Unifine Richardson Case Solution

2. What options should Rob Pincombe consider and which of these options would you recommend to Pincombe if you were hired as a consultant? Why?

Pincombe has three options. The first option is to buy pure American honey, the second option is to buy pure Canadian honey, and the third option is to buy Canadian-Argentinean honey. Pincombe's personal opinion suggests that Canadian-Argentinean would not taste good, and he thinks that customers would agree to his point of view. Apart from that, the United States of America has imposed an anti-dumping tariff on Argentina and China. Moreover, Argentinean honey is regularly tested for adulteration and the authorities are keeping a keen eye on its products. Clearly, it would not be wise to pursue the third option.

Pure American honey costs $1.10 per pound and pure Canadian honey costs $1.75 per pound, whereas Canadian-Argentinian honey costs $1.42. Given the quality, taste, and tariff on the Argentinean honey, it does not seem feasible. Pure Canadian honey is quite costly for the company as the cost difference would be $0.67 (1.75-1.08). On the other hand, the price difference for American honey would be $0.02. It needs to be noted that once the cost is set, it would be pursued in the long-run despite market fluctuations of prices. Given the financials, the company should buy pure American honey as Unifine Richardson’s customers demand consistency not only in quality but also in prices. It will be easy for them to bear the extra cost of $0.02.