Impact of fair trade

The Impact of Fair Trade on Consumer Behaviour and Retail Industry in the United Kingdom

ABSTRACT

The movement for fair trade relations between the North and the South is an ambitious concept that came into reality forty (40) years ago. It is a dream come true for the farmers and producers of developing world wherein international trade to some extent become fair. With the strong advocacy support of the international aid agencies, civil society and fair trade organizations, and fair trade has finally taken its greater share in the international community and continue to set a trend in trading relations among nations. In the United Kingdom, fair trade continues to gain support from various institutions and companies. Institutionalization of the sysasftem in most cities and communities of the country is now becoming prevalent. Fair trade marks in most products in the market is now speaking laudablafasfy. It became a phenomenon that concerns the consumers and the dynamics of their demands. On the other hand, fait trade being global in context, it continue to affect the trade relations of the nations all over the world which in turn will affect the supply chain management of the companiasfes. For the past few years, statistics from fair trade organizations showed that sales from fair trade products are on the rise, companies are now conasidering and accepting the concept of fair trades while consumer awareness are consistently increasing. It is therefore influencing the consumer besfhaviour and setting the new trends in the business world. This paper will revisit and evaluate the performance of fair trade in the country in terms of its asdfimpact in the retail industry and the consumer behaviour. It will venture its analysis on how fair trade operates and uncover the norms of fairness in asdfbusiness and trade parlance. Further analysis will be considered as to how fair trade affect and or contributes to ethical consumerism being one of theasd trends in the country. Detailed and in depth discussions will be made on the business aspect wherein it will analyze the correlation between fafsadir trade system in marketing, human resource management and corporate governance. It is also in the interest of the project to assess the impacts of fsathe system to the retail business industry and the supply chain process of the business organizations who adopted the fair trade system in the countdfary. This includes the academic institutions, civil society organizations and the fair trade organizations. Furthermore, the study will look into the fair tsdfrade system as a business strategy being mainstreamed in some companies in the country and its impact to the financial performance and market development.asdf It is going to delve the aspect of the system as an alternative business model that will be worth exploring among business decision makers in the couasdfntry. Fair trade being an emerging business model needs to be analyzed if it thrives and survives the test of recent economic crisis. With fair trade asfd being politically and socially sensitive, this paper will focus on the economic and business implication of the subject and its relevance beiadng an alternative business model in this recent economic crisis.

Objectives:

Generally, the proasfaject aimed to identify the extent of influence that fair trade affects the behaviour of consumers in choosing and purchasing retail products in the f country and it implications to the global market and international trading system.

Specifically it aims to:

  1. Determine the probability of the consumers buying fair trade products versus non fair trade products
  2. Determine the recent trends and market share of fair trade products in retail industry in the country
  3. identify the relationship of fair trade to ethical marketing and fulfilment of corporate social responsibility for retail companies
  4. contributions of fair trade in market positioning and business decision making among retail companies
  5. Resilience of Fair Trade in Global recession

Project Outcomes/ Deliverables:

The project is expected to deliver the following outcomes:

  1. Consumer data on fair trade products in the country
  2. Market share forecast of fair trade in retail sector
  3. Provides recommendation on advancing ethical business image and promotion of corporate social responsibility among retail companies
  4. Recommends marketing strategies and decision making policies using fair trade as a leverage.
  5. In depth analysis on fair trade as a means to satisfy the ethical consumerism trends whilst improving public relations through concrete expression of corporate social responsibilities.
  6. Analysis on the resiliency and vulnerability of fair trade in economic recession

The sounding call of fair trade advocates echoes around the globe especially in the western markets wherein its saturation and penetration drive reaches and affects the retail industry. The campaign for fair trade among aid agencies, non-government organizations and the civil society continue to shape the market trends by influencing the public opinions and consumer behaviour. This is in line with the growing tends of ethical consumerism and emphasis on corporate social responsibility among companies here in the country and abroad. This is in response with the evolving trends of the government's and consumers of the world getting more and more concerns in environment and the climate situation which directly shapes trend of the global market and the international trading system.

While fair trade being a social and political in nature its growing business and economic effects is inevitable. It shapes the trend and its market share is ever increasing. It is in the interest of this research to look into the business aspect of the trading system and how its dynamics affects the key factors in business decision making process. In order to present and put more focus and emphasis on the business and economics of fair trade, the paper shall evaluate the impact of fair trade in the supply chain management of the companies adopting fair trade, the impact of fair trade on consumer behaviours, and the implications of fair trade on marketing, financial performance and corporate governance.

Aside from working closely with the existing and dominant fair trade organizations in the country, the researcher will focus more on working with the leading fair trade companies and assess how fair trade impact on their entire operations amidst the recession. It research shall draw out conclusion on whether the fair trade would be an alternative business and trading model that withstand and resilient in time of economic and financial crisis. The result and outcome of this project would be an essential input for the following:

What are the key questions the project attempts to answer?

The course of the study it seeks to answer critical questions significant to the accomplishments of its project objectives and deliverables as follows:

  1. What are fair trade and its implications to global market trends?
  2. How fair trade affects the behaviour of retail consumers?
  3. What is the existing trends and market share of fair trade products retail industry in the country?
  4. How fair trade can be utilized as marketing tools to increase sales and expand market share?
  5. What are the benefits of companies promoting fair trade products and how does it affects company image and performance?

What research methods do you intend to use and why?

The project will apply the following research methods in order to carry out its objectives and deliverables as follows:

  1. Literature Reviews: This will provide the researcher comprehensive background information on the history and evolution of Fair trade. This will give the researcher a firm foundation and broader understanding of the topic.
  2. Survey Questionnaires for Selected Consumers: This will provide the researcher a first hand data on how consumers perceived about fair trade and its effect on its purchasing decisions. This will produce hard evidence on the actual market share of fair trade.
  3. Interviews with fair trade shops and organizations: These methods will provide an input to the research on how fair trades operate in a competitive commercial market. This will also provide the information on the benefits of fair trade to the companies.
  4. Actual survey with the retail outlets: This method will allow the researcher to gather actual information on the saturation and trends of fair trade products occupying in the shelves.

What primary and/or secondary data sources do you intend to use?

The researcher shall utilize both primary and secondary data on the following forms:

  1. Primary data:
    1. Survey questionnaires for consumers
    2. Personal interviews for fair trade shops and organizations
    3. Actual surveys on retail outlets
  2. Secondary data:
    1. Books
    2. Journals, articles and publications
    3. Published researches
    4. Websites
    5. Reports
    6. Related studies

Please provide draft chapter headings for your report.

  1. INTRODUCTION
    1. Historical Background of Fair Trade
    2. Principles and Prerequisites of Fair Trade
    3. Fair Trade in the United Kingdom
  2. The Economics of Fair Trade
    1. The Global Fair Trade Dynamics
    2. Fair Trade and the Supply of Chain Management
    3. Ethical Consumerism and Fair Trade
    4. The status of fair trade in the UK retail market
  3. Implications of Fair Trade to Business
    1. Fair Trade and Marketing
    2. Fair Trade and Corporate Governance
    3. Fair Trade and Supply Chain Management

    Conclusion, Findings and Recommendation

Gantt chart

The Impact of Fair Trade on Consumer Behaviour and Retail Industry in the United Kingdom

A Literature Review

The concept of fair trade emerged out of the demands from the developing countries who expressed their sentiments being victims of unfair trade relations and policies being implemented and practiced by the developed countries. The concern was raised in the forum of trading nations wherein the sympathy of the international development organization to the developing nations created pressure to their respective governments paving the way to consider free and fair trade policies towards the developing nations.

The concept of fair trade though does not originates in the United Kingdom, but its impact and advocacy to pursue the ideals is basically centred in the country. This is perhaps the very reason why the country plays an active role in advocacy and implementation of fair trade in the global market. The UK being a practitioner of fair trade now continue to perform a significant role in introducing and influencing the business industry of the country to adopt and or mainstream fair trade in their respective business strategies.

With the considerable period of time that fair trade has been in the country, it is worth revisiting to assess its significance and relevance in the most trying times of the global economy and business environment, thus this research proposal.

The concept of fair trade as a way of setting alternative trade rules in the global arena was being presented by Stiglitz and Charlton (2005). The dynamics of global trade rules which put an emphasis on the unfair trade policies imposed by the rich countries over the developing countries has been presented. It provides significant information on how the dynamics of trade between rich and poor countries has been controlled and influenced by foreign policies specifically trade policies of the rich countries affecting the international market access.

The authors emphasized the roles of the nations in negotiating trade agreements during he series of World Trade Organization meetings, which divides the world into the poor nations striving to access fair trade relations with the rich nations imposing their protectionist policy against the poor nations products. This simply shows unequal playing grounds which became the battle cry of the developing countries.

The book focus only on the agreements of the countries on trade negotiations that was based on sound economic principles relevant to the achievement of social justice whilst evading the issue of politics and disputes among nations. It is concern on the analysis of the trade liberalization and its impact on the global market and to the developing countries. The analysis is further focused on reforming the trend of international trade by striking a balance between the developed and the developing world with the former giving due consideration to the latter to cope with and to benefit more in the trade reforms agenda to make it more fair.

Fair trade affects trading relations of nations globally and it entails legal and diplomatic complexities. Bhagwati and Hudec (1996) studied legal analysis articulating the conflict between the international trade policy and the domestic economic policies particularly on the issue of local environmental policy, labour policy and competition policy which commonly argued and debated between the developed and the developing world. The developing countries always find it unfair to compete with the standards of the developed countries when it comes to the trade restrictions.

The emphasis on the harmonization of the international trade based on the framework of the General Agreements on Tariffs and Trades whilst resolving the specific policy conflicts in the international context. In the process of harmonization and resolution of the policy conflicts in order to come up with a generally agreed policies and measures in the international trading system. It is in this context of harmonization in the conflicting policies that international free trade will be realized with sense of fairness and equality in trade relations among countries of the world.

Fair trade in the country defines new trends of consumer behaviours. Worcester (2000) presented a significant findings when in comes to ethical consumerism in the United Kingdom. He claimed that most consumers tend to judge the companies in terms of their staff treatment and financial performances being the on but its showed significant number of respondents will assess companies in terms of their environmental and social responsibility being their baseline of judging local companies.

As to the factors influencing the behaviours of the consumers, it is noted that about thirty seven percent (37%) was accounted for the environmental impact of the product, clear policy on environmental/social issues and company's support of community. The study also pointed out reasons that there is an increasing awareness of the consumers being ethical and the increasing patronage on the ethical products and companies. Another aspect was being explored on the demographics of the ethical consumers within the country.

Fair trade being a movement is about equality and fairness in the trading practices in amore comprehensive manner which covers pricing, working conditions and communities. Fair Trade Foundation (2009) emphasized that the developing world farmers should be fair in trading terms with the developed worlds and that multinational companies should be required to pay reasonable and sustainable prices to the products from the developing world. It is the primary goal of the system to address the existing gap and unfair practices of the conventional trading system which is unfair and exploitative to the producers of the developing world who are heavily reliant on agricultural production to improve and to have more control of their future.

With fair trade being practiced in the country, there is already an increasing volume of fair trade product in the in the United Kingdom. This means that the fair trade marked products are consistently increasing in the shelves of retails store in the country. In its latest commissioned research it showed that there is an increase of about seventy percent (70%) of the consumers being are aware and tend to patronize the fair trade product compared to the 2007 market survey. In this continuing trend of fair trade positioning the retail industry in the country, its worth venturing to look into the actual benefits of the company fair trade is going to be considered in decision and policy making.

Moreover, there is a recorded increase in number of establishments and institutions all over the country that supported the fair trade campaign among are all in thousands of schools, workplaces, communities and places of worship. The movement continue to thrive and influence the consumer behaviour which in turn affects their purchasing behaviours. It showed that in the country, towns are considering themselves as strong supporters of fair trade and that their campaigns are spreading its influence in most countries of the world (Annual Report 2008/2009).

Fair Trade is now influencing several sectors in the country. Development Magazine (2004) reiterated that the influence of fair trade campaign is now invading the academic world as more universities and business schools in the country are supporting and declaring themselves as fair trade institutions. The support of the movement reaches its influence to the civil society and civic organizations making its range wider and larger. This mean that more and more people will then be patronizing fair trade products and it shapes the consumer behaviours which business decision makers should try to look into and seriously take into considerations.

At the centre of the debate surrounding sustainable development is recognition that companies can make a major contribution by being environmentally and socially responsible and that tools associated with these concepts can enhance the competitiveness and economic performance of the firm. It is worth arguing that in a world of globalization it is equally important to look at issues of international trade wherein fair trade is among the emerging issues and concerns.

There are concerns in the business sector as to the consistency of the agenda with the concept of development and competitions. Welford et.al. (2003) presented an argument that fair trade is consistent with the concept of sustainable development and the goal to improve and maximize the benefits of businesses. It reiterated the point that there is a need for companies to be more ethical and responsible in terms of its employee relations, product sourcing and corporate governance as prerequisites of fair trade practices. It claimed that with the trade liberalization, the international market is getting wider and there is a need for the companies to look into their policies on trade and supply chain management in order to cope with the recent innovations and developments in the global markets. In this context, it suggested that the integration of fair trade policies into a business strategy can enhance competitiveness.

The issue of how fair trade can benefit companies becomes a primary concern among companies. Traidcraft Exchange presented that fair trade can be a useful tool to be utilized in business strategy that will meet the corporate social responsibility of the company while advancing its financial performance through improved market share. Through fair trade, companies can advance market positioning by creating an image of being a socially and environmentally accountable and responsible institution thus improving the quality of business practice within the supply chains.

With the fair trade operating in the world it is worth examining whether the development contribution of Fair Trade in the lives of the coffee of the sector it represented is indeed positive and if it serves its general purpose. Ronchi (2002) showed the positive impact of the responsible trading system to the lives of coffee producers in some cooperatives of Costa Rica. The system created a positive atmosphere among stakeholders of fair trade. Its stipulated that fair price on the products of the farmers in the developing world can be converted into a tangible positive developments in the quality of lives among farmers and the essential organizational development of the cooperative who participated in fair trading.

There is therefore a concrete social impact of the fair trade system to the lives of the people who are directly involved in the production of the products that will be traded internationally. This enables them to get the maximum benefit of the products through fair pricing system that fair trade advocated. In essence it requires imports and export system to trade responsibly by considering the stake of the farmers and their communities.

Finally, the for decades of practicing fair trade, its impact in the filed of business and economics is very evident. Hayes and Moore (2005) explained that Fair trade minimizes the profit maximization of the major companies in the developed countries by sharing portion of it to the developing world. It is very instrumental in improving the labour relations and its practices. Another positive aspect is that fair trade promotes equality and independence in the product marketing while strengthening a healthy market competition being essential of free trade and fair trade.

The impact of fair trade in the developing world has been felt by challenged and marginalized sector of agriculture. Now the effect of this alternative trading system is now making its pace in the United Kingdom. With its influence in the existing social institutions such as the church, civil society, the academe and the government, its is unstoppable in shaping consumers behaviour and in the long run it will shape and define the market supply and demands. It is therefore necessary for the business institutions to take a strategic look into this emerging business model in the context of corporate social responsibility, fairness norms and ethical business.

LIST OF REFERENCES

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