Ben and Jerry’s Case Study

This case work comes from the second edition of Business Strategy an introduction published in 2001. It is very enterable and interesting, providing students with insights into how devil entrepreneurs who secure up an methamphetamine hydrochloride selection shop in a renovated petrol station became the name calling behind one of the approximately well-known applesauce cream checks around the globe. Students will find step up 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 focus on people and giving back to society, and how they successfully used PR to come up trumps in the deoxyephedrine cream war.At the end of the case study you will find a series of questions for students to realize them thinking critically about Ben & Jerrys strategy from its humble beginnings to where it is now. The case also provides the opportunity for students to act up research into th e current state of play. They could find out how Ben & Jerrys have further developed their brand and product offerings (they now have scum cream counters in cinemas, they offer a full choice of Fair Trade ice creams, etc. ) and what opposition they now face, if any.Students will find it swear outful to read chapter 20 on social responsibililty and business ethics. They could also use this hankerer case study as a springboard for their work on the Strategic Planning Softw atomic frame 18 (SPS), to which they have free advance with purchase of the textbook. The beginning Ben Cohen and Jerry Greenfield became friends at school 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 some decades.When they left school, both Ben and Jerry became hippies social drop-outs who lived an alternative and improper lifestyle. They both grew their h air and a beard and together with their dog, Malcolm, they croakd in together as flatmates. One of the interests they dual-lane was in food and as they discussed various ways of making a living, they concluded that the two most exciting areas of fast food at the time were bagels and ice cream. Having established that the equipment needed to bake bagels would terms $40,000, the two men enrolled on an ice cream making correspondence course for the cost of $5 each.In 1978, having developed some basic ice cream recipes, Ben and Jerry set up a shop in a renovated petrol station in Burlington with a capital investment 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 Homemade ice cream and to fail the shop a unique and welcoming character, they utilize a piano player to play colour 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 same hippiesh view 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 majority of ice cream products were traditionally-flavoured, Ben and Jerry introduced unusual flavours with chunks to grade the textures more interesting, such as fruit, chocolate, nuts, toffee and similar sweets. Chunky ice cream became the prominent feature of the impertinently organisations image. During the summer of 1978, customer 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 year that the troubles began. Over the counter ice cream sales modify up and Ben and Jerry realised they would have to find other outlets for their products if they were to avoid bankruptcy. They per suaded a number of local grocers in Vermont to stock the product in one pint tubs, but it soon transpired that a broader customer groundwork would be needed. Having approached a number of national supermarket chains, Ben Cohen learned that the size of the business, not to mention his appearance and positioning to business, made the buyers reluctant to take stock from him.He was advised that he ought to seek to sell 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 corporation with a view to have it distribute Ben & Jerrys ice cream done with(predicate)out the New England states. Dennis Silva, the friendship vice-president, agreed to take some Ben & Jerrys stock despite Bens unconventional approach to business.In order to increase distribution further, Ben also approached P auls 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 owned by the large US based Pillsbury Corporation. Pillsbury turned over $4 meg a year and had extensive food interests in addition 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 companys founder, Reuben Matthus.Matthus had started Hagen-Dazs in 1959 in New York. He came up with the Danish- sullening 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 Hurley discovered that both Dari-Farms and Pauls were distributing Ben & Jerrys as well as Hagen-Dazs, he rang both Dennis Silva and Chuck Green. Although Ben & Jerrys still had only a tiny share of the market compared to Hagen-Dazs, Hurley was determined that the distributors he used were not going to help a competitor.We didnt say 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 short tally of Ben & Jerrys we were selling said Chuck Green of Pauls Distribution. They had drawn this line in the sand express that we had to make a decision.When Ben and Jerry heard of Hurleys threat, they arranged a meeting with the distributors to discuss the situation. In view of the dominance of Ben & Jerrys, neither distributor wanted to stop taking the ir products, but at the same time, the thought of having Hagen-Dazs withdraw their supply could prove very damaging indeed. The 3 parties agreed that they would need legal com foreign mission if they were to take on the might of Pillsbury and they chose Howie Fuguet, a business lawyer who had spent his professional life reason large organisations. Like Ben and Jerry, Howie was an eccentric.He was said to have cared little for his appearance 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 imagine that it can bully Ben & Jerrys, strangle 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 gelt boy go The key move was to make Pillsbury the target of the fight back and not Hagen-Dazs Pillsbury was bigger and had more to lose. Since the mid 1960s, the symbol of Pillsbury was the Pillsbury scratch 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 among two competitors, Howie proposed that they attacked the Pillsbury company by specifically targeting the dough boy. Accordingly, the Whats the dough boy afraid of? campaign was launched, intentionally designed to appear as a Davi d versus Goliath conflict where a small company (Ben & Jerrys) had been unfairly treat by a large bully in the shape of Pillsbury.We didnt really know a thing about PR. We were just trying 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 campaign outside the Pillsbury headquarters in Minneapolis, Minnesota and it wasnt long before the local television news programmes started carrying the story on a regular basis. This made the cosmos sympathise with Ben & Jerrys, but also provided a lot of free publicity for the company a nd its products. From its 17-strong legal department, Pillsbury assign Richard Wegener to get rid of the Ben & Jerry problem. Wegener quickly realised the size of the task facing Pillsbury. The publicity became bigger than the trash itself said Wegener.The reputation of Pillsbury was at stake and Wegener sought to bring 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 unwittingly as an enormous amount of publicity for the Ben & Jerrys brand.After the victory The success of Ben & Jerrys after the Pillsbury confrontation was marked. The distribution channels were widened still further until Ben & Jerrys ice cream was supplied t hrough 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 $cxxx 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 plump ice cream, Mocha latte and Triple caramel chunk ice cream. In addition, non-ice cream frozen 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 quality meant that the new products became quickly take by the m arket. The personality of the founders helped to frame the companys culture and its mission. Two important statements were released which described the companys approach to its business. In 1988, the company stated that We are dedicated to the creation and demonstration of a new corporate concept of link prosperity. This was articulated via its Philanthropy disceptation and its Mission Statement.Ben & Jerrys Philanthropy Ben & Jerrys gives away 7. 5 percent of its pre-tax earnings in three ways the Ben & Jerrys Foundation 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 hopefulness. 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 ded icated 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 variety 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 career 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 & Jerrys is the determination to seek new and creative ways of addressing all three parts, while holding a deep respect for the individuals, inside & outside the company, and for the communities of which they are a part. Questions for s tudents 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? picture evidence from the case in your answer. 3. Which of Donaldson and Prestons view of stakeholders did Ben & Jerrys have in the case? pop the question evidence from the case in your answer. 4. Comment upon the ethical behaviour of the two sides of the Pillsbury dough boy campaign. Which side, if either, was secure?