Russia has a known reputation in the ice-cream industry. They are known for their flavorful ice creams that are of a wide flavor varieties. The Ben and Jerry’s Homemade, Inc. founded in Burlington, Vermont decided to have a franchise in Russia, which longs for modernization of its market economy. Since ice-cream is considered as a commodity, they thought of using it as an entry point to strengthen their economic growth. The franchise was named ‘Iceverks’ – Ice Cream of Vermont and Karelia.
This was also thought of to bring together diplomacy in America and Russia although there were risks on doing such kind of business, even if Vermont and Karelia are sister cities. There was also an effort of change of political systems from strict social, the communist system, to the democratic political system. The management of Iceverks taught the necessary tools to the employees and managers to equip them for proper and good management strategies.
Then suddenly the climate inside the management changed, with the lessening of the effectiveness in their management because their local partners have become better in equipment to manage the joint venture. With this, they just decided to donate their equipment to the management and the equity to their local partners (Moss, 2000, p. 136). In 1997, Ben and Jerry’s has left Russia, with the Iceverks no longer using Ben and Jerry’s as their brand name.
For me, although this happened, we cannot say that the venture was unsuccessful, because the Iceverks was able to maintain their standards for ice cream production and customer satisfaction services, the legacy that the Ben and Jerry’s left for Russian and even other foreign customers. The Ben and Jerry’s intention was not really on the profit but on the development, because instead of withdrawing all the equipment in the Iceverks because they are leaving, they even donated it to them.
The corruption in the Mafia also brought about their withdrawal of management because of the matter of philosophy. The Ben and Jerry’s did not want to give consent to the bribery or corruption there was just to have protection from the Mafia. The American companies were required to pay 30% more of their profit just to acquire the said protection. Again, the economic shift was hard to attain that time.
The mind set of the Russian managers was more on the capitalist ideology, which hinders them from being immediately penetrated by the training they received from the American managers, which the Ben and Jerry’s have given much effort on. Since Ben Cohen, the founder of the Ben and Jerry’s, is more of the ideal businessman, he was more of a diplomatic and socially responsible person. He did not care much of the money involved in the business. But then, there was an observed loss of jobs because the company has enormous money loss that could not support the work force any longer.
As mentioned above, the Russian partners, who are in profit maximization, decided to split up with the Ben and Jerry’s, which made B&J just leave and leave their equipment to them. Leaving the Iceverks was somehow a much better decision than staying, because eventually the political system will eat them with their principles. In fact, they have succeeded in other countries like Japan, France and the UK, applying the same business strategies. It was a good decision to leave also because of the very unstable economy, with lots of financial risks, etc.
that have affected much of their transactions, from simple packing to large machineries and refrigerators, etc. The big cultural differences also contributed to their decision, because they do not have the total control and regulation of the political and philosophical missions and visions of the company, since it is a joint venture. Reference Moss, L. S. (2000). Bankruptcy Reform in Russia: The Case for Creditor Rights in Russia. Review of Russian Economics, 13, 121-146.