Ben & Jerry’s Case
Started almost 20 years earlier, Ben & Jerry’s had plenty of great opportunities to expand the business by entering into foreign markets.However, their attempts of expansion cannot really be considered successful (note: the case describes the period 1978-1997).In the following paragraphs, I will evaluate their international market entry strategies, based on the ’International Market Entry Evaluation Process’ described by J.
K. Johansson in his book Global Marketing – Foreign Entry, Local Marketing, and Global Management written in 2000.
According to the process, the five steps of evaluation are Country Identification, Preliminary Screening, In-Depth Screening, Final Selection and Direct Experience. Before its idea of entry into Japan, Ben & Jerry’s attempted to expand their business in six different countries on three continents, none of which was approached in a systematical way eg. based on the above-mentioned process. Had the company followed a well-thought-out plan, it probably would have realized more success than it actually did.
The first country Ben & Jerry’s tried to set foot in was Canada, which comes by no surprise as the Country Identification step assumes foreign partners to be chosen based on geographical closeness. The strategy was not successful as the company finally had to repurchase its licensing agreement because of high taxes and low quotas. The next country of attempt was Israel, which I consider an opportunistic approach since the license was given based on friendship and not real evaluation.
The country held good opportunities though with the product being sold in supermarkets and restaurants, but the partnership did not result in high income according to the terms and conditions of the contract. The first joint venture in Russia did not prove to be a lucrative business either, and the four years spent in the country ended on disadvantageous terms. It could be considered as a free give-away of technologies, equity and equipment. The last three foreign markets approached were the United Kingdom, France and the Benelux States.
In none of these cases was any of the steps of the International Market Entry Evaluation Process followed which resulted in very opportunistic approaches without consensus, a well-designed plan or a valuable strategy. I do not consider the first six foreign entries to be successful at all, however, some of the countries held good potentials but lack of experience and knowledge made Ben & Jerry’s not successful. The company has a great chance to increase its sales, market share, profits and income by entering into the Japanese market.
Probably having learnt from its previous experiences, the approach of the Japanese market has been more systematic than the previous one. It has actually been quite consistent with the steps of the International Market Entry Evaluation Process, they have even reached the stage of the last step, as it turns out at the beginning of the case – they made a trip to Japan to get first-hand experience before making a decision. The Japanese market has correctly been evaluated to have a large market and an existing demand for super premium ice-cream, which makes it a prospective opening.
At the same time, the company has recently been experiencing declining market share on the domestic markets, worsened by decreasing growth rates. The combination of these factors result in finding the idea of entrance appealing, however, the complicated process of entering into the market must be taken into consideration too. In my opinion, it is time Ben & Jerry’s did the necessary steps to expand their business. The company has seen different ways to approach Japanese consumers, however, the two best ones has been to enter with Seven-Eleven or through Mr.
Yamada. These represent two totally different strategies and both have their advantages as well as disadvantages. Entering with Seven-Eleven has the advantage of providing high sales and also a lot of experience in effective involvement of professionals. Making them partners would also mean a quick access to the Japanese market. On the other hand, they have expressed a complicated way of logistics and inventory management, and they would also presume a very dominant position in their partnership. Making Mr.
Yamada their partner seems to be a much easier way to approach Japanese consumers. Mr. Yamada does not have complex and specific requirements as Seven-Eleven but he still has the extensive knowledge of the market, however, what he does not have is a proven business plan to start the business. Although it may seem to be easier to choose the strategy that involves less complications, Ben & Jerry’s has reached the stage where they ought to make responsible long-term decisions rather than focusing on short-term convenience.
Seven-Eleven has a lot of requests to be followed, it only proves that they have experience and market knowledge and they know what type of products there will be sufficient demand for. In my opinion, the company should choose Seven-Eleven to form a partnership with, based on the information provided by the case. The chance to succeed in the Japanese market would be higher this way. Bibliography Johansson, J. K. Global Marketing – Foreign Entry, Local Marketing, and Global Management, Johansson, 2000.