its pre-tax earnings in three ways the Ben & Jerrys nates employee Community action Teams at five Vermont sites and through corporate grants made by the Director of Social Mission Development. We support projects which are models for social change projects which exhibit seminal problem solving and h opefulness. The Foundation is managed by a nine member employee board and considers proposals relating to children and families, disadvantaged groups, and the environment.Mission Statement Ben & Jerrys Ben & Jerrys is dedicated to the creation & demonstration of a new corporate concept of linked prosperity. Our mission consists of three interrelated parts wTo make, distribute and sell the finest quality all-natural ice cream and related products in a wide categorisation of innovative flavors made from Vermont dairy products. wTo operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating life opportunities and financial rewards for our employees.wTo operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community local, national, and international. Underlying the mission of Ben & Jerry s is the determination to seek new and creative ways of addressing all three parts, while holding a duncish respect for the individuals, inside & outside the company, and for the communities of which they are a part. Questions for students 1.Identify the stakeholders that Ben & Jerrys and Hagen-Dazs had in common at the time of the controversy. 2. Which of Donaldson and Prestons view of stakeholders did Hagen-Dazs have at the time of the confrontation? Provide evidence from the case in your answer. 3. Which of Donaldson and Prestons view of stakeholders did Ben & Jerrys have in the case? Provide evidence from the case in your answer. 4. Comment upon the ethical doings of the two sides of the Pillsbury dough boy campaign. Which side, if either, was right?