Competitive Advantage

Sustainable Competitive Advantage (SCA) is a corporate strategy’s focal point and it is present. SCA is facilitates the improvement and maintenance of an enterprise’s ability to of earning returns on its investment that is higher than the cost incurred in the investment. Since market competition is inevitable and keeps on increasing as businesses and technologies take a more modern avenue, an enterprise has to survive in this competition by employing a unique value-creating strategy.

This survival is only achievable by the adoption of the sustainable facet of competitive advantage. Moreover, the market conditions undergo frequent transformations and as a result, development of existing and creation of new resources and capabilities by the enterprise ought to be instituted. The above constitutes the elements of sustainable competitive advantage (Thompson, Bernard, 2003). Business organizations aim at being distinct and able to reproduce in their activities. These alienate them from their competitors in the eyes of the consumer.

Since the competitors are not in a position to duplicate these values, the firm remains to be sustainably competitive. Organizations ought to utilize software service providers for all their software needs because of various reasons that are very consequential to the organization in question. To begin with, these providers more often than not offer software that is genuine and free from bugs. This ensures that the outcomes realized from the use of the software are certainly correct.

Guarantee is provided for the software. Besides, technical support is always available from the providers hence enables the employees of the organization make queries in areas that they find challenging through out. Updates for the software are also catered for by the providers and this lowers the maintenance cost. Software service providers beep up the security of the organization’s sensitive information since they are more secretive and they are obliged to compensate for any malfunctioning or failure of their product.

Additionally, in choosing of the service provider, the firm ought to assess compatibility of the software with their systems, the ease to access the provider for updates or modifications and also the technological qualifications of the service providers (Thompson, Bernard, 2003). More important, the cost to be incurred in providing the service should be within the organization’s ability.

1. High intensity domestic competition breeds international success.

2. In the diamond-shaped chart, there are key elements of it success is to be sustained: Company strategy (structure and rivalry), factor conditions, demand conditions, related and supporting industries.

3. The home base shapes a company’s capacity to innovate rapidly in technology and methods and to do so in the proper directions.

4. A global strategy supplements and solidifies the competitive advantage created at home base.

5. The most important sources of national advantage must be actively sought and exploited.

6. Caught up in a never-ending process of seeking out new advantages and struggling with rivals to protect them.

7. Stability is valued in most companies, not change. Protecting old ideas and techniques becomes the preoccupation, not creating new ones. The long-term challenge for any firm is to put itself in a position where it is most likely to perceive, and best able to address the imperatives of competitive advantage. Expose a company to new market and technological opportunities that may be hard to perceive.

Preparing for change by upgrading and expanding the skills of employees and improving the firm’s scientific and knowledge base. Overcoming complacency and inertia to act on the new opportunities and circumstances. Much attention has rightly been places on the importance of visionary leaders in achieving unusual organizational success. Great leaders are influenced by the environment in which they work. Innovation takes place because the home environment stimulates it. Innovation succeeds because the home environment supports and even forces it.

The right environment not only shapes a leader’s own perceptions and priorities but provides the catalyst that allows the leader to overcome inertia and produce organizational change. Great leaders emerge in different industries in different nations, in part because national circumstances attract and encourage them In many industries, the national environment provides one or two nations with a distinct advantage over their foreign competitors. Leadership often determines which particular firm or firms exploit this advantage.

The ability of any firm to innovate has much to do with the environment to which it is exposed. Seeking safe havens and comfortable customer relationship only reinforces past behavior. Innovation grows out of pressure and challenge. It also comes from finding the right challenges to meet. The main role of the firm’s leader is to create the environment that meets these conditions.

8. The new rules for innovation, a company should actively seek out pressure and challenge not try to avoid them. Part of the task is to take advantage of the home nation in order to create the impetus for innovation.

Some of the ways of doing so are: seel to the most sophisticated and demanding buyers and channels seek out the buyers with the most difficult needs, establish norms of exceeding the toughest regulatory hurdles of product standards, treat employees as permanent, and establish outstanding competitors as motivators.

9. The true costs of stability. Such a search for a quiet life, and understandable instinct, has led many companies to buy direct competitors or from alliances with them, in a closed, static world, monopoly would indeed be the most comfortable and profitable solution.

In reality competition is dynamic. Good managers always run a little scared, they respect and study competitors. Seeking out and meeting challenges is part of their organizational norm. A firm need not exclusively serve demanding buyers nor should it compete head on with any rival. The aim in seeking pressure and challenge is to create the conditions in which competitive advantage can be preserved. In global competition, the pressures of demanding local buyers, capable suppliers, and aggressive domestic rivalry are even more valuable and necessary for long-term profitability.

These drive the firm to a faster rate of progress and upgrading than international rivals, and lead to sustained competitive advantage and superior long-term profitability. A tough domestic industry structure creates advantage in the international industry. A comfortable, easy home base, in contrast, leaves a firm vulnerable to rivals who enjoy greater dynamism at home. If a firm lacks the pressures for improvement and innovation, it must create them

10. Perceiving industry change. One of the most important advantages an industry can have is early insight into important needs, environmental forces and trends that others have not noticed.

Firms gain competitive position before rivals perceive an opportunity and are able to respond. Identify and serve buyers with the most anticipatory needs. Some buyers will confront new problems or have new needs before others, because of their demographics, location, industry, or strategy. Buyer with anticipatory needs should be identified, designated as priorities and cultivated. Discover and highlight trends in factor costs. Increases in the costs of particular factor or other inputs may signal future opportunities to leapfrog competitors by innovating to deploy inputs more effectively or to avoid the need for them altogether.

Maintain ongoing relationship with centers of research and sources of the most talented people. Identify the places in the nation where the best new knowledge is being created that is now or might become relevant to its industry. Identify school, companies, institutions where the best specialized human resources needed in the industry are being trained. Invest time and money. Study all competitors, especially the new and unconventional ones. A firm should designate the most forward-looking or unconventional competitors for particular study, including foreign competitors who may enjoy the benefits of a very different home base.

Learn from to counter them. Bring some outsiders into the management team. Managers from other companies or industries or from the company’s foreign subsidiaries. Benefit the innovation process.

11. International within the national cluster. Firm gains competitive advantage from the presence in its home nation of world-class buyers, suppliers and related industries. Have a strong cluster at home unblocks the flows of information and allows deeper and more open contract than in possible when dealing with foreign firms. Buyers, channels and suppliers.

Recognizing that home-based buyers and suppliers are allies in international competition, a firm must persuade: regular senior management contact, formal and ongoing interchange between research organizations, reciprocity in serving as test sites for new products or services and cooperation in penetrating and serving international markets. Related industries. Industries those are related or potentially related in terms of technology, channels, buyers, or the way buyers obtain or use products, are potentially important to creating and staining competitive advantage.

Locating within the nation. A firm should locate activities and its headquarters at those locations in the nation where there are concentrations of sophisticated buyers, important suppliers, groups of competitors, or especially significant factor-creating mechanisms for its industry. Geographic proximity makes the relationship within a cluster closer and more fluid.

12. Serving home base buyers who are international and multinational. Identify and serve buyers at home that it can also serve abroad.

13. Improving the national competitive environment.

14. Diversification.

Part of company strategy in virtually every nation. Acquisitions were involved in international success stories, the acquisitions were often modest or focused ones that served as an initial entry point or reinforced an internal entry. Theory for diversification strategy are as follow:

1. New industries for diversification should be selected where a favorable national “diamond” is present or can be created. Diversification proposals should be screened for the attractiveness of the home base.
2. Diversification is most likely to succeed when it follows or extends clusters in which the firm already competes.
3. Internal development of new businesses, supplemented by small acquisitions, is more likely to create and sustain competitive advantage than the acquisition of large, established companies.
4. Diversification into businesses, lacking common buyers, channels, suppliers or close technological connections is not only likely to fail but will also undermine the prospects for sustaining advantage in the core businesses.

15. To sustain competitive advantage in global industries, a firm must sell to all significant country markets. Identifying such buyers in other nations will help a firm understand the most stimulate rapid progress in products and services.

16. A firm must be willing to source products or equipment from foreign firms if they are superior. Also work to upgrade local suppliers. Loyalty to domestic suppliers, for its own sake, is ultimately self-defeating. The best form for this is to confront them in no uncertain terms with the need to match their foreign competitors in quality and productivity in order to retain the business.

A firm aspiring to competitive advantage must be aware of, and ideally have some access to, all the important scientific work going on in the world that is related to its industry.

17. A firm must be the best rivals in the marketplace in order to sustain and upgrade its advantage. Must find a way to gain advantage over the best rivals in order to assure its market position. Meet rivals in all the important markets is to deny them profits in safe markets that can be used to cross-subsidize low profits in contested markets.

18. Choose a location that will expose the firm to significant needs and pressures lacking at home. The purpose is to learn as well as raise the odds that information passes credibly back to the home base.

19. Foreign acquisitions can serve for: gain access to a foreign market or to selective skills and to gain a highly favorable national diamond.

20. Alliances or coalitions are final mechanism by which firm can seek to tap national advantages in other nations. Alliances take form as joint ventures, licenses, sales agreements and supply agreements. Alliances are a tempting solution to the dilemma of a firm seeking the home-base advantages of another nation without giving up its own (are rarely a solution).

21. Real leaders believe in change. Energize their organizations to meet competitive challenges. Find ways of overcoming the filters that limit information and prevent innovation. Have a broad view of competition in which their national environment is integral to competitive success. Work hard to improve that environment and to encourage appropriate government policies.

* 1. MGMT65000 – Strategic Management – spring 2011 Test 1 By: Divya Mishra School of Management Purdue University Calumet Submitted to: Dr. Arifin Angriawan1|Page * 2. Company profile & backgroundNIKE, Inc. is engaged in the design, development and worldwide marketing of footwear,apparel, equipment and accessory products. . It sells its products to around 18,000 retail accountsin the United States and through a mix of independent distributors, licensees and subsidiaries innearly 200 countries. NIKE is the largest seller of athletic footwear and athletic apparel in the world. The Company creates designs for men, women and children.

The top selling product categoryincludes running, basketball, childrens, cross-training and womens shoes. It also designs shoesfor outdoor activities like tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling,cheerleading, aquatic activities, hiking and other athletic and recreational uses. Index membership Sector Industry EmployeesS&P 500 Consumer Cyclical Footwear 23,300ProductsNIKE sells sports attire and accessories relevant to each sport mentioned above as well as othersports-inspired lifestyle apparel, like bags, socks, sport balls, eyewear, protective equipment,basic sport equipment, etc.

In addition to NIKE’s footwear, apparel, and accessories businesses, the Company sells productsunder other brand names in particular markets. NIKE wholly-owns five footwear and apparelcompanies that specialize in different sports: Cole Haan, Converse Inc. , Hurley InternationalLLC, Umbro Ltd. , and NIKE Golf. These subsidiaries combined together account for 13% oftotal revenues, $2. 5 billion, in fiscal 2009. Manufacturing Footwear & ApparelAll of NIKE’s footwear is manufactured outside the United States in the factories of China,Vietnam, Indonesia, and Thailand and account for 98 percent of total NIKE brand footwear in2009.

The main raw materials used in NIKE footwear are rubber, plastic compounds, and foamcushioning materials, nylon, leather, canvas, and polyurethane films used for cushioningcomponents. NIKE brand apparel is also manufactured almost entirely outside of the United States, in 34different countries. The main materials used in NIKE apparel are natural and synthetic fabricsand threads, plastic and metal hardware, and water and heat resistant fabrics. Marketing and AdvertisingNIKE places a significant weight on marketing the company and its products.

NIKE aggressivelybonds the contracts with highly successful and influential athletes, coaches, teams, and leagueslike Michael Jordan, Serena Williams, and Tiger Woods to popularize its footwear, apparel andsports accessories. In order to sustain its dominance in the industry and stay competitive stay, NIKE activelyresponds to trends and changes in consumer preferences by adjusting the mix of existing productofferings, developing new products, styles and categories, and influencing sports and fitnesspreferences through aggressive marketing.

Its primary areas of marketing remain Net TV andmagazines. 2|Page * 3. CompetitorsThe rivalry in the sports wear industry is very high. NIKE competes with numerous athletic andleisure shoe companies worldwide. It faces fierce competition in product offerings, technologies,marketing expenditures, pricing, costs of production, and customer services. The maincompetitors are Adidas, Reebok, Timberland, Woodland, and Puma.

Strengths Weaknesses Brand recognition Overseas manufacturing High product quality dependency Effective marketing Decreasing United States strategy market share Capacity of innovation High product price Strong distribution chain compared to Adidas Strong R&D Currency exposure Strong customer Medium retail presence relationship/satisfaction SWOT Analysis Opportunities Threats Expansion into emerging Fierce industry competition markets Revenue relies on Increased demand in product consumers’ discretionary innovation income Growing segment of women Economic rescission athletes Fluctuation in the currency Increase in the number of sports events like Olympic, FIFA3|Page * 4.

NIKE Innovations NIKE with Apple: The NIKE+ package consists of a pair of specially designed NIKE+ running shoes, an iPod nano, and a NIKE + iPod sport kit. The kit consists of a sensor that fits into a built-in pocket beneath the insole of the left shoe and a receiver that fits into the iPod nano dock connector. As a person runs, iPod tells the distance, pace, and calories burned via voice feedback that adjusts music volume as it plays. (Google image) Design your own shoes: NIKE allows customers to design their own shoes from a catalogue of predefined designs. Customers can choose their own colors and mascots to create shoes which define their personality.

It provides Touch screen technology in store allowing customers to design shoes of choice. (Google image) Nike self lacing automatic shoes: NIKE is also coming up with the new automatic self lacing sneakers. The automatic lacing system provides a set of straps that can be automatically opened and closed to switch between a loosened and tightened position. 4|Page * 5. Critical data of Nike Annual Report$ Millions 2010Net Income 1,906. 7Current Liability 3,364. 2Total Assets 14419. 3Tax Rate 24. 2%Interest Rate 6. 35%Long-Term Debt 445. 8Return on Equity 19. 54%Total Equity 9753. 7Weighted Average Cost of Capital 8. 9%Capital Employed 11055. 1Interest Expense 6. EBIT 2516. 9NOPAT 1907. 81Return On Capital Employed 20. 7%Economic Value Added 1267. 25Cash Flow From Operations* 3164. 2Capital expenditure* 335. 1Free Cash Flow 2045. 31Five year Nike stock performance vs. S&P500* (Fiscal year 2006-2010) 2% Nike S&P500 90%5|Page * 6. 2010Nike revenue growth 2006-2010 Nike Revenue 25000 20000 Revenue 15000 10000 5000 0 2006 2007 2008 2009 2010 YearNike revenue generation by product 2010 Revenue Generation by Product 6% 34% Footwear 60% Apparel Equipment6|Page * 7. 1. Please use Figure 2. 3 page 53 (Grant’s textbook, 7th edition) as your overall guide to draw a balanced scorecard for the firm.

Please draw a balanced scorecard for the firm that you choose. Identify all four perspectives, each perspective’s objectives and their relationships. See example in the appendix. Feel free to modify it. On the other pages please elaborate on the four perspectives and their elements. For the financial performance perspective, at least you need to discuss: ROCE, EVA, and FCF. Conclude what the numbers mean to you as a manager (e. g. Good, bad, or neutral; and why). Why do firms need to prepare a balanced scorecard? (20 points) Balance Scorecard for NIKE 2010FINANCIAL GOOD–NEUTRAL • ROCE : 17. 8% Neutral • EVA: 1267. 25 millions Good • FCF : 2045. 1 millions Good • ROE : 19. 54% Good • Profit Margin :10. 03% Good • NIKE growth: 7% vs. industry growth Good 4. 5% Bad • High advertising cost Good • Better COGS% than competitorsCUSTOMER GOOD-NEUTRAL • Customer Satisfaction Good • Customer Loyalty Good • Customer retention ratio Good • Market Share Good • Competitive Price Bad • Number of Customers Good Good • Design own shoes optionINTERNAL GOOD • Marketing Innovative Products Good Celebrity endorsement Good Diversity of online product Good • R&D Integrated researches Good Product technology Good High quality product design Good • Good supplier relation Good • IT for inventory control Good7|Page

Strategic Plan: Part 1 Malissa Love-Virgil BUS/475 March 12, 2013 Victor De Jesus Strategic Plan: Part 1, Conceptualizing a Business Little League Scoops mission is to provide the healthiest homemade ice cream at the same time as supporting the youth in the local neighborhood. Little League Scoops offers two free scoops of ice cream to the little league ball players after his or her ball game. Little League Scoops, aside from management, only employs students from the local high school, providing a learning experience for students preparing to leave high school.

Organization Vision “A vision statement is sometimes called a picture of your company in the future but it’s so much more than that. Your vision statement is your inspiration, the framework for all your strategic planning. A vision statement may apply to an entire company or to a single division of that company. Whether for all or part of an organization, the vision statement answers the question, “Where do we want to go? ” What you are doing when creating a vision statement is articulating your dreams and hopes for your business.

It reminds you of what you are trying to build” (“Vision Statement,” 2013). At Little League Scoops, we provide homemade superior tasting ice cream while fostering healthy activities in our neighborhood youth. Little League Scoops makes the healthiest homemade ice cream fresh daily for those in the surrounding areas. The primary goal of Little League Scoops, other than to become a sturdy long-term company in a small town, is to promote healthy activities in the children by encouraging them to maintain healthy activities throughout the summer vacation.

Little League Scoops believes that by promoting healthy activities in children, we create healthy adults with healthy habits. Keeping children busy instead of setting them in front of video games will aid in lowing childhood obesity as well as laziness. Guiding Values The area that in which Little League Scoops resides is not wealthy in terms of monetary value. Little League Scoops is looking to maintain healthy business long term, but it also wants to foster abundant relationships with the community.

Little League Scoops provides competitive prices for homemade healthy ice cream for anyone who is not a little league ball player and free scoops for those who are. Little League Scoops believes it is the responsibility of the organizations within a community to foster good will. Providing incentive for the youth to stay active is how Little League Scoops intends to become a predominate company in the surrounding areas. As the name of the organization grows, surrounding areas will be invited to join in the free scoops program for the little league teams in those townships.

Guiding the Organization’s Strategic Direction “People have different beliefs around what is right, wrong or inconsequential, and so it is critical that company’s build some foundational beliefs in employees to make sure his or her decisions are in alignment with the organization. A company’s mission, vision and values are that foundation. They guide decision making by building common beliefs and understanding among employees.

When a strong mission, clear vision and detailed values are implemented, an organization will begin to eliminate personal preference, ensuring that critical decisions are ethically sound and consistent in approach” (“Decision Making: The 3 Foundations Of Business Decision Making: Mission, Vision, Values,” 2013). Little League Scoops mission is to provide the healthiest homemade ice cream at the same time as supporting the youth in the local neighborhood. Little League Scoops believes that by promoting healthy activities in children, we create healthy adults with healthy habits.

Combining the mission, the vision, and the values of Little League Scoops, the organization will use these driving forces to maintain the strategic direction and become an icon housed within a small community. Addressing Customer Needs and Achieve Competitive Advantage Summertime brings a need for cooling refreshments. Ice cream has forever been a favorite among Americans. “The U. S. ice cream industry generated total revenues of $10 billion in 2010, with take-home ice cream sales epresenting the largest section of the market, generating revenues of $6. 8 billion or 67. 7 percent of the market’s overall value. Frozen dairy production follows a clear seasonal pattern. Summer is the unchallenged season for eating ice cream and other related products. Production kicks up in March and April to fill retail and foodservice pipelines in the late spring and early summer. June is the highest production month of the year, but production remains strong through August to satisfy summer demand. (“Ice Cream Sales & Trends”, 2013). Providing the community with delicious and healthy ice cream serves two purposes. The first purpose is the refreshing coolness of a delicious ice cream. The second purpose is providing healthy ice cream is beneficial to those who like ice cream but are health conscious. Little League Scoops makes all its ice cream fresh each day. Hired to help make and serve all the delicious flavors are high school juniors and seniors looking for job experience prior to leaving high school.

Little League Scoops believes that if opportunities are provided for the youth, they will in turn become responsible adults. The competitive advantage that Little League Scoops has over competing ice cream parlors are (1) Providing healthy homemade ice cream, (2) hiring high school students and teaching them how to become responsible workers, (3) providing opportunities for the community’s youth to stay active by rewarding them with free scoops, (4) always keeping the youth as priority. Conclusion

Other ice cream parlors may offer a larger array of flavors; however, Little League Scoops smaller assortment is always freshly homemade. There is no comparison to homemade ice cream at competitive prices. There is no comparison to encouraging the youth to stay fit and active. Providing a healthy refreshing treat after a ball game will keep the children eager to participate in summertime activities, instead of sitting in front of a video game. No price can be placed on the health of the future. Todays’ youth are tomorrow’s leaders.

Encouraging them today will show them they can do anything they put their minds to. References Vision Statement. (2013). Retrieved from http://sbinfocanada. about. com/od/businessplanning/g/visionstatement. htm DECISION MAKING: The 3 Foundations of Business Decision Making: Mission, Vision, Values. (2013). Retrieved from http://newdirectionsconsulting. com/4579/blog/the-3-foundations-of-business-decision-making-mission-vision-values-2/ Ice Cream Sales ; Trends. (2013). Retrieved from http://www. idfa. org/news–views/media-kits/ice-cream/ice-cream-sales-and-trends/

Strategic Analysis of Ben & Jerry’s Homemade, Inc. Can B&J Serve a Double Scoop of Being Green and Making Green? ESM 210 Professor Delmas Final Paper November 21, 2000 Alex Tuttle Vicky Krikelas 1 BEN & JERRY’S ICE CREAM Table of Contents INTRODUCTION……………………………………………………………………………. MARKET DESCRIPTION………………………………………………………………….. FIRM DESCRIPTION………………………………………………………………………. THE MISSION STATEMENT……………………………………………………………… 1 1 1 2 GENERAL CORPORATE STRATEGY…………………………………………………… 2 CORPORATE ENVIRONMENTAL STRATEGY………………………………………… 4 STRATEGY ANALYSIS……………………………………………………………………… 8 Five Forces Model of Competition……………………………………………………. 8 SWOT Analysis………………………………………………………………………….. 11 Key Success Factors…………………………………………………………………….. 11 STRATEGIC CONSISTENCIES…………………………………………………………….. 12 STRATEGIC DISCONNECTS………………………………………………………………. 13 UNILEVER ACQUISITION…………………………………………………………………. 14 RECOMMENDATIONS & CONCLUSION………………………………………………… 15 BIBLIOGRAPHY……………………………………………………………………………… 17 Figures FIGURE 1. FIGURE 2. FIGURE 3. FIGURE 4. FIGURE 5. ANNUAL REVENUES………………………………………………………….. 4 ANNUAL RECYCLING………………………………………………………… 7 PORTER’S 5 FORCES MODEL ………………………………………………9 SWOT ANALYSIS………………………………………………………………11 KEY FACTORS OF SUCCESS……………………………………………….. 2 2 3 INTRODUCTION Ben & Jerry’s is an innovative leader in the super premium ice cream industry. The company blends a commitment to provide all natural, high quality ice cream with a commitment towards social activism and environmental responsibility. This report will analyze both the company’s environmental strategy and general corporate strategy in order to identify the consistencies and disparities (if any) between these strategies and to determine whether a “green” company such as Ben & Jerry’s can sustain a competitive advantage.

We will also discuss the potential impacts on the company’s strategic vision in light of the recent acquisition by Unilever. Our analysis will focus on examining the strengths and weaknesses of the environmental and general corporate strategies in light of its internal resources and external competitive and non-market forces. MARKET DESCRIPTION Ben & Jerry’s operates in the highly competitive super premium ice cream, frozen yogurt and sorbet business.

Super premium ice cream is generally characterized by a greater richness and density than other kinds of ice cream and commands a relatively higher price. The company’s two primary competitors include Haagen-Dazs (a member of the Ice Cream Partners organization) and Dreyer’s Grand Ice Cream Company, which introduced its Godiva and Dreamery super premium ice cream line in the fall of 1999. Other significant competitors include Healthy Choice, Nestle and Starbucks (SEC Report, 1999). FIRM DESCRIPTION Ben & Jerry’s Homemade, Inc. the Vermont-based manufacturer of super-premium ice cream, frozen yogurt and sorbet, was founded in 1978 in a renovated gas station in Burlington, Vermont, by childhood friends Ben Cohen and Jerry Greenfield with a modest $12,000 investment. The company is now a leading ice cream manufacturing company known worldwide for its innovative flavors and all-natural ingredients made from fresh Vermont milk and cream (www. benjerry. com). Manufacturing of all Ben & Jerry’s frozen dessert products occurs in the company’s three plants located in Vermont.

The company distributes ice cream, low fat ice cream, frozen yogurt, sorbet and novelty products nationwide as well as in selected foreign countries in supermarkets, grocery stores, convenience stores, franchised Ben & Jerry’s scoop shops, restaurants and other venues. Outside of Vermont, the products are distributed primarily through Dreyer’s and other independent regional ice cream distributors. Unilever, a multinational food and personal products company recently acquired Ben & Jerry’s in spring 2000. The Ben & Jerry’s Board of Directors approved Unilever’s offer of $43. 60 per share for all of the 8. million outstanding shares, valuing the transaction at $326 million (www. lib. benjerry. com, October, 2000). Under the terms of the agreement, Ben & Jerry’s will operate separately from Unilever’s current U. S. ice cream business. There will be an independent 4 Board of Directors, which will focus on providing leadership for Ben & Jerry’s social mission and brand integrity. Both co-founders will continue to be involved with Ben & Jerry’s, and the company will continue to be Vermont-based. THE MISSION STATEMENT Ben & Jerry’s adopted a three-part mission statement formalizing the company’s business philosophy.

According to the company’s home page (www. benjerry. com), the mission statement is as follows: Product Mission: 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. Social Mission: 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.

Economic Mission: to operate the company on a sound financial basis of profitable growth, increasing value to our shareholders and creating career opportunities and financial rewards for our employees. Underlying this mission is the determination to seek innovative ways of addressing all three components, while holding a deep respect for employees and the community at large. GENERAL CORPORATE STRATEGY Ben & Jerry’s corporate strategy strives to implement the three integrated missions described above: developing a high-quality product, achieving economic growth and profitability, and incorporating social activism.

The general corporate strategy can be characterized as a focused or market niche strategy based primarily on product differentiation and quality production. Although focused differentiation strategies target a narrow buyer segment, this strategy helps Ben & Jerry’s gain a strong competitive advantage as it can offer consumers something they perceive is appealingly different from rival competitors—innovative super-premium ice cream flavors that taste better and consist of all natural, high quality ingredients.

In addition to differentiating its product from other ice cream competitors, Ben & Jerry’s general strategy combines several other key components, including fostering a company image of social activism, creating brand loyalty, franchising the company to aid economic growth, and developing creative advertising campaigns. Product Differentiation One means of gaining a competitive advantage is through the use of a differentiation strategy to provide a better product that buyers believe is worth the premium price (Thompson and Strickland, 1998).

Since higher quality ice cream generally costs more than the economy and regular types of ice cream, Ben and Jerry’s has incorporated product differentiation in its general corporate strategy in order to command a higher price. The use of all-natural, high quality 5 ingredients and the innovative flavors of Ben & Jerry’s ice cream illustrates the strategic use of product differentiation to gain a competitive advantage in the ice cream market.

Quirky flavor names such as Chubby Hubby, Wavy Gravy, Phish Food, and Chunky Monkey also set Ben & Jerry’s apart from the traditionally-named ice cream products of rival companies. Furthermore, the use of recycled materials and dioxin-free (unbleached) paper in product packaging contributes to the uniqueness of Ben & Jerry’s ice cream and helps keep its costs down. Socially-Conscious Company Image Ben & Jerry’s strives to be an independent, socially-conscious Vermont company that supports local dairy farmers.

Several examples illustrate how Ben & Jerry’s implements this corporate strategy. For instance, the company donates 7. 5% of pretax profits to philanthropic causes through the Ben & Jerry’s Foundation, community action teams, and through corporate grants (http://www. hoovers. com). The company also donates free ice cream during public events and community celebrations in the Vermont area, and contributes a percentage of the profits earned from ice cream sold in Vermont retail stores to fund local charities (SEC Report, 1999).

Furthermore, the company has ensured the long-term viability of its own key suppliers, the Vermont dairy farmers, by executing a strategic decision to pay more than a specified minimum price for its dairy ingredients (SEC Report, 1999). Brand loyalty Developing brand loyalty is another strategic move to strengthen competitive advantage. Ben & Jerry’s has made substantial efforts to gain a favorable reputation and image with buyers through its frequent promotional campaigns (i. e. , Free Cone Day), donations to social causes (i. , Ben & Jerry Foundation), and the use of eco-friendly products, as discussed below under Environmental Strategy. This strategy has proven successful; the 1999 Harris Interactive Poll regarding buyer perception of corporate reputability ranked Ben & Jerry’s first in the “social responsibility” category and fifth overall (SEC Report, 1999). Small-Scale Growth and Franchising The economic mission of the company (to achieve profitability, increase value to shareholders and create career opportunities) is implemented through Ben & Jerry’s strategy for small-scale business growth.

Ben & Jerry’s has maximized profitability by initially starting small and slowly building an ice-cream business over time (Spolsky, 2000). Ultimately, the success at the small-scale required the company to shift its corporate strategy toward the establishment of several franchised “scoop shops” throughout the nation and Europe. As of 1999, there were approximately 164 scoop shops in North America (SEC, 1999). These scoop shops serve as a major employment resource and a source of revenue for non-profit groups.

In addition, Ben & Jerry’s gains a competitive advantage through franchising by expanding market share, increasing revenue and publicizing the company’s brand name using minimal amounts of startup capital. As shown in Figure 1, Ben & Jerry’s has achieved substantial, yet gradual, growth in revenues since 1993. Marketing Strategy According to the Securities Exchange Commission (SEC) annual report, Ben & Jerry’s use of natural ingredients, high product quality, periodic introduction of new flavors, focus on grass- 6 roots community involvement and the “down home” local image are essential elements of the company’s marketing strategy.

The company’s Waterbury ice cream factory is the single most popular tourist attraction in Vermont. In addition, the company is well known for it’s creative television advertising and public relations campaigns. The use of innovative online marketing and web-based promotions with Yahoo have further emphasized this image and strengthened brand name recognition (SEC Report, 1999). Ben & Jerry’s Annual Revenue: 1993-1998 225 $ (in millions) 200 175 150 125 1993 1994 1995 1996 1997 1998 Year Figure 1. Annual Revenue for Ben & Jerry’s: 1993 to 1998. Source: Ben & Jerry’s 1998 CERES Report.

CORPORATE ENVIRONMENTAL STRATEGY In 1992, Ben & Jerry’s became the first publicly held company to adopt the CERES (Coalition for Environmentally Responsible Economies) principles as part of its environmental strategy (Ben & Jerry’s 1998 CERES Report). CERES is a non-profit coalition of interest groups working in partnership with companies towards the goal of corporate environmental responsibility worldwide. This involvement with CERES is evidence of the company’s dedication to protecting the environment and insurance that consideration is made to the environment when managing and operating its business.

The CERES principles are as follows: • Protection of the Biosphere 7 • • • • • • • • • Sustainable Use of Natural Resources Reduction and Disposal of Wastes Energy Conservation Risk Reduction Safe Products and Services Environmental Restoration Public Outreach and Education Management Commitment Audits and Reports Ben & Jerry’s believes that “businesses should be among the leaders in the social change necessary to repair and prevent the damage that the human race is capable of inflicting upon natural cycles through everyday corporate, national, international, local and personal practices” (ibid).

By integrating the CERES principles into the company’s overall goals, Ben & Jerry’s strives to develop a comprehensive environmental strategy that conforms to its mission of making an exemplary product, earning a fair return, and serving its community. Ben & Jerry’s environmental goals as a company are to minimize its negative impacts on the environment, promote sustainable farming and safe methods of food production that reduce environmental degradation, and use its business as a medium for environmental and social change.

In order to accomplish this strategy there are numerous policies and activities that the company is executing, or has plans to execute in the near future. By analyzing Ben & Jerry’s environmental strategy within the framework of the Principle Strategy-Implementing Tasks, as outlined in Chapter 9 of Crafting and Implementing Strategy (Thompson and Strickland, 1998), we can effectively examine the steps the company is taking to best achieve its goals. These actions are visible in all aspects of the company and are proof of the company’s commitment to its environmental strategy.

There is an ever-present culture within Ben & Jerry’s of environmental awareness and interest in company greening. In implementing its strategy, Ben & Jerry’s has worked to ensure that every employee is involved and that values are shared throughout the company. Within the management structure of the company, efforts are made to make sure that the Board of Directors and CEO are fully informed about pertinent environmental issues and are fully responsible for environmental policy. In addition, the company considers demonstrated environmental commitments when selecting Board members.

As the founders, Ben Cohen and Jerry Greenfield continue to provide strong environmental leadership that is crucial to effective implementation of the company’s environmental strategy. There is significant dialogue within the chain of command of the company. At each manufacturing site in Vermont there is an Environmental Coordinator who is in charge of operating and monitoring environmental activities. These coordinators meet with the Manager of Natural Resource Use on a monthly basis. Through this dialogue, nvironmental strategies for company-wide and site-specific compliance and operations are made. The Manager of Natural Resource Use reports to the Senior Director of Operations who in turn reports to the CEO (ibid). This flow of information ensures that every decision-maker is aware of environmental issues and considers these factors when running the business. 8 There is also a significant employee environmental awareness and education campaign within the company. Programs such as the company-wide Environmental Awareness Week promotes employee knowledge of environmental issues.

During orientation, new employees are introduced to the environmental policies of the company by the Manager of Natural Resource Use (ibid). In addition, there are employee-led groups called Green Teams that work on company-related projects like recycling, composting, and writing “eco-facts” for the company newspaper (ibid). This activism and knowledge-share that is built into the company network contributes to the success of its environmental strategy by enabling company personnel to better carry out their strategic roles.

In addition to this internal communication, the company also uses various strategies to build public interest and awareness in environmental issues. This succeeds in not only promoting the goals of the company, but also in adding to the competitive advantage of the company by gaining public support and loyalty. Ben & Jerry’s website has a plethora of information on its environmental policies, activities, and accomplishments. The importance that the company places on these issues is shown by the fact that some of this information is highlighted on the home page (www. benjerry. om, 2000). Other tools the company uses for disseminating information to the public are the publications of the Annual Report and CERES Report, as well as position papers on dioxin and rBGH at their scoop shops. In addition, the company puts on an annual festival encouraging public awareness of environmental and social issues (CERES Report, 1998). In order to be successful in implementing its environmental strategy, Ben & Jerry’s has established many strategy-supportive policies company-wide. These are detailed in the company’s 1998 CERES Report. These policies apply to all U. S. ocations and international locations under the company’s direct ownership. The Manager of Natural Resource Use continually updates them whenever new technologies, concerns, or standards emerge. Examples of these include: • • • • Beginning in 1997, all uncontaminated waste oils from its plants are re-refined by a certified handler to be reused. In 1994 the company created a list of approved environmentally friendly cleaning and office supplies that is continually updated when appropriate. Scoop shops are built with environmentally sound material, such as tiles and countertops made of recycled materials.

The “Contractor’s Handbook” contains environmental requirements for all outside parties working at Ben & Jerry’s sites. Another area that is crucial to ensure that environmental strategies are achieved is in the allocation of resources to strategy-critical activities and the institution of best practices for continuous improvement. The company puts a lot of energy into exploring opportunities for waste reduction, recycling, and energy use. In addition, the company tracks the cost and impacts of all waste and energy use associated with the production process.

Using a system of integrated environmental tracking tables the company reports on solid, hazardous, wastewater, and dairy waste production, energy use, and recycling. This information is used to identify trends and set 9 goals. As a result of this work the company has demonstrated continual improvement in its solid-waste recycling, rising from 35% in 1995 to 53% in 1998. Figure 2 shows the amount of waste the company has recycled between 1995 and 1998. In 1998, a Packaging Innovation Group was created with a goal reducing waste from ingredient packaging (ibid. ).

In 1997, the company conducted a project to develop a pint container that would be more environmentally sustainable and compostable. The company invested hundreds of man-hours to analyze sources of chlorine-free paper for their “Eco-Pint” (ibid. ). The release of this product is in direct line with the company’s environmental strategy and presents a major step forward in its goal to develop a compostable, non-toxic container. Annual Recycling at Ben & Jerry’s Tons of Solid Waste 1000 800 600 400 200 0 1995 1996 Year 1997 1998 Figure 2. Annual Solid Waste Recycling at Ben & Jerry’s between 1995 and 1998.

Source: Ben & Jerry’s 1998 CERES Report. Ben & Jerry’s realizes the importance of community participation and accountability. Consistent with its environmental strategy, Ben & Jerry’s uses its business as a means of promoting environmentalism, small-scale agriculture, human rights, and economic justice. This is achieved through Corporate Giving to organizations like Natural Resources Defense Council and the Vermont Land Trust, the establishment of the Ben & Jerry’s Foundation which funds non-profit social and environmental organizations across the United States, and Community Actions Teams.

These teams are made up of Ben & Jerry’s employees who organize annual major community projects in their area and provide grants to various community-based organizations. All told, Ben & Jerry’s donates approximately 7. 5% of its pre-tax profits annually (ibid. ). 10 Another means by which the company seeks to achieve its environmental strategy is through management of its supply chain. Ben & Jerry’s is consistently working to purchase ingredients and other inputs from environmentally and socially responsible sources. The company has a Vendor Certification Program in which 80% of its suppliers were enrolled by the end of 1998 (ibid. . As part of the assessment process, Ben & Jerry’s evaluates the environmental competencies of potential suppliers and considers this information when determining whether or not to do business. In addition, Ben & Jerry’s only purchases dairy supplies from family farmers who pledge not to treat their cows with rBGH, because of the adverse effects it has on sustainable agriculture (ibid. ). By working with its suppliers, Ben & Jerry’s attempts to ensure that its environmental goals are shared throughout its supply chain. This leads to a more effective implementation of its overall strategy.

STRATEGY ANALYSIS An analysis of the external and internal forces shaping the ice cream industry is necessary in order to determine the effectiveness of Ben & Jerry’s current (and prospective) corporate and environmental strategies. We will utilize several analytical tools to characterize the strengths and liabilities of the industry and the effectiveness of the company’s strategy, particularly through the use of the Five Forces Model of Competition, the Sixth (Non-Market) Force analysis, SWOT analysis, and the key factors of success.

Five Forces Model of Competition In order to identify and assess the strength of external competitive forces on the ice cream industry we utilized a common analytical tool, Porter’s Five Forces Model of Competition, which is based on the following five factors: rivalry among competing sellers, bargaining power of buyers, bargaining power of suppliers of key inputs, substitute products and potential new entrants to the market (Thomas and Strickland, 1995). Figure 3 summarizes the competitive strength of these forces on the ice cream industry.

Rivalry Among Competing Sellers The principal competitors in the super-premium ice cream industry are large, diversified companies with significantly greater resources than Ben & Jerry’s; the primary competitors include Dreyers and Haagen-Dazs. Rivalry can be characterized as intense, given that numerous competitors exist, the cost of switching to rival brands is low, and the sales-increasing tactics employed by Dreyers and other rivals threatens to boosts rivals’ unit volume of production (SEC Report, 1999).

Buyers The power of buyers is relatively high because buyers are large, consisting of individual customers, grocery stores, convenience stores, and restaurants nationwide and globally. Since retailers purchase ice cream products in large quantities, this gives buyers substantial leverage over price. In addition, there are many ice cream products to choose from, so the buyers’ cost of switching to competing brands is relatively low. In order to defend against this competitive force, a company’s strategy must include strong product differentiation so that buyers are less able to switch over without incurring large costs. 1 Suppliers The suppliers to the ice cream industry include dairy farmers, paper container manufacturers, and suppliers of various flavorings. Such suppliers are a moderate competitive force, given that the ice cream industry they are supplying is a major customer, there are multiple suppliers throughout the nation to choose from, and many of the suppliers’ viability is tied to the wellbeing of large, established companies such as Dreyers and Haagen-Dazs. Therefore, the ice cream suppliers have moderate leverage to bargain over price.

Substitute Products Many substitutes products are available within the dessert and frozen food industry (cookies, pies, Popsicles, cake). The ease with which buyers can switch to substitute products is an indicator of the strength of this competitive force. Since substitute products are readily available and attractively priced compared to the relatively higher priced super-premium ice cream products, the competitive pressures posed by substitute products are intense. Companies that enter the super-premium market, therefore, must adopt defensive strategies that convince buyers their higher priced product has better features (i. . , quality, taste, innovative flavors) that more than make up for the difference in price. Potential New Entrants The barriers to entry within the ice cream industry are moderate due to the brand preferences and customer loyalty toward the larger and more established rival companies. Other obstacles to new entrants include strong brand loyalty to established firms and economic factors, such as the requirement for large sources of capital, specialized mixing facilities and manufacturing plants.

In addition, the accessibility of distribution channels can be difficult for an unknown firm with little or no brand recognition. Although Ben Cohen and Jerry Greenfield successfully launched their ice cream business from a gas station with modest funding and staff, they had to initially rely on a rival company’s distribution channels (and later on independent distributors) in order to gain a stronger foothold in the market. Figure 3. Porter’s Model of the Five Competitive Forces S ubstituteProducts Many S ubstitute s

Buye rs S trong le rage ve Largenum rs be Rivalry Among Competing Sellers Many large established rivals S upplie rs Mode le rage rate ve Ne Entrants w Mode Barrie to rate rs Entry 12 As discussed above, several competitive forces on the ice cream industry are relatively strong, suggesting that it is a difficult industry to be competitive in. However, Ben & Jerry’s implementation of a differentiation strategy has helped the company effectively defend against these forces and gain a competitive advantage.

The use of higher quality ingredients and ecofriendly packaging has created a unique brand image that helps develop brand loyalty and beat rival competitors to the market. The company’s social activism toward the community and use of innovative flavors also help insulate the firm from the strong bargaining power of buyers since rival firms and/or products are relatively less attractive. Similarly, Ben & Jerry’s product differentiation strategy also allows the company to fend off threats of substitute products that don’t have comparable features.

The company’s differentiation strategy also mitigates the threat of potential entrants due to high buyer loyalty for a superior product. The moderate threat posed by suppliers is tackled by two other facets of the company’s strategy: ensuring the viability of suppliers by paying premium prices for raw materials, and redesigning the distribution network to gain more control and reduce reliance on rival distribution channels. The “Sixth” Force (Non-Market Forces) Industry Regulations Ben & Jerry’s is subject to regulation by the United States Food and Drug Administration (FDA) and the Vermont Department of Agriculture.

In response to stringent labeling criteria for healthoriented foods, the company made changes in its labeling regarding its low fat/low cholesterol products (SEC Report, 1999). FDA regulations may potentially affect the ability of the company, as well as rival firms in the ice cream industry, to develop and market new frozen dessert products. However, given that Ben & Jerry’s is already in compliance with the FDA, it is unlikely that such regulations will have a significant impact on the company’s operations.

Other regulatory forces include potential RCRA liability due to the company’s generation of hazardous materials during the manufacturing process. However, Ben & Jerry’s is currently exempt from these hazardous materials regulations since the level of hazardous materials generated is below the threshold for requiring a permit; indeed, by staying small and maintaining regulatory compliance, the company gains a competitive advantage over larger companies that may have to meet stricter regulations or be more susceptible to non-compliance.

Public and Stakeholders Public and stakeholder concerns over health and nutrition and environmental pollution exert a strong force on the ice cream industry. The heightened consumer awareness and demand for low-cholesterol or low-fat foods can force companies to respond with ingredient substitutions and differentiated product lines to stay in business. Similarly, the increasing consumer trend toward supporting eco-friendly product packaging and all-natural, organic ingredients can cause ice cream companies to revise their strategies.

Ben & Jerry’s, with it’s commitment to providing all natural ingredients, a low-fat ice cream line, and chlorine-free paper for example, is in a better position to attract those consumers who are willing to pay more to get more. Given Ben & Jerry’s proactive strategic approach, the company can effectively insulate itself from these public pressures and enjoys a significant competitive advantage over those companies that resist incorporating socially progressive or eco-friendly values into their strategies. 13

SWOT Analysis Another means of analyzing the strategies of the company is by examining the strengths and weaknesses of its internal resources, and then exploring the external threats and opportunities facing the company. By developing a clear understanding of these factors, we can evaluate where the company should go from here. Figure 4 identifies these forces for both the general corporate and environmental strategies of Ben & Jerry’s. Based on our analysis, we feel that much of the company’s internal strengths and external opportunities lie within its environmental strategy.

This gives further evidence to suggest that the environmental and corporate strategies are well integrated, and that this integration is crucial to the future success of the company. Figure 4. SWOT Analysis of Ben & Jerry’s Strengths Product Differentiation Brand Name & Image Creative Advertising & Promotion Innovation Environmental Leader Threats Image Deterioration Increased Competition Shift in Buyer Preferences Loss of Sales to Substitutes Bush Presidency Conflicts with Unilever Weaknesses Dependence on Outside Distribution High Cost Financial Instability Geographic Limitations

Opportunities Growing Consumer Environmental Interest Geographic Expansion Market Diversification Alliances Key Success Factors A successful strategy incorporates the company’s efforts to be competent on all of the industry’s key success factors and to excel on at least one factor (Thompson and Strickland, 1998). In the highly competitive super-premium ice cream industry, the key factors of success include product 14 differentiation, a strong distribution network, brand loyalty and clever advertising.

As shown in Figure 5, Ben & Jerry’s excels in these (and other) key factors, and has a particular expertise on product differentiation to gain a competitive advantage. Product Differentiation All-natural ingredients Innovative flavors High quality Brand Loyalty Favorable reputation with environmentally-aware consumers Access to Distribution Network use of independent suppliers and existing channels Social Activism Corporate philanthropy Ben & Jerry’s Fund Eco-friendly Product Dioxin-free pint containers Recycled materials Hormone-free dairy supply

Clever advertising Free ice cream samples Grassroots and local image Figure 5. Ben & Jerry’s Key Factors of Success. STRATEGIC CONSISTENCIES According to the Ben & Jerry’s Mission Statement, the goal of the company is to integrate product quality with economic success and social responsibility. One of the key strategic factors that successfully links these three missions together is the differentiation strategy. In this respect, the environmental and general corporate strategies are very much in tune with each other.

Differentiation not only increases the competitive advantage of Ben & Jerry’s, but it also leads to environmental excellence in the operation of the company. By focusing its attention and energy on recycling, energy efficiency, and product innovation, Ben & Jerry’s can reduce its impact on the environment while at the same time reducing product cost. This is being achieved through the work of the Packaging Information Group that focuses on reducing the incoming packaging which adds to the waste stream, and the production of the compostable “Eco-Pint. ” These and other actions help build a competitive advantage within the market.

By using allnatural, rBGH-free ingredients and dioxin-free containers, Ben & Jerry’s can also attract environmentally minded consumers to its products, thus increasing market share. At the same time, this practice helps protect the environment and support family-farming and sustainable agriculture. Therefore, this differentiation strategy has the versatility of providing a better product that can attract customers, command a higher price, and protect the environment, thus satisfying the three integral parts of the company’s mission and both the corporate and environmental strategies.

In order for this environmental differentiation strategy to be sustainable there needs to be a willingness among customers to pay for environmental quality, credible information about the company’s environmental attributes, and insulation against imitation. The company’s steady 15 growth in revenue over the last few years shows that the customer base is there and that they are more than willing to pay a premium price for a superior quality product. Ben & Jerry’s addresses the latter two issues through its informative website, external audits, and constant innovation creating unique, hard to imitate flavors and products.

Another way in which the environmental strategy and corporate strategy are consistent with each other is in the area of regulatory compliance. As a result of the attention Ben & Jerry’s pays to the environmental risks associated with its production process, and the efforts made by the company to ensure that negative impacts to the environment from its business operations are minimized, Ben & Jerry’s has had very few compliance issues and has never been issued any penalties by Federal regulators (1998 CERES Report). In addition to the environmental benefit from such compliance, there is a beneficial impact on the business as well.

By minimizing operational costs, the company gains a potential competitive advantage over competitors with less stringent environmental controls that may face compliance issues. Overall, the company’s environmental strategy and general business strategy are well integrated. By focusing on differentiation, which is in large part due to environmental policies and programs, the company gains a competitive advantage over its rivals. As the company grows and increases its annual profits, more money can therefore be donated to social and environmental causes through its various giving channels.

Ben & Jerry’s has positioned itself so that its success is highly dependent on its environmental image, therefore the two strategies are intimately linked. There are, however, some disconnects between strategies. There are a few instances where environmental goals take a back seat to company profits. Examples of these disconnects are described in the next section below. DISCONNECTS BETWEEN STRATEGIES Although the mission of the company is to temper economic growth with environmental responsibility, during our research we discovered several ccasions in which company profits clearly outweighed the desire to be as environmentally proactive as possible. For example, Ben and Jerry’s currently packages its Peace Pops inside a plastic wrapper and paper board box. This change was in response to a belief that sales had been declining due to customer disapproval of its original packaging, which consisted solely of a plastic wrapper. This change has led to an increase of packaging materials by 152,000 pounds annually (ibid. ).

This is in direct conflict with the company’s policy on waste reduction and illustrates the priority given to company profits over environmental concerns. Similarly, an effort to introduce an organic line of desserts, which would have been more in line with its environmental strategy, was abandoned due to economic costs. Another example of a “disconnect” is in the company’s energy use. Ben & Jerry’s recognizes that its operation, like any industrial process, is energy intensive. However, as of 1998, the company had no formal policy on energy use and conservation (ibid. ).

While the plants and scoop shops make attempts to be energy efficient, the company relies on non-renewable sources of energy for its production processes, instead of using green energy that would be less damaging 16 and more consistent with its environmental policies. Although not expressly stated, it seems that economic cost is once again superseding sustainability. While Ben & Jerry’s works to reuse and recycle as much of its waste as possible, it is the policy of the company to send any hazardous waste that cannot be recycled to a hazardous waste incinerator to be handled.

Although this may be the most economical method of treating hazardous waste, it is not necessarily the most environmentally sound disposal technology, and directly contradicts the company’s environmental goals. In keeping with the corporate strategy of maintaining a local, down home image, many sacrifices to the environmental strategy are made. The most glaring disconnect is in the national distribution of the product from a single state. Manufacturing in Vermont requires extensive shipping of its products; this is a highly energy-intensive process.

In 1998, emissions from the distribution of its products totaled over 113,000 pounds for carbon monoxide, 15,000 pounds of nitrogen oxides, 7,000 pounds of hydrocarbons, 1,600 tons of carbon dioxide, and 400 pounds of particulate matter (ibid. ). This tradeoff illustrates an inherent inconsistency between the corporate and environmental strategies of the company. While these disconnects do occur, we feel that Ben & Jerry’s has done an excellent job in integrating its business and environmental strategies and balancing profitability with environmental protection.

UNILEVER ACQUISITION AND IMPACTS ON STRATEGY Ben & Jerry’s strategy will likely shift towards larger-scale economic growth in response to the recent Unilever acquisition of the company in April 2000. Ben & Jerry’s emphasized that this acquisition will allow the company to create an even more dynamic, socially positive ice cream business with global reach (www. lib. benjerry. com). In addition, the financial backing of a larger and established company will strengthen Ben & Jerry’s competitive advantage with respect to the five forces, particularly the threat of competition from rival firms.

According to the cofounders, “neither of us could have anticipated, twenty years ago, that a major multinational would some day sign on, enthusiastically, to pursue and expand the social mission that continues to be an essential part of Ben & Jerry’s and a driving force behind our many successes. But today, Unilever has done just that. While we and others certainly would have preferred to pursue our mission as an independent enterprise, we hope that, as part of Unilever, Ben & Jerry’s will continue to expand its role in society” (ibid).

The agreement between Unilever and Ben & Jerry’s ensures that the current social mission of Ben & Jerry’s will be encouraged and well-funded, which will lead to improved performance in this area; and an opportunity has been offered for Ben & Jerry’s to contribute to Unilever’s social practices worldwide. According to Richard Goldstein, President of Unilever Foods of North America, Unilever feels that “Ben & Jerry’s has a significant opportunity outside of the United States. Unilever is in an ideal position to bring the Ben & Jerry’s brand, values and socially responsible message to consumers worldwide.

Much of the success of the Ben & Jerry’s brand is based on its connections to basic human values, and it is our hope and expectation that Ben & Jerry’s continues to engage in these critical, global economic and social missions” (ibid). Based on the nature of this agreement, Unilever is pledging to uphold Ben & Jerry’s mission of 17 integrating product quality with economic performance and social responsibility. Therefore, we do not expect that Ben & Jerry’s environmental strategy will change, except that more innovations can possibly be made with the augmented financial and human resources.

In addition, the social and environmental mission of the company will have the opportunity to be applied on a more global scale. As far as the preservation of the company’s corporate strategy, Unilever’s global presence and greater access to distribution channels will allow for Ben & Jerry’s to continue to expand internationally, thus increasing market share, profitability, and competitive advantage. Potential threat to Ben & Jerry’s success as a result of the Unilever acquisition are the negative public perception of the company (i. e. elling out), loss of consumer support and brand loyalty. This can be mitigated through marketing strategies geared towards alleviating public fears and ensuring that the underlying goals and policies of the company will remain intact. RECOMMENDATIONS & CONCLUSION Based on our analysis, we believe that the corporate and environmental strategies are appropriate and well integrated. While there are some disconnects between the two strategies, overall it is clear that the company strives to achieve economic success and environmental responsibility.

Up to now, Ben & Jerry’s has been successful at maintaining this balance. The primary concern is how well the company can insulate itself from future competition that could threaten its position as a leader in the super premium frozen dessert industry. In light of the threats identified in the SWOT analysis, we recommend that Ben & Jerry’s implement the following suggestions: • • • • • • • Protect its public image in light of the recent acquisition by Unilever by maintaining its current position as a market-leader in environmentally and socially responsible business practices.

Continue cost-cutting efforts through implementation of further waste reduction, energy conservation, and recycling programs. Draft a formal written policy on energy use. Frequent product innovation and diversification to address threats of substitute and imitation products and meet changing consumer preferences (i. e. lactose-free ice cream, all organic line of frozen desserts, cookies) Continue franchising scoop shops to increase its market reach and withstand growing competition, both nationally and internationally.

As the company grows, there will be greater waste generation and distribution-related emissions – increase the development of cleaner manufacturing, disposal, and distribution technologies to ensure that the company continues to stay in compliance. Develop additional manufacturing plants and distribution centers outside of Vermont to reduce distribution costs, cut down on distribution-related emissions, and increase production volume of the company. If George W.

Bush becomes President, there could be a relaxation of environmental regulations and attitudes, thus leveling the playing field and eroding Ben & Jerry’s competitive advantage over firms that may be less environmentally responsible. The 18 • company needs to continue to focus on its differentiation strategy to retain its edge and bolster customer loyalty and support. Continue to work with Unilever to ensure that Ben & Jerry’s remains an independent subsidiary with its social and environmental values firmly in place. Protect itself from assimilation into the multinational corporate identity.

In conclusion, our analysis has illustrated that a company can be competitive without sacrificing its environmental goals and strategies. Through differentiation, Ben & Jerry’s has established itself as both a leader in product quality and environmental responsibility. The challenge will be for Ben & Jerry’s, after being acquired by a multinational conglomerate, to demonstrate that it is still possible to maintain its uniqueness and proactive environmental strategy. So can Ben & Jerry’s continue to serve up a double scoop of being green and making green?

Stay tuned for the next flavor of the month. 19 BIBLIOGRAPHY Ben & Jerry’s 1998 CERES Environmental Report, 1998. Securities and Exchange Commission Annual Report for Ben & Jerry’s Homemade, Inc. Form 10-K, 1999. Spolsky, Joel, “How to Grow a Business,” http://www. fool. com, August 4, 2000. Thompson, Arthur A. Jr. , Strickland, III, A. J. Crafting and Implementing Strategy, Text and Readings, 10th edition. Irwin McGraw-Hill, 1998. www. hoovers. com www. benjerry. com www. lib. benjerry. com Substitute Products Many S ubstitute s 20

Memorandum Subject: Ducati: In Pursuit of Magic (A) Date: Feb. 19th 2013 Ducati is one of the premium motorcycle producers specializing in sport segment superbike from Italy. The company experienced booming in sales and reputation in 1996-2001. This boost had attracted Texas Pacific Group to pursue controlling interest in the company for higher expected future return. The economic boom somehow masked the mistakes made by Ducati during the period. When sales started to decline during 2002-2005, three major problems started to become more obvious among the management team: * Product discontinuity. Cost disadvantage compared to Japanese producer. * Decline in sales in U. S. market. Ducati needed to addresses these problems to put the company back on track. Before offering solutions to any of the problems mentioned above, we would like to dig into details about the industrial background, company strategic positions, and competitive advantages and disadvantages about the company. These analyses are especially beneficial to help identify potential opportunities and threats of the motorcycle industry and its sport segment. Five forces analysis are supplemented to our analysis. Threats: * Rivalry: rivalry among industry and the sports segment came from United States and Japanese motorcycle makers. There are intense competitions among brands for entire industry as well the sport segment. A major competitor for cruiser is Harley-Davidson, and Honda and other Japanese motorcycle producers constitute major competitors for the sport segment. * Currency fluctuation: exchange rate posted issues for international operations. Ducati and fellow motorcycle companies engaged in operations all over the world, exchange rate fluctuation generated uncertainty for the company.

This is for both the industry and for the sport segment. * Substitutes: there is a high incentive for alternative transportations for the US market. This hurt the industry as well as sport segment. * Government regulation: Chinese government posted regulations that prohibited motorcycle usage domestically for various reasons. This makes it hard the entire industry as well as the sport segment. * Entrant barriers for industry: low entry barrier due to three reasons. First, people with knowledge can build motorcycle easily. Second, low capital requirement for entrants. Last, there are low switching costs for customers. Opportunities: * Entrant barriers: high for the sport segment due to technology advancement, better design and engineer work, high capital requirement for entrants and distinctive incumbency advantages for established brand. * Buyer’s power: low. This is caused by the brand power and the brand loyalty. People want to pay premium for the bike to feel cool and different. There is a huge demand for motorcycle. * Higher buying power in BRIC. Consumers in those countries are more likely to spend on motorcycle. This is beneficial to the industry, especially the sport segment. More diversified riders lead to market growth. There are more women riders than ever before. This is beneficial to the industry and to the sport segment. The following part included company analysis and analysis of company’s strategic position. * Value drivers and competitive advantages: * Use a unique Desmodrimic valve control system to increase the engine performance * Use a engine that were built in a L-twin design to improve aerodynamics and weighted lighter * Special motorcycles had a low-hum sound. * Frame gave greater rigidity, handling power, and enhanced speed.

It offered more compact design architecture. * Superb in-house design and external design team teams. * Related field that increase value: Ducati Corse racing, apparel, local Ducati clubs, Ducati museum, Ducati riding experience training course, Ducati. com and Ducati’s multi-franchise distribution points and mono-franchise Ducati retail stores. * Cost drivers: * The large research and development for consecutive years. * Marketing cost associated with selected motorcycle publications. * The production line used the lean manufacturing, which decreases the production costs. Competitive disadvantages: * Cost disadvantage. Japanese motorcycle makers can produce cheaper bike with advanced technology. * Product discontinuity. Evolution of products that consumers do not recognize. * Do not intend to stretch and extend business to cruiser motorcycles, i. e. limited customers. * Relatively low market share than major Japanese companies, which occupied about 78% of total market share. This lead to low brand recognition. Even though Ducati has its competitive advantages, it does not mean that these advantages are sustainable.

In order to determine whether Ducati will remain competitive, Barney’s VRIO framework is going to be applied. Hence, four questions are going to be addressed in this part of the case study, which are the Question of Value, the Question of Rareness, the Question of Imitability, and the Question of Organization. * The Question of Value: * Ducati has a group of highly skilled engineers and an in-house design team which allow the firm’s products to have the attribute of speed, performance, and innovation. Such capability helps fulfill customers’ needs and perceptions. Ducati is positioned to be fast with good braking ability. The ability of producing sport bike with speed and safety makes its customers feel safe and reliable while using the product, which helps the firm to build up good company’s reputation. * The Question of Rareness * All the Ducati’s bikes use the Desmodromic valve control system which enhances the engine performance and only Ducati uses this system in the market. * All Ducati’s engines were built in the unique L-twin design which gives the benefit of improved aerodynamics and lighter weight.

This design is rare since the two cylinders of the engine are mounted at a 90-degree angle, which it has to work with the unique Desmodromic valve control system to reach its full ability. Moreover, it gives a unique low-hum engine sound which makes Ducati’s engine even more special. * The Ducati’s tubular trestle frame design was evolved from the Fornula One-inspired tubular trestle with Ducati engineers’ special design to enhance the performance features of the bikes. * The Question of Imitability * With Ducati’s investment in research and development, it would be hard for competitors to just imitate Ducati’s newest technology. Ducati’s in-house design team creates a barrier to imitation since its job is to design completely new model. Moreover, Ducati started to use online resources to gain insight into customers’ needs and perceptions. * Ducati’s Italian styling and origin lower the possibility of its design being imitated, yet it is worth to be noted that MV Agusta is owned by an Italian investment group and its designer Massimo Tamburini had worked in Ducati before, which make it easier for MV Agusta to imitate. * The Question of Organization * Ducati started to invest a lot of money in research and development, which boosted from €3. million in 1997 to approximately €26. 5 million in 2005. Such investment enables the Ducati to fully exploit the potential of its engineers and design team. * The internal culture of Ducati encouraging creativity and teamwork allows the engineers and design team to interact and be innovative. * The building of Ducati museum – the “World of Ducati” – allows Ducati to give museum and factory tour to enhance visitors’ experience, build up brand loyalty, and signify the company’s ability to be innovative or to create a dream. * Ducati’s purchase of Gio.

Ca. Moto and joint venture with Dainese help to build the Ducati brand by selling a wide range of products including Ducati apparel and accessories. * The establishment of Ducati Corse Racing team helps to publicize the Ducati brand by participating in professional motorcycle racing. The team also demonstrates Ducati bikes’ high- performance features. * Ducati’s support in enthusiasts’ clubs and the establishment of the Desmo Owners Club (which promotes Ducati’s event to the clubs) help to build the Ducati brand and brand loyalty. The Ducati’s eight country-specific websites not only have information on bike models, but also provide a virtual tour of Ducati’s world headquarters in Bologna, which enhances the customers’ perception to the Ducati brand. Moreover, the websites allow buyers to customize their bikes and also give feedback, which again help Ducati to gain insight into its customers and fully exploit its ability in producing high quality sport bikes. * Ducati has been attempting to build a strong brand by encouraging its dealers to restructure the stores to be in the Ducati-store format.

We proposed three alternatives to tackle the problems associated with our problems. 1. We propose to sell Ducati to produce synergy to premium car maker such as Lamborghini. This provided cost savings and promoted efficiency. 2. Improve and extend U. S. market to gain market share and profits by invest in human capital and better IT system. This corresponds to positive U. S. outlook after 2006. 3. Invest in Research and Development to carry out revolutionized products. In this way we are trying to replicate the revolutionized products that help the company out of trouble in 2003.

Our recommendation is alternative #1. Before analyzing #1, we would like to point out the drawbacks of the other two options. For alternative #2, it would take two years before the U. S. market become the largest market in the world for the motorcycle business. This postponed schedule is unsatisfied to the investment group who foresee better and immediate solutions for our problems. Another challenge for the U. S. market currently is that in the short run, competition and the low demand makes it hard for individual company to capture large profits.

For alternative #3, large amount of research and development input will somehow reduce return for the investment group in the short run. This might not be the primary interest for the investment group that takes controlling interest of the company. On top of that, there are uncertainties involved in the new product even with shortened new product issuance period. Lastly, new product development does not bring current return to the investment group, which is potentially not preferred. Alternative #1 is the best one of all.

It can potentially offer the best price for the investment group in that it can eliminate the downside risk for the company to go under. On top of that, business combination with powerful company such as Lamborghini would provide synergy. This synergy will provide cost saving for Ducati. First, since a lot of parts are produced in those shops, it is way much easier to produce it for themselves than for outside partners for the company. It can also cut down non-necessary division or labor for the cost saving purposes.

Additionally, acquirer with strong financial background can assist in expanding the U. S. market and engage in research and development process to produce a revolutionized product. I predict when the alternative# 1 get implement, the market share of Ducati will rapid increase. Because company such as Lamborghini has enough capitals to innovate different types of motorcycles. With the good fame of Lamborghini, their product will be wide noted and get into the market earlier than the competitors. Ducati will have a bright future and sustainable growth under that company.

For companies to be able to give their best and produce high quality goods and services they require to have a work force which is of high productive, their productivity is mostly based on some few aspect such a pay and benefit and competitive advantages. As companies/firm face still competition to control the market some management of these companies are coming up with ideas to please their employee and accommodate them in their firm. All firms require these three things. Some have attractive benefits others are reassessing their offers some package are fund education, elderly care , health care for employee family, offer transport for their employee, rewarding the most productive employee and providing houses for their employees.

Fund education

Some companies encourage their employee to further their studies and climb up the ladder in the company. This is done in order to increase employee experience in what he/she handle in the company. It’s also done in order to increase the productiveness of a employee.

Elderly care

As most companies face stiff competition service and good, some firms are starting a package to cater for their employee who have since retired and are in their late ages. This is done in order for an employee to be bale to concentrate on his duties and give their best in that company. Company which offer these services tends mostly to out d other s who do not have such kind of services in their operation.

Health care for their immediate family

Where an employee is required to leave his place of work and go to take his immediate member of family to a hospital, some companies are cutting this wastage of time by introducing health care services to their employee not only saves time the service will also save the employee money as he/she does not need to spend anything in the hospital as his company will settle the bills.

Offer transport for their employee

Firm will buy buses which are used to ferry their employee from their residence to their place of work this is done in order to be bale to save to time which they could have used to go and look for other means of transport and thus reporting to work late or already exhausted and thus been unable to produce more for the company. In some firm every employee is dropped at his/her door and thus save companies and also employee time.

Rewarding the most productive employee

In most firms an employee who produces more in the firm is mostly rewarded by the management this is done in such away that the productiveness of employee is perused, where by a firm provide a questioner where every employee fills the questioner with the guidance of the management.

Providing houses to employee

In area where the employee comes from a far distance the firm provide houses for their employee where the employer do not want their employee to waste time they are provided with a house where they resides together with their family. It’s also done in order for a company to be able to know that their employees are safe.

Results

Companies which have the above described services to their employee tend to have high production and do better than other who does not have any benefit /competitive advantage.

Messer. M (2006) Benefits: Gian a competitive edge with offerings employers want strategic finance 88.no5, 8, and 10

Competition for experienced accounting and finance professional increase organization are looking for ways to give themselves an edge way top help, a worker achieve a better work life balance this is by making the worker comfortableness in his work and also in his life among the benefits is over time work and companies that offer facilities such as health care or similar effort demonstrate commitment to personal to their employees.

They use various ways such as sharpening the skills of the employee,

Sharpening of skill

This is done by the company sending employee to school to increase their skill in the company. This effect is felt by the company in their production. Incase where an employee is kept comfortable by the company he tends to produce more in turn of return. A company input can determine the employee out put this is determined oh how committed is the company to its employees. Company and employee vary widely. In order for a company to perform effectively its must know who to hire, retain nature and develop its employees.

The trouble is the employee effective studies show that the best and the academically brightest are more likely to leave a firm. This is the best are mostly not comfortable either by the working condition or the workers pay and benefits and thus they are poached by other companies which have better conditio0n and benefits. A company may use the benefits to increase its employee morale and retaining and attracting employees it can also use benefits to keep employee attitude and increase their performance. Such benefit includes career growth or a mentor in a firm.

Career growth

This is whereby the company can take its employee to school in order for them to acquire new skill for the company. This makes the employee to feel that the company owns them and thus give all the best to the company. What is important in any company is the employee and their status a important factor any company to keep its clients and its business knowing its attached into it .its capability to recruit, retain and develop its employees.

In most countries in the third world many workforces will join many companies with a view of giving their best into the company will be determined by company interest in strengthening and restructuring the employee profession. Those different employees will look different in most companies, some will be challenged by the rumination given by the company and advance their career with the aim of crimping the ladder and also for a better pay. Some will not work with the referenced company for long due to been unable to adapt to the company, other will go to better paying companies, provide better working condition have good package.

Many employee do not take a company as a place to work for over five years they gauge their stray on some aspect its understood that many employee in the country are more likely to leave seeking better working condition and other rumination.

In some companies they have developed ways of tapping the promising employee by promoting him over the ladder, they also encourage them to go to school and advance their career in order for them to climb the ladder of promotion and get better pay thus encouraging them to work with the said company. Companies should at least look into employees policies under which they work.

Schwartz B,R,Wurtzel J, Olson L ; attracting and retaining teachers organization for a economic cooperation and development. The OECD Observer no261.27-28

In each and every company all workers rigorous requires some readiness. In order for them to be able to produce for the company this means they have to asses the work of the company what is expected of them and their aims/goals.

Introduction

For example some company creates a week in the company calendar for rigorous training and also introduction. This enables the employee to be able to produce what is expected of him. It also expects to minimize time loss in the company. To develop a company to be able to produce more and have effective employees a company is supposed to match the productiveness of an employee. In some company they provide a questioner which every new and old employee fills, it offer each week this is aimed at direct correspondence between the directors and employee. In order one to known the weakness and strong ness of an employee. Its coordinated in such a way that the directors reads the questionnaire and when they note there is laxness in one employee a special team is there to assist him.

Some firm share workshop with other firm this is to ensure that an employee can learn from the other employee of another firm other organization organize for departmental workshop this sharpens an employee and also he /she get to understand what he does not understand . This is aimed at putting them with the high performing employee and low performing employee to effective knowledge.

One common thing is that good employee is an advantage to the company in which a company can be able to produce more and employee can learn from one another. Supporting and retaining employee’s makes them feel that they are part of that company thus they work with all their strength knowing that they will be in that company for a long period. In each and every form when making a policies one should address pay and potential for company /sector growth.

In many countries most in third world country worker5 policies are becoming a bit tough to the worker and many people are resulting for self- employment a company should come up with way to reward the employee i.e. by paying more for one who produce more. This is linking pay and benefit to competitive advantage.

T. H Koen,Wang C,J.2005 Benefits  offer an advantage a firm productivity ?an empirical examination personnel review 34:no4.,393,512

Summary

This is explaining or suggesting that employee benefits have a moderate effect on firm productivity, irrespective of industry or firm size.