Mystic Monk coffee company is a cloistered monastic environment where monks from the Carmelite monastery of Clark, Wyoming spend their daily manual labour hours roasting coffee (Thompson, 2012, pg. 420). The monks are a religious sect of the Catholic church and are fully dedicated to their religious and spiritual side, which requires most of their daily hours, be spent praying or contemplating in silence; this leaves little time to spend on coffee roasting productions, especially due to the small population of monks that are able to live at the Carmelite monastery. There were many restrictions that the Carmelite monks faced with their coffee productions such as having restricted roasting capacity, inadequate land and partial workers. Father Daniel Mary, the prior of the Carmelite order, had a vision of expanding the small monastery of 13 monks, by creating a new Mount Carmel in the Rocky Mountains of Wyoming.
There is a nearby location called the Irma Lake Ranch that would include a large house, caretaker house, guesthouse, a gothic church, a convent for Carmelite nuns, a hunting cabin and a dairy and horse barn; this would allow the monks to expand their opportunities, as well as expand their Carmelite monk residents (Thompson, 2012, pg. 421). This vision is everything that Father Daniel Mary ever dreamed, the only thing prohibiting the change, is that the Irma Lake Ranch will cost the monks $8.9 Million.
The Mystic Monk coffee company only earns money based on their coffee sales (11% of revenues) and donations from private donators; the Carmelite monastery received a $250,000 donation which they can use at their discretion (Thompson, 2012, pg. 420,423). The following report will take a look at the options that are available to the Carmelite monks and what would be the most strategic plan that should be enforced in order for the monastery to be successful. External and Internal Analysis
Strengths * Fair trade/ Organic Arabica beans * Variety of coffee flavors * Accessories (t-shirts, cups, CD’s) * Online shopping is available * Tea has been added to selection * Free labour/ No wages paid * Affordable/ reasonable retail price * Membership “coffee club” * Favors catholic market (large)| Weaknesses * Limited roasting capability (540 lbs/day) * Limited production due to worship * Cant expand due to limited land * Coffee is not a necessity (trend?) * Caffeine is highly addictive (health) * Purchase beans instead of growing * No business expertise/ experience * No absolute competitive advantage * Poor earnings (11% of revenues)| Opportunities * Expand availability into grocery stores * Collaborations (Keureg, Tassimo) * Other purposes (weight loss, bio fuel) * Increase advertisements * Expand into international market * Start a franchise * Open coffee shops (Starbucks, Tim’s)| Threats * Poor coffee growing season * Natural disaster/ weather * Economic Conditions (recession) * Established competition (Folgers, nabob) * Others’ personal religious beliefs * Dependant on donations/ revenues|
(Mystic Monk, n.d., pg. 1)
The Mystic Monk coffee company has to look at their options before they are able to make a decision regarding the continuation of their business. The two options that are available to the Carmelite monks at this point in time are: 1) stay at the current location of Clark, Wyoming, and continue operations as they are and use some donation money to purchase another roaster to help increase production or 2) see if the owners of Irma Lake Ranch would “gift” them a portion of the ranch without monetary repayment, as a donation, and they would pay the owners as a lease to own the remaining balance of the land, until a breakeven point has been reached.
Discussion of Alternatives
The first option is to stay at their current location to continue operations as they are. The advantages of choosing this option are: 1) retaining their donations and revenues to improve their current monastery, 2) there is little to no risk involved. The disadvantages of choosing this option are: 1) there is little opportunity to expand the Mystic Monk Company, 2) they cannot easily increase their Carmelite population.
The second option is to move to a nearby area, which would involve purchasing the Irma Lake Ranch. The advantages of choosing this option are: 1) the Mystic Monk Coffee can increase production easily, 2) there is a large opportunity to expand, 3) the new Carmelite monastery would allow its population to double. The disadvantages of choosing this option are: 1) there is a tremendously high level of risk involved, 2) the owners may not gift the monks any land.
After evaluating the advantages and disadvantages of each alternative, a decision has been concluded that the most practical and strategic option would be to receive a portion of the Irma Lake Ranch, as a “gift” without monetary repayment, then pay the land owners on a lease to own schedule with the increased earnings projected from the new Mount Carmel location. This is the most logical selection if they want to expand and improve their Mystic monk coffee brand, as well as their community; the Carmelites will have no opportunity to grow or expand if they choose to stay where they are and continue on as they have been, as well as soon they will not be able to keep the supply at an adequate level to cover the demand for their products.
The Carmelite monastery would have more financial opportunities available with this purchase, such as milk production from the dairy cows, horse rides on the trails through the forest, increased population to help roast and package the coffee. Also, the monks would have sufficient land to be capable of growing and producing their coffee beans without the need of suppliers, which in turn will decrease the cost of goods sold and drastically increase the Mystic Monk’s net profit margin from the current 11% of the sales revenue. The risk on this investment is exceptionally high, but if it is successful, the reward and pay off could be far greater than projected.
A realistic action plan must now be devised, to ensure that the previous decision is executed correctly, otherwise the Carmelite monks and the Mystic Monk coffee company will not be successful. The monastery is incapable of affording the Irma Lake Ranch with the funds that they currently have, including the $250,000 donation. The Mystic Monk coffee company should confront the current owners of the Irma Lake Ranch and see if they would be willing to “gift” them a portion of the property without monetary repayment, which could be considered a donation; the remaining balance owing on the land could be contracted as a lease or rent to own situation, where a breakeven point would be reached in a reasonable time frame. Also, because the property has been “gifted” to the Carmelite monks, they would be eligible to receive a tax break, which would significantly affect their financial status.
The new property would be able to offer the monastery an opportunity to expand their brand by introducing tourism, sustainability and other financial opportunities. If the Mystic Monk coffee company decided that they would be capable or growing their own beans on the new land, they would be able to drastically cut costs on the cost of goods sold and eliminate suppliers, which in turn will increase their marginal earnings from the sales revenue. All of these new opportunities are realistic and show that the increased earnings would rapidly and effortlessly be able to pay off the remaining balance owing to the original Irma Lake Ranch owners.
In conclusion, the Mystic Monk coffee company has been successful with its entrance into the coffee market, however demands are increasing and new opportunities are being presented to the Carmelite monastery. If they wish to grow and expand their business and community, they are going to need to take the risk which is to relocate to a more practical location, ideally the Irma Lake Ranch.
Irma Lake Ranch offers many new prospects to the Carmelite monks, which they would not be exposed to if they stay at their current location. This property can allow them to be independent from suppliers and venture into new venture projects such as introducing horse trail rides and milk from the dairy cows. Although the monks are a non-for-profit group, the sales revenue will mostly be paid to the original property owners until the principal amount is depleted, the rest of the money from earnings and donations will be put towards building, growing and maintaining the new Mount Carmel Monastery.
Mystic Monk Coffee | Buy Coffee Beans Online | Online Coffee Store. (n.d.). Mystic Monk Coffee | Buy Coffee Beans Online | Online Coffee Store. Retrieved January 24, 2013, from http://www.mysticmonkcoffee.com/store/storefront.php Thompson, A. A., Peteraf, M. A., Gamble, J. E., & III, A. S. (2012). Case 1. Crafting and Executing Strategy (18th Edition ed., pp. 420-424). New York: McGraw-Hill/ Irwin.