Ben & Jerry's Case Analysis
Give the history of the company in the case. In this history you should discuss how the company came into the situation presented in the case.?
In 1977, two friends, Ben Cohen and Jerry Greenfield, decided they were tired of working for someone else and wanted to start their own business. They took a five dollar correspondence course on ice-cream making, rented an abandoned gas in Burlington, Vermont, and started their business with an investment of $12,000 dollars. They began making home-made ice-cream in a four-gallon mixer, and used higher fat, all natural and pure ingredients to produce a richer and smoother product. Soon, the business became successful in the local community. Ben and Jerry's advertisement consisted of community based projects, carnival shows, and movie nights for customers in the parking lot ("Ben and Jerry's Homemade Ice Cream: Keeping the Mission Alive,").
The business continued to expand, and by 1980 Ben and Jerry began to package pint-size ice-cream to sale in the local grocery stores. This would be the beginning of the large expansion of the business. Within a year, manufacturing outgrew their current building, and operations had to be moved to a second site. Sales were approaching $500,000 dollars. The company continued to grow at an average of 60 percent per year. In 1984, the Ben and Jerry offered a Vermont-only stock which raised $750,000 for construction of a new operations site in Waterbury. The new site allowed for a greater production and Ben and Jerry began distributing nationally. By 1990, the company was selling in all major markets ("Ben and Jerry's Homemade Ice Cream: Keeping the Mission Alive,").
In 1982, Jerry Greenfield decided to leave the company to move to Arizona. Jerry felt the company was getting to large and impersonal. Ben Cohen became the dominant force in the company, but in 1985, Jerry returned. Ben established The Ben & Jerry's Foundation in 1985 that was operated by employees. The Foundation donated grants to charitable organizations. The company contributed 7.5 percent of pre-tax profits to the Foundation in an effort to balance profits with community enrichment. Ben believed in "caring capitalism" and wanted to keep a concept of linked prosperity for the company ("Ben and Jerry's Homemade Ice Cream: Keeping the Mission Alive,").\par The company's growth continued to expand, and Ben became less interested in the aspects of running the business. Fred "Chico" Lager was hired in 1982 as general manager, and by 1986 Chico was doing all the management of the company. Ben began to notice that the original social mission of the company was beginning to be lost due to the growth. Chico established a mission statement and helped to create a better understanding of the mission throughout the company. When Chico began to wear from the stress of running the business, he decided to leave for a six-month trip. Chuck Lacy then took over management of the company ("Ben and Jerry's Homemade Ice Cream: Keeping the Mission Alive,").\par The company's salary policy was on a 5-to-1 ratio, meaning that the top level pay can only be five times the lowest level pay. This policy began to become a problem in recruitment and retention of quality level management. As the company expanded, many of the management and staff believed this policy to be a hindrance in continued growth and hurt the company in competition ("Ben and Jerry's Homemade Ice Cream: Keeping the Mission Alive,").\par "Ben & Jerry's is dedicated to the creation and demonstration of a new corporate concept of linked prosperity. Our mission consists of three interrelated parts.\par Product Mission\par
To make, distribute and sell the finest-quality all-natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products.\par Social Mission\par
To operate the company in a way that actively recognizes the central role that...
"Annual Report, 10-K". Ben & Jerry 's Homemade, Inc. 1996. Retrieved on November 4, 2004 from http://www.benjerry.com/our_company/research_library/fin/0000768384-97-000005.html.par
"Ben and Jerry 's Homemade Ice Cream: Keeping the Mission Alive," Harvard Business School Case 392-025par
"Core Competence of the Corporation". by C.K. Prahalad and Gary Hamel. The Harvard Business Review May-June 1990. (Available as a Reprint.)par
McKell, Lynn. Ed. "Ben & Jerry 's Homemade, Inc." December 3, 2002. Retrieved on November 4, 2004 from http://marriottschool.byu.edu/teacher/ISYS201/Packet/ben&jerrys.doc.par
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