Ben and Jerry are American business partners who were high school buddies and after trying varied stints at various locations they moved to Vermont where they started what became to be known as Ben Jerrys, a home-made ice cream vending company they started by converting a gas station into an ice cream parlor.
Among what the legend highlights, they attained their ice cream making knowledge on the strength of a 5 correspondence course that taught them how to make ice cream and their initial investment was 12,000 out of which 4000 was borrowed. In addition, the two company founding friends had a reputation for being socially committed as witnessed by some of the social causes they embraced and were able to introduce an open and relaxed work environment. The business they started expanded and in five ears time was able to attain a revenue of 58 million from 4 million, as they had thoroughly discussed in their book (Cohen and Greenfield, 1997). The company went public and in around 1991 its gross earning had made it to around 100 million showing that they were enjoying unprecedented success rate for a company that was selling home-made ice cream delivered to neighborhood shops by one of the owners (Redder, 1994).
The company had also managed to expand into Europe, although it started to suffer financial setback at around the year 1994 despite the fact that its gross sales had reached 150 million. In 1995, the company brought in a new CEO who was able to raise the gross sales to 237 million despite the fact the net income was low at 3.4 million. In January 2000 there was a speculation that a few multinationals had shown interest to take over the ailing company whose owners had made it public that they intend to sell the company, because it seems that the nature of the competition that was coming from major players in the ice cream business such as Haagen Dazs and the deteriorating business relation they were having with some of their partners (Smalley, 19997) had become more than they can handle. One of the multinationals that offered a takeover bid among a few was Unilever a conglomerate that has it headquarters in London and eventually it was able to acquire the company by beating the other bidders. The following section will discuss how a company known for its social involvement and commitment had adjusted its renowned Ben Jerrys mission and its popular brand name by being a part of Unilever.
Iconic Status of Ben Jerry
Ben Jerrys had an iconic status because of the social role it was playing that enabled it to grow into a socially responsible company that was lauded by Bitman (1990) as the caring capitalism. If there was something onlookers were worried about when the news that Unilever was about to acquire the company became official was that it will lose the iconic status the company was enjoying that it had attained by long term involvement in the community it was selling its various products in, by focusing on improving the lives of people. Many outside sources had concluded that Unilever will go soft on the Ben Jerrys social mission, although in order to defy such skepticism and to show that it also gets involved in community affairs, the company had to earmark 5 million to save family farms to continue with the legend of good social and economic policy.
While the owners were in charge of the company they started a foundation that was receiving 7.5 of the companys pre-tax profit and the money will find its way to organizations such as Anti Displacement Project and others. This is in addition to some of the stands the owners were taking such as supporting small-scale farming, not buying milk with iBGH, and they had gone as far criticizing the US governments spending policy by claiming that more money is spent on nuclear weapons than programs that tend to childrens health care, social stands that had enabled the ice cream vending company to do a successful business (Solomon, 1999). Amid the takeover frenzy, one the founders of the company Ben Cohen was trying to bring together investors that he believed were socially responsible (Hall, 2005). In spite of such efforts, Unilever was able to acquire Ben Jerrys in the year 2000 by purchasing the company outright by paying 43.60 a share.
Unilever
Unilever as a leading European multinational company has interest in food industries, in addition to home and personal care products. The core products the company brings into the market includes tea, culinary, ice cream, skin care, deodorant with known brand names such as Dove, Lux, Lipton, Magnum, as well as Calvin Klein that are on sale around the world. The number of employees under the wing of the company that operates in 150 countries was estimated 246,000 in 1999. Unilever also had suffered a setback as its sale that was at 31.5 billion had slipped to 27 billion in 1999 that had made it look toward boosting its growth. In order to accomplish that the company was able to identify which were its most successful businesses based on their ability to generate a sizeable market share, so that it will concentrate its RD effort on them. In light of that, 400 businesses deemed to be successful had been identified and in addition to RD, their marketing and human resources departments had become major areas that needed enhancing with the hope that the measures taken would restructure under-performing businesses that required a reduction of 25,000 jobs over a five-year period. In all this, the company had two declared priorities worth highlighting developing e-business capabilities with the aim to improve the method of communicating the various brands to customer so that they will have a better understanding, and creating a world-class supply chain that have their anchors at 150 key sites around the globe that might lead to bring the number of manufacturing plants closed to 100. When it comes to financial performance the company measures the effectiveness by regions it is operating in and products category it carries. Based on that the best region the company fared in was Europe with earmarked sales of 12.4 billion and among products, personal care was the best performer at 7 billion.
The company that had acquired a company that has an iconic status because of its social involvement and commitment also is a good corporate citizen that had been responsible environmentally, its social corporate behavior had also been impeccable, and they both are company priorities according to what Brinton (1990) and others outline as the proper way of doing business. To demonstrate what the company accomplished in its environmental responsibility area it claims that it had completed as far back as 1999 environment audit on at least 90 of its factories whose outcome was found to be satisfactory and the remaining audit had been completed the following year with similar results. Both plants the company has in Buenos Aires and Ghana have taken the necessary steps to make both locations facilities environmentally safe and responsible in what they are doing that adheres to what Vogel (1992) outlines as an acceptable global business ethics.
On the behavior side, the company has a code of business principle that oversees employees health, safety, product quality, and environmental impact. Other commitments of the multinational company includes raising the standard of living of communities where it has facilities, developing ongoing partnership with it employees and business partners, and to work with other entities at various capacities to deal with social, economic, and environmental challenges. The company had spent 26 million on community involvement and had donated 3 million to disaster relief in 1999 alone demonstrating that it is indeed suitable to be the suitor of an iconic legend based on what its future plans are (Di Norcia and Tinger, 2000).
The Takeover of Ben Jerrys by Unilever
The most important factor that was the focus was how the smaller iconic company will continue to fare with its social mission when acquired by a multinational company where the priority undoubtedly might be the shareholders and the companys bottom line. Since the smaller iconic ice cream vending company had many supporters and followers, even if the company was facing growth problem there was a campaign against the takeover and there were suggestions for the company to use a recent statue that will allow any company to reject any takeover offer if found to affect the interest of employees, suppliers, and the economy of the state where the company operates. In spite of that, Unilever determined to turn around its own sluggish growth was planning to acquire more well-known brands such as Best Foods, Amora Maile, and Slim Fast where Ben Jerrys just happened to be on the list of preferred choices, because the company had analyzed the strong potential the ice cream vending company has both in the US and globally with the understanding that the ethics the company is employing and its business drive could easily be aligned with the new small company (Kaler, 2000). With such intent, the company offered 43.60 per share that came to 326 million, which was 25 premium of the current going market price of the stock. Amidst such heated negotiation, where there was a white knight group out to avert the takeover, the main concern had been that how will the ice cream vending company that was very well known for its social mission would manage to continue to do so once it is under the umbrella of the multinational company.
Accordingly, Unilever was aware of the iconic status of the ice cream vendor and its top management came up with a commitment that would appease the big number of skeptics by allowing the company to retain its brand name, an exception for a company that would absorb companies that it acquired under one of its brands. Another sweetener was a promise to keep the existing employees at least for two years. As a third goodwill gesture the acquiring company will commit an initial 5 million into the renowned Ben Jerrys Foundation. Further commitment was the original plan where 7.5 of pretax profit that was finding its way into the foundations fund had a cap of 1.1 million for ten years following the acquisition. The acquiring company had gone out of its way again to appease the opposition of the takeover by choosing to work closely with the existing management team and created an external board that would include the current Ben Jerrys CEO. The additional five members would be among those who had a long term relation with the acquired company showing that even if the main reason behind the takeover attempt had been profit driven, with the long term anticipation of raising the sluggish sales of Unilever, the company had made sure not to ruffle too much feather because of the mounted opposition it had faced and were given a leeway to make an independent decision where the new selected board members do not have to report to anyone else outside of the group, by making their top priority promoting the brands the ice cream maker was carrying. Unilever top management were clear about their goal where they stated that they were aware that they are better equipped than anyone else when it comes to cutting cost, but their priority was the supper premium brand the ice cream vendors created that has the values of the company that they pay special attention to and they will listen to any suggestions.
After the Acquisition
Although there were many who said no to the acquisition and skeptics about the icons takeover, one thing clear was Unilever was not either a flop when it comes to corporate responsibility where it had a long standing good record in all the communities it was operating. There will not be much problem with how to manage the handful products Ben Jerrys had popularized because Unilever itself has a US based ice-cream operation in Green Bay, Wisconsin from where it was managing well known brands such as Breyers, Good Humor, Popsicle and Klondike. One key area to highlight that would show the new acquired company was very important for Unilever is that there had been a change of CEO where a new CEO who was well-versed in ice-cream making and selling had taken the helm (Oliver, 1993). What took place was not different from what takes place when there is a new takeover where the acquired company most of the time will be required to adjust its working procedures to what the acquiring company requires and that took place smoothly. If there had been a problem it was the letting go of employees because of work redundancy that will surface and even if that cannot take place before the promised two years expires.
Other section the new owner revamped was supply chain management, which the acquiring organization found it to be badly organized and inefficient to the point where it had a negative impact on the environment. Such activities would inevitably require the closing of some plants or sites while workers will be required to learn new skills. Although the company was popular with its social inputs, the former owners did not have formal training of any kind to run a company that has a huge growth potential, in fact that was the main reason why they were forced to bring in a CEO, then when they failed to turn around the company they had decided to put it on the block (Peter, 1995). After finalizing the acquisition the two founding owners became ambassadors of the brand they created with no day-to-day managing responsibility.
As time progressed, the external board was in need of what it called statement of value, which meant both the old and new management should find a middle ground that will mix the old and the new way of doing things, without introducing any negative repercussion to the success of the company. After settling that aspect, the next concern was efficiency where any kind of cost cutting was welcome. While such concerns were systematically dealt with and were showing good results, the corporate social responsibility that had made the ice cream maker an icon was not put aside and it was a hot issue discussed that involved the two chairmen of the company who came to the US to discuss the values both companies and what they have going for it currently without taking into consideration how small the iconic company with only 200 million sales was when compared to the multinational with a sales figure of 60 billion showing that the acquired company was in safe hands, as far as pursuing its social responsibility values was concerned. If there had been one conflict that surfaced, it was that the Unilevers code of ethics prohibits being politically active, an endeavor the smaller company was involved in heavily that resulted in creating a huge amount of brand loyalty, because that was how people were identifying with the ice cream vendor, while at the same time they were savoring the home-made brands the company was churning out. Although the top management felt the change, they were able to take solace in some of the things they were allowed to do such as partnering with nonprofit organizations and their effort to come up with brands that were organic. Yet, those at the top and others who knew what the smaller company had been contributing had voiced their dissatisfaction by saying that the shop have become boring and barren of values, highlighting the main driver of business that was making many people visit the stores were the values the company had been immersed into that seemed to be gone. According to insiders report the company was an edge dweller, meaning that it was active in progressive politics and social issues that had contributed to making people attracted to what was on offer, because there was something more than munching on the ice cream, although consumers enjoyed the ice cream too.
That being as it is, restructuring had to take place that resulted in closure and workers reduction that had varied effect such as some workers who were working at plants that found buyers were able to get employment with the new buyers, while a few got a transfer. Those who had been with the company saw the layoffs that took place after the two years waiting, as having a negative impact to the companys social role that was known to create employment in economically distressed areas such as Vermont. When looking at the restructuring that took place the outcome had been that it was possible to bring down the cost structure of the older company that made bringing more ice cream to the market possible by introducing new manufacturing techniques flanked by efficient distribution system, where the company was able not only to meet its target but was able to exceed it.
Conclusion
Overall, the new combined company claims that the social and environmental practices are integrated with the companys business practices revealing that with few exceptions such as avoiding to be active politically, the rest of what Ben Jerrys uphold from the inception of the company is still in practice. In fact, themes the smaller company had embraced before the acquisition such as giving high priority to products, economic advancement, and social causes are still the main pillars of the joint company demonstrating that the new merged company will not falter on its social responsibilities as feared by the skeptics. There are also three groups in the company that are watching how the company implements its social responsibility and they are The Social Group, the Natural Resources areas and Ben Jerrys foundation where the company is directing some portion of the profit it generates into the hands charitable foundations. In fact, to show the support of what the iconic company was doing a special manger to oversee what is called the Social Mission for Europe adapted from what the small US company was doing in its social responsibility role had been assigned.
