Fair Trade Jewellery Co.: Establishing an Ethical Global Value Chain
(8 pages of text)
In August 2019, Fair Trade Jewellery Co., a mid-size jewellery retailer based in Toronto, Canada, was wondering how to ensure that its customers received responsibly sourced gold and diamond jewellery. The company had already devoted considerable amounts of time, energy, and expense to develop a responsible supply chain. Its activities toward that goal had included various initiatives beyond jewellery retail, such as providing inventory financing for artisanal miners in the Democratic Republic of Congo. After discovering that a key US partner along the supply chain may have not been following a clear chain-of-custody system in its refinery, the company was unsure how to proceed. Responsibly sourced gold was potentially being contaminated by other gold at the refinery, which led Fair Trade Jewellery Co. to consider opening its own local small-scale refinery. However, that initiative could mean considerable strategic risk and financial burden for the company. It could also have potential effects on its employees, who relied on the company for their livelihood. Did the company’s ethical mission require vertically integrating to such a considerable extent?
This case can be used in undergraduate- and graduatelevel courses on international business, strategy, or operations management. It raises questions about how to manage a complex supply chain that involves a downstream retailer and upstream suppliers who work in conflict and high-risk areas. A discussion of global value chains can also expand the global context and raise additional case solutions. In a business strategy class, this case can be used to explore strategic drift. In a marketing class, the case can help examine the risks posed when an ethical brand risks failing to deliver on its brand promise. After working through the case and assignment questions, students will be able to
- describe the social risks that are present in the gold supply chain;
- explain the advantages and disadvantages of a complex responsible sourcing decision; and
- analyze the financial viability of starting a small-scale gold refinery.
Canada; Democratic Republic Of Congo, Small, 2019
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