Ben And Jerry’s Homemade Ice Cream Inc. – Period Of Transition Case Study Sample
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What issues does Bob Holland face when he takes over as CEO of Ben and Jerry’s?
In an entrepreneurial life-cycle, there is a point at which founder of every organization at some point in time realizes his own limitations and feels an imminent need to hand over the running of the company to someone more competent, exposed and may be at times even younger and this is exactly the situation that Ben and Jerry’s are at in the case study. When Bob takes over the company he is faced with the following challenges:
Competition: There were a number of national players already competing in the crowded market space like Haagen Dazs, Dreyer’s Grand, Breyers, Kraft and Pillsbury. There were already cases where competition was beating up companies like Steve’s and Shamitoff, the former was stumbling and then later got beat out of the market. The growth rate was better 14%, which almost seven times the normal FMCG product.
One of the key driving factors in the ice-cream segment was the cost of distribution as most ice cream companies used the “direct to store” model wherein one of the distributor representatives would place the ice cream on the shelves directly, shelf space being a premium and a strong customer loyalty to price and flavor increased the number of constraints in making a decision. The super - premium segment is also crowded, how to make Ben and Jerry’s stand out in the crowd?
Shifting Customer Preference: Another important aspect of the competition was the changing trend and preference among the customers shifting to the so-called “guilt free” products. Which pushed ice cream makers to create and put on the shelves more number of sherbets and fat-free products. Customers would want newer and more novel brands and flavors, is Ben and Jerry’s investing enough into R&D?
Threat at manufacturing point: Ben and Jerry’s were using manufacturing facilities of its competitor. When the competitor wants extra capacity it is obvious that they would lose out. This made the St Alban facility an important aspect in strategy planning. This was despite the fact that the plant due its ambitious but impractical automation requirements led to a loss of $6.8 million. Dreyer’s could enter into the super-premium segment without too many entry barriers, is this not a threat?
Distribution: The Company’s products were distributed widely by Dreyer’s Grand. More than half of the total production was carried by them giving them the last mile connectivity. This could be a threat in the days to come. Shouldn’t the distribution be carried out by a company that has no interests in the ice cream business? Doesn’t Dreyer’s pose a threat somewhere?
Marketing: For a company of the size of Ben and Jerry’s they indulged in very little marketing, instead depending intensely on the free-press that they got around the social causes that the company indulged in. The new advertising series for a new line of product is limited. Should not the company not have a much larger branding exercise for itself?
Expansion: The company has its presence in the United States, UK, Russia and Israel. However, is this sufficient? Should the company not look at other faster growing FMCG markets like Brazil, India and China that from the BRICS market?
What should he do?
Bob Holland takes over the company at a very crucial stage – this is when the founders accepted their limitations and wanted someone with greater exposure to take over the reins of the company. With the competition and a rigorous selection process Bob when he takes over Ben and Jerry’s there are lots of expectations from him – one of the key expectations is that he will take the company to the next higher level of operations, manufacturing, distribution, marketing, expansion along with obvious expectations of brining in higher returns.
When the company decided its decision to hand over the reins it is obvious that the limitations of the current CEO were appreciated and acknowledged and the new CEO is expected to compliment them and ensure the company goes to the next higher level.
Some of the key things that Bob can do is:
R&D: To create newer brands that will appeal to the new and existing markets also create a Vermont flavor for its proposed distribution, manufacturing facilities not only across the United States but also all across the globe
Marketing and Branding: Create an intense branding and communication strategy to communicate the company’s strategy in terms of what it stands for and the brand promise.
Expansion and Manufacturing: It is imperative for the company to explore newer markets to sustain its high growth rate and beat the competition, markets like India and China must be explored simply because of the volume that they can offer. He can also consider contract manufacturing only in those markets where there is no threat element to the company itself.
Distribution: Creating a dedicated distribution network that is capable and has no relationship with the competition. While this will take a considerable amount of time, it is worth it because it is a key element of the organization for many years to come.
Competition: While competition cannot be fully wished away in any market, effective marketing strategy, backed by excellent manufacturing and distribution would be a key to create that set of loyal customers in any market across the world.
How does the concept of strategy help him decide what to do?
Strategy often decides how the company must move to effectively overcome its competition and create a sustained advantage for itself while delivering the maximum possible value to its stakeholders and shareholders.
Many texts on Strategy talk about conflicts between profit maximization and values. As an exec at a large corporation, describe how to choose between personal values and your responsibility to the shareholders through your discussion of the HBS case.
There should never be any conflict between profit and values. It is simply values that will supersede everything else at all times and especially in the times of crisis. Company and personal values must be aligned at all times and this is crucial. There can be no compromise on the value system at any time. No Strategy however good or large can subjugate value system and supersede it. This is paramount for the goodness to pervade. This is more so true in the case of a conflict or a need for direction. The mission, vision and values are to be the direction setters and reference points when there is a crisis and it is paramount especially if there is a crisis that values not be compromised.
Boundless. (2014). What is Strategy? Retrieved from Boundless: https://www.boundless.com/management/textbooks/boundless-management-textbook/strategic-management-12/strategic-management-86/what-is-strategy-415-1550/
Covey, S. (1989). 7 Habits of Highly Effective People. Salt Lake City: Franklin Covey.
McGrory, K. (2014, July 05). THE OC&C FMCG GLOBAL 50 - STUNTED GROWTH. Retrieved from OC&C strategy Consultants: http://www.occstrategy.com/news-and-media/2014/07/fmcg-global-50-stunted-growth
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