Ben & Jerry's Comparison to Porter's 5 Forces

Ben & Jerry's Case Analysis

Facing their first ever net income loss and experiencing a disconnect between company strategy, it is necessary to compare Ben & Jerry's to Michael Porter's "Five Forces" model to obtain guidance and a clear perspective on what path their new CEO Robert Holland should take the company. Ben & Jerry's operational effectiveness was not successful in that they were inefficient in managing operational activities. The high cost of distribution, significant delays in opening a new manufacturing plant with a $6.8 million write-down, producing the large chunk ice cream, and difficulty forecasting demand for ice cream flavors all contributed to the company's first profit loss in 1994. Porter states that cost advantages arise from performing company activities more efficiently than competitors and Ben & Jerry's ineffectiveness to do this was causing a decrease in profit and increase in debt. Resolving the company's costly equipment problems was one of Robert Holland's top priorities when becoming the new CEO.

Another top priority was to focus on Ben & Jerry's unique activities as a key success factor to gain competitive advantage over their competitors. For example, their corporate strategy to integrate product quality with social responsibility is a key factor in the successful operation of the company. Ben & Jerry's have used a variety-based positioning strategy to pinpoint a specific customer base who are interested in the environment and are willing to pay a premium price for higher quality.

Ben & Jerry's disconnect with their growth strategies and equipment problems cost the company huge profits. Ben & Jerry's was first known for their chunky rich superpremium ice cream. Developing too many flavors and product lines in a short period of time, caused Ben & Jerry's to experience a complexity in their business that they were not able to manage. A trade-off should have arose and Ben & Jerry's should have conducted more product research and tailored their company to handle the different products, equipment, and managing skills needed for such a huge expansion.

Ben & Jerry's has had a consistent fit with their environmental image, which has allowed them to donate more profits every year to different causes. Ben & Jerry's have had very few compliance issues, which benefits business by minimizing operational costs and gaining competitive advantage over competitors through their strict environmental controls. Other strategic consistencies are the support they give to Vermont farming and agriculture. This strategy has provided a better product that has attracted customers and allowed Ben & Jerry's to command a higher price, satisfying the company's mission of corporate success and environmental commitment.

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