Case Studyequal Exchange

Memo

To: Executive Directors, Equal Exchange

From: Mike Dorzweiler, Senior Consultant, ABC Consultant Company

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Date: April 15, 2016

Introduction:

The following is a situation analysis for Equal Exchange (EE). Key issues are noted and recommendations are provided.

Current Situation:

Rink Dickinson, Jonathan Rosenthal, and Michael Rozyne founded EE in 1986. All three men were involved with the New England Food Co-operative Organization, which specialized in bought fruits and vegetables from local farmers at above market prices, then sold them to grocers and consumer groups interested in fresh, locally-grown products. Dickinson, Rosenthal, and Rozyne wanted to foster a similar business relationship with farmers outside the U.S. Their vision was to change the way food was grown, bought and sold around the world. With $100,000 in startup funds and a small warehouse in Boston, EE got into the coffee bean market, purchasing beans from small scale farmers in Latin America at above-market prices. EE then roasted and packaged the beans for sale to natural food grocers, specially coffee shops, restaurants, and non-profit organizations. From the beginning, EE paid the producers an above market price for their products out of a desire to help provide a better, more stable income and to more equitably distribute the proceeds of the final sales. On each product the company slogan -- “Small Farmers, Big Change” -- is prominently displayed.

In 1990, EE adopted a worker-owner co-op structure. The founders believed that such an ownership structure would make the employees feel valued and that they would in turn be willing to invest their whole being in the organization. Key to this new structure was shared employee ownership. New employees must be voted in by the worker-owners. After one year, each new worker-owner buys one share of Class A voting stock, entitling the owner to a single vote. No worker-owner can buy...