Ben & Jerry’s Homemade, Inc., the Vermont-based manufacturer of ice cream, frozen yogurt and sorbet, was founded in 1978 by Ben Cohen and Jerry Greenfield. Their first shop was in a renovated gas station in Burlington, Vermont, with a $12,000 investment ($4,000 of which was borrowed).
Within a short time, they became popular for their innovative flavors, made from fresh Vermont milk and cream. The main products of Ben & Jerrys are ice cream, low fat ice cream, frozen yogurt, sorbet and novelty products and are produced in pints, quarts, and 2.5-gallon tubs. Their products are distributed nationwide as well as in selected foreign countries in supermarkets, grocery stores, convenience stores, franchised Ben & Jerry’s scoop shops, restaurants and other venues. Ben & Jerry’s franchises scoop shops in both the U.S. and Canada.
The company also has wholly-owned operations in France, Japan and the United Kingdom, and licensees in the Benelux countries, Israel, Canada, Peru and Lebanon. In 1999, Ben & Jerry’s employed 814 people worldwide, primarily covering only the manufacturing, central and distribution facilities in Vermont. Economy Overview in Russia: After the implosion of the Soviet Union in 1991, Russia was struggling to establish a modern market economy and achieve strong economic growth. Russia heavily depended on exports of commodities, particularly oil, natural gas, metals, and timber, which accounted for over 80% of exports. Russia’s agricultural sector beset by uncertainty over land ownership rights, which had discouraged needed investment and restructuring. Another threat was negative demographic trends, fueled by low birth rates and a deteriorating health situation – including an alarming rise in AIDS cases.
The Term Paper on Ben Jerrys Jerry Iceverks Business
... plans were started for Ben & Jerry? s to conduct business in Karelia. Ben & Jerry? s Vermont-Karelia Ice Cream, or Iceverks, was ... shop, then return to Vermont to conduct communication with Ben & Jerry? s in Vermont and Iceverks in Russia. Upon Dave? s ... long-term intentions to continually and successfully produce ice cream in Russia. They wanted to take advantage of the opportunity ...
Russia’s industrial base was dilapidated. Other problems included widespread corruption, capital flight, and brain drain. ice cream Industry in Russia: Russia has always been known for its tasty ice creameaten all year-round. Ice cream is one of the few quality food products and so popular that is available even when supermarket shelves were otherwise bare. Russians in Moscow consume 170 tons of ice cream per year, 98 percent of which is Vanilla. Since Russia was the third largest market in the world in the late 1980s, the ice cream business represented enormous potential.
While one can still purchase the Soviet-era standard, the vanilla waffle cone, now Russians can choose from a dizzying array of flavors and ice-cream products. The Russian ice cream industry has also become much more diverse, accommodating not just the major producers but also proving hospitable to small business development and franchising. Ben & Jerrys in Russia: Between 1992 and early 1997, Ben & Jerry’s was part of a joint venture called Iceverk in the Russian republic of Karelia. Back to 1988, when Ben Cohen, president and cofounder of Ben & Jerrys, took a trip to Karelia, Russia (Vermounts Russian sister state), he thought of opening up a Ben & Jerrys scoop shop in Russia and bringing the United States and Russia together through ice cream diplomacy. Right after Mr. Cohen returned from Russia, Ben & Jerry made a joint venture proposal, called Iceverks(Which stands for Ice Cream of Vermont and Karelia).
Ben & Jerry’s contributed equipment and ice cream making know-how to the venture, and their local partners provided facilities for a small production operation and two Scoop Shops, which opened for business in July of 1992. Ben & Jerrys initial investment into the joint venture was approximately 50 percent of the total startup fee and the rest of the capital was invested by their Russian partners. Over the next four years, they worked with their local partners to open several more scoop shops and to start selling pints in grocery stores, first in Karelia and eventually in Moscow, St. Petersburg, and other cities. As the Soviet Union fell apart and Russia started the transition to democracy and a market economy, their goals in Iceverk changed. They began to focus less on cultural understanding and more on transferring our business skills and experience to their local partners to complement the ice cream making skills they had already acquired. By 1996, the business climate in Russia was changing so rapidly that they felt their management of Iceverk was becoming less effective even as we devoted more time and resources to it. They began to understand that their local partners had become better equipped to manage Iceverk than they were.
Business Plan Ice Cream
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So they decided to donate the manufacturing equipment they still owned to Iceverk, and donate their equity in Iceverk to their local partners. Finally Ben&Jerrys left Russia in 1997. Iceverk no longer uses the Ben & Jerry’s brand name, but it continues to make great ice cream in Petrozavodsk, Karelia’s capital. BUSINESS ENVIRONMENT We will try to explain business environment in Russia between 1992-1997 that Ben&Jerrys was part of a joint venture called Iceverk in Russia at this period. Since 1991, Russia has struggled in its efforts to build a democratic political system and market economy to replace the strict social, political, and economic controls of the communist period. Political Instability : With the collapse of the Soviet Union political uncertainty for potential foreign investors in the newly democratic Russia. The country had to be rebuilt, and it was questionable what laws would be enacted and what laws would be discarded. Thats why, all foreign business operating in Russia were doing so under risk. Management Problems: As a result of former communist work ideology, skilled managers were in short supply for the Karelia facilities.
Managers, as well as subordinates, needed to be trained both in work habits and in Western capitalist philosophy. Consequently, managers had to be flown in from the United States until the Russians could learn the intricacies of free market as well as the production of high-quality ice cream. Corruption and Mafia: With the fall of the USSR, the Russian Mafia has gained enormous power. The underworld is thought to control some 40 percent of the Russian economy. US businesses pay as much as 30 percent of their monthly profit for Mafia protection. This was a major concern for Ben&Jerrys since their company philosophy for doing business in the East is to not give into extortion or bribery. Economic Condition: After the implosion of the Soviet Union in 1991, Russia struggled to establish a modern market economy and achieve strong economic growth.
The Essay on Socially Responsible Corporations Companies Company Ben
Socially Responsible Corporations Socially Responsible Companies are those that put the public interest as a priority in everything they do. These companies range anywhere from the food industry (Ben and Jerry's) to communications (Motorola). These companies are noted as philanthropists, and are the leading companies in their markets. They also, most of the time, have very loyal employees who love ...
In Russia 40 % of population is below poverty line. Distribution of Income is deteriorated. Purchasing power of Russian people is very low. Thats why firms can not increase their product price easily, otherwise they will use market. Inflation: Inflation in Russia after the collapse of Soviet Union was serious problem. In 1992 inflation rate was %2000. Products and raw material prices were changing every day.
Thats why making long-term decision was impossible. High Interest Rate: In 1992 Interest Rate was very high. Thus, Investment in Russia borrowing from local banks had very high cost. Currency Problem: All Ben Jerrys stores were selling ice cream for rubles. Because of currency flactuation and inconvertibility they faced hard currency costs. Black Market: In Russia, where most firms play down success for fear of paying taxes, poor output figures often hide a booming black market economy. Official figures, reassessed after the World Bank complaints that Russian statisticians were ignoring the black market economy, indicate that it accounts for 22 percent of GDP.
But even Prime Minister admits that the size of the untaxed shadow economy might be as high as 50 percent of GDP. Bureaucracy: The idea to open a store in Russia gained momentum about five years ago, when cold war tensions were starting to ease. The company first explored opening in Georgia or in Moscow. Bu the bureaucracy in both places scared them off. The company eventually settled in Petrozavodsk due mainly to the sister-state relationship between Vermont and Karelia. But obtaining permission from Soviet authorities to start operations and renovating the facility also took time. COMPETITION As average 480,000 tons ice cream was produced annually in Russia in 1990s.The industry had 120 companies and 18,000 employees.
The Essay on How Should Ford Motor Company Market Differently to Generation Y, Generation X, and Baby Boomers?
How should Ford Motor company market differently to Generation Y, Generation X, and baby boomers? Each generation has its own characteristics, attitudes and lifestyle. Understanding their needs, wants and buying behaviors is essential to be able to connect with them. Efficient communication to convey the message will help gain their trust. Once gained, with their attention captivated, it will be ...
In 1990s there were two main competitors for Ben&Jerry in Ice Cream Market: Foreign Companies and Local Firms. Foreign Ice Cream Companies: Almost all famous ice cream companies had investment or franchising agreement in Russia, because Russia was good market for ice cream industry. Buskin Robins had franchising agreement until 1996. After that it went to joint venture. Buskin Robins had ice-cream shops almost every Russian City. The most powerful foreign company in Russia was Nestle.
It was domain of ice cream market in Russia because of its mass production capacity and relatively cheaper prices. Haagen-Dazs and some Finland and Czech Companies were other important competitors of Ben&Jerrys. Local Companies: In 1988, most home refrigerators in Russia had very small freezers. Thus, ice cream was a dessert commonly sold by street vendors and restaurants for immediate consumption. At this time, street vendors were Ben&Jerrys most substantial competition, selling tons of good-tasting ice cream every day for as little as 35 rubles per unit. However, variety was a weak spot in Russian ice cream-it vas vanilla or nothing.
Thus, Ben&Jerrys relied on variety and novelty a competitive advantage. Local vendors were hostile toward the new Ben&jerrys facility. Almost all ice cream sold in Petrozavodks was supplied ….
