Ben& Jerrys Homemade Ice Cream Inc:

A Period of Transition

Lahore School of Economics

Course: Business Policy

Assignmen: Written Analysis of Case Study

Submitted by: Saad Javed (15P00029)

MBA II A

Submitted to: Dr Zahid

Date: 16th February 2017

A Period of Transition

Case Overview

Ben & Jerry homemade ice cream Inc was incorporated in 1977 with an investment of $12000 in
on old gas station shop. The company has gained reputation for the unconventional mix in
flavors, in its early few years and increased demand led the company initially packages their ice
cream into a pint container and then started expanding their business by entering new geographic
markets. Ben & jerry Ice cream reach and availability have been to almost all supermarket chain
across United States which accounted for the majority of the sales. In 1990s a trend of healthier
eating started which hurt the sales of Ben & Jerry Ice Cream and all the entire Ice Cream
Industry but up till 1994 the company operations has been complex to the level that more
managerial expertise were required to run company. Ben & Jerry decided to have a replacement
in their management due to increased complexity of the business, it had difficulty forecasting
demand and maintaining production efficiencies by hiring experienced CEO who can offer
expertise beyond what Ben can offer as CEO. Ben and jerry ice cream had strong competition
with Haagen Dazs in super premium segment; other competitors are Dreyers grand and Breyers
in premium segment.

Ice cream industry competition

Competition in the industry had been extremely severe and difficult, leading brands had achieved
almost entire US market. Consumers are becoming more value conscious and therefore
advertising expenses of each industry players were increased. In Ice Cream Industry Ben & Jerry
Ice Cream drive in a highly competitive super premium ice cream category. The industry has
multiple players in each category in super premium category Haagen-Das and Dreyers were
considered primary competitor. Haagen-Das was established in 1970 and it was a pionieer brand
in Super premium Category which a market share just below 50%
Issues faced by Bob Holland as CEO of Ben and Jerry's

1. Ben & Jerry Ice Cream Inc Started making losses

In 1994 company sales growth continued to slow and company has announced its first
quarterly loss from its incorporation. A loss for the year 1994 was 1869,000 which are due to the
substantial increase in selling, general and admin expenses i.e. 30% (Exhibit 2). Financial
position of the company is constantly deteriorating and hence it is one of the major challenges
for Bob Holland. Bob Holland needs to utilize his operational and management expertise by
devising strategy which helps making this company profitable again.

2. Strict Ingredient requirement

US food and drug administration has reinforced trend of new food labeling standard where
manufacturers have to mention ingredients, nutritional information including fat content. Ben &
jerry Ice Cream was segmented as super premium ice cream containing butter fat content which
ranged as high as 17%. Hence lower fats desserts becoming increasingly popular among
American consumer Bob Holland would also have to address this issue as the company was
primarily in Super premium Category where this segment are much more conscious about their
health.

3. Competitors entering super premium segment.

Ice cream industry is been expended, competitors which are formally catering to their
specific customer segments now started competing among each other. Ben & jerry initially
enjoying a distinct segment of super premium Ice cream i.e. Mix in against competitor Haagen
Dazs Smooth flavors. Now Haagen Dazs also developed their own version of Mix in ice
cream, moreover Haagen Dazs created its presence in overseas market and seeking new
opportunities in the Mediterranean. Other than this Dreyers and Breyers were also purchased
by Nestle and Unilever plc respectively, and become a direct threat to the super premium
segment.
 4. Reliance upon Dreyers for production

Ben & Jerry Ice Cream Inc operated two production facilities itself and one other the
company relied on Dreyers production and which also seems vulnerable due to Dreyers own
expansion plan. The planned third own factory in St. Albans Vermont experienced significant
delay due to automated manufacturing system. Therefore this is considered as another challenge
for Bob Holland to maintain its production until third plant become operational.

Bob Holland should create strategies by looking up into companies competencies and choosing
what company needs to do and what should not. Earlier company was focusing on only one
segment and because of having a competitive advantage of being only one to provide super
premium Mix in and even Ben & Jerry was considered substitute word to such type of ice
cream but now situation is quite different other companies are also entering to this segment and
on the other hand this segment is also shrinking. So, Holland needs to follow these strategies to
achieve effective operations with profitability.

Firstly, Holland should Increase sales volume in smooth product line and diversify in
premium segment as other competitors are extending their product line becoming direct threat
for Ben & jerry. Customer preferences are changing they prefer low butter fat ice cream therefore
extending products for other segments help improving the profitability of the company.
Moreover company may also gain competitive advantage by differentiating its product on its
already established high quality product.

Secondly, new management position needed a high level of professionalism without increasing
compensation packages Management should support social mission by instigating ways to
improve life of people along with product mission.

Lastly, we should do SWOT analysis of the external and internal forces influential in ice cream
industry which is essential in order to establish the effectiveness of Ben & Jerry current corporate
strategies. They should utilize several analytical tools along with experience to characterize the
strength of the industry and the success of the companys strategy. Companys differentiation
strategy also alleviates the danger of potential entrants which may favor Ben & Jerry to cash
their brand loyalty.

Strategy In Ben & Jerrys Ice Cream Inc.

Article says that rivals can easily copy your improvement in quality and efficiency but they
wont be able to copy the strategic positioning the company has, In Ben & Jerry case earlier the
company has a strategic position to be considered as synonym of super premium Mix in Ice
Cream and it distinguish it from others now we need to retain this position with marketing in
such a way that shows that Ben and Jerry is performing activities which are distinct and could
not be copied. Operational effectiveness is the basic component which can be copied easily so in
this way productivity frontier of the industry capability keep on shifting towards the right. This
absolute improvement in industry will be the result of competition but it would not give relative
improvement for any specific company and hence competitive convergence will occur and all
companies are following similar activities.

Therefore Bob Holland should focus on developing distinctive position which may not be copied
this could be possible by doing trade off on the competencies the company have and can be bring
into play efficiently. Other than this Ben & jerry must not follow straggling it must create
coordination among activities interlinked to optimize the effort of those activities

Employees in Ben & jerrys need guidance about how to deepen a strategic position rather than
broaden or compromise it. They must be trained in a way to extend the companys uniqueness
while strengthening the fit among its activities. This work of deciding which target group of
customers and needs to serve requires discipline, the ability to set limits, and forthright
communication. Hence Bob firstly should decide with segment he wants to serve and capitalizing
on the experience which they have in super premium Mix in must be sold in new markets.
Therefore I would recommend despite of following other by entering in low quality market,
Holland should keep this position and sell its ice cream in new markets. In this way a long
created perception about the brand will be continued.