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CHAPTER 15 • LEADERSHIP AND EMPLOYEE BEHAVIOR IN INTERNATIONAL BUSINESS
Part 3 Closing Cases
Ben & Jerry’s—Japan
On an autumn evening in Tokyo in 1997, Perry Odak, Angelo Pezzani, Bruce Bowman, and Riv Hight gratefully accepted the hot steaming oshibori towels their kimonobedecked waitress quietly offered. It had been just over nine months since Odak had committed to resolving the conundrum of whether to introduce Ben & Jerry’s ice cream to the Japanese market and, if so, how. The next morning would be their last chance to hammer out the details for a market entry through 7-Eleven’s 7,000 stores in Japan or to give the goahead to Ken ...view middle of the document...
Greenfield met with a high-level team of 7-Eleven executives, including Masahiko Iida, the senior managing director. Iida expressed interest in selling Ben & Jerry’s ice cream, suggesting that Ben & Jerry’s could sell directly to 7-Eleven, avoiding some of the distribution costs that are typical of the usual multilayer distribution system in Japan. However, a major American beverage distributor in Japan warned it would be the kiss of death to enter the market through some kind of exclusive arrangement with a huge convenience-store chain like 7-Eleven. The balance of power would be overwhelmingly in the retailer’s favor. Another possibility emerged in the form of Ken Yamada, a well-recommended third-generation Japanese-American who was already running the Domino’s Pizza franchise in Japan. Greenfield learned Yamada was interested in acting as a licensee for Ben & Jerry’s in Japan overseeing marketing and distribution of its products there.
The Market for Superpremium Ice Cream in Japan
Starting in 1994, Ben & Jerry’s began making inquiries about opportunities in Japan, the second largest ice cream market in the world, with annual sales of approximately $4.5 billion. Although the market was big, it was also daunting. Japan was known to have a highly complex distribution system; its barriers to foreign products were high; and the distance for shipping a frozen product from America was immense. Ben & Jerry’s would be a late entrant, more than 10 years behind Häagen-Dazs in gaining a foothold in the market. In addition, there were at least six Japanese ice cream manufacturers selling a superpremium product. Despite the challenges of entering Japan, that market had several compelling features. It was arguably the most affluent country in the world, and Japanese consumers were known for demanding high-quality products with great varieties of styles and flavors (which practically defined Ben & Jerry’s). Though Häagen-Dazs’s financial figures were not published, market intelligence suggested the ice cream maker had Japanese sales of about $300 million. Häagen-Dazs had managed to capture nearly half the superpremium market in Japan. On the one hand, Häagen-Dazs would be a formidable competitor that would likely guard its market share. On the other hand, there would be no apparent need for Ben & Jerry’s to teach the local market about superpremium ice cream. The market seemed to welcome
A Fresh Look at the Japanese Options
Perry Odak assumed leadership of Ben & Jerry’s in January 1997. Odak had the board’s agreement that the company’s sales (and especially profits) must grow and that non-U.S. markets were the most likely key to that growth. In February 1997 Odak added a business-related detour to a scheduled trip to Thailand with his wife. He stopped by Tokyo for a courtesy call to Mr. Iida. After about 10 minutes of pleasantries at this introductory meeting at the 7-Eleven headquarters in Tokyo, Iida asked Odak point-blank: “Is there anyone at Ben...