MAY 30, 2014

TEAM PAREF - STRAMAN K31

CASE 01 - MYSTIC MONK COFFEE

1. Has Father Daniel Mary established a future direction for the Carmelite Monks of Wyoming? What is his vision for the monastery? What is his vision for Mystic Monk Coffee? What is the mission of the Carmelite Monks of Wyoming?

Yes, Father Daniel Mary established his own vision for the future of the Carmelite Monks of Wyoming. He envisioned a new monastery that could accommodate 30 monks, a retreat center for lay visitors, a Gothic church, a convent for Carmelite nuns, and a hermitage on a large portion of land called Irma Lake Ranch that costs $8.9 million. The vision for they Mystic Monk Coffee is to expand its operations through the purchase of a new brewery which would be capable of producing more coffee therefore generating more funds for the vision for the new monastery. The mission of the Carmelite Monks of Wyoming is to live a life of solitude and prayer while working to earn profits in order to make the vision of Father Daniel Mary a reality.

2. Does it appear that Father Daniel Mary has set definite objectives and performance targets for achieving his vision?

Yes, Father Daniel Mary has set definite objectives and performance targets for

achieving his vision. Since the acquisition of the Irma Lake Ranch posed something of a financial obstacle thus creating the need to set objectives and performance targets. Considering that Mystic Monk Coffee failed to generate enough money needed for the payment of the Irma Lake Ranch it was decided that the first objective was make the production of coffee higher which meant investing in a larger roaster since the older roaster they had been using had limited capacity. Buying a new roaster would be the performance target, the new roaster would greatly increase the production; in a day the average roaster produced about 540 pounds of coffee, but with the new roaster this would increase to 780 pounds (6 hours of work X 130 pounds per hour

= 780). Aside from the increase in production capability, they also decided to improve the distribution of the coffee; initially it was through word of mouth that people heard of the Mystic Monk Coffee, but majority of their sales were made through their website.

3. What is Father Prior’s strategy for achieving his vision? What competitive advantage might Mystic Monk Coffee’s strategy produce?

The strategy of Father Prior to achieve his vision of creating a new Mount Carmel was through generating profit from the Mystic Monk Coffee. To generate more profit, Father Prior plans to purchase a larger roaster that could produce 130 pounds of coffee per hour, since the current roaster they have could only produce 540 pounds of coffee a day. A competitive

advantage of Mystic Monk Coffee is the high quality and wide array of coffee blends. Brother Java roasts high quality fairtrade and organic Arabica beans into four popular flavor namely Chants of Carmel, Cowboy Blend, Royal Rum Pecan and Mystic Monk Blend. Their marketing strategy is another way to achieve the vision. People hear about Mystic Monk Coffee through word of mouth, and their customers could avail of the coffee conveniently by a phone call or online through a website. The competitive advantage this strategy produced makes it easy for customers to avail the coffee. And since their coffee is promoted through word of mouth, there is a niche target market for the product.

4. Is Mystic Monk Coffee’s strategy a money-maker? What is MMC’s business model? What is your assessment of Mystic Monk Coffee’s customer value proposition? its profit formula? its resources that enable it to create and deliver value to customers?

Yes, MMC’s strategy is a money-maker because they have a niche target market - US Catholics - although it doesn’t generate the required amount for Father Daniel Mary to reach his goal for the monastery. MMC’s current business model involves a two-part plan. The first by investing in a new coffee roaster that will be able to roast 130 pounds per hour instead of per day and the second by being able to set up wholesale sales to churches and coffee shops. MMC’s customer value proposition is good because because the product itself is of high quality and is up to par with the target market’s standards. Having a wide variety of flavors is also another plus. The profit formula is positive but then being limited to having only 6 hours a day is one of the major constraints MMC has for their plan on reaching their goal. Limited manpower, work hours, and marketing strategies are also part of the constraints.

5. Does the strategy qualify as a winning strategy? Why or why not?

With regards to earning a profit, MMC has a winning strategy. With regards to earning enough to reach MMC’s goal, it is slowly winning. The strategy wins with the external situation by having loyal customers in the long wrong but loses internally because of missed opportunities with how much MMC could’ve been produced. Although only one year has passed, the ‘sustainable competitive advantage’ is slowly getting there based on the fact that sales of coffee grow every year and by the time MMC gets more recognized, a lot more US Catholics will be familiar with the brand. Since the main goal is to acquire enough funds within a reasonable amount of time, MMC has failed in the last category for a strategy to be considered, winning. An 11% profit margin per month isn’t enough because it would take decades before the funds reach $8.9 billiion.

6. What recommendations would you make to Father Daniel Mary in terms of crafting and executing strategy for the monastery’s coffee operations? Are changed needed in its long-term direction? its objectives? its strategy? its approach to strategy execution? Explain.

To be able to reach their goal, MMC should take time on how to go about their new strategy.The idea of investing on a larger roaster will only work if the work hours and workforce

will be increased. The brothers can’t rely on the consumers alone because they themselves have to sacrifice prayer/reflection time to be able to produce more products. Roasting and packaging can take loads amount of time to accomplish. MMC shouldn’t rely merely on their website because with delivery fees alone, MMC spends about $128,820 per year ($56,500*0.19*12=$128,820). MMC should diversify and spend more time reaching out to different stores and churches to give consumers more options on how to purchase their coffee. A means of marketing and advertising will also play a big role in helping improve their current status.