Case Study Equal Exchange
Case Study Equal Exchange.
1. What are the key elements of Equal Exchange’s strategy? Which of the five generic strategies is the company pursuing? How has the cooperative integrated corporate social responsibility into its business strategy? The key elements of Equal Exchange strategy is to buy direct form farm cooperatives, pay a fair price for the coffee, promote sustainable farming and promote the financial well being of the coops by buying beans at time of harvest and offering advance credits to make cash accessible at a low cost. Additional strategies include educating consumers of the condition in which cocoa and coffee farmers live in and working with non-profit and religious organizations to promote their product and causes.
Equal Exchange is pursuing the broad differentiating strategy by following a stringent socially responsible, eco-friendly and global approach. The cooperative has not simple integrated corporate social responsibility into its business strategy but made it the entire strategy. By paying a fair price, ensuring the supplying farmers are fairly compensated, fighting against unfair labor and forced labor practices they are fulfilling the CSR call to better society. The coops approach to being employee owned and profitable are furthering their local economy and bettering their own society.
2. What are Equal Exchange’s competitively important resources and capabilities? Which of its resources have the greatest competitive power? Are any of its resources and capabilities able to pass all four VRIN tests for sustainable competitive advantage? Explain. Equal Exchange’s competitively important resources and capabilities include a distinct advantage in supply chain management by negotiating with farmers to produce high quality products at fair pricing. Additionally the human capital is a resource that offer extremely high competitive importance, with the unique workplace structure and employee ownership loyalty and longevity of employees is the norm.
The workplace democracy has the greatest impact on competitive power however it does not meet all four of the VRIN tests. This advantage is very valuable and rare if not unique and allows EE to retain extremely knowledgeable employees making them more efficient with lower training costs while keeps them from being employed by a competitor. The free exchange of ideas adds a wealth of knowledge and access to ideas that most companies simple do not. These things are most defiantly not substitutable as nothing can replicate the free flow of ideas and true loyalty.
However it can be duplicated and in fact Equal Exchange wants it to be as they have consulate with other coops as to how to create this environment.
3. What does a SWOT analysis reveal about Equal Exchange’s ability to seize market opportunities and nullify external threats? Explain. The SWOT analysis shows that Equal Exchange is in great positions to nullify external threats and had moderate opportunities to seize additional markets. Because of the unique structure to the supply chain and distribution channels they have strong footholds in their markets and territories. Additionally if Equal Exchange focuses its resources towards additional fair trade and eco-friendly markets it is in good position to carry over these competitive advantages.