Deck 1: The Dynamics of Business and Economics

Question 1

Ben Jerry's has a reputation for social responsibility and social activism. For example, in 1996 it sued the city of Chicago and the state of Illinois for the right to label its products as free of rBGH (a growth hormone given to cows to boost milk production), and in 2005 it helped create the world's largest Baked Alaska (a type of frozen dessert) as part of a campaign to oppose opening Alaska's Arctic National Wildlife Refuge to drilling.
In 2000, Ben Jerry's was acquired by Unilever, a large multiproduct company. As part of the acquisition, Unilever agreed to remain hands-off about Ben Jerry's social activism. However, this agreement is now being tested over a recent hot-button issue: the fight to pass laws requiring labeling of products containing genetically modified organisms (GMOs).Ben Jerry's has been vocal about its support for GMO labeling. It is working to switch entirely to non-GMO ingredients, and has provided financial backing for a Vermont law requiring GMO labeling (the first law of its kind in the United States). Unilever, on the other hand, has been equally public about its opposition to labeling; it contributed more than $450,000 to defeat a similar labeling law in California and is a member of the Grocery Manufacturers Association suing to block the Vermont law from taking effect.
The conflict has been uncomfortable for both organizations. Some pro-labeling groups have boycotted Ben Jerry's because of its ties to Unilever. For its part, Unilever has kept to the agreement and declined to pressure Ben Jerry's, but both companies' reputations may be damaged by their tie to each other. If the conflict continues to deepen, a resolution or even compromise will be needed.
How involved should the relationship be between a large parent company and its many subsidiaries? Should the parent company require its subsidiaries to adhere to a unified set of values, practices, and corporate culture, or are differences and diversity allowable (or even valuable)?

Answer 1

Case Summary :
The case talks about the acquisition of two companies BJ and UL. UL being bigger has acquired BJ. BJ is a socially responsible organization taking initiatives to prove the same. UL had promised BJ that there wouldn't be any hindrance from their side in matters of their social activities.
A recent issue about GMO labeling has caused the parent and the subsidiary company to stand against each other. This is uncomfortable to both companies however they are focused to stand their ground and defend their ideas.
Relationship between companies in acquisition :
The parent company possesses entire or part of subsidiary company. However they both are separate entities. The parent company can implement rules and laws for the subsidiary to follow.
The parent has to let the subsidiary take care of their functions. The independence here is the key factor. They exist as one organization but they are different entities and the working will definitely vary from each others. The association between them is based on how they deal with each other.
The parent company has to grant them the freedom to continue work as they always work, this would help in efficiently managing them. Hence if diversity in the working and value system has to prevail both the companies should mutually agree to this form of working. They have to be confident of their work and keep progressing.
Conclusion :
UL can imply its rules and set of formats on BJ and change their way of working and activities. Here there are no restrictions implied on BJ and they possess the complete freedom to continue their work with a new leadership but same values and working patterns.

Question 2

Conflicts with other countries can impact the equilibrium price of certain products, which in turn can lead to changes in the economic cycle. Many Western powers-including the United States and the European Union(EU)-placed economic sanctions on Russia due to the conflicts in the Ukraine. Russia struck back, imposing a one-year embargo on a number of agricultural imports from any country sanctioning Russia. This had an immediate impact on the EU, where exports to Russia comprise a significant portion of the fruit, vegetable, dairy, and meat markets. Suddenly, a $6.5 billion export market halted.
A visible effect of the embargo included lower food prices across Europe. Considering the perishable nature of agricultural products, many producers have been forced to immediately switch to selling their surplus within the EU. This influx of supply, without any corresponding increase in consumer demand, provided a real-world demonstration of the classic supply and demand chart-prices plummeted. For example, in 2014 the cost of Dutch cucumbers and tomatoes had dropped 80 percent; in the Czech Republic, apple prices were down 70 percent; and Spanish, Italian, and Greek peaches and nectarines were selling at 30-50 percent cheaper.
While these price drops seem wonderful for consumers, producers facing lower prices were unable to turn a profit, which harmed their future viability and the long term health of major European industries. The EU acknowledged this and called special meetings and provided emergency support measures for the worst-affected markets. This situation demonstrates how major changes in supply and demand brought about by trading conflicts can have an immediate impact on a nation's (or trade bloc's)economy.
Analyze the EU's food price deflation using the theories of supply and demand, and chart what has happened on a supply and demand graph.

Answer 2

Case Summary:
This case is in light to a state of trade relations being in jeopardy between nations like EU and RU owing to the clash in UKR. EU had placed monetary penalty on RU. They reverted back with applying embargo for one year on all states which implied penalty on them.
There was an atypical position where the production to be supplied was high and there was no matching demand for the same resulting in price decline for the EU sellers. The economy in EU was shaken and some of the markets had to be supported by the government to further continue the business.
Supply:
Supply is quantity of selling produced goods at varying prices at any specific time. The EU government as an aftermath of UKR quarrel had restricted the trade proceedings to RU. This made them ban the import of EU agricultural goods.
Demand:
Demand is the desire of oneself to purchase and possess an item at a particular period of time. The consumer behavior is usually of the sort that they would like to buy more number of goods for lesser price value. Excessive supply of goods reduces the demand of that product.
Effect of Supply and Demand:
The balance of the demand and supply graph is shaken here as the EU markets had excessive supply of goods and they did not have an equivalent demand to obtain a profit out of the trade. Due to excess goods the producers were required to trade their goods for cheaper price.
The markets increased with supply and they could not channelize it properly facing a $65 billion loss in the export front. The prices were very conducive for the consumers. Therefore, the EU management had provided emergency service aids to worst affected areas in the marketplace.
Conclusion:
EU wanted to relapse for the UKR attack and RU placed a heavy blow on the EU's economy. Impose of embargo by RU resulted in excess supply and reduction in the price of goods drastically. This demonstrates that any imbalance in the supply and demand curve eventually results in price fluctuations.

Question 3

Ben Jerry's has a reputation for social responsibility and social activism. For example, in 1996 it sued the city of Chicago and the state of Illinois for the right to label its products as free of rBGH (a growth hormone given to cows to boost milk production), and in 2005 it helped create the world's largest Baked Alaska (a type of frozen dessert) as part of a campaign to oppose opening Alaska's Arctic National Wildlife Refuge to drilling.
In 2000, Ben Jerry's was acquired by Unilever, a large multiproduct company. As part of the acquisition, Unilever agreed to remain hands-off about Ben Jerry's social activism. However, this agreement is now being tested over a recent hot-button issue: the fight to pass laws requiring labeling of products containing genetically modified organisms (GMOs).Ben Jerry's has been vocal about its support for GMO labeling. It is working to switch entirely to non-GMO ingredients, and has provided financial backing for a Vermont law requiring GMO labeling (the first law of its kind in the United States). Unilever, on the other hand, has been equally public about its opposition to labeling; it contributed more than $450,000 to defeat a similar labeling law in California and is a member of the Grocery Manufacturers Association suing to block the Vermont law from taking effect.
The conflict has been uncomfortable for both organizations. Some pro-labeling groups have boycotted Ben Jerry's because of its ties to Unilever. For its part, Unilever has kept to the agreement and declined to pressure Ben Jerry's, but both companies' reputations may be damaged by their tie to each other. If the conflict continues to deepen, a resolution or even compromise will be needed.
How should companies tied together in a business relationship deal with fundamental differences between their values and practices?

Answer 3

Case Summary :
The case talks about the acquisition of two companies BJ and UL. UL being bigger has acquired BJ. BJ is a socially responsible organization taking initiatives to prove the same. UL had promised BJ that there wouldn't be any hindrance from their side in matters of their social activities.
A recent issue about GMO labeling has caused the parent and the subsidiary company to stand against each other. This is uncomfortable to both companies however they are focused to stand their ground and defend their ideas.
Dealing fundamental differences in tie-ups are:
The two companies in the tie-up have to be sure of each other's function in the business. The parent company has considered the acquisition because of the subsidiary's excellence which also includes its value systems.
They should rely on each other to perform the right work. Each one has their own ways of muddle through circumstances and it should be respected and dealt with empathy. Also they have to take responsibility for their own work and function correctly.
Conclusion:
The best way to deal with differences will be to value each other's way of working and possess liberty to work on their own.

Question 4

Conflicts with other countries can impact the equilibrium price of certain products, which in turn can lead to changes in the economic cycle. Many Western powers-including the United States and the European Union(EU)-placed economic sanctions on Russia due to the conflicts in the Ukraine. Russia struck back, imposing a one-year embargo on a number of agricultural imports from any country sanctioning Russia. This had an immediate impact on the EU, where exports to Russia comprise a significant portion of the fruit, vegetable, dairy, and meat markets. Suddenly, a $6.5 billion export market halted.
A visible effect of the embargo included lower food prices across Europe. Considering the perishable nature of agricultural products, many producers have been forced to immediately switch to selling their surplus within the EU. This influx of supply, without any corresponding increase in consumer demand, provided a real-world demonstration of the classic supply and demand chart-prices plummeted. For example, in 2014 the cost of Dutch cucumbers and tomatoes had dropped 80 percent; in the Czech Republic, apple prices were down 70 percent; and Spanish, Italian, and Greek peaches and nectarines were selling at 30-50 percent cheaper.
While these price drops seem wonderful for consumers, producers facing lower prices were unable to turn a profit, which harmed their future viability and the long term health of major European industries. The EU acknowledged this and called special meetings and provided emergency support measures for the worst-affected markets. This situation demonstrates how major changes in supply and demand brought about by trading conflicts can have an immediate impact on a nation's (or trade bloc's)economy.
How important to business is the surrounding political and regulatory environment? How can businesses best deal with volatile political situations that might end up affecting them?

Question 5

Ben Jerry's has a reputation for social responsibility and social activism. For example, in 1996 it sued the city of Chicago and the state of Illinois for the right to label its products as free of rBGH (a growth hormone given to cows to boost milk production), and in 2005 it helped create the world's largest Baked Alaska (a type of frozen dessert) as part of a campaign to oppose opening Alaska's Arctic National Wildlife Refuge to drilling.
In 2000, Ben Jerry's was acquired by Unilever, a large multiproduct company. As part of the acquisition, Unilever agreed to remain hands-off about Ben Jerry's social activism. However, this agreement is now being tested over a recent hot-button issue: the fight to pass laws requiring labeling of products containing genetically modified organisms (GMOs).Ben Jerry's has been vocal about its support for GMO labeling. It is working to switch entirely to non-GMO ingredients, and has provided financial backing for a Vermont law requiring GMO labeling (the first law of its kind in the United States). Unilever, on the other hand, has been equally public about its opposition to labeling; it contributed more than $450,000 to defeat a similar labeling law in California and is a member of the Grocery Manufacturers Association suing to block the Vermont law from taking effect.
The conflict has been uncomfortable for both organizations. Some pro-labeling groups have boycotted Ben Jerry's because of its ties to Unilever. For its part, Unilever has kept to the agreement and declined to pressure Ben Jerry's, but both companies' reputations may be damaged by their tie to each other. If the conflict continues to deepen, a resolution or even compromise will be needed.
What should Ben Jerry's do in this situation? What should Unilever do?

Question 6

Conflicts with other countries can impact the equilibrium price of certain products, which in turn can lead to changes in the economic cycle. Many Western powers-including the United States and the European Union(EU)-placed economic sanctions on Russia due to the conflicts in the Ukraine. Russia struck back, imposing a one-year embargo on a number of agricultural imports from any country sanctioning Russia. This had an immediate impact on the EU, where exports to Russia comprise a significant portion of the fruit, vegetable, dairy, and meat markets. Suddenly, a $6.5 billion export market halted.
A visible effect of the embargo included lower food prices across Europe. Considering the perishable nature of agricultural products, many producers have been forced to immediately switch to selling their surplus within the EU. This influx of supply, without any corresponding increase in consumer demand, provided a real-world demonstration of the classic supply and demand chart-prices plummeted. For example, in 2014 the cost of Dutch cucumbers and tomatoes had dropped 80 percent; in the Czech Republic, apple prices were down 70 percent; and Spanish, Italian, and Greek peaches and nectarines were selling at 30-50 percent cheaper.
While these price drops seem wonderful for consumers, producers facing lower prices were unable to turn a profit, which harmed their future viability and the long term health of major European industries. The EU acknowledged this and called special meetings and provided emergency support measures for the worst-affected markets. This situation demonstrates how major changes in supply and demand brought about by trading conflicts can have an immediate impact on a nation's (or trade bloc's)economy.
What are some ways the EU and its agricultural producers can deal with their oversupply and deflation issues?