Mystic Monk Coffee

Running head: MYSTIC MONK COFFEE

Mystic Monk Coffee

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MYSTIC MONK COFFEE

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Mystic Monk Coffee (MMC) is a business that was started by a group of 13 monks led by Father Daniel Mary, the prior of the Carmelite Order of monks in Clark, Wyoming. MMC averages about $56,500 per month in its sale off specialized coffee. Its cost of sales averaged about 30 percent of revenues, inbound shipping costs accounted for 19 percent of revenues, and broker fees were three percent of revenues—for a total cost of goods sold of 52 percent. Operating expenses such as utilities, supplies, telephone, and website maintenance averaged 37 percent of revenues. Thus, MMC’s net profit margin averaged 11 percent of revenues. Father Daniel Mary had formed a vision of acquiring a large parcel of land in which he located a 496 acre ranch for $8.9 million and building a monastery with accommodations for thirty monks, a retreat center for lay visitors, a Gothic church, a convent for Carmelite nuns, and a hermitage (Thompson, Peteraf, Gamble, Strickland III & Jain, 2014). 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 MMC? What is the mission of the Carmelite Monks of Wyoming? Father Daniel Mary has established a future direction for the Carmelite Monks by wanting to recreate Mount Carmel in the U.S. Rocky Mountains. His vision for the monastery is to transform the small brotherhood of 13 monks living in a small home used as a makeshift rectory into a 500 acre monastery that would include accommodations for 30 monks, a Gothic church, convent for Carmelite nuns, a retreat center for lay visitors, and a hermitage. Father Daniel Mary does not have a clear vision for MMC other than wanting to use the income from MMC to fund the purchase of land for the new monastery. Although he stated that with the purchase of a new larger roaster capable of producing 130pound-per-hour more to increase the production; he still shows no clear vision on how to achieve

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the maximum production of the equipment. If you were to compare Father Daniel Mary’s vision of wanting to make more money through MMC to Howard Schultz’s vision for Starbucks on how he wanted to bring the Italian Espresso bar experience to America, which showed the stakeholders the intended direction of where the company was headed. The main mission of the Carmelite Monks was to pray and worship God. Does it appear that Father Daniel Mary has set definite objectives and performance targets for achieving his vision? No it does not appear that Father Daniel Mary set definite objectives and performance targets for achieving his vision. The only main goal that Father Daniel has was trying to raise the funds to purchase Lake Irma Ranch for $8.9 million. It only states that the monks could purchase a new roaster for $35,000 which would increase production, but there is really no supporting evidence that the monks or Father Daniel Mary have thought this through on how to actually achieve more production or the extra man-power that will be needed to achieve this goal. What is Father Prior’s strategy for achieving his vision? What competitive advantage might MMC’s strategy produce? Father Daniel Mary main strategy for achieving his vision is by relying on mostly charitable contributions to the monastery and from profits received from MMC. MMC uses high quality fair trade Arabica and fair trade organic Arabic beans which allows them to produce a variety of blends, roasts, and flavors to appeal to a broad range of coffee preferences that helps them produce a number of tangible and intangible benefits for their customers. One of the competitive advantages MMC has is that the Catholic Church has about 69 million members in the U.S. which they hope will spread by word of mouth with their loyal Catholic customers. Although the quality of MMC’s coffee is good, they will not be capable of

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sustaining an advantage in the industry. The one advantage that they do have is its monastic relationship will make it difficult for its competitors to imitate. Is MMC’s strategy a money-maker? What is MMC’s business model? What is your assessment of MMC’s customer value proposition? Its profit formula? Its resources that enable it to create and deliver value to customers? MMC’s strategy could be a money-maker but at the current level of production and hours worked daily to produce what is sold now really limits their ability to buy Lake Irma. MMC’s business model is really suspect, although it has a compelling customer value proposition; it really never really lays out a clear plan on how it will actually achieve the increased production needed to raise the $8.9 million. As far as its profit formula, MMC has no labor expense. The company’s cost of sales of 30 percent, broker fees of three percent, and shipping cost of 19 percent contribute to a cost of goods sold of 52 percent. MMC’s current sales along with 11 percent net profit margin will not allow them to generate enough in earnings within a reasonable amount of time to raise the $8.9 million. Their resources would include the purchase of a new roaster to increase production but I feel that because of their monastic constraint would prevent them from being able to keep up with the amount of daily production required to deliver value to its customers. The only way that their current business model would work, is for Father Daniel Mary to scale back his vision and use the revenues to better support what they already have. Does the strategy qualify as a winning strategy? Why or why not? With the evidence that has been shown, MMC with the average monthly income of $56,500 and its loyal following among Catholic consumers has the potential to have a sustainable competitive advantage. If Father Daniel Mary and MMC want to see a dramatic increase in sales and earnings to help fund the purchase of Lake Irma, the business model must be revised.

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What recommendations would you make to Father Daniel Mary in terms of crafting and executing strategy for the monastery’s coffee operations? Are changes needed in its longterm direction? Its objectives? Its strategy? Its approach to strategy execution? Father Daniel Mary must first realize that in order to achieve his goals of building the new Mount Carmel, that over have the funds needed will have to come from donations. He first must realize that in order to fully utilize the production capabilities of a new roaster that he will have to increase the normal six hours of work to 12 hours per day. With the added production and sale possibilities, MMC’s net profit margin could improve from 11 percent up to 19 percent. The increase in profits could mean a net annual income of $718,000. With that potential annual increase plus the $250,000 initial donation, his vision for purchasing the land could be achieved in 12 years. Some other factors that could shorten the amount of time it takes could be to contract out the production and shipping by a company such as First Colony Coffee and Tea. By doing so they could gain new followers from that company which would increase revenues. Company’s like First Colony Coffee and Tea has the resources necessary to produce and ship larger volumes of coffee that would increase their revenues. They may also be able to help get MMC into other retailer stores that could possibly want to sell that brand of coffee to its customers. They should try and target more coffee shops with large Catholic populations to help boost their overall sales. Father Daniel Mary should also look into more advertisement, but by going into business with a contractor they could possible help them to improve on their current business model, strategy, and execution.

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Thompson, Jr., A., Peteraf, M., Gamble, J., Strickland III, A., & Jain, A. (2014). Crafting and Executing Strategy: The Quest for Competitive Advantage, Concepts and Cases (19th ed., pp. 2-45). New York: McGraw Hill Education.