Why high inflation could adversely affect companies

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Reference no: EM131296945

Ben & Jerry's, which makes ice cream, was founded in 1978 in Burlington, Vermont, by Ben Cohen and Jerry Greenfield with a $12,000 investment, a $5 correspondence course in ice cream making, and a rock salt ice cream maker. They converted an abandoned gas station into their first Ben & Jerry's store.

Today, Ben & Jerry's is a large, well-known maker of high-quality ice cream, frozen yogurt, and sorbet. Ben & Jerry's emphasizes its strong commitment to the global community and to the environment. It also has an image of being socially conscious, standing for "we do good by doing good," which resonates with consumers. Still, the company is exposed to many uncontrollable external factors. It must respond to a younger market.

It must also satisfy legal requirements regarding disclosure of nutritional content on its label. It is also exposed to competition from premium brands such as Häagen-Dazs. Ben & Jerry's could be exposed to economic conditions such as inflation or a recession. For example, most companies experience a decline in the demand for their products when the economy weakens because people cannot afford to buy as many products and services.

However, Ben and Jerry's is not highly sensitive to adverse economic conditions because its product is an "affordable luxury" that consumers can buy as a treat even during bad economic conditions. Thus, it is less sensitive to economic changes such as recession and inflation. For more information on Ben & Jerry's, go to the company's website at https://www.benjerry.com.

Questions

1. Explain why high inflation could adversely affect companies like Ben & Jerry's

2 .Explain why a recession could adversely affect companies like Ben & Jerry's.

3. Explain in your own words why Ben & Jerry's is not highly sensitive to economic conditions.

4. How does its social responsibility agenda make Ben and Jerry's less exposed to economic shocks?

Reference no: EM131296945

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