Mystic Monk Coffee SWOT Analysis - Case Study Example

Mystic Monk Coffee Introduction The aim of this report it to provide a strategic analysis and recommendations to Father Prior Daniel Mary in relationto monastery’s capability to fund the purchase of the ranch. The report is comprised of four major sections, whereas each element is provided with analysis and specific. 1. The vision and mission of the monastery and its coffee operations First of all, it is worth to indicate that the monastery has no clear mission. Mission formation is an important aspect that needs to be taken before any strategic planning as it identifies the idea of existence of the monastery. Mission statement for the Wyoming monastery should reflect the idea of why does the monastery exist and what role does it have for Carmelite monks and Catholic communities. The vision of the company was declared to be: “acquiring a large parcel of land - a new Mount Carmel – and building a monastery with accommodations for 30 monks, a retreat center for lay visitors, a Gothic church, a convent for Carmelite nuns, and a hermitage” (Turnipseed 2011, 237). While this vision clearly defines the goal of the monastery for the next year or several years, it needs some improvement as it sounds more like a strategic plan than a vision statement. 2. MMC’s strategic and financial objectives Based on the information provided it is possible to list the following strategic and financial objectives set by the monastery: To purchase a large parcel of land, the Irma Lake Ranch To find funds necessary for acquiring the Ranch (the asking price of $8.9 million) To consider coffee operations as a potential source for funding the project 3. MMC’s strategy and business model In order to achieve the above listed strategic objectives, the monastery needs to have appropriate strategy and business model. At the present moment, the monastery does not have clearly identified strategy. Current business model is based on the sales of roasted coffee beans to Catholic visitors, wholesale shops and churches. The monastery purchases fair trade Arabica beans at $2,99, roasts it, packages, and resells at $9,95 per 12 ounce bag. The sales are carried out mainly online, via corporate website of the monastery. If customer purchase three coffee bags or more, they are granted free shipping service. Also, there exists a “coffee club”, whereas customers are offered to monthly delivery of one to six bags of preselected coffee (Turnipseed 2011, 237). All these elements make up the current business model of the Wyoming Monastery Coffee business operations. Before recommending any improvements on the strategy and business model, it is necessary to analyse the key internal strengths and weaknesses of the monastery and evaluate major threat and opportunities. SWOT analysis Strengths Weaknesses Opportunities Threats History and recognition of Carmelite monastery Coffee roasting capabilities limited to 540 pounds per day Demand growth for packaged coffee in USA Increasing number of competitors Sale of high quality fairs trade/organic coffee Lack of business knowledge and experience Shift of consumer’s preferences towards organically grown and sustainable coffee Volatility of world prices for coffee beans New Mount Carmel Foundation No clearly defined organisational structure Development of additional sales channels (local shops, churches, and other local institutions) Set up online sales operations 4. Strategic options and recommendations Based on the below presented analysis and evaluation, there can be offered several strategic options for consideration. More detailed overview with key steps is presented below. Strategic option №1: To focus on large-scale coffee operations and sales The first initial strategic option was to consider Mystery Monk Coffee operations as a potential source for funding the project. For implementing this strategy it is necessary to produce a calculation of the monastery’s production capability. At the moment, roaster production capability is limited to 540 pounds per day. Assuming that the monastery will purchase new roaster and increase its capability to 130-pound-per-hour, it is possible calculate the potential income which coffee roasting operations will generate for the monastery. If there will be two shifts, each for 6 hours, the production time per day will be 12 hours. If the monks will work days a week, the total number of working days will be approximately 26 days/month. Thus, the maximum output of roasting operations will be 3744 pounds of coffee per year (12hours*26days*12months) or 4988 bags of coffee (12 ounce). Even if to assume that the monastery will work with maximum production level and will sell all the coffee, it will not cover the necessary investment in the nearest 5-10 years. Therefore, it is important to find additional channels that will add to coffee operations. Actions to take: (1) To purchase the new larger roaster ($35,000) and increase production capability to maximum; (2) To develop effective marketing campaign and communication strategy in order to ensure increased sales of produced coffee (focus to be made on high—quality fair trade/organic coffee beans) (3) To activate other sources for funding, such as New Mount Carmel Foundation Strategic option №2: To apply to a bank for a loan As the analysis shows it is obvious that coffee operations is not enough in order to cover the necessary investment for purchasing the ranch. However, MMC’s coffee operations is viable business which can be developed and generate revenue for the monastery. However, assuming that the owner of the rancho will not be happy to wait for 5-10 years until the monastery will be able to buy out the ranch, the monastery can consider the option of applying to a bank for a loan. Actions to take: (1) Develop a detailed business plan (2) Apply to a bank for a loan (3) Get money, purchase ranch, and develop business based on the plan approved (4) Generate revenue, and pay out loan and interest rate to a bank. Strategic option №3: To find another (less expensive) place for monastery It might be reasonable to reconsider the choice made in favor to Irma Lake Ranch and to find another place for the monastery. It might be smaller place, also beautiful, and appropriate for implementing the Monastery’s new vision. This specific option is highly recommended to the Father Prior Daniel Mary, as thus the monks will not be involved so heavily into production and commercial activities, and will have time to devote time to spiritual activities. Actions to take: (1) To search for other, less expensive places for relocation of the monastery. References: Johnson, G., Whittington, R., & Scholes, K. (2012). Fundamentals of strategy. Harlow: Financial Times Prentice Hall. Turnipseed, D. L. (2011) Mystic monk coffee (pp. 236-240) in Gamble, J. E., Thompson, Jr., A. A., & Peteraf, M. A. Essentials of Strategic Management (3rd Ed.), New York, NY: McGraw-Hill Irwin. Read More