BU601T

GOLD 15

Case Analysis Memorandum

Ben & Jerry’s Homemade Ice Cream Inc.: Keeping the Mission(s) Alive
TO: Mr. Chuck Lacy
FROM: Management Consultant
RE: Ben & Jerry’s Future Growth Opportunities

Dear Mr. Lacy,

Please find below my analysis regarding the issues facing Ben & Jerry’s and my recommendations for your

new tenure as CEO to promote future growth within the company.

Market Environment: With increased competition and slow market growth Ben & Jerry’s need to re-

position its brand to capitalize on the available market shares. With a shift in consumer taste to products

containing lower cholesterol and calories, the company needs to extend its product line to meet this change

in demand. Given that the company is already distributing to all 12 core markets, it must look at options to

further penetrate the existing markets while reducing operational costs to increase profits.

Values: Ben & Jerry’s is an anti-establishment, independently-minded and socially conscious firm that

places significant emphasis on the company’s social mission. While the company is committed to its triad of

values: product, economic and social, there often appears to be conflict between the position of these

values that leads to organizational dysfunction. The double-bottom line principle of measuring the firm’s

success based on financial and social performance is intended to provide direction within the social

mission. However, the lack of emphasis on economic characteristics within the company business plan

indicates that the firm is not placing equal weight on all values.

Organizational-Issues: Ben’s commitment to a good quality product and social values proved valuable in

creating a caring capitalist environment that helped launch the company into its initial success. However,

with increasing complexity and competition within the frozen dessert industry there is a need to re-assess

how the company’s values factor into its economic success. The 5-to-1 ratio has deterred potential

management candidates who feel under-valued by the below market compensation rate, causing a gap in

senior management staffing capabilities.

RECOMMENDATIONS

Implement a 10-to-1 ratio and improve comprehensive compensation packages for all employees. (See

Exhibit 1 for the addendum to the policy)

There is a large gap between Ben and Jerry’s wage ratio and American business norm, offering the

company room to negotiate better wage ratios while still maintaining their social mission to reduce wealth

discrepancies. The move to a 10-to-1 ratio would allow the company to offer compensation that better

aligns with the market to attract higher qualified individuals for complex management positions within the

organization. This change would reduce salary compression between middle and upper management,

offering mid-level employees more incentives for promotion. Adjusting comprehensive benefits packages

will re-orient the company’s social focus on the well-being of employees, helping to offset the potentially

negative reception of the 10-to-1 ratio change. Additionally, implementing performance based incentives

will tie employee performance to the economic bottom-line, while providing mindset training will align new

and current employees with the company’s social mission.

Expand the product line to enter additional segments and further penetrate current distribution markets.

Currently Ben & Jerry’s have a zero percent market share in the superpremium frozen yogurt segment

which is estimated to reach a market size of $100M by 1994. Given the consumer demand for low-calorie

options the company should increase production of high-margin, low mix-in flavors for the current

superpremium ice-cream segment, and expand them to the superpremium frozen yogurt line to reduce

production costs and increase profit margins. Additionally, the company should continue to maintain its

corporate mission to social and environmental sustainability as market research shows that 52 percent of

consumers are willing to pay 10 percent more for a product produced by a socially responsible company.

For expansion, the company should look to further penetrate markets in the L.A., Florida, Mid-West to close

the gap between Ben & Jerry’s and Haagen-Dazs market shares.
Exhibit 1 Memorandum to Employees Regarding Comprehensive Benefits Restructuring

TO: All Employees

From: Chuck Lacy
RE: 5-to-1 Salary Ratio Addendum

The following changes to Ben & Jerry’s overall compensation package will be implemented as follows:

1. The current 5-to-1 ratio will be increased to 10-to-1 in order to help the company provide more

attractable market rate salaries for top management staff. With the increasing complexity of the

company’s operations and increased competition in the frozen dessert market there needs to be a shift

in focus at the top management level to place more emphasis on the economic mission for the

company’s continuous growth. The corporation needs to offer better compensation in order to attract

and retain high-quality senior management executives.

2. After six months of employment all full-time employees will be enrolled into basic benefits package

regardless of wage or salary. During an annual enrollment period employees will have the opportunity

to select additional flexible benefits based on individual needs (e.g. variable health care coverage).

Some special benefits are issued proportional to salary (e.g. Stock Options, Stock Grants) and may be

granted based on performance and/or seniority.

3. All employees will be eligible to receive performance based incentives regardless of their salary or

wage level. The determination of these incentives will be tied to the performance of the company and

communicated to all employees on an annual basis.

4. The compensation of corporate officers may be a combination of salary and performance bonus.

Combined, these two forms of cash compensation do not need to satisfy the 10-to-1 ratio, but the

performance bonus must not exceed 10 percent of the officer’s base salary.

5. All new and current employees will be required to take mindset training to re-align with the company’s

three part mission.