SWOT Case Study - Ben and Jerry's

Strengths

• Prestigious, established, successful, global operation, with sales in USA, Europe and Asia, which is synonymous with social responsibility and environmentalism. For example, its products are packed in unbleached cardboard containers.
• Ben & Jerry's also donates a minimum of $1.1 million of pretax profits to philanthropic causes yearly. The company sponsors PartnerShops, which are Ben & Jerry outlets independently owned and operated by nonprofit organizations such as Goodwill Industries. The company is also involved in other good causes, including global warming, gun control and saving family farms.

The company sells its colorfully named ice cream, ice-cream novelties, and frozen yogurt under brand names such as Chunky Monkey, Phish Food, and Cherry Garcia. It also franchises some 750 Ben & Jerry's Scoop Shops worldwide.

Ben and Jerry's were bought by consumer products manufacturer Unilever in 2000, but were still able to retain their social responsibility platform and kept both co-founders closely involved with product development. Their brands complement Unilever's existing ice cream brands.

In 2009 Ben and Jerry's Chunky Monkey ice cream flavor was named in a top ten list of the best ice cream in London.

In 2007 Ben and Jerry's co-founders, Ben Cohen and Jerry Greenfield were asked to join Lance Armstrong in speaking about clean technology and alternative energy at the Ernst and Young national entrepreneur of the year awards.

In 2008, their market share was second only Haagen-Dazs who had a 44% market share while Ben and Jerry's had 36%. This was achieved in spite of a premium price point. The premium price of the product was supported by a high quality image, and high quality products.

Weaknesses

• In 2006, former CFO Stuart Wiles was convicted of embezzling some $300,000 from the company during his tenure at Ben & Jerry's, which ran from 2000 to 2004.
• In 2006 they had to stop using Michael Foods as their egg supplier, due to bad PR from the Humane Society, which alleged that Michel Foods treated chickens inhumanely.
• They achieved success despite several corporate weaknesses. The most obvious was a lack of professionalism in its management, and no clear mission statement (which they have amended). They reinvested huge amounts of property and equipment in 1994 increasing their long-term debts by almost 45% in 1993. They increased marketing and selling expenses and administrative infrastructure, which increased 28% to $36.3 million in 1994 from $28.3 million in 1993 and increased as a percentage of net sales to 24.4% in 1994 from 20.2% in 1993. They took out a vast amount of capital lease in their aim to automate their production to keep up with the intense competition.
• Their clear focus on multiple social responsibility issues could hurt the company by shifting the focus away from important business matters, and also add unnecessary costs.
• They need more experienced management to fuel aggressive growth in a downturned economy and change flat sales in their premium product lines.

Opportunities

• In today's health conscious societies the introduction of more fat-free and healthy alternative ice cream and frozen yogurt products.
• Provide allergen free food items, such as gluten free and peanut free.
• In 2009 Ben & Jerry's announced plans to roll out the country's first HFC-free freezers; freezers that would be sold to grocery stores and would not emit harmful chemicals into the atmosphere.
• In 2008 they acquired Best foods and Slim-fast which will allow them to enter a new industry of weight loss products. In turn they can now expand into new geographic markets-more countries, like Europe, where the weight loss/management trend is taking hold.
• They could expand their existing product lines to compete with the 'private-in house brands' offered by supermarkets, and in developing countries.
• Selling Ben and Jerry's premium ice cream in South America (which is an emerging market that has yet to be capitalized upon). There is a growing demand for premium ice cream in new markets like Asia.

Threats

• Much of their target market is constantly changing its product preferences (desiring to prevent diabetes, obesity etc.). That, coupled with a decrease in household sizes and discretionary income, has left sales flat in recent years.
• Consumers are concerned about fattening dessert products. Especially Ben and Jerry's target market, which are accustomed to reading nutrition labels.
• Any contamination of the food supply, especially e-coli.
• Major competitors, like Nestle (Pillsbury), Kraft Foods, Dunkin Donuts, and Dean Foods. They also have competition from global food companies with similar products and any grocery store label products. Much of their competition seems to be merging together, in order to remain marketable in this tough economy.
• Experts say that animal feed prices are rising, partly because biofuel crops are replacing cow fodder. In turn, the high priced animal feed pushes up the cost of milk. Prices of all milk products are rising worldwide, due to what some call a "perfect storm" of low supply and high demand. There is a distinct possibility that their may not be enough milk to meet demand, and that there could be a global milk shortage.
• Agricultural economists say today's milk shortage is basically a case of low supply and high demand worldwide. Supply is down for many reasons. A bad drought in Australia dried up the grass that the country's cows eat. New export taxes were added on Argentina's milk in an attempt to keep the country's food prices under control. Also, European farmers can't significantly increase production until a quota system is phased out eight years from now. The U.S. and Europe always used to have spare dairy products to sell cheaply around the globe, but that's no longer the case, says market expert Erhard Richarts.
• Skim Milk powder (which is easier to transport than fresh milk) is used in a wide range of foodstuffs, and in 2007 its price shot up to record levels worldwide - almost twice as high as the year before. Then retail prices went up, a butter shortage, cheese prices went up, and then wholesale prices went up, and there doesn't seem to be an end to it.

by Mkt Teachers