Ben And Jerrys Big

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Ben And Jerrys Big

  1. 1. Ben and Jerry’s
  2. 2. Main Issue: Balancing Social Responsibility and Profits Sub-issues: When does economic responsibility override social responsibility: – Relationship with suppliers? – Management Relationship with media
  3. 3. Timeline Ben Cohen and Jerry Greenfield meet in 7th grade gym class. 1977 1963 Ben and Jerry move to Vermont and complete a $5 correspondence course in ice cream making.
  4. 4. Timeline Ben and Jerry open their scoop shop in a renovated gas station. 1980 1978 B and J begin packing their ice cream in pints to sell to grocery stores.
  5. 5. Timeline Time magazine hails Ben and Jerry’s as “The best ice cream in the world.” 1984 1981 Ben and Jerry offer a Vermont-only public stock offering.
  6. 6. Timeline Ben and Jerry’s has sales exceeding $4 million, a 1984 120% increase from the previous year. Ben and Jerry fight back against Haagen-Dazs with 1984 “What’s the Doughboy afraid of?” campaign.
  7. 7. Timeline The foundation is provided with 7.5% of the company’s pre-tax profits. Ben and 1985 Jerry’s has sales exceeding $9 million a 143% increase. The Ben and Jerry’s Foundation is established 1985 at the end of the year.
  8. 8. Timeline The company posts sales of just under $20 million a 100% increase over the 1986 previous year. Dreyers becomes master distributor for Ben and 1986 Jerry’s.
  9. 9. Timeline The company posts sales of 1987 just under $32 million up 59% from the previous year. Ben and Jerry are named to the 1987 Esquire Register, the magazine’s “annual honor roll of 1987 men and women whose accomplishments , values, and dreams reflect America at its best.
  10. 10. Timeline As of the end of the year there are more than 80 scoop 1988 shops in 18 states. Sales exceed $47 million, up 49% from 1987. Ben and Jerry are named U.S. Small Business Persons of the 1988 Year by President Reagan in a White House Rose Garden Ceremony
  11. 11. Timeline Sales exceed $58 million, up 1989 23% from 1988. Ben and Jerry receives Columbia University’s Lawrence A. Wien 1989 Prize for corporate social responsibility.
  12. 12. Timeline To help Vermont Dairy farmers the company pays a 1990 dairy premium of $1/2 million to farmers that supply milk to the company. The company enjoys sales of more than 77 million, an increase 1991 of more than 32% over 1989.
  13. 13. Timeline Total sales for 1992 are more than $131 million, an increase of 1991 36% over 1991. The company has sales of $97 million, an increase of 26% over 1992 1990.
  14. 14. The Hierarchy of Strategy Levels Enterprise Level Strategy Corporate-Level Strategy Business-Level Strategy Functional-Level Strategy
  15. 15. The Hierarchy of Strategy Levels Enterprise Level Strategy “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. “ Social Mission Statement
  16. 16. The Hierarchy of Strategy Levels Corporate-Level Strategy “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. “ Product Mission Statement
  17. 17. The Hierarchy of Strategy Levels Business-Level Strategy “Underlying the mission of Ben & Jerry's is the determination to seek new & creative ways of addressing all three parts, while holding a deep respect for individuals inside and outside the Company and for the communities of which they are a part.“
  18. 18. The Hierarchy of Strategy Levels Functional-Level Strategy “To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees.” Economic Mission Statement
  19. 19. The Clash of Ethical Systems Between Business and Government Business Ben and Jerry’s Government Individualistic Ethic Balanced Ethic Collectivistic Maximize Concession Minimize concession to self- Subordination of to self-interest interest and maximize interest in individual goals and self group goals. interest to group goals interest. Minimize the load of Balance self-interest and Maximize the obligations society obligations. obligations assumed by imposes on the individual the individual and discouraging self- interest Emphasizes Emphasizes uniqueness of Emphasizes equality of inequalities of individuals and strives for individuals individuals harmony among them.
  20. 20. Social Gap Model Ben and Jerry’s Society’s Expectations Avg. Industry Performance 1978 1999
  21. 21. Stakeholder Map Government Gen. Public Employees Competitors Retailers Suppliers Ben & Customers Jerry’s Media “Worthy Owners/ Causes” Stockholders Creditors Community Activists
  22. 22. Primary Stakeholders • Employees – Interest • Stable employment & Profit sharing • Treated and rewarded fairly: Fair Pay for work • Safe, comfortable, and FUN work environment: Joy Gang • Affairs affecting women, minorities, gays and lesbians on their workforce & employee benefits – Power • Quitting, striking, unionizing • Implement new ideas (Recycling) • Publicity (Community Volunteer Program)
  23. 23. Primary Stakeholders • Owners/Stockholders – Interest • Satisfactory return on investment • Appreciation of stock value over time • Attendance at two day picnic/festival featuring rock concerts, postcard writing, video messages to Congress, and plenty of Cherry Garcia! “Just happy to be a shareholder of Socially Responsible company!” • Chance to buy into a company that reminds them of themselves – Power • Voting rights based on share ownership • Rights to inspect company books or records & copy of annual report, printed on recycled paper signed by the chairperson • Right to buy more or sell existing
  24. 24. Primary Stakeholders • Customers – Interest • Value and quality for dollar spent • Receive safe & yummy products • Most have interest in specific causes that Ben & Jerry’s supports, such as Rainforest Crunch – Power • Purchasing goods from competitors • Boycotting if practices of company are unacceptable – They buy because they DO approve of Ben & Jerry’s polices.
  25. 25. Some Suppliers • Cultural Survival-Brazilian Nuts • La Soul - Apple Pie • Maine’s Passamaquoddy Indians-Blueberries • Greystone bakery-Brownies – OK once quality control overcome • Aztec Indians-Coffee • Vermont Dairy Farmers
  26. 26. Primary Stakeholders • Suppliers – Interest • Receive regular orders for goods • Be paid promptly • Livelihood – Brownie Bakery-inner city – Brazilian Nuts-make more profitable than deforestation – La Soul - recovering addicts – Coffee-Indian – Power • Refusing to meet orders if contract breached • Supplying to competitors • Ben & Jerry’s so close with suppliers, not issue
  27. 27. Primary Stakeholders • Competitors: Haagen-Dazs, Dreyer’s, Breyer’s – Interest • Be profitable • Gain market share • Premium ice cream industry growth – Power • Technological innovation • Charging lower prices • Blocking new entrants
  28. 28. Primary Stakeholders • Retailers – Interest • Receive quality frozen goods in timely fashion at reasonable cost • Premium ice cream that consumers value – Power • Buying from other suppliers • Boycotting • Reducing shelf space
  29. 29. Primary Stakeholders • Creditors – Interest • Repayment of loans • Collect debts and interest – Power • Calling in loans • Repossession
  30. 30. Secondary Stakeholders • Federal, State, & Local Government – Interest • Raise revenues through taxes • Promote economic development – Power • Issuing regulations, licenses, and permits • Allowing industrial activities
  31. 31. Secondary Stakeholders • The General Public – Interest • Protect the social values • Minimize risks • Achieve prosperity in society – Power • Supporting activists • Pressing government to act • Condemning or praising Ben & Jerry’s
  32. 32. Secondary Stakeholders • Vermont Communities – Interest • Employ local residents – One of state’s top 10 employers by size – Vermont’s average per capita income = $17,436 – At B & J’s the Lowest salary plus benefits = $22,000 • Protect local environment • Develop local area • A top tourist spot in the state – Power • Extending additional credit • Issuing operating licenses and permits • Lobbying government
  33. 33. Secondary Stakeholders • Social Activists – Interest • Monitor company actions and policies to ensure they conform – Legally – Ethically – Safety – Power • Gaining broad public support by publicizing issues • Lobbying government for regulations
  34. 34. Secondary Stakeholders • Media – Interest • Keep the public informed on all relevant issues – Health – Well-being – Economic status • Monitor company actions – Power • Publicizing events that affect public • Accentuate the negative or the positive – Benefited enormously from media exposure at start up – Now press watching closely for signs of hypocrisy
  35. 35. Secondary Stakeholders • Worthy Causes – Interest • 7.5 % pretax profit goes to a worthy cause that workers help to choose • Rainforests, Children’s Defense Fund, AIDS patients, homeless people • Lids for Kids (B&J’s and Yahoo!) – Hooking up K-12 to the internet – Power • Publicity • Very little power or control
  36. 36. Good Intentions, Bad Outcomes • Cultural Survival-Brazilian Nuts – Turned out to be Portuguese settlers – 95% from agricultural-business giant that also Clear Cuts the Rain Forest! • Pigs – Heart Attacks and High Cholesterol? • La Soul – Bankruptcy
  37. 37. Stakeholder Issues: Ethics • Utilitarianism – Greatest good to the greatest number • Environmentalism, whole hippie ideals... • Make the world a better place... – Focuses on ends, not the means to get there • T-shirts and jeans still meet economic and social benefits, for example
  38. 38. B&J’s Levels of Moral Development The Beginning Growth Maturity Level 3: Postconventional Level 2: Conventional Stage 6 Universal ethical principle Level 1: Preconventional orientation Stage 4 Law and order Stage 5 Social-contract Stage 2 Rewards orientation Stage 3 Stage 1 Reaction to Good boy/Nice girl punishment morality
  39. 39. Stakeholder Issues: Ethics • Rights – Certain groups of individuals – Childcare • Running at expense of $90,000/year – Insurance Coverage • Married, unmarried, heterosexual, or homosexual partners covered – Media Says: “some need not apply?!?” • Republicans • Gun owners-CEO worked for Winchester Rifles • Pro-Lifers • Meat eaters
  40. 40. Stakeholder Issues: Ethics • Justice – Fair treatment of each person • Upward appraisals – Each given fair chance – “What’s the Dough Boy afraid of?” – Now aggressively shutting out competitors from distribution channels » Amy’s Ice Cream-Austin, TX
  41. 41. Environmental Ethics • Four fundamental beliefs – Life on earth should continue – Human life on earth should continue – Natural justice should be done – Nonmaterial qualities of life are worth pursuing • Environmental Ethics – Related to natural environment that agree with society’s norms • See suppliers and worthy causes!--Values Led
  42. 42. Diagnostic Typology Stakeholder’s Potential for Threat to Ben & Jerry’s H L Mixed Blessing:Collaborate Supportive: Involve Stakeholder Employees Suppliers Potential Vermont Communities Stakeholders Social Activists/Media Worthy Causes For H Cooperation Non-supportive: Defend Marginal: Monitor With Competitors Creditors B & J’s L Retailers/ Customers General Public Government
  43. 43. Laws, Government Regulations and Regulatory Agencies • Fair labeling (Social) – Fat Grams listed on package • Vermont Department of Banking & Insurance – Law that allowed IN state offering (Economic) • The IN State Offering – One in every 100 families – 1800 households bought stock – 1/3 with minimum buy
  44. 44. Laws, Government Regulations and Regulatory Agencies • Vermont Chamber of Commerce – B&J’s withdrew because lobbying for business – Incompatible with broad environmental & social issues – Wanted to remove members of Vermont’s Environmental Board because too pro-environment! • SEC (Economic) • FDA (Social) – Bovine Growth Hormone
  45. 45. Stakeholder Responsibility Matrix S ta k e h o ld e r s E c o n o m ic L egal E th ic a l P h ila n th r o p ic S to c k h o ld e rs C u sto m e rs E m p lo y e e s C o m m u n ity P u b lic a t L a rg e S o c ia l A c tiv ist BEC A U SE It Is B en & Je rry ’s
  46. 46. Porter’s Model Potential Entrants Internet Sales Other Stakeholders Employees Industry Buyers Distributors Competitors • Dryer’s Grocers • Breyer’s Individual Consumer “Enlightened” • Haagen-Dazs Suppliers • Others Vermont Dairy High tech/fat free Vermont Republic Industries Cultural Survival Substitutes La Soul
  47. 47. 3. Management • Success criteria: financial/social performance Values and • Operate by environmentally sound principles Aspirations of • Hire the handicapped Management 2. The Market 1. The Company Strategy Market Organizational Formulation Opportunities and Strengths and Decision Threats Weaknesses • Flexible • Growing at 15% • Reputation • Public Relations • Lack of corporate direction 4. Society • Franchises • Middle management alienation • Internet • Poor SOPs Acknowledged • Increasing Bureaucracy Obligations to Society • Devote resources to solve society’s problems
  48. 48. Establish Purposes and Principles Select Economic Select Social Project Economic Project Social Investment Criteria Investment Criteria Performance Performance Establish Performance Establish Performance Evaluate Economic Evaluate Social Standards for Economic Standards for Social Performance Performance Investment Criteria Investment Criteria Add or Delete Projects/ Products from Portfolio of Identify Projects and Identify Social Capital and Social Investments Products for Potential Projects for Potential Investment Investment Monitor Performance
  49. 49. Mission Statement • Product mission - “To make, distribute, and sell the finest quality, all-natural ice-cream… • Economic Mission - “To operate the company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees.”
  50. 50. Mission Statement - cont. • Social mission - “To operate the company in a way that actively recognizes the central role bus. plays in solitude of society by initiating innovative ways to improve the quality of life of a broad community - local, national, and international.” • Social performance audit
  51. 51. Board of Directors Name Position M/F Age Service Background, misc. Ben Cohen Chair M 43 17 Product dvlp., marketing Robert Holland Jr. President, CEO M 54 1 Operational, strategy, marketing Jerry Greenfield VP Chair M 43 17 Sales, promotion, distribution Elizabeth Bankowski Dr. Social Mission F 47 3 Worked for gvt. Merritt Chandler, Outsider M 78 7 Business consulting Jeffrey Furman M 51 12 Business consulting Fred Lager M 40 12 Management, consulting Frederick Miller, Outsider M 48 2 Strategic culture change Henry Morgan, Outsider M 68 7 Management Frances Rathke CFO F 34 5 Accounting
  52. 52. Committees • Compensation • Nominating • Social mission • Audit
  53. 53. Board of Directors Continuum Low Degree of Involvement High Rubber M in im a l N o m in a l A c tiv e P h a n to m S ta m p R e v ie w P a r tic ip a tio n P a r tic ip a tio n C a ta ly s t N e ve r kno w s P e rm its o f f ic e rs F o rm a lly re v ie w s I n v o lv e d to a lim ite d A p p ro v e s q u e s tio n s , T a k e s th e le a d in g w h a t to d o , if to m a k e a ll s e le c te d is s u e s d e g re e in th e a n d m a k e s f in a l ro le in e s ta b lis h in g a n y th in g ; n o d e c is io n s . I t th a t o f f ic e rs p e rf o rm a n c e o r re v ie w d e c is io n s o n m is s io n , a n d m o d if y in g m is s io n d e g re e o f v o te s a s th e b rin g to its o f s e le c te d k e y s tra te g y , p o lic ie s , a n d o b je c tiv e s , s tra te g y , a n d in v o lv e m e n t o f f ic e rs a tte n tio n d e c is io n s , in d ic a to rs , o b je c tiv e s . H a s a c tiv e p o lic ie s . I t h a s v e ry re c o m m e n d o n o r p ro g ra m s o f m g t. b o a rd c o m m itte e s . a c tiv e s tra te g y a c tio n is s u e s P e rf o rm s f is c a l a n d c o m m itte e m a n a g e m e n t a u d its
  54. 54. Founders - Ben Cohen • Chairman of Board • Dropped out of Colgate College and entered Skidmore’s University without Walls program, an unstructured college degree program, • Quit school again • Creative driving force
  55. 55. Founders - Jerry Greenfield • Head of Ben and Jerry’s Foundation • Studied pre-med. at Oberlin College • Drifted before pairing w/Ben • Greenfield and Cohen spend most of time traveling and doing marketing promotions for co.
  56. 56. CEO History • Ben Cohen, cofounder, was President from Jan. 1983-Feb. 1995 • Held essay contest to find new CEO • Robert Holland, Jr. replaced Cohen in Feb. 1989- 1991 in order to introduce a more professional management culture. • Holland resigned after he accomplished goals of stabilizing company’s manufacturing operations and bringing more professional management.
  57. 57. Current CEO • Odak replaced Holland in 1991, needed someone with marketing and sales skills that would put the company in better competitive position • 51 years old • Married and has three grown children
  58. 58. CEO continued • Earned a B.S. and M.S. degree in Applied Economics from Cornell • 25 years of management expertise in variety of consumer product and retailing businesses
  59. 59. Levels of Moral Development Focus: Self Focus: Others Focus: Humankind Level 3: Postconventional Level 2: Conventional Stage 6 Universal ethical principle Level 1: Stage 4 Law and order orientation Preconventional Stage 2 Rewards Stage 3 Good boy/Nice Stage 5 Social-contract girl morality orientation Stage 1 Reaction to punishment
  60. 60. Management Style • Business has responsibility for welfare of society as a whole. • Gain customer loyalty • Team quality management • Selective hiring • if it’s not fun, why do it?
  61. 61. Corporation Motivation and Social Responsiveness Management Voluntary values and response beliefs Pressure Forced from response stakeholders Legally Involuntary mandated response requirements
  62. 62. Flow of Authority Intended Actual Shareholders Shareholders Board Board Management Management
  63. 63. Public Affairs • Doing good = best kind of advertisement • Try to be environmentally safe • Employ handicap and youth • Get everyone involved – Joy Luck Gang – Community Action Teams
  64. 64. Components of Ethical Climate Ethical Criteria Individual Company Society Egoism Self-interest Company Economic Interest Efficiency Benevolence Friendship Team Social Interest Responsibility Principle Personal Company rules Laws and Morality and procedures Professional Codes
  65. 65. Ben and Jerry’s Ethical Climate Effective Communication Ethics Ethics Programs Auditing Top Management Leadership Realistic Ethics Objectives Ethical Training Decision- Making
  66. 66. Schein’s Model • Artifacts • Visible but often not – Mission Statement decipherable – Ben and Jerry • Testable in Physical • Greater level of Environment awareness – Annual Social Report • Basic Assumptions • Taken for granted – Importance of Social Performance
  67. 67. Annual Social Report • Workplace • Operations • Environment • Franchise / Retail • Marketing • International • Philanthropy
  68. 68. Social Report Example
  69. 69. Stock Performance
  70. 70. Human Resource Management • Work-Life Survey • Livable Wage • Gender Equity • Diversity • Child Care • Joy Gang
  71. 71. Updated Timeline Robert Holland is selected as the new CEO and turns around its 1994 performance for a net income of $6 million. The company begins a search for a new CEO. The company also 1995 reports its first loss of just under $1,900,000
  72. 72. Updated Timeline Perry Odak takes over the vacant position of CEO. Ben and Jerry publish their book Double Dip. 1996 The company had net sales of over 174, million. Robert Holland steps down as CEO after greatly improving 1997 manufacturing inefficiencies.
  73. 73. Ben and Jerry’s Conclusions • Establish a formal code of ethics • More directors from non-profit organizations • Establish standard operating procedures and training for supervisors • As the company grows, keep the social mission as a primary focus
  74. 74. Ben & Jerry’s: Before Economic Legal Ethical Philanthropic
  75. 75. Socially Responsible: Carroll’s Framework By Joylynn R. Radtke Ethical Legal (Expected) Philanthropic Economic (Required)
  76. 76. Conclusions, SR Company • Expect to be a target if you claim to be a socially responsible company • Being socially responsible is expensive • Corporate values, vision, and culture will often conflict with operations • Social responsibility requires “creativity” • Social responsibility begets social responsibility
  77. 77. Recommendations • Focus on differentiation • Add organizational infrastructure devoted exclusively to the social mission • Use Stakeholder Mapping and Diagnostic Typology to identify stakeholders and develop strategy for interaction • Establish an ethics and communications program
  78. 78. Recommendations Establish a mechanism to select and evaluate both economic and social projects Establish an issues (marketing) management process Board Members should support the Economic/Social mission of the company
  79. 79. Check out more great forwards at vparakhiya@rediffmail.com vparakhiya@gmail.com

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