Unifine Case

Issue:

The core issue Unifine Richardson (UR) faces is their sole honey supplier, Harrington Honey (HH), willrun out of Chinese honey in a little over a month because the Canadian Food Inspection Agency (CFIA)recently found traces of chloramphenicol (a banned antibiotic associated with causing a sometimes-fatal blood disorder) and rejected the contaminated honey. Until China finds a way to detectcontaminated honey, Unifine Richardson cannot sell any of its current Chinese-Canadian blend.

Because of the CFIA’s findings, the global supply of honey will decrease by 20%, thus causing an

increase in price. Harrington Honey will not be able to maintain the honey stream.The price of honey, globally, has already been on a steady incline (Exhibit 2) and the shortage willfurther intensify this trend. Another issue UR is facing is that there is also an uneven relationshipbetween the two companies. Harrington Honey is well aware of this and is using this to its advantageby not offering better choices to UR. Additionally, 80% of

UR’s honey

operations are tied to one majorcustomer, and this customer has tough standards. As stated earlier, Unifine Richardson hasapproximately one month of honey inventory left and it has to make a decision based on the availableoptions presented by Harrington Honey.

Analysis:

Unifine Richardson buys about one million pounds of honey annually. The world supply of honey hasdecreased by about 20%. Currently, the company pays $1.08 per pound for the Chinese-Canadianblend honey. Harrington Honey provided UR with three alternative sources of honey:1.

Canadian-Argentinean blenda.

Cost: $1.42 million (a 31% cost increase).b.

Customers may reject because flavor is significantly different from current honey blend.c.

Argentina is world’s third

-largest honey supplier.2.

100% Canadian honeya.

Cost: $1.75 million (a 62% cost increase).3.

100% American honeya.

Cost: $1.79 million (a 66% cost increase).b.

World’s...