BEN N JERRY ICE CREAM
Ben & Jerry’s Homemade Ice Cream Inc:
A period of Transition
Despite making the first yearly loss in 1994, the company’s health cannot be written off. The loss in 1994 can mostly be attributed to some irregular factors like debt due to the asset write-down of $6.8 million resulting from abandonment of complex manufacturing system and incorrect assumption about the value at the St. Albans plant. The introduction of the "Smooth, No Chunks" line in the same year also resulted in some extra advertising and promotion costs. The low debt-over-assets ratio and high liquidity ($20 million) proves the company′s ability for further investment and/or international expansion. The company’s performance record as compared to the industry average also proves the same. Based on the analysis of the data given, Ben & Jerry’s still has a strong position in the market and can secure long-term future profits.
The options open to the company can be divided into home market and international operations. Internationally, it can either expand to profit from the growth of the market, or it can focus on the home market to avoid the risks and costs involved with international expansion. There is potential to cut down the cost of sales in order to improve the competitive position. Since the leadership of the company believes in its human resources, employee costs are a main part of the overall cost structure. To reduce those costs, the company could
Reduce the wages to industry averages
Reduce the work force volume and implement more labor efficient production means.
Shift work force to the new St. Albans production plant.
Reduce the financial and non-financial employee benefits.
Reduce working hours as long as production capacity exceeds market demand.
On the sales side of the production, the following measures could be taken:
Producing Non-fat Sorbet flavors
Increasing demand for super-premium high-fat flavors through discount offers during festive season/weekends
Expansion of specialty
A period of Transition
Despite making the first yearly loss in 1994, the company’s health cannot be written off. The loss in 1994 can mostly be attributed to some irregular factors like debt due to the asset write-down of $6.8 million resulting from abandonment of complex manufacturing system and incorrect assumption about the value at the St. Albans plant. The introduction of the "Smooth, No Chunks" line in the same year also resulted in some extra advertising and promotion costs. The low debt-over-assets ratio and high liquidity ($20 million) proves the company′s ability for further investment and/or international expansion. The company’s performance record as compared to the industry average also proves the same. Based on the analysis of the data given, Ben & Jerry’s still has a strong position in the market and can secure long-term future profits.
The options open to the company can be divided into home market and international operations. Internationally, it can either expand to profit from the growth of the market, or it can focus on the home market to avoid the risks and costs involved with international expansion. There is potential to cut down the cost of sales in order to improve the competitive position. Since the leadership of the company believes in its human resources, employee costs are a main part of the overall cost structure. To reduce those costs, the company could
Reduce the wages to industry averages
Reduce the work force volume and implement more labor efficient production means.
Shift work force to the new St. Albans production plant.
Reduce the financial and non-financial employee benefits.
Reduce working hours as long as production capacity exceeds market demand.
On the sales side of the production, the following measures could be taken:
Producing Non-fat Sorbet flavors
Increasing demand for super-premium high-fat flavors through discount offers during festive season/weekends
Expansion of specialty