Ben and Jerry's Japan

Problem

After years of improper management, Ben & Jerry’s has begun to face problems with production and distribution.   A major competitor, Dreyer’s, is producing 40% of Ben & Jerry’s ice cream, which has caused an unhealthy dependency on a prime competitor.   30% of their ice cream is being shipped up to 3,000 miles away, greatly increasing their transportation costs.   They have begun to receive negative publicity after switching attention away from their social responsibilities, diminishing their reputable image.   Also, the rising trend of health consciousness for food in America has resulted in a slow in growth of Ben & Jerry’s ice cream sales.

The question of entry into the Japanese market is a complex one. There are a number of barriers that would need to be overcome, regardless of which entry strategy Ben & Jerry’s chose. Any entry would result in a significant refrigerated transportation expense being incurred, as it had been determined that all production would continue to take place in its existing facilities in Vermont. This would allow Ben & Jerry’s to take advantage of excess manufacturing capacity, as well as less expensive ingredient sourcing. This also meant that order lead-time would be substantial, as transportation time from Vermont to Japan would be roughly three weeks. There was also a tariff in place in Japan at 23.3% (with the potential to drop to 21% in 2000), in addition to concerns that currency fluctuations could result in a disadvantageous dollar-to-yen ratio. Further, there were indications that Japan’s economy, which had slowed in recent years, could continue to stagnate. Meanwhile Ben & Jerry’s largest US competitor, Haagen-Dazs, had a ten-year head start in the Japanese market…

Current Situation

* US Market share shrinking and Ben & Jerry is losing market share

* Sales started to fall off and decline in profits

* Vermont factory had considerable excess capacity

* Sales stated to...