Strategic analysis of Ben & Jerry's Icecream. This report will analyze both the companys environmental strategy and general corporate strategy in order to identify the consistencies and disparities (if any) between these strategies and to determine wh

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Strategic Analysis of Ben and Jerry's Homemade Inc. INTRODUCTION Ben & Jerry’s is an innovative leader in the super premium ice cream industry. The company blends a commitment to provide all natural, high quality ice cream with a commitment towards social activism and environmental responsibility. This report will analyze both the company’s environmental strategy and general corporate strategy in order to identify the consistencies and disparities (if any) between these strategies and to determine whether a “green” company such as Ben & Jerry’s can sustain a competitive advantage. We will also discuss the potential impacts on the company’s strategic vision in light of the recent acquisition by Unilever. Our analysis will focus on examining the strengths and weaknesses of the environmental and general corporate strategies in light of its internal resources and external competitive and non-market forces. MARKET DESCRIPTION Ben & Jerry’s operates in the highly competitive super premium ice cream, frozen yogurt and sorbet business. Super premium ice cream is generally characterized by a greater richness and density than other kinds of ice cream and commands a relatively higher price. The company’s two primary competitors include Haagen-Dazs (a member of the Ice Cream Partners organization) and Dreyer’s Grand Ice Cream Company, which introduced its Godiva and Dreamery super premium ice cream line in the fall of 1999. Other significant competitors include Healthy Choice, Nestle and Starbucks (SEC Report, 1999). FIRM DESCRIPTION Ben & Jerry's Homemade, Inc., the Vermont-based manufacturer of super-premium ice cream, frozen yogurt and sorbet, was founded in 1978 in a renovated gas station in Burlington, Vermont, by childhood friends Ben Cohen and Jerry Greenfield with a modest $12,000 investment. The company is now a leading ice cream manufacturing company known worldwide for its innovative flavors and all-natural ingredients made from fresh Vermont milk and cream ( Manufacturing of all Ben & Jerry’s frozen dessert products occurs in the company’s three plants located in Vermont. The company distributes ice cream, low fat ice cream, frozen yogurt, sorbet and novelty products nationwide as well as in selected foreign countries in supermarkets, grocery stores, convenience stores, franchised Ben & Jerry's scoop shops, restaurants and other venues. Outside of Vermont, the products are distributed primarily through Dreyer’s and other independent regional ice cream distributors. Unilever, a multinational food and personal products company recently acquired Ben & Jerry’s in spring 2000. The Ben & Jerry's Board of Directors approved Unilever's offer of $43.60 per share for all of the 8.4 million outstanding shares, valuing the transaction at $326 million (, October, 2000). Under the terms of the agreement, Ben & Jerry's will operate separately from Unilever's current U.S. ice cream business. There will be an independent Board of Directors, which will focus on providing leadership for Ben & Jerry's social mission and brand integrity. Both co-founders will continue to be involved with Ben & Jerry's, and the company will continue to be Vermont-based. THE MISSION STATEMENT Ben & Jerry’s adopted a three-part mission statement formalizing the company’s business philosophy. According to the company’s home page (, the mission statement is as follows: Product Mission: to 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. Social Mission: to 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. Economic Mission: to operate the company on a sound financial basis of profitable growth, increasing value to our shareholders and creating career opportunities and financial rewards for our employees. Underlying this mission is the determination to seek innovative ways of addressing all three components, while holding a deep respect for employees and the community at large. GENERAL CORPORATE STRATEGY Ben & Jerry's corporate strategy strives to implement the three integrated missions described above: developing a high-quality product, achieving economic growth and profitability, and incorporating social activism. The general corporate strategy can be characterized as a focused or market niche strategy based primarily on product differentiation and quality production. Although focused differentiation strategies target a narrow buyer segment, this strategy helps Ben & Jerry’s gain a strong competitive advantage as it can offer consumers something they perceive is appealingly different from rival competitors—innovative super-premium ice cream flavors that taste better and consist of all natural, high quality ingredients. In addition to differentiating its product from other ice cream competitors, Ben & Jerry’s general strategy combines several other key components, including fostering a company image of social activism, creating brand loyalty, franchising the company to aid economic growth, and developing creative advertising campaigns. Product Differentiation One means of gaining a competitive advantage is through the use of a differentiation strategy to provide a better product that buyers believe is worth the premium price (Thompson and Strickland, 1998). Since higher quality ice cream generally costs more than the economy and regular types of ice cream, Ben and Jerry’s has incorporated product differentiation in its general corporate strategy in order to command a higher price. The use of all-natural, high quality ingredients and the innovative flavors of Ben & Jerry’s ice cream illustrates the strategic use of product differentiation to gain a competitive advantage in the ice cream market. Quirky flavor names such as Chubby Hubby, Wavy Gravy, Phish Food, and Chunky Monkey also set Ben & Jerry’s apart from the traditionally-named ice cream products of rival companies. Furthermore, the use of recycled materials and dioxin-free (unbleached) paper in product packaging contributes to the uniqueness of Ben & Jerry’s ice cream and helps keep its costs down. Socially-Conscious Company Image Ben & Jerry’s strives to be an independent, socially-conscious Vermont company that supports local dairy farmers. Several examples illustrate how Ben & Jerry’s implements this corporate strategy. For instance, the company donates 7.5% of pretax profits to philanthropic causes through the Ben & Jerry’s Foundation, community action teams, and through corporate grants ( The company also donates free ice cream during public events and community celebrations in the Vermont area, and contributes a percentage of the profits earned from ice cream sold in Vermont retail stores to fund local charities (SEC Report, 1999). Furthermore, the company has ensured the long-term viability of its own key suppliers, the Vermont dairy farmers, by executing a strategic decision to pay more than a specified minimum price for its dairy ingredients (SEC Report, 1999). Brand loyalty Developing brand loyalty is another strategic move to strengthen competitive advantage. Ben & Jerry’s has made substantial efforts to gain a favorable reputation and image with buyers through its frequent promotional campaigns (i.e., Free Cone Day), donations to social causes (i.e, Ben & Jerry Foundation), and the use of eco-friendly products, as discussed below under Environmental Strategy. This strategy has proven successful; the 1999 Harris Interactive Poll regarding buyer perception of corporate reputability ranked Ben & Jerry’s first in the “social responsibility” category and fifth overall (SEC Report, 1999). Small-Scale Growth and Franchising The economic mission of the company (to achieve profitability, increase value to shareholders and create career opportunities) is implemented through Ben & Jerry’s strategy for small-scale business growth. Ben & Jerry’s has maximized profitability by initially starting small and slowly building an ice-cream business over time (Spolsky, 2000). Ultimately, the success at the small-scale required the company to shift its
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corporate strategy toward the establishment of several franchised “scoop shops” throughout the nation and Europe. As of 1999, there were approximately 164 scoop shops in North America (SEC, 1999). These scoop shops serve as a major employment resource and a source of revenue for non-profit groups. In addition, Ben & Jerry’s gains a competitive advantage through franchising by expanding market share, increasing revenue and publicizing the company’s brand name using minimal amounts of startup capital. As shown in Figure 1, Ben & Jerry’s has achieved substantial, yet gradual, growth in revenues since 1993. Marketing Strategy According to the Securities Exchange ...

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