Assignment On

Fair Trade Coffee

Submitted To: Mr. Anwar Sadat Course Instructor School of Business Studies Southeast University

Submitted By: Sultan Ahamed ID: 2012010004074 Batch: 11th (C) Dept. MBA (1 year) Southeast University

Date of Submission: 11th May, 2012

1. Is it important for coffee marketers such as Starbucks, Kraft, and Nestle to create ethical supply chains Why? Yes, it is important for coffee marketer to create ethical supply chains. The major role they play in the coffee industry they account for what happen to more than half of the commodity share. What and how they do will have a great impact and influence on the production of the commodity. This program ensures that coffee bean growers in impoverished countries receive a reasonable wage for their harvest (www.globalexchange.org). In the past, market fluctuation, bean surpluses, and currency affected growers income worldwide. With such an enormous global demand for coffee, it is sound business practice to compensate these workers fairly and encourage sustainable farming practices. Currently, it is time to realize the historically ignored social, environmental, and personal impact throughout the supply chain. Ethical supply chain management in the coffee industry has been addressed through the implementation of the Fair Trade program. This will decrease the environmental damage caused by the production of beans, leading to a more secure crop supply positively impacting the coffee market at large and will improve the relationships with suppliers, increasing demand through awareness building and taking steps to reduce supply. 2. A recent study by the UKs Institute of Grocery Distribution determined that the majority of consumers do not buy fair trade products. The report noted, Self-interest is at the center of food choice for most consumers. Few consumers consider the impact of their purchase decisions on anyone or anything but themselves and their family. Do you agree with this finding? I am agreeing with this finding and feel that for the majority of consumers buy that way. It would be good if every person in the world were concerned with responsible sourcing and procurement, ethical trade practices, and environmental impact of the product they are consuming. But in reality this simply is not the scenario, because a large percentage of consumers focus solely on the price of a good or service when making a purchase decision. The product is coffee and its luxury item so I still believe that most consumers are generally aware that these types of ethical issues exist, and with all else being equal (price, quality, value), would readily choose a fair trade option. As our global economy is more competitive and people are conscious about the social and ethical aspects so it is the perfect time for global organizations to reevaluate the true value

within their supply chains for the betterment of the environment and social aspects as well as the farmers who are involved with production. Because when they will use the fair trade products it will help the root level people who are involved with the production and not fairly treated. There are of course exceptions to the rule; with some consumers hyper-focusing on these global and environmental concerns willing to pay a premium for a sense of fairness.

3. What recommendations would you make to help cure the ills of the coffee market? There are not a large number of major players in the global coffee marketplace. MegaCorporations such as Proctor & Gamble, Kraft, Starbucks and Nestle each have the resources and can change the market positively for the long term betterment and sustainable demand and supply. Public interest and knowledge of fair trade practices is increasing worldwide. So when they will take initiatives the farmers will be treated fairly. Fair trade and ecological responsibility are just two pieces in the puzzle. Steps have already been taken by Kraft to incorporate a percentage of certified crops into their coffees (Keegan, & Green, 2011). Consumers will in turn realize increased value in the product. As the industry experts disagree about ways to reduce the low quality beans so they should also concern about that because this beans can use in lower price for the developing countrys people by this they can increase their market. My recommendations are as follows: The industry as a whole should gradually incorporate ethical supply chains as standard practice; market price should not be drastically altered during this process to reduce the risk of decreased demand. The end result should be a secure, ethical, and sustainable supply chain.