Ben & Jerrys Business Operations - Term Paper Example

Table of Contents Executive Summary 3 2.Introduction 3 3.Creating and Developing Opportunities: 4 4.Managing Innovation 6 5.Entrepreneurial Behavior 7 6.Conclusion 9 7.References 10 1. Executive Summary This report contains a detailed analysis on Ben & Gerry, which is now a separate SBU of Unilever. The company’s history is discussed in the introduction in which, the company profile, growth, innovation, later conglomeration with Unilever, and current approaches to maximizing the welfare of the stakeholders is discussed. This report also focuses on the basic reasons which led two entrepreneurs to success. Also, the main concern of the report revolves around looking at the practical implications of the theory of Innovation, Entrepreneurship and the creation of opportunities through Ben & Jerry’s ice cream business operations. The innovations that have been taking place in the company since its embarking upon a long-term journey have been illuminated during the due course of the report. The main reasons because of which Unilever opted to buy Ben & Jerry’s have also been discussed. Apart from that, the entrepreneurial aspect of this company has been explained and how entrepreneurship has played a practical role in the success of their business has been elucidated. All these elements have combined together to translate into profitable growth of their company along with its brand and have led it to its present state. 2. Introduction The purpose of this report is to conduct a research on an organization and discuss in detail, how its presence does creates opportunities and prospects for its stakeholders in light of the theory of the same. Apart from that, the method by which the company innovates its processes and products in order to meet the ever changing needs of the consumers is also conversed. Furthermore, this report also concerns how the selected organization incorporates entrepreneurial principles in order to exploit the available opportunities in the market and undertake some level of risk-taking in order to derive the most benefits from the untapped market segments (Drucker, 1986). For this research, Ben & Jerry’s has been selected as it has been coming up with innovations in its flavors ever since it has come into being in 1978. The Ben & Jerry’s is an ice-cream, frozen yogurt and sorbet manufacturing company which was set up in 1978 as an ice-cream parlor on a renovated gas station in Vermont USA, by two entrepreneurs namely Ben Cohen and Jerry Greenfield with an investment of $12,000. The ice cream parlor soon gained popularity around the neighborhood and the pair began to pack their product and started to supply it to Mom and Pop stores and convenience stores in their Volkswagen Campervan. They eventually grew to interest Unilever and Ben & Jerry’s was then sold at a value of $326.43 million. (Lager, 1994); Ben & Jerry’s 2010). Had Ben & Jerry’s not exploited the opportunity of a gap in the market for innovative flavors, someone else would have swept the market. This report contains a thorough study of Ben & Jerry’s innovativeness in terms of their product offerings. The appropriateness of their innovation is also discussed along with the entrepreneurial aspect of their inventive nature in introducing new flavors every now and then. Besides that, the ways with which Ben & Jerry’s have been creating opportunities for its both internal and external stakeholders is also discussed. 3. Creating and Developing Opportunities: Entrepreneurial Organizations tend to create greater internal and as well as external opportunities for its stakeholders as compared to traditional organizations. This is because with a risk associated with the decisions, the company receives higher returns mainly because of first-mover-advantage and manages to create a need recognition amongst the consumers (Welsch, 2004). The reason Ben & Jerry’s became so successful is that along with their ideas of innovative flavors of ice creams, they took the risk of investing their savings of $8,000 and borrowing extra $4,000 to start-up a business. They created an opportunity for themselves to make a multimillion business out of their ideas and they did. Any organization would make the subsequent opportunities enumerated for its stakeholders if it becomes successful: Creation of employment, introducing new products and services in the market, increased shareholders’ welfare through higher profits, growth and expansion for itself, achieving economies of scale. (Eckhardt et al, 2003). When Ben & Jerry’s grew, it opened its franchises across the town and this created opportunities for distribution companies to get business. Apart from them, the consumers who could not conveniently consume their Ben & Jerry’s could now avail the product at more convenient locations. Ben & Jerry’s also creates franchising opportunities for individuals who wish to invest their money in a business. The expansion of Ben & Jerry’s created an opportunity for Unilever to purchase it and keep the brand as a separate SBU to cash on the brand equity (Ben & Jerry’s, 2010). The Economic mission statement of Ben & Jerry’s is as follows: “To operate the company on a sustainable financial basis of profitable growth and to increase the value for our Stakeholders and expanding opportunities for development and career growth for our employees”. (Ben & Jerry’s, 2010). The above statement clearly portrays the sense of responsibility Ben & Jerry’s display towards its stakeholders both internal and external. Apart from that, this mission statement mentions profitable growth of the company which is directly linked with employee opportunities. This is a big motivational factor for the employees to work hard in order to achieve career growth in the form of more opportunities. Moreover, as the business would expand, this would create more opportunities for potential investors to maximize their returns (Coronadogrrl, 2005). Apart from the mission statement, there are franchising opportunities available to the public. With a strong worldwide brand equity, anyone who wishes to invest in Ben & Jerry’s would ensure a steady return because of the latter (Ben & Jerry’s, 2010). Moreover, Ben & Jerry’s actively involves itself in the society and manages to create an emotional value in the minds and hearts of the consumers. In achieving the world record of “The World’s Largest Sundae”, Ben & Jerry’s ice-cream was used. Apart from that, the company further establishes long-term relations with its consumers by celebrating its anniversary by organizing the ritual Free Cone Day (Ben & Jerry’s 2010). 4. Managing Innovation Any organization which is not receptive to changes will be crushed with time as eventually, one competitor or the other will recognize the need and foresee an upcoming change and take a risk to exploit it. These changes could be increases in demand due to demographic factors, customer preferences, shifts in paradigms etc (Drucker, 1986). Ben & Jerry’s is known worldwide for its innovative flavors and this has mainly been the success of the brand. The market gets to see a new flavor almost every season of the year. Quite recently, Ben & Jerry’s has launched a new line of flavors in the spring of 2010. Bringing innovation in no way implies that there must be something so different which the market cannot accept. If Ben & Jerry’s brings about innovations, it must ensure that the flavors would appeal to the consumers. When it was first launched in 1978, Ben & Jerry’s came up with crunchy flavors which proved to be an instant hit. If Ben & Jerry’s launches a new and innovative flavors which do not appeal to the consumers, such an innovation would prove to be futile (National Rural Electric Cooperative Association, 1994). With innovation, the business cycle of any company can be widened. That is, when an innovation takes place, it experiences growth and then eventually matures and leads to a decline. Managers aim to prolong the growth period of an innovative business/product and extending the maturity period by revamping the offerings. If the company is an innovative one, it will have another idea and business; probably an extension to the current one and in this way, the maturity stage can be steered towards another period of growth as the new offering would generate new demand in the marker. However if the company does not wish to take the risks and launch another idea amidst of falling/stagnant revenues, it will eventually lose its share to the competitors in the long run (Drucker, 1986). Ben & Jerry’s innovations have been backed by a strong research and development which enables it to provide the market with the product that it needs and introduce flavors which are well accepted into the market and hence extending its business cycle (Ben & Jerry’s, 2010). 5. Entrepreneurial Behavior “Entrepreneurial organizations must do more than support an individual entrepreneur: they must repeatedly initiate new product or service ideas within the context of an existing firm, reconverting their people and assets to new uses, bringing new ideas from many sources into good currency. Ideas must be generated, resources assembled, the new product or services produced and delivered to users by organization-wide redirection and cooperation. The test of organizational entrepreneurship is that members across the firm must be involved in creating "something different," and that the organization must sustain such effort again and again.” (Jelinek et al, 1995). Apart from that, Entrepreneurial Organizations’ culture is led by leadership roles assumed by its employees when it comes to accepting changes. Apart from the culture, the need and drive for innovation is also necessary. In other words, there has to be a risk taking ability within the organization and it must show a leadership role to confidently embark on accepting changes (Jelinek et al, 1995). The businesses venture pursued by Ben Cohen and Jerry Greenfield is a perfect example of entrepreneurship by itself. The two college graduates decided to do what they most liked and also make money from it. An initial investment of $12,000 was made to start up a business on a renovated gas station. With the founders’ expertise in the ice-cream making techniques, they came up with new flavors which the consumers had never before experienced. The flavors proved to be an instant hit and soon enough, Ben & Jerry’s opened up another branch within 3 years of the startup (Lager, 1994). Their entrepreneurial behavior of commencing a business with $12,000 and introducing new and exciting flavors which the market needed and renting out another space for expansion were the early indicators that Ben and Jerry were natural entrepreneurs. However, Ben & Jerry’s also had plain vanilla flavors to meet the needs of those customers who preferred simple ice creams and would have any ice cream which was simple. This conflicts with Ben & Jerry’s original focus to introduce exciting flavors in the market. But this can be called as a more defensive way of conducting businesses to avoid complete failure if Ben & Jerry’s had not become famous for its exciting flavors. Moreover, the history points out that Ben & Jerry’s was even closed temporarily during its early days because despite the store became very popular, the owners were not making any money. After careful perusal of the same, Ben & Jerry’s came up with different techniques to manage the financials of their businesses and then continued to grow ever since (Lager, 1994). 6. Conclusion After Ben & Jerry’s was sold to Unilever, it was decided to keep the corporate brand of Ben & Jerry’s as the brand was strongly established and now, owing to the innovative flavors of Ben & Jerry’s the brand was launched in international markets hence sustaining the growth of the latter; which again was an entrepreneurial decision as people have different tastes and preferences. However, the original decision of the owners of Ben & Jerry’s to allow a conglomerate with Unilever was not an entrepreneurial one because they either did not want to take on a bigger challenge of going global or they could not take the risk of further growth. If they had grown on their own, Ben & Jerry’s could have been a separate entity itself. Moreover, the current strategies of Unilever are consistent with Ben & Jerry’s original strategy to have a wide portfolio of brands as well to cater to all kinds of ice cream lovers. This in one way, does not depict a risk taking behavior by Unilever as opposed to Ben & Jerry’s original founders who came up with innovative and exciting flavors for the market in the first place (The Economist, 1997; U.S. News & World Report, 2000; Heard, 2000). Currently, the new flavors introduced by Ben & Jerry’s every now and then also indicate that the company hasn’t lost its edge in what it is known for. As Ben & Jerry’s operates a separate SBU of Unilever, it has sustained itself innovatively. This makes Ben & Jerry’s a comprehensive entrepreneurial organization with risk taking abilities and a drive for innovation which creates opportunities for its stakeholders every now and then. 7. References DRUCKER, P. F. (1986). Peter Drucker on entrepreneurship and innovation. New York, AMACOM. Top of Form LAGER, F. (1994). Ben & Jerrys, the inside scoop: how two real guys built a business with social conscience and a sense of humor. New York, Crown Publishers. (1997). BUSINESS - Ben & Jerrys growing pains. The Economist. 344, 79. (2000). BUSINESS & TECHNOLOGY - Vermonters scream about ice cream - Will a giant scoop up Ben & Jerrys? U.S. News & World Report. 128, 43. NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION. (1994). A Survival kit for entrepreneurs: the Ben & Jerrys story. Washington, D.C., National Rural Electric Cooperative Association, Economic Development Group. BEN & JERRY’S (2010), Official Web page., [online] Available at: BEN & JERRY’S (2010)., Franchising Opportunities., [online] Available at: [Accessed December 2, 2010] CORONADOGRRL (2005).  Ben and Jerrys Company Brand Building and Values., [online] Available at: [Accessed 2 December 2010] HEARD, James E., (2000), 1999 Sear Report: Social Auditor’s Letter, [online] (Updated March 2000), Available at: [Accessed 2nd December 2010] WELSCH, H. P. (2004). Entrepreneurship: the way ahead. New York, Routledge. ECKHARDT, J. T., & SHANE, S. A. (2003). Opportunities and Entrepreneurship. Journal of Management. 29, 333. JELINEK, M., LITTERER, J. A.(1995). Toward Entrepreneurial Organizations: Meeting Ambiguity with Engagement, Entrepreneurship: Theory and Practice, Vol. 19.pp137-169. Bottom of Form Read More