Ben & Jerry’s Homemade Inc. Case Study
This case examines issues of asset control for Ben & Jerry’s Homemade, Inc., in light of the outstanding takeover offers by Chartwell Investments, Dreyer‘s Grand, Unilever, and Meadowbrook Lane Capital in January 2000.
The case requires a discussion of fundamental firm objectives and the implications of a non-traditional corporate orientation; one needs to review the development of Ben & Jerry's strong social consciousness and the takeover defence mechanisms that maintain management's control on company assets.
One is required to estimate the economic cost of its social agenda, and evaluate the implications of takeover ...view middle of the document...
Social: "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."
Reputation for quality
The high quality of the product is certainly a crucial factor for the success of the proposed strategy. The stress on the genuine origin of the ingredients and the company’s name "Homemade" creates and nourishes this impression in the eyes of the customer.
The founders beliefs in social responsibility has not only earned them the brand loyalty of the socially aware `baby-boomer’ generation, it also has saved the company a lot of money by providing free marketing through media coverage of social events4.
The company’s devotion to employee satisfaction is one of the causes for the company’s low employee turnover rate of 12%. The low turnover rate has impact on learning effects, training costs, and employee commitment.
Low Gearing ratio
The low ratio of debts over total assets of 12% in 1999 gives B&J credibility, which is a good foundation for further investments and expansion
Company is not only and industrial leader but also commands an important position in a variety of social causes
Increased competitive pressures and declining financial performance has triggered a number of takeover offers
Cofounders Ben Cohen & Jerry Greenfield know that the company’s social orientation requires corporate independence
But Chief Executive Perry Odak feels that Ben & Jerry’s shareholders would be best served by selling out to the highest bidder
Required to answer the following :
• What is the economic cost of social contribution
• What are the implications of takeover defence strategies
• Whether B&J should continue to independently pursue its social agenda or accept one of the attractive takeover offers and shift toward greater profit orientation.
Ben & Jerry’s Social Consciousness
Since 1985 the company has donated 7.5% of its pre-tax earnings to various social foundations
In Million $ 1999 1998 1997 1996 1995 1994
Pre Tax Earnings 8.9 9.1 6.4 6.4 9.8 2.8
Charity contribution 0.668 0.683 0.48 0.48 0.735 0.21
The company supports causes such as Greenpeace International and Vietnam Veterans
Expresses Customer Appreciation with an annual free cone day at all of its scoop shops
Social Value led Marketing – Development of an ice cream flavour to provide demand for harvestable tropical-rainforest products and represent an economically viable alternative to cutting down trees
Social Value led Financing – Initial Public Offer first opened to the citizens of Vermont as a gift to gratify their initial support to the company
Social value led Operating decisions – to create a win-win solution to a tricky environment problem the company sponsored...