2. 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 bestdiscussion 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
2. An agreement with Ken Yamada and dominos.
3. Distribution through Meiji Milk, including Tokyo Disneyland
4. To Open a scoop shopsat 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. ProductMission: 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 respectfor 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,
3. employees, farmers, franchisees, customers, and neighbours alike. Missions
how it’s transferable in Japan:-
1. It deals with costsavings 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 productline.
The mission to make a profit producing a premium productis 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 bythe 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 resourcesand 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 productwas 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 companyrecently 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
4. 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 successfulenterprises in the food business in recent years has
been Ben & Jerry's Homemade, Inc., a producerand 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
productaccounted 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
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 chosennontraditional means of
promotion, such as 4 large outdoorfestivals 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 choicesdo 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
5. 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 productwere
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 productbeyond 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'tsell 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 bestof the increasing consolidation and strength of the retailer
(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 promoteits 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 choosemore 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-shopwould serve as better channel for brand awareness. We also
6. introduced some localization ideas. Starting from flavour development to
productpackage, 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 responseto 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
chosenstrategyand 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.
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) corporateand 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) Forceanalysis,
SWOT analysis, and the key factors of success.
Five Forces ModelofCompetition:-
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
7. 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 costof
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).
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 choosefrom, so the buyers’ costof switching to
competing brands is relatively low. In order to defend against this competitive
force, a company’s strategy must include strong productdifferentiation so that
buyers are less able to switch over without incurring large costs.
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.
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
8. enter the super-premium market, therefore, must adoptdefensive strategies that
convince buyers their higher priced producthas better features (i.e., quality,
taste, innovative flavours) that more than make up for the difference in price.
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 costperspective. The company identified two
leading partnering options. One was to give Japanese convenience store chain
exclusive rights to the productfor a limited time. The other was to give long-
term rights for all sales of the productin Japan to a Japanese-American who
would build the brand. Forthe company to enter Japan in time for the upcoming
summer season, it would have to be through one of these two partnering