a. Savanta’s business could be adversely affected because its imports from Ketraz may be prevented by the U.S. government due to violations of child labor laws. Even if the U.S. government does not impose restrictions, consumers in the U.S. may no longer purchase the jewelry produced by Savanta as a form of protest against the child labor violations in Ketraz.

b. Savanta could consider establishing an arrangement with a specific business in Ketraz that has an excellent reputation for treatment of its employees (including the avoidance of child labor). Alternatively, it may establish its own subsidiary in Ketraz to obtain the stones and produce them there. This would allow it to have full control over the employment. 

c. The U.S. government could impose restrictions on all imports from Ketraz due to violations of child labor laws, even if Savanta could prove that its imports are not contributing to the violations. Alternatively, if Savanta establishes a subsidiary in Ketraz and the U.S. government does not impose restrictions, Savanta’s strategy would likely shift its labor from the U.S. to Ketraz. Thus, it may have to lay off U.S. workers as a result, which could cause some U.S. consumers to stop buying jewelry from Savanta as a form of protest against the layoffs.