Broad information: http://www.fairtrade.org.

uk/en
One firms approach: http://www.santeustachioilcaffe.it/en/progetto_buon_caffe.php
If youd rather see a video: https://www.youtube.com/watch?v=cuY6KvqEqrc
a) Why would firms include fair trade products in their mix? [1 mark]
This question is primarily descriptive and just calls for you to identify the positive byproducts of selling Fair Trade goods.
- Links might be made to cause related marketing (how does Fair Trade link to Cause
Related Marketing?) and the positive branding effects or developing legitimacy and
reputation.
- A way for firms to meet their sustainability goals. Discuss how Fair Trade products
allow firms to do this.
- A response to customer demands and a way of differentiating the firm (note changing
consumer preferences, and values for ethically sourced products) Students discussing
this might refer to theories link with competitive advantage (Integrative theories)
contributes to the business case for CSR.
Being only one mark, and not specifically asking about CSR, this question doesnt require
you to talk about CSR in detail, so writing too much about it here would be redundant and is
best kept for question 2.

b) How is the Fair Trade movement connected to CSR and sustainability? Be sure to
connect Fair Trade to readings from week 2. [6 marks]
This is your opportunity to show off your theoretical knowledge, be sure to draw in both CSR
and sustainability.
Fair Trade provides connections to:
instrumental theories of CSR if selling
Fair Trade does add value to the business and
benefits shareholders then the CSR initiative
has proven to be a strategic tool to create
wealth. Fair Trade can also be thought of as
an example of cause related marketing that
improves the relationship between the
customer and business by building the
ethical/social association.
political theories of CSR with corporate
constitutionalism suggesting that businesses
have power (eg over wages and commodity
prices (to some extent)) and therefore a social
impact, the business has a responsibility to
use this power responsibly. Fair Trade
products allow businesses to meet that
responsibility to pay a fair wage/price and
therefore meet that responsibility. Fair Trade
can also link to integrative social contract
theory. The norm that leads to obligations for
the business depends on the country but
Australian values towards equality and a
living wage mean that the contract
between business and society involves an
obligation to pay a fair price.
integrative theories of CSR since
integrative theories talk about how business

Fair Trade can be a form of CSR which

yields benefits to the firm and is therefore
strategic. Depending on the firm, Fair Trade
can help address the various strategic
dimensions of CSR:
Centrality: for a firm whose mission is to
distinguish itself through its coffee (eg by
selling single origin), investing in their own
Fair Trade co-op, or buying Fair Trade coffee
allows the firm to meet that mission. Their
inputs are seen as being less generic.
(Specificity: less relevant the firms buying
Fair Trade do not capture the benefits to the
community, or the increases in yield due to
improved farming practices. Although it can
lead to a more sustainable supply)
Proactivity: Fair Trade is a response to a
social trend, but selling the products can still
be thought of as proactive as early
participation in the program can offset future
sustainability threats
Voluntarism: the Fair Trade movement is a
voluntary one, and firms selling those
products do so in the absence of government
requirements
Visibility: that the Fair Trade label has such
strong recognition among consumers means
that companies carrying the label are highly

integrates societal demands, Fair Trade can

be thought of as meeting the a societal
demand for fairly sourced commodities. By
responding to a groups needs, Fair Trade can
enhance the firms legitimacy and
acceptance.
ethical theories of CSR these theories talk
about sustainable development, universal
rights (human, labour, respect for the
environment) and the need to contribute to
the common good of society. The
operationalisation and intent of CSR relate to
these three subsets of ethical theories of CSR.

visible in their CSR efforts and can benefit

from the branding effects.

c) What might be some of the challenges to business of integrating fair trade into
their business model? [4 marks]
Here, it may be difficult to think of four separate problems that business would face. Rather,
we would be looking for two problems in some detail. For example:
While potentially positive for a firms brand, a business model centring on Fair Trade
products faces the scalability challenge. Specifically, many Fair Trade initiatives are small
scale co-op style businesses. For very large retailers, guaranteeing consistent levels of Free
Trade inputs when buying from a co-op may prove challenging. The finite supply may be
threatened by drought or localised catastrophes, leading to supply cutbacks. Firms building
Fair Trade products into their business model may have to, instead, make their own
investments downstream to diversity risk and improve the reliability of supply a significant
upfront investment.
The same approach could be taken for points such as:
The marketplace for sustainably grown products (especially coffee) is already crowded with
other certifications such as Rainforest Alliance so a business selling Fair Trade products
faces the substitute problem.
Customers may be wary of green washing, and selling Fair Trade products does not
provide immunity from corporate scandals. Therefore, businesses seeking to integrate Fair
Trade products into their business model in order to improve their reputation after a scandal
may face on-going criticism.
Consumers remain price sensitive, and studies into consumer behaviour suggest that the
premium paid for Fair Trade products still provides a deterrent to purchase. Switching a
business model to selling primarily Fair Trade products, then, risks reaching only a niche
market.