Unifine Richardson
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Provide a brief summary of the case and the immediate issue(s).
Sourcing in China was a cheap alternative for Unifine Richardson rather than sourcing domestically. China also was a better choice because it produced a superior quality compared to closer countries such as Argentina. Due to regulatory issues, any honey being imported from China would be rejected until it would be able to meet CFIA standards. Even if China could eliminate the cholarmphenicol traces in the honey, would the 15 month time frame be accurate? With China out of the picture, the supply of honey on the world market dropped 20% which increased the cost of honey supplied in non-Chinese markets as well as availability concerns. The only way to reduce the price of the honey would be to enter into a long term fixed price contract. One issue with this is that Unifine Richardson doesn’t even know what type of honey blend their customers will like or if they even will be satisfied with the difference in quality. The USA also imposed an anti-dumping tariff to ensure that honey would not be re-exported from Canada that was originally purchased from China or Argentina.
As Rob Pincombe, what alternatives would you consider? What action(s) would you recommend? Briefly and concisely state your reasons.
100% Canadian Honey – This is the most expensive alternative but the company would be able to market that they promote Canadian business and help stimulate the economy. The difference in price or profit margins might be balanced out with more customers appreciating that the item is being sourced domestically. One thing that was not discussed in the case is what the cost savings would be for transportation.
100% USA Honey – This was the cheapest alternative. Transport costs would be lower.
50-50% Blend Canadian/Argentinean Honey – this was the second most expensive option. However, with the USA putting an anti-dumping tariff on honey from Argentina, a barrier is created because Unifine Richardson might not be able to sell their product to the States under this regulation. There is also a considerable difference in standards between this type of honey.
Another possible option would be to see if there are any other suppliers of honey of the same quality that might not be a major player. However, this may provide to be a waste of time as a smaller operation may have hidden costs/issues that do not provide good enough quality of service.
The alternative that I would consider would be to choose the 100% Canadian Honey. First of all, it is the best quality and secondly it promotes business within Canada. Even though USA provides the cheapest price, there was no reference to the transport costs. One big issue that could skew the cost would be the exchange rate. If the Canadian dollar remains low, this hidden cost could end