Ben & Jerry’s Analysis By:Group 2 The case presented on Ben & Jerry’s Homemade ice-cream is complex and produces a considerable amount of deliberation. In the following pages we hope to give you a synopsis of Ben Cohen & Jerry Greenfield, as well as the company they created, while attempting to carefully construct answers to the questions posed on specific issues raised by Mr. Brasel in the power point slides he provided to the class. The history of Ben Cohen and Jerry Greenfield can be dated back to when the men first met in the seventh grade. Both Cohen and Greenfield grew up in Merrick, Long Island and quickly became friends during Junior high school. After high school, Jerry finished college. His goal was to attend medical school to become a doctor, but he could not get in. (benjerry.com). On the other hand, Ben applied and was accepted to several colleges, but always dropped out of them. The beginnings for the development of Ben & Jerry’s Homemade were launched in 1977 from the front porch of Jerry’s parent’s house. Neither Ben nor Jerry knew anything about running or opening a business, but both men knew about food and shared the great passion of eating. They pondered on what type of business they would start. The men came across an AD in the local newspaper for an ice-cream-making course offered through a local college. There was a $5 fee associated with the course. Due to the extreme poverty in which Cohen and Greenfield were brought up in, they decided to split the fee and took the course on ice-cream-making from Penn State University. The two men combined their life savings of $8,000 and took out a loan for &4,000 from a bank. With this money, Ben & Jerry leased and renovated an old gas station in a town where they did not think they would be as successful as they eventually became. Ben & Jerry’s Homemade opened for business on May 5, 1978 in Burlington, Vermont. Cohen and Greenfield knew they wanted to have a lot of customer interaction and be able to enjoy themselves while running this business. Keeping that in mind, Burlington became the official location for Ben & Jerry’s. The location of Burlington was centered on the large number of college students and the fact that there was virtually no competition. (Case Studies, pg. 40) Ben and Jerry created very fun and different flavors that they always fantasized about. Their ice-cream became so popular that soon after Ben & Jerry’s Homemade opened, their ice-cream was being sold to local restaurants, grocery stores, and supermarkets throughout the Vermont. (benjerry.com) The Green team will touch on the following topics and present an argumentative, collaborated response. We will discuss six main discussion points. The discussion points will answer, “How has Ben & Jerry’s fulfilled its mission statement?”, What evidence can you provide regarding Ben & Jerry’s performance on each of the three dimensions of the mission statement?”, “How did Ben & Jerry’s become a takeover target?”, “ Do you think the current takeovers are justifiable?”, “What might Ben & Jerry’s be worth to the bidders?”, and “Should Henry Morgan defend the agenda of the current management team or support one of the acquisition offers?” In the first topic of discussion we will attempt to expand on Ben & Jerry’s mission statement. Ben & Jerry’s mission statement is a complex and complicated one. It encompasses a unique approach to corporate governance. It straddles the line by giving superb quality of product, in line with economic growth for the company, the employees, and the investors; while staying committed to the utmost social good. Ben & Jerry’s mission statement consists of three individual statements that make up a truly unique perspective to corporate governance. Ben & Jerry’s Mission statement: * Social Mission: To operate the Company in a way that actively recognizes the central role that business plays in society by initiating innovative ways to improve the quality of life locally, nationally and internationally. * Product Mission: To make, distribute and sell the finest quality all natural ice cream and euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the environment. * Economic Mission: To operate the Company on a sustainable financial basis of profitable growth, increasing value for our stakeholders and expanding opportunities for development and career growth for our employees. The social aspect of Ben & Jerry’s mission was satisfied by using a plethora of remarkable feats. They were known for their emphasis on socially progressive causes and their strong dedication to helping the community. One feature of this was Ben & Jerry’s generous donations. Since 1985, Ben & Jerry’s have made donations of 7.5% of their pre-tax earnings to various social conditions. Ben & Jerry’s supported causes such as Greenpeace International and the Vietnam Veterans of America Foundation. (Case Studies Pg.41) They created a special customer appreciation day where customers could come and delight in free ice-cream cones all day. This appreciation day was first started on the one-year anniversary of Ben & Jerry’s. Ben & Jerry’s passion for the social viewpoint of their mission statement can also be seen through their development of an ice-cream flavor that contained harvestable tropical-rainforest products. This flavor uses cashews and Brazil nuts harvested from the tropical-rainforests. This represents an economically sustainable alternative to cutting the trees down. (Case Studies pg. 41) A part of Ben & Jerry’s strong precedence for their social-mission, they are also committed to corporate transparency. 80 percent of Ben & Jerry’s products are non-GMOs (Genetically Modified Organisms) (BenJerry.com). Their branding maintains a constant level of producing the finest natural ice-cream, frozen yogurts, and sorbets, while being fun and innovative. Ben & Jerry’s were also known for giving back economically while maintaining their strong customer focus. In May of 1984, 75,000 shares of Ben & Jerry’s were issued exclusively to the residents of Vermont at $10.50 a share. By limiting the offering of these shares to only Vermont residents, Ben & Jerry’s Homemade believed they were giving those who first supported the company a chance to share in the profits earned by the business. Now that we have touched base on the great lengths Ben & Jerry’s went to in order to reach out to the community through their social mission, let us take a closer look into the economical portion of their mission. As mentioned earlier, a part of their economic mission statement is to increase value for their shareholders. The company’s three main business partners – Ben Cohen, Jerry Greenfield, and Jeffrey Furman – held 47 percent of the voting power (case study pg. 44). This left only 17 percent of the common equity outstanding. With such a small percentage remaining outstanding, individuals may be steered away from investing in the company. Ben & Jerry’s neither was nor predestine to be take over targets. It just happened due to the way corporate management was set up. It is the board of directors and the CEO who make the decisions of the best interest of the shareholders. If properly implemented, the corporate governance system should provide incentives for the board of directors and top management to pursue objectives that are in the interests of the company’s owners and it should provide for effective monitoring of performance. (Slides) So, unfortunately when Cohen and Greenfield took the company public, it opened up the door that some day if the company was not profitable enough, a larger company who wanted to buy Ben & Jerry’s Homemade would have that opportunity. The option would be deliberated upon and the best interest of the investors would determine the fate of Ben & Jerry’s. Yes, we believe that the takeovers where justifiable on a basis of profit. Ben & Jerry’s would have been more profitable if it was less socially responsible. Ben & Jerry could have still given to charities and still remained innovative in environmentally friendly activities all while raising shareholders wealth. Bidders for Ben & Jerry saw the potential earnings the company had to offer. The company was successful, but its social responsibility was the reason shareholders’ profits did not rise. The price/earnings ratio was almost 20 percent.(Case Studies pg. 51) We believe given a ratio that high would have been considered. Ben & Jerry's went public in 1984 and, from a fiscal point of view, had been a disappointment to investors. Until December, the stock had hovered around $17.(Business Day) On, April 12, 2000 Ben & Jerry’s closed at $43.06 the day after the two men sold their company to multinational food giant Unilever. (Business Day) Henry Morgan, director for Ben & Jerry’s Homemade, should not defend the agenda of the current management group. He should support one of the acquisition offers. Ben & Jerry’s average return on shareholder’s equity stood at 7 percent in 1998, up from 5 percent in 1997. (Case Studies pg. 47) In 1999, the return on shareholder’s equity stood at around 9 percent, which was better, but not benefiting the investors or the charitable donations. With this takeover by Unilever, the Ben & Jerry’s three part mission statement would remain intact, the current employees of the company would keep their jobs, and lastly, but most importantly, the shareholders would be rewarded. As we have shown from the previous pages, Ben & Jerry’s had put together an excellent three part mission statement. However, their constant focus on the social portion of the mission statement, led them to forget about the success of the company in terms of profits along with the failure to deliver results to their long-term investors. It was this constant social focus that led to the inevitable buy out of Ben & Jerry’s by Unilever.

Work Cited "Ben & Jerry's Mission Statement." Ben & Jerry's. www.benjerry.com, n.d. Web. 06 Sept. 2013. Bruner, Robert F., Ken M. Eades, and Michael J. Schill. "Ben & Jerry's Homemade." Case Studies in Finance: Managing for Corporate Value Creation. Sixth ed. Boston: McGraw-Hill Irwin, 2010. 39-51. Print.

Hays, Constance L. "Ben & Jerry's To Unilever, With Attitude." The New York Times. The New York Times, 13 Apr. 2000. Web. 07 Sept. 2013.

“The Scoop on Ben & Jerry’s Sellout.” Slate.com. 04/12/2000. Web. 07 Sept. 2013.