International Financial Management: Ben & Jerry's Performance Analysis

This report provides a comprehensive financial analysis of Ben & Jerry's, examining its mission statement across product, economic, and social dimensions and how these dimensions interacted. It discusses wealth maximization strategies and their benefits for various stakeholders, including shareholders, lenders, and society, highlighting the importance of cash flow and investment decisions. The report evaluates Ben & Jerry's performance, analyzing sales, profit margins, and social initiatives, and explores the reasons behind the company becoming a takeover target. It also includes a discussion on defense strategies and fair value assessment using comparable multiples, offering insights into the company's financial health and strategic decisions.

International Financial
Management for Business

TABLE OF CONTENTS
1. Three dimensions of the Ben & Jerry’s mission statement and explaining e compatible with
each other.....................................................................................................................................3
2. Discussing alternative views that Wealth Maximization (WM) can benefit all stakeholders. 4
3. Evaluation of performance of three dimension and necessary evidence relating to Ben &
Jerry performance........................................................................................................................5
4. Reason for Ben and Jerry's becoming a takeover target..........................................................6
5. Fair value of the company based on the comparable multiples...............................................8
6 Being independent board director on board of company for 5 years explaining the
acquisition of company with other organization. ........................................................................8
7. Defence strategies used by the management of Ben and Jerry's home-made ice cream.........9
REFERENCES..............................................................................................................................11

1. Three dimensions of the Ben & Jerry’s mission statement and explaining e compatible with
each other
The mission statement of Ben & Jerry’s involves three dimensions and it continuously
seeks out finding new and creative ways in order to fulfil each of them without making any
compromise. Below stated are the three dimensions -
Product: This dimension refers to make, distribute and sell the finest quality of all the
ice-cream and the other related products which is in respect to the wide variety of the innovative
flavours which is being created from the Vermont dairy products (Bekaert and Hodrick, 2017). It
basically involves providing high quality products to its customers which will help in grabbing
their attention and increasing the customer base.
Economic: The economic dimension refers to operating the organization upon the good
and effective financial base pertaining to the profitable growth along with rise in the value of the
shareholders. It also involves creating the career related opportunities and the financial rewards
for its staff. This mainly accounts for enhancing the financial base of the company which will
helps in meeting with social dimension of the business.
Social: This dimension states about the idea of operating the organization in such a way
which actively recognizes the central role that the business plays within the organizational
structure of the society through the way of initiating the innovative ways of enhancing and
improvizing the life of the entire community which involves the local, national and international.
Ben & Jerry’s social orientation was actually managed by its products and economic
objectives. Ben & Jerry’s fulfilled their mission statements and were compatible with each other
and initiating with working on the social mission, for instance, once, the company chose to face
risk of letting low productivity for the religious purpose of supplying brownies (Shapiro and
Hanouna, 2019). The unmatched productivity resulted into 50 blocks of brownie but through the
way of creative idea for compromising the situation and developed a new flavour under this
product mission and in addition, it financial report showed its ROA rise from 1.4% to 3.5% and
the ROE increased from -2.6% to 8.9%.
All the three dimensions were not compatible and were not in harmony with each
other at few times. This can be explained with the help of an example told by Cohen and
Greenfield. One of the fine day, Cohen and Greenfield were discussing about their inability to
gain higher profits and as talked to the accountant, it was revealed that the company is making

efforts in providing high quality product but at the same time it is charging less price. Thus, in
order to gain profits, the company raised its prices. But they had the fear of losing the customers
and after price rise the business survived. But at the other times, the management was lacking
behind its social dimension, thus, they choose to sacrifice their short-term profits in order have
social gain. Another example is sometimes management had to sacrifice short term profits for
social gains. When Ben met Bernie Glassman, Bernie had a bakery which was owned by the
non-profit religious institution. A huge order was given to Bernie for making brownies but in the
last two tons send they were all stuck together and when Bernie was called, it was told that they
are in need of money. Another example is that this brownie incident resulted into creation of the
new flavour called chocolate Fudge Brownie in order to make use of the brownies which was not
part of the objectives of the company. Therefore, sometimes, all the three dimensions of mission
statement of Ben & Jerry’s were not in harmony, otherwise, they were compatible with each
other which resulted into meeting with the desired profits of the company in a better and
effective way.
2. Discussing alternative views that Wealth Maximization (WM) can benefit all stakeholders
There are several ways that help company to maximize wealth of interested people.
Stakeholder comprises all people that have interest in organization for their personal reasons.
The reasons that company publishes information regarding its performance through various
patterns such as annual, general meeting publication, financial statements so that better decision
regarding investing into Ben & Jerry's company can be evaluated. The financial position of
company can be interpreted by stating that its profitability along with sales revenue is increasing.
It resource organisation to maximize its shareholders wealth.
The biggest benefits that can shareholder get through this is intense security, adoration
and condemnation. The increased return enhance company's market capitalization which
ultimately result in higher return (Khan and Hussanie, 2018). Primarily purpose of shareholder
is to invest in company is to enhance its earning level via inclining capital invested. Wealth
maximization is connected with long term objectives of stakeholders that they want to pursue
along with increasing growth of business. With respect to this, it permits organization to build
long term relationship with stakeholders.
Strategic objective of attaining consistency in business process allows suppliers and
creditors to gain trust for important financial decision taken by specific company. Financial

management of organization focuses to produce maximum profit so shareholder do not
withdraw their funds. It allows company to have good amount of retain earning that ensures good
wealth management (Rose, 2018). Decreasing unit cost of shares helps organization to achieve
positive outcome through this methodology. In addition to this, increasing price of each share
aids stakeholders to determine greater value for their invested capital. There are numerous
patterns that firm opts for the purpose of its profitability along with objective of enhancing
shareholder fund.
WM helps lenders and creditors to understand that company is in good financial
condition. It gives that security of their fund, higher return of investment, etc. It upgrades the net
present value of stakeholders. The biggest benefit achieved with it is reduced risk to all
customers, shareholders, creditors, suppliers, etc. In addition to this, fulling social responsibility
by providing quality products to customers. Making sure that company take care in safeguarding
health conditions of clients (Adefisoye and Appolos, 2020.). In case of foods industry the most
care need to give which is part of WM.
Employees are valuable resource of business so that demonstrating policies and
procedure that increases their personal development by proper remuneration, compensation,
lifestyle, etc. Providing corporate leadership to community also plays role in enhancing wealth in
terms of proper guidance, improvement. With respect to this, operating compatibility
environmental standards so that its related issues can be avoided. These all ply role in obtaining
stable growth of company
Promoting economic wealth fare, payment of regular dividends, effective investments
decisions,etc. The main reason that can interpret that wealth maximization benefit all
stakeholders that it is concerned with proper cash flow with in organization (Aljajawy and Al–
Baker, 2020). All stakeholders are interest lies in company's financial position as their part of
earned money is used by firm which ensures its effective operational practices. In aspect to this,
it ensures good return of investment in terms of profit, quality product, goodwill, etc. The wealth
maximization becomes possible by focusing on above mentioned factors such as increasing unit
price, selling more shares, enhancing fixed cost utilization, decreasing per unit cost, etc. It will
benefit stakeholder by increasing their return on investment, availability of capital & dividend on
time, etc. Society will get better quality products, employment opportunities and many more

such as environmental responsibilities accomplishment by focusing on conservation of resources,
declination of pollution, etc.
3. Evaluation of performance of three dimension and necessary evidence relating to Ben & Jerry
performance
From the above analysis it is clear that the major three dimension of the Ben & Jerry
performance and these are product, economics and social (Madura, 2020). These are the major
dimension of the mission of the company and for evaluating the performance of the company it
is very essential for the company to analyse these three aspects in detailed manner.
 Product- the performance of the products of Ben & Jerry was good and this is visible in
the further explanation. For the analysis of the product, it is very essential for the
company that they must focus on the quality of the product. This is particularly because
of the reason that when the quality of the product will not be good then the sales of the
company will reduce. With the figures of the sales it can be evaluated that the sales of the
company have being on an increasing trend. This is particularly because of the reason
that in the year 1994 the sales of the company were $148.8 and frequently it increased
every year and in 1999 it reached to $237. This data reflects the fact that the product of
the company has been improved over time and because of this reason the sales of the
company has increased.
 Economic- the economic condition of the company that is the profitability of company is
having good growth and development and this result in good performance of company.
this is the dimension which is related with the sound financial position of the company
that is effective profitability of the company. this is the major dimension for analysing the
performance of the company because if the profit of the company will not be increasing
then this will affect the working and operations of the company. the major evidence of
the performance of the company in terms of economic performance is the profit margin.
With help of the gross margin and net profit margin it is clear that the income is
increasing since the year 1994. This is particularly because of the reason that there was an
increasing trend among the profitability of the company. In the year 1994 the net profit
margin was -1.3 % but gradually it increased and in year 1999 it was 3.4 %.
 Social- with respect to the social aspect the working and operations of Ben & Jerry are
good and effective. in addition to the product and economic another dimension is the

social and this involves the fact that how much initiative the company takes in order to
structure the society by way of using innovative ways to improve the quality of life of the
community and consumer as well. The company takes many types of initiative in order to
take care of the society and the environment. This is pertaining to the fact that company
takes the resources from the environment and if they will not work in proper and
effective manner then their activities will harm the society and environment (Muneer,
Ahmad and Ali, 2017). Thus for this Ben & Jerry do a generous donation relating to their
corporate resources. They have donated 7.5 % of their pre- tax amount earning to
different social community action groups and foundations. In addition to this, the
company has also supported many of the social causes like Greenpeace international and
the Vietnam Veterans of America foundation. This has been undertaken by way of
signing petition and recruiting different volunteers.
4. Reason for Ben and Jerry's becoming a takeover target
Ben and Jerry's home-made ice-cream company that was established successfully, soon
became a takeover target for which there were numerous companies that were bidding. The
owners of the company were against the opinion that the company should be taken over as they
thought that a company with a social motive can operate independently and post the takeover the
purpose won't be solved. But the chief executive and some board members felt that the takeover
will be resulting into best benefits for the shareholders of the company (Körber, Prasch and
Bengler, 2018).
The conditions for the takeover arose in the business due to the decreasing level of the
financial performance and the simultaneously increasing level of the competitive pressure in the
business. One of the most significant reason for considering the takeover offers by the company
was that it was able to generate value for the shareholders which was one of the essential
objectives of the business. Post the takeover the advantages could be extended to the
shareholders that could satisfy their expectations (Walker, 2018). Apart from this another reason
was that the company was operating with a three-fold mission which was related to product,
economic and social benefit. This could not prove to be successful for the company in its
existing capacity.
Despite the huge market share the company struggled to perform in context of its share
prices which proved to be a set back for the new lot of investors that are there in the company.

For this reason the financial arrangements also became a tough job for the company. Another
major reason was the social causes for which the company operated in the market. It contributed
huge amount in the form of donations which further affected the profitability that was generated
pre-tax by the company (Winkler, 2017). This reduced the amount that was available to the
shareholders hence leading to the dissatisfaction to them.
The poor financial performance of the company can evidently be noticed as initially the
homemade ice-cream company was a market leader and had hold a premium position with both
its financial and the social stature. But now various companies are bidding to assume control of
the company. Another example could be that the company is highly undervalued in terms of
share prices in the market and this is the major reason for the dissatisfaction among them. The
contrasting economic and social motive of the company has been the significant contributor to
reducing its profitability in the market.
Also, the future growth prospects of the company were low which was a major reason for
the failure of the organization and it's the trustworthiness of its stakeholders.
The current investors of the Ben and Jerry's home-made shall accept all the takeover
offers that are presented by the various bidders in the market. This is since the pre-offer
announcement price of the share was $21 and all the takeover offers were exceeding this amount
of the share price. This also proved that the company was highly undervalued in the market and
the shareholders were not receiving the value for the investments that were made by them
(Naujoks and et.al., 2019). The offers were providing the maximum benefit to the shareholders
of the company as they were offered $31 to $36 by the different competitors of the market who
were bidding to acquire the company. This shall also be good for the other stakeholders as the
operational efficiency shall be derived through the benefit of synergy. This can also be one of the
major contributors to generating the competitive advantage for the company.
The pre announcement share price in the market was $21 which is said to be highly
undervalued as all the bids that are received are above this mark. The bids that are offered to the
company have significant difference from the exiting share price in the market. It can be assessed
that if the shares are sold out to the highest bidder among these, then it shall be yielding good
returns to the investors of the company. In this way it is offering the maximum benefit to the
shareholders of the company.

5. Fair value of the company based on the comparable multiples
EPS of Ben and Jerry's home-made = Net income / outstanding common shares
= 8000000 / 7561089 = $ 1.06 per share.
So the EPS of Ben and Jerry's= $ 1.06 per share
Fair value of Ben and Jerry on the basis of its P/E and P/B ratio
P/E ratio = 19.8
Fair value of the company = Net income * P/E ratio = 8000000 * 19.8 = $158400000 mn.
Implied share price of the company = 158400000 / 7561089 = $20.95 per share.
Implied value of shares of Ben and Jerry on the basis of comparable multiples as the price
earning ratio:-
Particulars Dreyer's Grand Eskimo Pie TCBY
Enterprises
Yocream
International
P/E multiple (a) 47.2 30.7 12.5 9.4
Net income of
B&J (b)
8.0 million 8.0 million 8.0 million 8.0 million
Equity value (c)
(a * b = c)
377.6 million 245.6 million 100 million 75.2 million
Shares
outstanding (d)
7561089 7561089 7561089 7561089
Implied value
range (e)
(c / d = e)
$49.94 $32.48 $13.23 $9.95
From the above table of implied share value of Ben and Jerry's shares, it can be concluded that
as per other competitors in the industry, the company's shares are averagely priced. If we look at
Dreyer's Grand and Eskimo Pie, the company shares are quite undervalued and from the point of
view of TCBY Enterprises and Yocream international, the company's shares are overvalued. So
summing up the comparison of the prices of the four companies it can be inferred that the prices
of Ben and Jerry are averagely priced.

P/B value ratio
Fair value of the company on the basis of P/B ratio = Net income * P/B ratio = 8000000 * 1.8 =
$14400000 millions.
Implied value of the company on the basis of its P/B ratio
= fair value of the company / Outstanding common shares = 14400000 / 7561089
= $1.90 per share.
Implied value of shares of Ben and Jerry on the basis of comparable multiples (P/B ratio)
Particulars Dreyer's Grand Eskimo Pie TCBY
Enterprises
Yocream
International
P/B multiple (a) 7.8 1.1 1.2 1.8
Net income of
B&J (b)
$8.0 millions $8.0 million $8.0 million $8.0 million
Equity value (c)
(a * b = c)
62.4 8.8 9.6 14.4
Shares
outstanding (d)
7561089 7561089 7561089 7561089
Implied value
range (e)
(c / d = e)
8.25 1.16 1.27 1.9
From the above table it can be concluded that value of Ben and Jerry's shares on the basis of
other four competitors in the industry, Ben and Jerry's share are undervalued. Only on the basis
of Yocream International, the company's shares are equally valued, as both of these companies
have similar P/B value ratio. So the company stays undervalued overall as none of shares are
priced above the competitors.
Reviewing and weighing estimates for a single value estimate
Implied values obtained on the
basis of P/E multiples
Weights Weighted value
49.94 0.47 23.62

32.48 0.31 9.99
13.23 0.13 1.66
9.95 0.09 0.94
Total =105.6 1 36.2
The pre announcement offer of the company is equal to $ 21 but the offers are higher than that
which means that the takeover must be accepted by the company.
6 Being independent board director on board of company for 5 years explaining the acquisition
of company with other organization.
Being an independent director of Ben & Jerry’s (BJ) company the primary responsibility
is to think about all the strategies that enhance value of company. The present situation of
organization is lack competitive that similar firms in industry. There are various ways in which
business can its worth in present market. There are two ways that can be opted by firm for
development which includes supporting present management agenda and acquisition with
offering companies.
With respect to this, as being board director I will suggest e Ben & Jerry’s firm to accept
the offer of Unilever and Dreyer’s which will aid to get better position in market .
Unilever is has competitiveness in sector which has made its financial position
unbeatable. The product mix of company has formulated with several commodities lines that can
be beneficial in terms of gaining risk bearing capacity (Park, 2020). The additional quality of
offering price will provide assistance in managing skills, knowledge, competitiveness of
members, etc. the management team of BJ which will be effective in order to derive
specialization for handling corporate issues. With respect to this, it is not possible for BJ for
dealing these issues due to vast competition. Restricting social commitment and interest can both
positive and adversely affect performance of Ben & Jerry's organization.
One of most important benefit that can be obtained is larger market share as Unilever
offers to integrate frozen desserts into its division. It will increase sales of BJ products as firm
has good marketing and promotional strategies. Effective financial position enables firm to drive
better outcome a collaborative working and strategic alliance will positively affect BJ.

The Independent director has knowledge of both external and internal circumstances of
organization so decisions can be taken in unbiased manner. The another offer from Dreyer’s can
also modify company's position in terms of better management team, autonomous business team
and encouraging social endeavours (VanPatten, Keating and Wulff, 2020). The aim of Dreyer's
organization is gain effective results by taking ownership. It will favourably influence
development of organization (Hummel, 2020). Subordinates of BJ will also get opportunity to
enhance their skills, attributes and knowledge which impact lead to growth of both individual in
collective way.
These both opportunities will remove barriers occurring in path of leading towards
success. Collaborative working with multinational companies provide risk bearing capacity,
financial stability, larger product lines, effective marketing & advertising strategies, expertise
management team, integrated resources, etc. Further, Ben & Jerry’s company will be able
remove obstacles that it is facing in order to compete with greater market capitalized firm. The
opportunity of increasing sales target segment can be achieved.
The guide given by this director are very useful for growth of Ben & Jerry’s firm.
Government standard functioning, risk management, good corporate credibility can be attained
through this mode of business practices. Acceptance of these offers will permit company to have
these competitive strategies. The independent director is responsible for providing guidance and
monitoring any issue prevailing in the company. Agency problems can be easily tackled by
management of organisation through consulting with independent director as unbiased
judgement will lead firm towards in right direction. Being an separate identity independent
director will be able to share accurate opinions for overcoming any related challenges that is
serving as barrier for success.
7. Defence strategies used by the management of Ben and Jerry's home-made ice cream
The management of the company agreed on the fact that if the company shall be taken
over then the social causes that it served are difficult to operate and also the three-fold mission of
the organization is also difficult to prosper in the company (Sarkar, 2017). But the management
also considers the fact that they have been elected in the business and provided with the decision-
making power so that they can extend benefits to the shareholders and guide the operations for
the growth of the owners of business. In order to meet this responsibility the management have

been applying the white knight defence tactic so that the company is taken over by friendly
company despite the unfriendly bidder.
The white knight defence tactic involves the management accepting the best prices
among all the offers that are made by the bidders (Jnr, 2019). The best price shall make sure that
the maximum benefit is provided to the shareholders and the management has fulfilled with its
responsibility. Suppose the pre offer announcement price was $21 and all the bids offered were
higher than this market value of the shares. Further the management of the company shall be
evaluating the terms and conditions that are offered then select the best deal which shall be
benefiting all the stakeholders of the company and not just the shareholders (Lee and Bao, 2020).
This defence tactic shall be ensuring that the company is taken over at the fair price or
consideration in the market and not the undervalued amount that is judged by its share market.
The Vermont legislature was also an important part of the takeover or the acquisition that
was being finalized in the favour of the shareholders of the business. It stated that the corporation
must be benefited as a whole and not just the shareholders of the company (Huang and Chen,
2019). It provided the rights to the directors of the business that the decision of the takeover must
be made in accordance with the interests of the customers, suppliers, employees and the
creditors. It focused on the factor that the all the stakeholders are equally important and a deal
must be designed such which stays acceptable to all in the business.
The management of the company was with the idea that the three fold mission and the
Vermont legislature must be fulfilled through striking a takeover deal by the company. Its major
intentions were to provide value to the shareholders and also work in the interest and benefit of
the various stakeholders in the business. In order to meet the following requirements in the
business, the management has applied the white knight defence tactic wherein they undertook
friendly takeover with the acquiring company who is offering the best deal benefitting the
various stakeholders of the company.

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