Fundamentals of Financial Management 10th.pdf

SOURCE: Courtesy BEN & JERRY’S HOMEMADE, INC. PTER An Overview of Financial Management 1 make money. For example, in a recent article in Fortune magazine, Alex Taylor mented that, “Operating a business is tough enough. Once you add social goals to the demands of serving customers, making a pro?t, and returning value to shareholders, you tie yourself up in knots.” Ben & Jerry’s ?nancial performance has had its ups and downs. While pany’s stock grew by leaps and bounds through the early 1990s, problems began to arise in 1993. These problems included petition in the premium ice cream market, along with a leveling off of sales in that market, plus their own inef?ciencies and sloppy, haphazard product development strategy. pany lost money for the ?rst time in 1994, and as a result, Ben Cohen stepped down as CEO. Bob Holland, a former consultant for McKinsey & Co. with a reputation as a turnaround specialist, was tapped as Cohen’s replacement. pany’s stock price rebounded in 1995, as the market responded positively to the steps made by Holland to right pany. The stock price, however, ?oundered toward the end of 1996, following Holland’s resignation. Over the last few years, Ben & Jerry’s has had a new resurgence. Holland’s replacement, Perry Odak, has done a number of things to improve pany’s ?nancial performance, and its reputation among Wall Street’s or panies, the decision would have been an easy “yes.” However, Ben & Jerry’s Homemade Inc. has always taken pride in doing things differently. Its pro?ts had been declining, but in 1995 pany was offered an opportunity to sell its premium ice cream in the lucrative Japanese market. However, Ben & Jerry’s turned down the business because the Japanese ?rm that would have distributed their product had failed to develop a reputation for promoting social causes! Robert Holland Jr., Ben & Jerry’s CEO at the time, commented that, “The only reason to take the opportunity was to make money.” Clearly, Holland, who resigned from pany