Equal Exchange: Trading Fairly and Making a Profit
Contents
I, Executive Summary 2
II, Introduction 3
III, Assignment Question 5
1. Question 1 5
a) Strategically relevant components of Equal Exchange’s macro-environment 5
b) Are these factors favorable to the sellers of fair trade food and beverage products? 6
c) Opportunities for growth 6
2. Question 2 6
a) The competitive pressure facing the fair trade food and beverage product industry. 6
b) Five-forces analysis 7
3. Question 3 7
a) Key elements of Equal Exchange’s strategy 8
b) Generic strategy 8
c) Cooperative integrated corporate social responsibility 8
4. Question 4 9
a) EE’s competitively important resources and capabilities 9
b) Unique resources and capabilities 9
5. Question 5 10
6. Question 6 11
7. Question 7 13
IV, Conclusion 14
V, Updates 15
VI, Reference 17
I, Executive Summary
Equal Exchange is a for-profit Fair-trade worker-owned, cooperative company. Founded in 1986, it is the oldest and largest Fair Trade coffee company in the United States. Equal Exchange began with $100,000 as started up funds and a 2,000-quare-foot room in Boston’s South End. It purchased coffee beans from small-scale farmers at above-market price in Latin America. Initially, EE relied on other roasters and packers to prepare the premium coffee beans. It sold to natural food grocers, gourmet shops, restaurants, and non-profit organizations. The company’s founders wanted to help famers get a better, more stable price and, at the same time, take advantage of the growing consumer demand for higher-quality “specialty” coffee.
However, after 25 years in business, and 10 of which were spent as the only fair trade company in the coffee industry, Equal Exchange’s tremendous success seemed to have come to a screeching halt. If the impact of price increases is excluded, for a second year in a row, its revenues have grown only 2 percent. This is hardly acceptable comparing with the double-digit growth it had been through for the previous 15 years. Additionally, over the past few
I, Executive Summary 2
II, Introduction 3
III, Assignment Question 5
1. Question 1 5
a) Strategically relevant components of Equal Exchange’s macro-environment 5
b) Are these factors favorable to the sellers of fair trade food and beverage products? 6
c) Opportunities for growth 6
2. Question 2 6
a) The competitive pressure facing the fair trade food and beverage product industry. 6
b) Five-forces analysis 7
3. Question 3 7
a) Key elements of Equal Exchange’s strategy 8
b) Generic strategy 8
c) Cooperative integrated corporate social responsibility 8
4. Question 4 9
a) EE’s competitively important resources and capabilities 9
b) Unique resources and capabilities 9
5. Question 5 10
6. Question 6 11
7. Question 7 13
IV, Conclusion 14
V, Updates 15
VI, Reference 17
I, Executive Summary
Equal Exchange is a for-profit Fair-trade worker-owned, cooperative company. Founded in 1986, it is the oldest and largest Fair Trade coffee company in the United States. Equal Exchange began with $100,000 as started up funds and a 2,000-quare-foot room in Boston’s South End. It purchased coffee beans from small-scale farmers at above-market price in Latin America. Initially, EE relied on other roasters and packers to prepare the premium coffee beans. It sold to natural food grocers, gourmet shops, restaurants, and non-profit organizations. The company’s founders wanted to help famers get a better, more stable price and, at the same time, take advantage of the growing consumer demand for higher-quality “specialty” coffee.
However, after 25 years in business, and 10 of which were spent as the only fair trade company in the coffee industry, Equal Exchange’s tremendous success seemed to have come to a screeching halt. If the impact of price increases is excluded, for a second year in a row, its revenues have grown only 2 percent. This is hardly acceptable comparing with the double-digit growth it had been through for the previous 15 years. Additionally, over the past few