Ben & Jerry's Ice Cream Case Study

Excerpt from Case Study :

The Sarbanes-Oxley Act (SOX) (2002) was passed into law specifically for this reason. Unlike Unilever attempting to use governance to supplant and eventually replace the triad missions of Ben & Jerry's, many corporations including Enron, MCI, Tyco and many others did not have an ethical foundation to begin with at all. The use of SOX to legislate compliance to ethical standards is in effect trying to enforce ethical ecosystems into place through massive amounts of accounting and finance audits, controls and processes. When one considers the simplicity of the triad missions and how they permeate the brand at Ben & Jerry's, it becomes abundantly clear that good ethics is good business and saves literally billions of dollars across the global economy every year. Ben & Jerry's brand success had more to do with the accomplishment of those balanced objectives in the triad mission and the furthering of their ethical stance on using wealth to better the lives and serve others. The altruistic and highly egalitarian nature of the Ben & Jerry's brand was the result of these mission factors working in a synchronized fashion with each other to create a catalyst of ethics highly unique to the company.

Unilevers' governance strategy for ensuring the ethical and egalitarian nature of the Ben & Jerry's culture stays constant is used to stabilize the brand despite its being rolled up into the entire Unilever product family. While perfectly ethical, the challenge of managing brands that have a highly unique value-based identity is formidable. Corporate branding has two aspects, one is diversification and the one is belonging. A strong corporate brand can offer its members and stakeholders a way of expressing their values (Kotler 2001). For Unilever the ethical infrastructure of the governance board and many efforts to replace the triad missions does not take into account how deeply permeated these missions were in the company. There was recognition of the triad missions being important, yet governance could not replace the daily decision making results that looked to underscore each missions' objectives. The bottom line was that the continual and incessant pressure from the Unilever culture can't help but impact the Ben & Jerry's organization, processes, people and eventually the product and brand.

Corporate Social Responsibility Assessment

Inherent in Unilever was the need to show a return on investment (ROI) on the acquisition of Ben & Jerry's. The ability to generate greater profits while keeping aligned with then eventually replacing the triad missions with a series of governance processes and a governance board posted dilemmas in terms of Corporate Social Responsibility (CSR) as well. Davis and Blomstrom (1975) have defined social responsibility as the obligation of decision makers to take actions which protect and improve the welfare of society as a whole along with their own interests. Conversely Carroll and Buchholtz (2003) argue that CSR is not the responsibility of business people; their responsibility is purely to maximize profits for owners and shareholders. Further, theorists contend that the role of business is to attract and retain employees while adding significant value to customers' products.

Between these two philosophical extremes of needing to fulfill the vision of CSR that is integral to Ben & Jerry's culture on the one hand, and the need to show a profit and generate a return on investment and show shareholder wealth creation on the other, Unilever is caught in the middle of an ethical and governance quandary. CSR expectations and commitments made to the founders, employees, suppliers and stakeholders both inside and outside the company put Unilever in the position of having to rely on reactive business ethics performance. Svensson & Wood (2004) have defined reactive ethics performance as when the internal perception of what are acceptable values, norms and beliefs are a step behind what is acceptable according to the external perception including customers, suppliers and external stakeholders. This is the source of degenerating morale in Ben & Jerry's after the acquisition, the decision to consider artificial sweeteners in their ice cream (no sugar or low sugar) when all-natural ingredients were used, and the stifling of a public voice that the founders had so enthusiastically promoted prior to the acquisition. The reactive ethics performance of Unilever and the dichotomy of having to show a profit from the acquisition on the one hand yet keep the ethical ecosystem intact on the other continually makes Unilever look for areas of win/win between these two extremes. Unilever crafts a strategy of CSR that has a financially beneficial result, including simplifying the supply chain by standardizing only on rBGH-free milk, support for Fair Trade Coffee which has both social and supply chain benefits, and the retail expansion of stores both for community outreach but also for channel expansion and revenue growth. Unilever finds that straddling the two extremes of pure CSR with a more hybrid approach preserves the credibility of the governance board and processes as the new foundation for Ben & Jerry's brand. Yet for the success of their hybrid approach to CSR implementation and the use of governance as the eventual replacement of the triad missions, Unilever is still in a reactive ethics performance position, evidenced by the many challenges post-acquisition the case study lists. Unilever needs to urgently turn these internal weaknesses into strengths before they become external threats. As Svensson & Wood (2004) have stated, proactive ethics performance results in internal strength which becomes an external opportunity.

Unilevers' acquisition of Ben & Jerry's highlights how the ethical ecosystems that companies create become an integral part of their identity, reinforced by the thousands of decisions made daily to further those ethics and values. In effect these ecosystems become the brands of companies who rely on values-based marketing, which is certainly the case with the acquired company in this case. For Ben & Jerry's their triad missions, all executed in synchronization with one another and managed to be balanced between each other, form the foundation of the company's ethical ecosystem, value-based marketing efforts, brand and identity both internally and externally to stakeholders. Unilevers' approach to acquiring the company looks to thoroughly underscore the values and goals in the triad missions, looking to enforce and eventually replace these three missions with a governance board and processes that will allow Unilever to practice a hybrid form of CSR as a result. It doesn't work. The fact that daily reinforcement of the values and goals of the triad missions is no longer being accomplished and out of economic necessity to show a positive ROI on the acquisition, the use of hybrid CSR strategies is being increasingly relied on, Unilever faces the challenge of moving away from a purely reactive ethical performance level to a proactive one. Implications for the brand also exist, and for Unilever the best strategy is to look at the most severe areas of weakness and work quickly and thoroughly to turn them into strengths. Otherwise, the value of the original brand acquired will be lost.

References

Austin, J, & Quinn, J (2007). Ben & Jerry's: Preserving Mission and Brand within Unilever. Harvard Business School Case Study. 9-306-037

Carroll, a. & Buchholtz, a.K. (2003). Business and Society: ethics and stakeholder management. 5th ed. Cleveland. Ohio: Thomson South-Western

Cohen and Greenfield. (1997), Ben & Jerry's Double Dip, New York, NY: Fireside

Davis, K. & Blomstrom, R. (1975). Business and Society: Environment and Responsibility, 3rd ed. New York: McGraw-Hill. (pg. 39)

Kotler (2001). Principles of Marketing (3rd European ed.). Harlow, UK: Prentice Hall.

Roddick, a. (2000), Business as unusual, London, UK: HarperCollinsPublishers

Sarbanes, P, & Oxley, M (2002). The Sarbanes-Oxley Act of 2002. U.S. Congress Act, HR 3763, Retrieved September 29, 2007, at http://fl1.findlaw.com/news.findlaw.com/hdocs/docs/gwbush/sarbanesoxley072302.pdf.

Svensson, G. & Wood, G. (2004). Proactive vs. reactive business ethics performance: a conceptual framework of…

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