Equal Exchange’s competitively important resources include: Tangible Resources: Ph m Mỹ Linh_11122196. ạ Advanced Accounting 54A. Page 6
- Finacial resources : As a for-profit workers co-operative, Equal Exchange had shareholders that were both inside and outside of the company. A major source of financing was preferred stock offering of Class B shares to outside investors.Besides, smaller flow of capital came in the form of Class A shares of stock ( membership shares) which were only sold to Equal Exchange employee.Moreover, Equal Exchange teamed up with Eastern Bank and provided an Equal Exchange certificate of Deposit (CD), which was an alternative to conventional CD. - Organizational resources : Equal Exchange became a 100% worker-owned co-operative . Decisions are made within the co-op, on their terms. Intangible resources: - Company image and reputation : They was effective in creating messages about the origin of products and where consumer money went. They build good reputation for fair trade : help farmers get a better, more stable price and, at the same time, take advantage of growing cosumer demand for high quality “specialty” organic products. - Direct relationship with farmers : Equal Exchange import directly from farmer co- operatives. - Partnerships : Equal Exchange partnered with some fair trade advocacy organization, such as : Global Exchange, to create a nationwide public education compaign to raise the public awereness about their brand. - Company culture and incentive system : The company does business with social commitment. Employees shared loyalty for their own company, responsibility for decision making. That would lead to higher level of job satisfaction, morale and productivity. The gap between the highest-paid manager and the lowest-paid employee was reasonable. Equal Exchange’s competitively important capability is ability to provide organic food with social commitment . Equal Exchange has shorter supply chain compared to conventional competitors, and they manage the supply chain and control quality by contract with small farmers to produce high quality products at fair pricing. Ph m Mỹ Linh_11122196. ạ Advanced Accounting 54A. Page 7
After determining Equal Exchange’s competitively important resources and capabilities, we found that the resources have the greatest competitive power is ability to provide organic food with social commitment. Equal Exchange buys directly from co-operatives that represent small producers and there by helps these co-ops to internalize the activity, and profits, formerly captured by the middlemen. There is no resources or capabilities able to pass all four VRIN tests for sustainable competitive advantage. Ability to provide organic food with social commitment is the most competitive power.
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