Submitted by

Mohammed Naseer khan

(1226114117)

Shiva Reddy

(1226114135)

Amarnath Reddy

(1226114141)

1. What are the concerns of Perry Odak, the CEO of Ben & Jerry’s at the time of the case?

Perry Odak was concerned to solve problems regarding to the growth of the products outside US.

He was concern about whether or not entering the Japanese market through finding out the best discussion given by the economic specialists of the company in a below options:

1. Franchising or merging with Seven-Eleven’s 7000 stores in order to enter the Japanese market.

2. An agreement with Ken Yamada and dominos.

3. Distribution through Meiji Milk, including Tokyo Disneyland

4. To Open a scoop shops at Tokyo Disneyland.

5. An agreement with Dreyer’s (Nestle).

2. Characterize Ben & Jerry’s vision, goals, mission, and culture. How transferable are these to Japan?

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:-

1. Product Mission: to make, distribute and sell the finest quality all natural ice-cream and related products in a wide variety of innovative flavours made from Vermont dairy products.

2.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.

3. 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.

It’s transferable which operates the three-part mission that aims to create linked prosperity for everyone that’s connected to our business in Japan: suppliers,

employees, farmers, franchisees, customers, and neighbours alike. Missions how it’s transferable in Japan:-

1. It deals with cost savings for the avoidance of layers between most suppliers and retailers for expectations in falling tariffs.

2. Focus on the health conscious to societies.3. Look on the opportunities to expand a geographic market which favors its

resources and interests.4. Expand product line.

The mission to make a profit producing a premium product is fine. Improving the quality of life is sort of vague and directionless. The result is the lack of a mission for which a clear and definable strategy can be developed and implemented. When this is compounded by the requirement that it be operated as a caring capitalistic enterprise whose social goals were at least as important as its business goals, perhaps more so.

3. Analyze Ben & Jerry’s resources and capabilities in Vermont. Which key resources and capabilities will provide the company with a platform upon which to build a sustainable competitive advantage in Japan?

Ben and Jerry's enjoyed a good position in the US super premium Ice cream market. Market share was second only Haagen-Dazs who enjoyed a 44% share the Ben and Jerry's 36 %. This was achieved in spite of a premium price point. The premium price of the product was supported by a very high quality image, which was developed by producing a very high quality product. The company had achieved a strong national distribution in its original US market.

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 flavours and all-natural ingredients made from fresh Vermont milk and cream.

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 (www.lib.benjerry.com, 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.

One of the most successful enterprises in the food business in recent years has been Ben & Jerry's Homemade, Inc., a producer and distributor of ice cream and related products. The company has risen to number two in this business, just behind Grand Metropolitan's Haagen-Dazs, and Ben & Jerry's had 38.6 percent of the 1992 market for super premium ice cream. Ben & Jerry's also have 95 franchised and 4 company-owned ice cream shops across the country. The number one flavour for the company is Chocolate Chip Cookie Dough, and this product accounted for 17 percent of 1992 sales.

The company was started by Ben Cohen and Jerry Greenfield in 1978. They started the company in a vacant gas station with $12,000 as an initial investment. They also had committed themselves to stay in business for one year. The first franchise was opened in 1981, and distribution started outside the home state of Vermont in 1983. The image that Ben & Jerry's has projected is of "two ordinary guys" who started a company on a shoestring and built it into a multimillion dollar.

The company uses a 7-to-1 formula for salaries, setting the limits of the highest-paid employee to 7 times that of the lowest paid full-time employee. This reduces tensions within the company and prevents it from becoming top-heavy in terms of salaries. The company donates 7.5 percent of its revenues to the Ben & Jerry's Foundation, a unit which supports various social causes. The company pays very little for advertising and instead has chosen nontraditional means of promotion, such as 4 large outdoor festivals and an annual shareholder's party in the summer. Each annual report contains a social audit in addition to a financial report. The company's factory in Vermont has been a leading tourist attraction for the state. Ben of Ben & Jerry's has stated: "Business has a responsibility to give back to the community." That is precisely what Ben & Jerry's continues to try to do (Hoover's Handbook of Emerging Companies 1993-1994, 1994, 157).

5. What strategic choices do Ben & Jerry’s have to grow in Japan?

Several factors resulted in reluctance of action by Ben & Jerry's in entering the Japanese market. The company was unsure on whether the company had any business in Japan. They had trouble finding a lead option for an entry, and Ben & Jerry's was struggling with so many changes in the CEO office, and also having no strategic planning. Ben & Jerry's got an offer from Ken Yamada, a Japanese-American entrepreneur who offered to oversea marketing and

distribution of Ben & Jerry's products in Japan. He proposed to take charge of all the Japanese market in exchange for a royalty on all Ben & Jerry's products sold in that market. In 1997 Seven-Eleven joined Yamada as a leading contender for the interest in the Japan strategy. Perry Odak was the new president for Ben & Jerry's and met with Mr. Iida, the president of Seven-Eleven Japan. Seven-Eleven Japan is the parent company of Seven-Eleven U.S. Seven-Eleven's more than 7,000 stores represented a major market regardless of all the possible outlets in Japan. One of the problems is if the product were introduced to the Japanese market through the Seven-Eleven convenience stores it would be just one of the many brands there. Ben & Jerry's might not be able to build its brand equity in Japan such as Haagen-Dazs had. Without brand equity it could be difficult to distribute the product beyond the Seven-Eleven chain. Also there is always the possibility that Seven-Eleven could cut off Ben & Jerry's at some future date if it doesn't sell effectively.

(1) Balancing the attraction of a potentially strong market against the mission and resources of the firm,

(2) Balancing the lack of resources (both financial and managerial) for a company-controlled brand-building strategy against the apparent hazards in granting brand development rights to a licensee,

(3) Making the best of the increasing consolidation and strength of the retailer sector, and

(4) Developing trust with a local partner.

It makes sense for Ben & Jerry's to enter the market in order to gain whatever market share that is possible, but since barriers to entry are so high they have to find a way to enter the market and get recognized whether it is through Seven-Eleven or by using Mr. Yamada. Entering is also a great idea if they proceed with the Seven-Eleven marketing plan. This plan allows Ben & Jerry's to enter into 7,000 Seven-Eleven stores shelve, but still competing with other brands. Also Ben & Jerry's would not have to promote its super premium ice cream is since it is already part of the ice cream market(for example Haagen-Dazs) and Japanese people are aware of it. A plus for this is that convenience stores appeared to account for about 40% of super premium ice cream sales in Japan, and Seven-Eleven was Japan's largest chain.

5. What should Perry Odak decide? Why?

Perry odak decided to choose more direct entry mode; opening the scoop-shop. Though FDI bears higher financial risks, the company can have better control and reaction to the market. Moreover, unlike 7-Eleven, Ben & Jerry's unique scoop-shop would serve as better channel for brand awareness. We also

introduced some localization ideas. Starting from flavour development to product package, pricing and promotion, various kinds of localized strategies are suggested. Ben & Jerry's have a strong potential in Japanese market. With better market observations and strategies that response to the market, Ben & Jerry's will be able to enter and adjust to the market more successfully.

6. What will Ben & Jerry’s need to do in Japan in order to carry out its chosen strategy and execute it well?

Moreover the best choice for Ben & Jerry’s is to go for an agreement with Seven-Eleven for the following reasons:

Exploitation of the existing partnership in the Japan for the distribution of Ben & Jerry’s products.

High number (7000) of points of sale in particular convenience stores which are a common way in Japan to purchase ice cream.

Increasing efficiency potential due to the logistic organization of Seven-Eleven and it’s just in time practices.

Costs savings in terms. Higher margins to hedge in case of Yen fluctuations against USD.

STRATEGY ANALYSIS:

An analysis of the external and internal forces shaping the ice cream industry is necessary in order to determine the effectiveness of Ben & Jerry’s current (and prospective) corporate and environmental strategies. We will utilize several analytical tools to characterize the strengths and liabilities of the industry and the effectiveness of the company’s strategy, particularly through the use of the Five Forces Model of Competition, the Sixth (Non-Market) Force analysis, SWOT analysis, and the key factors of success.

Five Forces Model of Competition:-

In order to identify and assess the strength of external competitive forces on the ice cream industry we utilized a common analytical tool, Porter’s Five Forces Model of Competition, which is based on the following five factors: rivalry among competing sellers, bargaining power of buyers, bargaining power of suppliers of key inputs, substitute products and potential new entrants to the market (Thomas and Strickland, 1995). Figure 3 summarizes the competitive strength of these forces on the ice cream industry.

Rivalry among Competing Sellers:-

The principal competitors in the super-premium ice cream industry are large, diversified companies with significantly greater resources than Ben & Jerry’s; the primary competitors include Dreyers and Haagen-Dazs. Rivalry can be characterized as intense, given that numerous competitors exist, the cost of switching to rival brands is low, and the sales-increasing tactics employed by Dreyers and other rivals threatens to boosts rivals’ unit volume of production (SEC Report, 1999).

Buyers: -

The power of buyers is relatively high because buyers are large, consisting of individual customers, grocery stores, convenience stores, and restaurants nationwide and globally. Since retailers purchase ice cream products in large quantities, this gives buyers substantial leverage over price. In addition, there are many ice cream products to choose from, so the buyers’ cost of switching to competing brands is relatively low. In order to defend against this competitive force, a company’s strategy must include strong product differentiation so that buyers are less able to switch over without incurring large costs.

Suppliers:-

The suppliers to the ice cream industry include dairy farmers, paper container manufacturers, and suppliers of various flavourings. Such suppliers are a moderate competitive force, given that the ice cream industry they are supplying is a major customer, there are multiple suppliers throughout the nation to choose from, and many of the suppliers’ viability is tied to the well-being of large, established companies such as Dreyers and Haagen-Dazs. Therefore, the ice cream suppliers have moderate leverage to bargain over price.

Substitute Products:-

Many substitutes products are available within the dessert and frozen food industry (cookies, pies, Popsicles, cake). The ease with which buyers can switch to substitute products is an indicator of the strength of this competitive force. Since substitute products are readily available and attractively priced compared to the relatively higher priced super-premium ice cream products, the competitive pressures posed by substitute products are intense. Companies that enter the super-premium market, therefore, must adopt defensive strategies that convince buyers their higher priced product has better features (i.e., quality,

taste, innovative flavours) that more than make up for the difference in price.

Potential New Entrants:-

The barriers to entry within the ice cream industry are moderate due to the brand preferences and customer loyalty toward the larger and more established rival companies. Other obstacles to new entrants include strong brand loyalty to established firms and economic factors, such as the requirement for large sources of capital, specialized mixing facilities and manufacturing plants. In addition, the accessibility of distribution channels can be difficult for an unknown firm with little or no brand recognition. Although Ben Cohen and Jerry Greenfield successfully launched their ice cream business from a gas station with modest funding and staff, they had to initially rely on a rival company’s distribution channels (and later on independent distributors) in order to gain a stronger foothold in the market.

An objective of Ben & Jerry's was to use the excess manufacturing capacity it had in the U.S., and it found that exporting ice cream from Vermont to Japan was feasible from a logistics and cost perspective. The company identified two leading partnering options. One was to give Japanese convenience store chain exclusive rights to the product for a limited time. The other was to give long-term rights for all sales of the product in Japan to a Japanese-American who would build the brand. For the company to enter Japan in time for the upcoming summer season, it would have to be through one of these two partnering arrangements.