STM - Ben and Jerrys Case Study - Group 7 - Final

 

Future Strategy – A Case Study  Study  Prepared by XLRI GMP Class of 2012  – Section A – Group 7 Achin Kishore (G11003) (G11003) Bhaskar Chatterjee (G11014 (G11014)) Hrishikesh Chennakesavula (G1 (G11020) 1020) Ipshita Ghosh (G11021) (G11021) Venkata Kesav Kilambi (G11055) Vijay Pitchai (G11056)

 

Ben and Jerry’s – Background 

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Ben Cohen & Jerry Greenfield, high school friends started the company as a homemade ice cream shop in Dec 1977 with an investment of $12000 The shop was an immediate success and by 1980, it expanded as a company that sold through small retail outlets The company gained a reputation for the the unconventional “mix “mix--in” flavors The company’s growth consistently averaged over 60 % annually & came mainly from entering new geographic markets with pint-sized containers By 1990, the company was selling s elling its products in all major markets in the US, and was present in most of the super market chains and “mom & pop” stores, which accounted for the majority of ice cream sold in the country

 

Statement of Mission 

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Ben and Jerry’s is dedicated to the creation and demonstration of a corporate concept of linked prosperity Deep respect for individuals inside and outside the company and for the community that they are a part of  Seek new and creative ways to address three interrelated parts of their mission mission – Product, Economic and Social

Product Mission Make, distribute and sell the finest quality ice cream and related products in a variety of innovative flavors Economic Mission Increase shareholder value and career opportunities and financial rewards for the employees Social Mission Improve the quality of life of the broad community – local, national and international

 

The Ben and Jerry’s Positioning  Positioning  Product Development Flavor differentiation was an essential factor in the growth of products By 1994, flavors had grown to 44 (including ice cream & frozen yogurt flavors). Considering expansion into ice cream novelties and low and and non-fat ice cream alternatives Manufacturing In 1994, Ben & Jerry’s – 60% ice cream, Dreyers – 40% ice cream. Distribution In 1994, Ben & Jerry’s was available in most stores that carried super premium ice cream 

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Marketing $6 million spending on marketing Entered into Europe and other ot her emerging markets Finance Went public in 1984 with 73500 shares. Ben & Jerry controlled over 40% shares 

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Never issued dividends & prefer reinvesting for future growth

 

Key Issues Ben & Jerry ‘s growth slowed , and its stock prices have dropped - suffering due to a trend towards healthy eating Handle operational challenges that have come from their growth and success –  stock outs and shortages Haagen-Dazs began aggressively attacking Ben Jerry‘s in a fight for market share. Lack of focus on recapturing the lost market share Mix-in flavors were costly and difficult to produce and were not priced accordingly as per the over utilization of flavors Direct store delivery added to their distribution costs Dependency on Dreyers for manufacturing 40% thus effecting their own growth plans Automated systems which could have increased their production were marred by defects. Under capacity running leading to loss of revenue The salary structure of the company was unsound - making it non lucrative for new brood of managers managers to join Decided to bring in an experienced CEO, someone with business acumen and an ability to see around future business development 

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Analysis 

Operational Efficiency is lagging and should be of Efficiency of top priority 

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Strike a balance in Product Mix 

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Old methods used by Ben and Jerry Under Utilization of plant machinery Distribution channels have to be worked correctly

Capture the growing yoghurt market market Do away with slow moving products

Maintain Product Quality

 

Strategy – Our Recommendations Short Term  Term  

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Focus on improvement of internal processes – production planning, purchasing, inventory management Improve on the distribution process HR perspective – organization needs more formalized structure Reduce the slow slow moving flavors flavors and retain the better-selling better-selling ones supplement with few varieties of fat-free yogurt / ice-creams Continue with fat free yogurt which was already selling well

Overall Strategy 

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Be consistent and persevere with the company’ company’ss mission Increase advertisement / mark marketing eting expenditure – even for mix-ins to stay ahead of the competition Continued and Renewed focus on quality Sustained emphasis on the social mission : ensure that this is met once operations are streamlined Capitalize on emerging markets

 

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