No Slide Title

Hellomy name is

Ben and Jerrys

Main Issue: Balancing Social Responsibility and ProfitsSub-issues:When does economic responsibility override social responsibility: Relationship with suppliers? ManagementRelationship with media

Timeline

Ben Cohen and Jerry Greenfield meet in 7th grade gym class.

1963Ben and Jerry move to Vermont and complete a $5 correspondence course in ice cream making.

1977

Timeline

B and J begin packing their ice cream in pints to sell to grocery stores.1980

Ben and Jerry open their scoop shop in a renovated gas station.1978

Timeline

Time magazine hails Ben and Jerrys as The best ice cream in the world.

1981Ben and Jerry offer a Vermont-only public stock offering.

1984

Timeline

Ben and Jerry fight back against Haagen-Dazs with Whats the Doughboy afraid of? campaign.19841984Ben and Jerrys has sales exceeding $4 million, a 120% increase from the previous year.

Timeline

The Ben and Jerrys Foundation is established at the end of the year.19851985The foundation is provided with 7.5% of the companys pre-tax profits. Ben and Jerrys has sales exceeding $9 million a 143% increase.

Dreyers becomes master distributor for Ben and Jerrys.19861986The company posts sales of just under $20 million a 100% increase over the previous year.Timeline

Ben and Jerry are named to the 1987 Esquire Register, the magazines annual honor roll of men and women whose accomplishments , values, and dreams reflect America at its best.19871987The company posts sales of just under $32 million up 59% from the previous year.Timeline

Ben and Jerry are named U.S. Small Business Persons of the Year by President Reagan in a White House Rose Garden Ceremony19881988As of the end of the year there are more than 80 scoop shops in 18 states. Sales exceed $47 million, up 49% from 1987.Timeline

Ben and Jerry receives Columbia Universitys Lawrence A. Wien Prize for corporate social responsibility.19891989Sales exceed $58 million, up 23% from 1988.Timeline

The company enjoys sales of more than 77 million, an increase of more than 32% over 1989. 19901991To help Vermont Dairy farmers the company pays a dairy premium of $1/2 million to farmers that supply milk to the company.Timeline

The company has sales of $97 million, an increase of 26% over 1990. 19911992TimelineTotal sales for 1992 are more than $131 million, an increase of 36% over 1991.

Functional-Level StrategyThe Hierarchy of Strategy LevelsEnterprise Level StrategyCorporate-Level StrategyBusiness-Level Strategy

The Hierarchy of Strategy LevelsEnterprise Level Strategy

To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community - local, national, and international. Social Mission Statement

The Hierarchy of Strategy LevelsCorporate-Level Strategy

To make, distribute and sell the finest quality all natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. Product Mission Statement

The Hierarchy of Strategy LevelsBusiness-Level Strategy

Underlying the mission of Ben & Jerry's is the determination to seek new & creative ways of addressing all three parts, while holding a deep respect for individuals inside and outside the Company and for the communities of which they are a part.

The Hierarchy of Strategy LevelsFunctional-Level Strategy

To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. Economic Mission Statement

Business Ben and Jerrys Government The Clash of Ethical Systems Between Business and Government

Individualistic Ethic Balanced Ethic Collectivistic

Maximize Concession to self-interestSubordination of individual goals and self interest to group goals interest.

Minimize the load of obligations society imposes on the individualMaximize the obligations assumed by the individual and discouraging self-interest

Emphasizes inequalities of individualsEmphasizes equality of individuals

Minimize concession to self-interest and maximize interest in group goals.Balance self-interest and obligations.Emphasizes uniqueness of individuals and strives for harmony among them.

Social Gap Model

19781999

Ben and JerrysSocietys Expectations

Avg. Industry Performance

Stakeholder Map

Ben & Jerrys

Employees

Customers

Owners/Stockholders

CompetitorsRetailersCreditorsGovernmentGen. PublicCommunityActivistsMediaSuppliers

Worthy Causes

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EmployeesInterestStable employment & Profit sharingTreated and rewarded fairly: Fair Pay for work Safe, comfortable, and FUN work environment: Joy GangAffairs affecting women, minorities, gays and lesbians on their workforce & employee benefitsPowerQuitting, striking, unionizingImplement new ideas (Recycling)Publicity (Community Volunteer Program)Primary Stakeholders

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Owners/StockholdersInterestSatisfactory return on investmentAppreciation of stock value over timeAttendance at two day picnic/festival featuring rock concerts, postcard writing, video messages to Congress, and plenty of Cherry Garcia! Just happy to be a shareholder of Socially Responsible company!Chance to buy into a company that reminds them of themselvesPowerVoting rights based on share ownershipRights to inspect company books or records & copy of annual report, printed on recycled paper signed by the chairpersonRight to buy more or sell existingPrimary Stakeholders

24

Primary StakeholdersCustomersInterestValue and quality for dollar spentReceive safe & yummy productsMost have interest in specific causes that Ben & Jerrys supports, such as Rainforest CrunchPowerPurchasing goods from competitorsBoycotting if practices of company are unacceptableThey buy because they DO approve of Ben & Jerrys polices.

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Cultural Survival-Brazilian Nuts La Soul - Apple PieMaines Passamaquoddy Indians-BlueberriesGreystone bakery-BrowniesOK once quality control overcomeAztec Indians-CoffeeVermont Dairy Farmers

Some Suppliers

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Primary StakeholdersSuppliersInterestReceive regular orders for goodsBe paid promptly LivelihoodBrownie Bakery-inner cityBrazilian Nuts-make more profitable than deforestation La Soul - recovering addictsCoffee-Indian PowerRefusing to meet orders if contract breachedSupplying to competitorsBen & Jerrys so close with suppliers, not issue

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Primary StakeholdersCompetitors: Haagen-Dazs, Dreyers, BreyersInterestBe profitableGain market sharePremium ice cream industry growth PowerTechnological innovationCharging lower pricesBlocking new entrants

28

Primary StakeholdersRetailersInterestReceive quality frozen goods in timely fashion at reasonable costPremium ice cream that consumers value PowerBuying from other suppliersBoycotting Reducing shelf space

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Primary StakeholdersCreditorsInterestRepayment of loansCollect debts and interestPowerCalling in loansRepossession

30

Secondary StakeholdersFederal, State, & Local GovernmentInterestRaise revenues through taxesPromote economic developmentPowerIssuing regulations, licenses, and permitsAllowing industrial activities

31

Secondary StakeholdersThe General PublicInterestProtect the social valuesMinimize risksAchieve prosperity in societyPowerSupporting activistsPressing government to actCondemning or praising Ben & Jerrys

32

Secondary StakeholdersVermont CommunitiesInterestEmploy local residentsOne of states top 10 employers by sizeVermonts average per capita income = $17,436At B & Js the Lowest salary plus benefits = $22,000Protect local environmentDevelop local areaA top tourist spot in the statePowerExtending additional creditIssuing operating licenses and permitsLobbying government

33

Secondary StakeholdersSocial ActivistsInterestMonitor company actions and policies to ensure they conformLegallyEthicallySafetyPowerGaining broad public support by publicizing issuesLobbying government for regulations

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Secondary StakeholdersMediaInterestKeep the public informed on all relevant issuesHealthWell-beingEconomic statusMonitor company actionsPowerPublicizing events that affect publicAccentuate the negative or the positiveBenefited enormously from media exposure at start upNow press watching closely for signs of hypocrisy

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Secondary StakeholdersWorthy Causes Interest7.5 % pretax profit goes to a worthy cause that workers help to chooseRainforests, Childrens Defense Fund, AIDS patients, homeless peopleLids for Kids (B&Js and Yahoo!)Hooking up K-12 to the internet PowerPublicityVery little power or control

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Good Intentions, Bad OutcomesCultural Survival-Brazilian NutsTurned out to be Portuguese settlers95% from agricultural-business giant that also Clear Cuts the Rain Forest!PigsHeart Attacks and High Cholesterol?La SoulBankruptcy

Stakeholder Issues: EthicsUtilitarianismGreatest good to the greatest numberEnvironmentalism, whole hippie ideals...Make the world a better place...Focuses on ends, not the means to get thereT-shirts and jeans still meet economic and social benefits, for example

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B&Js Levels of Moral Development

The BeginningGrowthMaturityLevel 1: PreconventionalLevel 2: Conventional Level 3: Postconventional

Stage 2 RewardsStage 1 Reaction to punishment Stage 4 Law and orderStage 3 Good boy/Nice girl moralityStage 6 Universal ethical principle orientationStage 5 Social-contract orientation

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Stakeholder Issues: EthicsRightsCertain groups of individualsChildcareRunning at expense of $90,000/yearInsurance CoverageMarried, unmarried, heterosexual, or homosexual partners coveredMedia Says: some need not apply?!?RepublicansGun owners-CEO worked for Winchester RiflesPro-LifersMeat eaters

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Stakeholder Issues: EthicsJusticeFair treatment of each personUpward appraisalsEach given fair chanceWhats the Dough Boy afraid of?Now aggressively shutting out competitors from distribution channelsAmys Ice Cream-Austin, TX

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Environmental EthicsFour fundamental beliefsLife on earth should continueHuman life on earth should continueNatural justice should be doneNonmaterial qualities of life are worth pursuingEnvironmental EthicsRelated to natural environment that agree with societys normsSee suppliers and worthy causes!--Values Led

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Diagnostic Typology

Mixed Blessing:CollaborateEmployeesVermont CommunitiesSocial Activists/Media

Supportive: InvolveSuppliersStakeholdersWorthy CausesNon-supportive: DefendCompetitorsRetailers/ CustomersGovernmentMarginal: MonitorCreditorsGeneral PublicStakeholderPotentialForCooperationWith B & JsHLHLStakeholders Potential for Threat to Ben & Jerrys

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Laws, Government Regulations and Regulatory Agencies Fair labeling (Social)Fat Grams listed on packageVermont Department of Banking & InsuranceLaw that allowed IN state offering (Economic)The IN State OfferingOne in every 100 families1800 households bought stock1/3 with minimum buy

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Vermont Chamber of CommerceB&Js withdrew because lobbying for businessIncompatible with broad environmental & social issuesWanted to remove members of Vermonts Environmental Board because too pro-environment!SEC (Economic)FDA (Social)Bovine Growth Hormone

Laws, Government Regulations and Regulatory Agencies

Stakeholder Responsibility Matrix

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SubstitutesBuyers

Potential Entrants

Other Stakeholders

Enlightened Suppliers

IndustryCompetitors Dryers Breyers Haagen-Dazs OthersVermont DairyVermont Republic IndustriesCultural SurvivalLa SoulEmployeesDistributorsInternet Sales

Grocers Individual Consumer

High tech/fat freePorters Model

47Industry Competitors - only those that sell through grocersMaint Workers union Dryers and Hagen Daz are national/regional distributors for Ben and JerrysSuppliers are enlightened Dairy - St Albans cooperative, ban hormone Vermont Republic Industries - Handicapped employer Cultural Survival - nuts from Brazil, support indigenous forest people La Soul - Bakery employing recovering alcoholics and drug addictsHaagan Dazs - Pillsbury

481998 ice cream market share based on supermarket sales

29% of the Other are private labels

Market valued at 3.6 billion

Enlightened SuppliersVermont Dairies - St Albans cooperative, ban bovine growth hormone (BGH)Vermont Republic Industries - Employer of the handicappedCultural Survival - nuts from Brazil, support indigenous forest peopleLa Soul - Bakery employing recovering alcoholics and drug addicts

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Other StakeholdersDistributorsDryersHaagen Dazs

EmployeesMaintenance Workers Union

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1. The CompanyOrganizationalStrengths andWeaknesses Flexible Reputation Lack of corporate direction Middle management alienation Poor SOPs Increasing Bureaucracy

2. The MarketMarketOpportunities andThreats Growing at 15% Public Relations Franchises Internet

3. ManagementValues and Aspirations ofManagement Success criteria: financial/social performance Operate by environmentally sound principles Hire the handicapped

StrategyFormulationDecision

4. SocietyAcknowledgedObligations to Society Devote resources to solve societys problems

511. Company: Strength: small and flexiblereputation for quality Weakness:middle management alienationlack of corporate directionbureaucracySOPs2. The Market Opportunities: premium ice cream market growing at 15%Internet salespublic relations marketingfranchisesThreats:seasonal salesInternet sales3. Management weird, free spirited, fun in workplacelong term financial and social gaininnovative ways to improve quality of life of broad communitycreate career opportunities and rewards for employeesoperate with environmentally sound principles (recycle/energy conservation)4. Societydevote resources to solving societys problems

Establish Purposes and Principles

Select EconomicInvestment CriteriaSelect SocialInvestment CriteriaEstablish PerformanceStandards for EconomicInvestment CriteriaEstablish PerformanceStandards for SocialInvestment CriteriaIdentify Projects andProducts for PotentialInvestmentIdentify Social Projects for PotentialInvestmentProject EconomicPerformanceProject SocialPerformanceEvaluate EconomicPerformanceEvaluate SocialPerformanceMonitor Performance

Add or Delete Projects/Products from Portfolio of Capital and Social Investments

52Model originally for portfolio analysis, adapted to Ben and Jerrys for internal business and social project analysis

profits versus quality of life to the community - resources devoted to one take away from the other.We realized that the solution to the dilemma was to choose the ones with positive effect on both.

Mission StatementProduct mission - To make, distribute, and sell the finest quality, all-natural ice-cream

Economic Mission - To operate the company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees.

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Social mission - To operate the company in a way that actively recognizes the central role bus. plays in solitude of society by initiating innovative ways to improve the quality of life of a broad community - local, national, and international.

Social performance auditMission Statement - cont.

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Board of Directors

55

CommitteesCompensationNominatingSocial missionAudit

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Board of Directors Continuum

Degree of InvolvementLowHigh

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Founders - Ben CohenChairman of BoardDropped out of Colgate College and entered Skidmores University without Walls program, an unstructured college degree program, Quit school againCreative driving force

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Founders - Jerry GreenfieldHead of Ben and Jerrys FoundationStudied pre-med. at Oberlin CollegeDrifted before pairing w/BenGreenfield and Cohen spend most of time traveling and doing marketing promotions for co.

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CEO HistoryBen Cohen, cofounder, was President from Jan. 1983-Feb. 1995Held essay contest to find new CEORobert Holland, Jr. replaced Cohen in Feb. 1989-1991 in order to introduce a more professional management culture.Holland resigned after he accomplished goals of stabilizing companys manufacturing operations and bringing more professional management.

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Current CEOOdak replaced Holland in 1991, needed someone with marketing and sales skills that would put the company in better competitive position

51 years old

Married and has three grown children

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CEO continuedEarned a B.S. and M.S. degree in Applied Economics from Cornell

25 years of management expertise in variety of consumer product and retailing businesses

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Levels of Moral Development

Stage 2 RewardsStage 1 Reaction to punishment Stage 4 Law and orderStage 3 Good boy/Nice girl moralityStage 6 Universal ethical principle orientationStage 5 Social-contract orientation

Focus: SelfFocus: OthersLevel 1: PreconventionalLevel 2: Conventional

Focus: HumankindLevel 3: Postconventional

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Management StyleBusiness has responsibility for welfare of society as a whole.

Gain customer loyalty

Team quality management

Selective hiring

if its not fun, why do it?

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Corporation Motivation andSocial Responsiveness

Management values and beliefsVoluntary response

Pressure from stakeholdersForced response

Legally mandated requirementsInvoluntary response

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Flow of AuthorityActual

ShareholdersBoardManagementIntended

BoardManagement

Shareholders

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Public AffairsDoing good = best kind of advertisement

Try to be environmentally safe

Employ handicap and youth

Get everyone involvedJoy Luck GangCommunity Action Teams

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Components of Ethical Climate

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Ben and Jerrys Ethical Climate

Ethics ProgramsRealistic Objectives

Ethical Decision-MakingEthics TrainingEthics Auditing

Effective CommunicationTop Management Leadership

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Scheins ModelArtifactsMission StatementBen and JerryTestable in Physical EnvironmentAnnual Social ReportBasic AssumptionsImportance of Social PerformanceVisible but often not decipherable

Greater level of awareness

Taken for granted

Annual Social ReportWorkplaceOperationsEnvironmentFranchise / RetailMarketingInternationalPhilanthropy

Social Report Example

Stock Performance

Human Resource ManagementWork-Life SurveyLivable WageGender EquityDiversityChild CareJoy Gang

The company begins a search for a new CEO. The company also reports its first loss of just under $1,900,00019941995Updated TimelineRobert Holland is selected as the new CEO and turns around its performance for a net income of $6 million.

Robert Holland steps down as CEO after greatly improving manufacturing inefficiencies. 19961997Updated TimelinePerry Odak takes over the vacant position of CEO. Ben and Jerry publish their book Double Dip. The company had net sales of over 174, million.

Ben and Jerrys ConclusionsEstablish a formal code of ethicsMore directors from non-profit organizationsEstablish standard operating procedures and training for supervisorsAs the company grows, keep the social mission as a primary focus

Ben & Jerrys: Before

EconomicLegal

Ethical

Philanthropic

Socially Responsible: Carrolls Framework

Ethical Legal (Expected)

Philanthropic Economic(Required)

By Joylynn R. Radtke

Conclusions, SR CompanyExpect to be a target if you claim to be a socially responsible companyBeing socially responsible is expensiveCorporate values, vision, and culture will often conflict with operationsSocial responsibility requires creativitySocial responsibility begets social responsibility

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RecommendationsFocus on differentiationAdd organizational infrastructure devoted exclusively to the social missionUse Stakeholder Mapping and Diagnostic Typology to identify stakeholders and develop strategy for interactionEstablish an ethics and communications program

Recommendations

Establish a mechanism to select andevaluate both economic and social projects

Establish an issues (marketing) managementprocess

Board Members should support theEconomic/Social mission of the company

Issues (Marketing) ProcessIdentification of Issues

Analysis of Issues

Prioritization of Issues

Formulation of IssueResponses

Implementation ofIssue Responses

Evaluation,Monitoring,Control of Results

88From Figure 19-4

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StakeholdersEconomicLegalEthicalPhilanthropic

Stockholders

Customers

Employees

Community

Public at Large

Social Activist

BECAUSEItIsBen& Jerrys

Chart310.510.34.64.170.5

Ice Cream Brands Market Share

Sheet1Breyers10.5Dreyer's10.3Haagen-Dazs4.6Ben & Jerry's4.1Others70.5

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Ice Cream Brands Market Share

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Sheet1NamePositionM/FAgeServiceBackground, misc.Ben CohenChairM4317Product dvlp., marketingRobert Holland Jr.President, CEOM541Operational, strategy, marketingJerry GreenfieldVP ChairM4317Sales, promotion, distributionElizabeth BankowskiDr. Social MissionF473Worked for gvt.Merritt Chandler, OutsiderM787Business consultingJeffrey FurmanM5112Business consultingFred LagerM4012Management, consultingFrederick Miller, OutsiderM482Strategic culture changeHenry Morgan, OutsiderM687ManagementFrances RathkeCFOF345Accounting

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Sheet1RubberMinimalNominalActivePhantomStampReviewParticipationParticipationCatalystNever knowsPermits officersFormally reviewsInvolved to a limitedApproves questions,Takes the leadingwhat to do, ifto make allselected issuesdegree in theand makes finalrole in establishinganything; nodecisions. Itthat officersperformance or reviewdecisions on mission,and modifying missiondegree ofvotes as thebring to itsof selected keystrategy, policies, andobjectives, strategy, andinvolvementofficersattentiondecisions, indicators,objectives. Has activepolicies. It has veryrecommend onor programs of mgt.board committees.active strategyaction issuesPerforms fiscal andcommitteemanagement audits

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Sheet1Focus of Ethical ConcernEthical CriteriaIndividualCompanySocietyEgoismSelf-interestCompanyEconomicInterestEfficiencyBenevolenceFriendshipTeamSocialInterestResponsibilityPrinciplePersonalCompany rulesLaws andMoralityand proceduresProfessional Codes

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