International business management refers to the effective management of business transactions that are to be performed across various countries. This is done to satisfy the objectives of people and organizations. Thus a firm should be aware of various issues while entering foreign markets. There are key political, cultural, social, legal and environmental issues that every organization must fully cover to ensure the smooth running of its business in foreign shores. Failure to do so may lead to may obstacles. It is always effective to take a proactive measure while conducting business in foreign markets. Ben & Jerry's Homemade, Inc., the Vermont-based manufacturer of ice cream, frozen yogurt and sorbet based in Vermont. It was founded in 1978 by two Brooklyn schoolmates Ben Cohen and Jerry Greenfield. Their first shop was in a renovated gas station in Burlington, Vermont with an investment of $12,000. Within a short time, they became popular for their innovative flavors, made from fresh Vermont milk and cream and they were also known for their innovative names for their ice creams. The main products of Ben & Jerry's are ice cream, low fat ice cream, frozen yogurt, sorbet and novelty products. These products are produced in pints, quarts, and 2.5-gallon tubs. Their products are distributed nationwide as well as in selected foreign countries. Their products are sold in supermarkets, grocery stores, convenience stores, franchised Ben & Jerry's scoop shops, restaurants and other venues.
Ben & Jerry's operated its franchise shops in both the U.S. and Canada. The company also has wholly-owned operations in France, Japan and the United Kingdom, and licensees in the Benelux countries, Israel, Canada, Peru and Lebanon. By 1997 Ben & Jerry's, had foreign sales of $6 million and total sales of $174 million and by 1999, Ben & Jerry's employed 814 people worldwide, primarily covering only the manufacturing, central and distribution facilities in Vermont.
Economy Overview in Russia:
After the implosion of the Soviet Union in 1991, Russia was struggling to establish a modern market economy and achieve strong economic growth. Russia heavily depended on exports of commodities, particularly oil, natural gas, metals, and timber, which accounted for over 80% of exports. Russia's agricultural sector beset by uncertainty over land ownership rights, which had discouraged needed investment and restructuring. Another threat was negative demographic trends, fueled by low birth rates and a deteriorating health situation - including an alarming rise in AIDS cases. Russia's industrial base was dilapidated. Other problems included widespread corruption, capital flight, and brain drain.
Ice Cream Industry in Russia:
Russia has always been known for its tasty ice creameaten all year-round. Ice cream is one of the few quality food products and so popular that is available even when supermarket shelves were otherwise bare. Russians in Moscow consume 170 tons of ice cream per year, 98 percent of which is Vanilla. Since Russia was the third largest market in the world in the late 1980's, the ice cream business represented enormous potential.
While one can still purchase the Soviet-era standard, the vanilla waffle cone, now Russians can choose from a dizzying array of flavors and ice-cream products. The Russian ice cream industry has also become much more diverse, accommodating not just the major producers but also proving hospitable to small business development and franchising.
Ben & Jerry's in Russia:
Between 1992 and early 1997, Ben & Jerry's was part of a joint venture called Iceverk in a place called Karelia, located in the Russian Republic. Back to 1988, when Ben Cohen, president and cofounder of Ben & Jerry's, took a trip to Karelia, Russia (Vermont's Russian sister state), he thought of opening up a Ben & Jerry's scoop shop in Russia and bringing the United States and Russia together through ice cream diplomacy. Right after...
References: 1. International Management Text and Cases: Managing across Borders and Cultures, 5th Edition by Helen Deresky.
2. IDFA (International Dairy Food Associations) – Industry facts on Ice Creams.
3. Ben & Jerry 's Homemade Holdings, Inc.- Company Information http://www.benjerry.com
4. Formulating ice cream for
the discriminating consumer - ice cream flavor trends, Dairy Foods, Jan, 1999 by Donna Gorski Berry.
5. Dairy market trends: ice cream poised, yogurt 's pace slowing, Dairy Foods, Sept,2004
6. Ice Cream Market Facing A Cold Reality ,Article by Packaged Facts, a division
7. Handouts given in class.
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