MNG91002 – Entrepreneurship Session 1, 2020 Assignment 1: Case Analysis – Fairphone

MNG91002 – Entrepreneurship Session 1, 2020
Assignment 1: Case Analysis – Fairphone
Core Information:
Due: Before 11:00 pm, Friday 10th April 2020
Weighting: 20%
Individual/Group Individual Assignment
Word limit: 1200-1500 words in total (plus or minus 10%)
Parts of the following article/case was published on https://studybreaks.com/tvfilm/is-fairphonechanging-the-future-of-smartphones/ – June 2018.
Fairphone, the Ethical Cell Phone, Wants to Change the Future of Smartphones
You may not have heard of Fairphone, a Netherlands-based smartphone start-up, but it could be changing
the dynamics of the mobile phone industry. Unlike the leading brands, Fairphone is committed to
producing ethically manufactured smartphones. Fairphone promote the phone on their website with the
following claim; ‘The modular phone that’s built to last. We’ve created the world’s first ethical, modular
smartphone. You shouldn’t have to choose between a great phone and a fair supply chain’
(https://www.fairphone.com/en/).
That last statement ‘a fair supply chain’ relates to the fact that most of the raw materials – especially
metallic-based components – obtained to manufacture the essential components of electronic devices, and
in particular smartphones, come from the Democratic Republic of Congo (DRC). Although this Central
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African area has a vast supply of rich minerals, it has experienced devastating civil con?ict due to mineral
exploitation. Thus, minerals mined for smartphones (including gold, tin, tantalum and tungsten), are often
referred to as ‘con?ict minerals’.
Peter van der Mark, a public relations (PR) expert, and Bas van Abel, an industrial designer, were
passionate about letting the public know about the mineral exploitation by major smart phone companies.
The pair collaborated to create an awareness raising campaign explaining the relationship between the
supply of minerals for smartphones and the con?ict in the DRC. Their campaign was called ‘Fairphone’.
At the time of launching their campaign in September 2009, neither Peter nor Bas intended to make a
commercial product. Indeed, they did not have the necessary expertise to do so. They assumed a prototype
would be a concept device that wasn’t functional and at best hoped it would be accepted as an exhibit at a
local museum. Fairphone was thus started as a not-for-profit organisation and established as a campaign,
with the mission of raising awareness of the major supply chain for electronic goods and its role in
creating conflict minerals. However, as the campaign gained momentum people started asking how they
could buy a ‘Fairphone’.
This unexpected demand heralded the launch of Fairphone as a ‘social enterprise’ in January 2013. Van
Abel took on the role of founder/CEO with the aim to: ‘produce a cool phone that puts human values ?rst’.
However, despite the enquiries about a Fairphone from people who had watched the campaign, at this time
the company essentially had no solid customer base, no employees who has any industry experience,
limited working capital and no mobile phone prototype. Nevertheless, Van Abel and six staff launched a
crowdfunding campaign in mid-2013 through their website, with the aim of pre-selling a maximum of
5,000 fair smartphones. Instead, by November 2013, Fairphone had pre- sold 25,000 non-existent
smartphones for 325 Euros each. By February 2014, Fairphone staff had produced and delivered 25,000
‘fair’ smartphones to customers in 32 countries.
As a social enterprise, Fairphone aims to profit from making a smart phone (enterprise), whilst assisting
marginalised communities, and reducing the impact on the environment (social). Thus Fairphone aims to:
(1) produce an aesthetically pleasing, mid-range competitively-priced smartphone;
(2) produce phones in a manner that supported people in the supply chain, rather than exacerbating the
conflict minerals associated with the mobile phone industry; 3) establish good, long lasting relationships
and fair working conditions in East Asian factories, and 4) reduce electronic (e)-waste by designing and
building phones in a modular format that are as easy to repair as possible.
These goals are summarised in the illustration on Fairphone’s website, as shown below:
Source: https://www.fairphone.com/en/
The Fairphone 3 was set to release later this year (2019), but in May 2018, the company announced that
the new model had been cancelled. Instead, there will be big improvements to the Fairphone 2, starting
with improved outer casing and a new version of Android. The company has explicitly stated that this
recent move is because they want their phones to last much longer than others.
The Fairphone 2, which the company markets as ‘“ethical, open and built to last’ is getting a remake.
Unlike companies such as Apple, Fairphone doesn’t actually want people upgrading to a new model. This
is a pretty radical stance for a smartphone company. It’s odd, then, that the Fairphone isn’t a bigger deal
right now, given that it occupies a wholly unique space within the market.
While it’s certainly making a splash — the company’s CEO just won the Global Economy Prize 2018 —
the company isn’t making any huge leaps in sales and cancelling a new release might harm it further,
despite its reasons being very much in line with its unique voice in the tech market.
Fairphone uses eco-friendly and recycled products, and the company checks that the production of the
phone is as free from exploitation as it can be on every step of the manufacturing chain. Factory workers
are paid fairer wages and raw materials are mined using local companies that employ safer conditions and
benefit the community. This doesn’t mean they’re perfect, though.
Most companies source cobalt, an essential material for cell phone batteries, from the Democratic
Republic of Congo, where it is mined by children. Fairphone is not exempt from this practice; it also
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sources its cobalt from mines in the DRC, but it uses small-scale mines where there can be transparency
and some progress. On their blog, the company has stated that ‘actions to improve the mining sector are…
urgent.’
This approach might seem like the bare minimum, but considering what is prevalent now, it’s a big deal.
Apple, Sony and Blackberry manufacture their products at Foxconn factories in China, where working
conditions have been called into question. Samsung Factories, also in China, have also been reported for
poor working conditions.
Fairphone still manufactures in China, using a Singapore company called Hi-P, which has generally better
conditions. However, their own research found that many Hi-P factory workers sometimes worked over 60
hours a week and that they get one — occasionally zero — days off per week. This practice is far from fair
trade and it’s something the company needs to improve upon if they’re to fully commit to their vision of
ethical manufacturing. At least Fairphone’s own investigations and studies means these problems are
being noticed and addressed, not swept under the rug.
Fairphone also aims to give a better experience to the consumer. iPhones, in particular, are infamous for
being intentionally difficult to fix. It’s challenging to get an iPhone repaired by anyone who isn’t an
official Apple technician — you can’t even remove the phone’s back without using tools and risking
losing your phone’s warranty.
It often seems that companies such as Apple modify their products strategically, such as removing the
headphone jack, to generate extra profit. To counteract this frustrating situation, Fairphone aims to make
their phones long-lasting and easy to repair, even selling spare parts so you can do it yourself.
Unlike most smartphone companies, Fairphone has a modular construction, with key components of the
phone coming apart in sections. For example, a removable battery, and screen that can be replaced by the
user, as well as potentially upgradable camera and audio components. Spare parts for the Fairphone are
thus much more user friendly, not requiring a skilled technician. This lowers repair costs, allows
consumers to upgrade components as technology improvements occur and potentially significantly
increases the life of the phone beyond more conventional smart phones.
The decision to cancel the new model and release improvements to the current one, instead, reflects
Fairphone’s user-friendly stance and could be seen as a turning point: If people realise that there’s no
reason to replace their phones as often as they do, phone companies can’t be as ruthless, and the market
will become more sustainable and eco-friendly.
In our current climate of increased concern for the environment, awareness of global human rights abuses
and widespread frustration towards Apple’s policies and design choices, Fairphone could be doing just the
right things to make it become the next big thing in smartphones. It’s a breath of fresh air among a
depressing resignation toward the hard facts of how our commodities are made.
The Overall Task
The following questions are all based on the above Fairphone article/case. Basing your arguments on the
topics that you have studied in the first five weeks of this unit, write a report addressing the following two
questions:
a) Entrepreneurs – and by extension, the firms they run – have been identified as having certain traits and
characteristics. Some of these traits are evident in the case of Fairphone, and how they ‘go about’
developing and implementing their business model. Discuss the extent to which Fairphone exemplifies
these entrepreneurial traits and characteristics. Justify your response with reference to academic sources
(e.g. academic journal articles, textbooks, etc.).
b) The article clearly outlines what we might consider ‘social entrepreneurship’, whereby an entrepreneur
establishes and/or leads an organisation or initiative engaged in social change. But launching and running
a social enterprise is not without its challenges. Describe at least three major boundaries or challenges
involved in running a social enterprise. Again, you should be looking to use academic sources as the
foundation of your review. Wikipedia or web blogs are not considered as ‘sound’ academic sources.
Write up your analysis. This should be in a report format. Here is a suggested structure:
a. Executive Summary
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b. Introduction
c. Analysis of Entrepreneur traits/characteristics (ie. linking them Fairphone)
d. Major Boundaries or Challenges in Social Entrepreneurship
e. Conclusion
f. References
g. Appendix (if required)
Submit the report via the Turnitin Submission Link (under Assessment Details on the Blackboard site)…
be fully aware of the plagiarism rules in the School; plagiarism will not be tolerated.
The marking criteria for the assignment can be found on the following page. They are published to give
you detailed guidelines about the way in which your mark will be calculated. Please read them carefully.
Note that they are a guide, not a definitive formula for allocating marks, and no set of criteria can
accurately describe every possible assignment. Your final mark will reflect the application of academic
judgement by your marker to your whole assignment.
MNG91002 – Entrepreneurship (Session 1, 2019) Assignment 1: Case Analysis – Fairphone
Ratings and Comments According to Criteria Mark
Executive Summary Provides a properly constructed and correct length executive summary:
Excellent Very Good Good Satisfactory Needs Development Poor
The executive summary provides a brief overview of the purpose of the report and an effective summary
of its content:
Excellent Very Good Good Satisfactory Needs Development Poor Further Comments as necessary: /10
Introduction Properly describes the task and sets up the report content that follows:
Excellent Very Good Good Satisfactory Needs Development Poor NA
Places the assignment in context in terms of discussing the nature and importance of entrepreneurs, the
growth in social entrepreneurship, and the challenges entrepreneurs generally face:
Excellent Very Good Good Satisfactory Needs Development Poor Further Comments as necessary:
/5
Case Questions
Entrepreneurs Traits and Characteristics Identifies and discusses the core entrepreneur traits and
characteristics discussed in the literature: Excellent Very Good Good Satisfactory Needs Development
Poor Relate these traits/characteristics to the case of Fairphone:
Excellent Very Good Good Satisfactory Needs Development Poor
Further Comments as necessary:
/35
Trends in Social Entrepreneurship Provides an analysis of major boundaries or challenges in social
entrepreneurship:
Excellent Very Good Good Satisfactory Needs Development Poor Provides plausible arguments
supporting the above analysis (using academic sources): Excellent Very Good Good Satisfactory Needs
Development Poor
Further Comments as necessary: /35
Conclusions: Draws sensible conclusions based on the analysis and discussion:
Excellent Very Good Good Satisfactory Needs Development Poor Conclusions reveal key learning to be
taken from the analysis:
Excellent Very Good Good Satisfactory Needs Development Poor Further Comments as necessary: /5
Technical and Professionalism Aspects of the Report In-text citations and proper referencing (note: an
absence of in-text citations and referencing may lead to penalties beyond the marks allocated for this
criteria point):
Excellent Very Good Good Satisfactory Needs Development Poor Appropriate sources used and
referenced:
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Excellent Very Good Good Satisfactory Needs Development Poor Presented in well-thought out,
consistent, readable form/appropriate length:
Excellent Very Good Good Satisfactory Needs Development Poor Style, spelling, grammar and syntax
Excellent Very Good Good Satisfactory Needs Development Poor Further Comments as necessary: /10
Summary Comments as Necessary:
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