Discuss Father Prior's strategy for achieving his vision. What competitive advantage might Mystic Monk Coffee's strategy produce?

" to pay Washington. The monks paid the Seattle broker the egment prevailing wholesale price per pound, which uc- mcally med daily with global supply and demand. The ngfrom' wacky of Mystic Monk Coffee's master limited it seven munted 1 grow the last production to 540 pounds per day; production was also limited by time devoted to prayer, silent medita- lion. and worship. Demand for Mystic Monk Coffee had not yet exceeded the master's capacity, but the monastery planned to purchase a larger, ISO-pound per-hour master when demand further approached the current master's capacity. The monks had received a ' quote of $35,000 for the new larger master. Marketing and Website Operations Mystic Monk Coffee was promoted primarily by word of mouth among loyal customers in Catholic parishes across the United States The majority of Mystic Monk's sales were made through its web- 1:1chth site, but on occasion telephone orders were placed ; retlatl With the m0nks' secretary, who worked outside the In: Cof- . cloistered part of the monastery. Mystic Monk also .ofiered secular website operators commissions on : ( at ' its sales through its Mystic Monk Coffee Afli- 1'gt: a ate ngm which placed banner ads and text ads 31 0:13: 0'1 PartiCipating websites. Afliate sites earned an 18 percent commission on sales made to customers who were directed to the Mystic Monk site from their site. The afliate program's Share A Sale participa- tion level allowed afliates to refer new afliates to Mystic Monk and earn 56 percent of the new afli- ate's commission. The monks had also just recently expanded Mystic Monk's business model to include wholesale sales to churches and local coffee shops. ms deliv- n SeatIlc. CASE Ol Mystlc Monk Coffee C-s Mystic Monk's Financial Performance At the conclusion of Mystic Monk Coffee's rst year in operation, its sales of coffee and coffee accesso- ries averaged about $56,500 per month. Its cost of sales averaged about 30 percent of revenues, inbound shipping costs accounted for 19 percent of revenues, and broker fees were 3 percent of revenuesfor a total cost of goods sold of 52 percent. Operating expenses such as utilities, supplies, telephone, and website maintenance averaged 37 percent of rev- enues. Thus, Mystic Monk's net prot margin aver- aged 1 1 percent of revenues. REALIZING THE VISION During a welcome period of solitude before his evening meal, Father Prior Daniel Mary again con- templated the purchase of the Irma Lake Ranch. He realized that his vision of purchasing the ranch would require careful planning and execution. For the Wyoming Carmelites, coffee sales were a means of support from the outside world that might pro vide the nancial resources to purchase the land. Father Prior understood that the cloistered monastic environment offered unique challenges to operating a business enterprise, but it also provided opportu- nities that were not available to secular businesses. He resolved to develop an execution plan that would enable Mystic Monk Coffee to minimize the effect of its cloistered monastic constraints, maximize the potential of monastic opportunities, and realize his vision of buying the Irma Lake Ranch. C-4 PART 2 Cases in Crafting and Executing Strategy and restaurants such as Starbucks, Dunkin' Donuts, it easier for farmers in developing countries to pay Washingto or Mcdonald's. Packaged coffee for home brewing workers a living wage. The specialty coffee segment prevailing was easy to find in any grocery store and typically of the retail coffee industry had grown dramatically tuated da carried a retail price of $4 to $6 for a 12-ounce pack- in the United States, with retail sales increasing from capacity ( age. About 30 million coffee drinkers in the United $8.3 billion to $13.5 billion during the last seven production States preferred premium-quality specialty coffees years. The retail sales of organic coffee accounted also limits that sold for $7 to $10 per 12-ounce package. Spe- for about $1 billion of industry sales and had grown tion, and cialty coffees were made from high-quality Arabica at an annual rate of 32 percent for each of the last had not y beans instead of the mix of low-quality Arabica seven years. monastery beans and bitter, less flavorful Robusta beans that per-hourr makers of value brands used. The wholesale price of Robusta coffee beans averaged $1.15 per pound, MYSTIC MONK COFFEE current ro quote of $ while mild Columbian Arabica wholesale prices Mystic Monk Coffee was produced using high- averaged $1.43 per pound. quality fair trade Arabica and fair trade/organic Market Prior to the 1990s, the market for premium- Arabica beans. The monks produced whole-bean quality specialty coffees barely existed in the United and ground caffeinated and decaffeinated variet- Mystic M States, but Howard Schultz's vision for Starbucks ies in dark, medium, and light roasts and in differ- word of 1 of bringing the Italian espresso bar experience to ent flavors. The most popular Mystic Monk flavors parishes America helped specialty coffees become a large were Mystical Chants of Carmel, Cowboy Blend, Mystic and thriving segment of the industry. The compa- Royal Rum Pecan, and Mystic Monk Blend. With site, but ny's pursuit of its mission, "To inspire and nurture the exception of sample bags, which carried a retail with the : the human spirit-one person, one cup, and one price of $2.99, all varieties of Mystic Monk Cof- cloistered neighborhood at a time," had allowed Starbucks to fee were sold via the monastery's website (www. offered s become an iconic brand in most parts of the world. mysticmonkcoffee.com) in 12-ounce bags at a its sales The company's success had given rise to a number price of $9.95. All purchases from the website were ate Progr of competing specialty coffee shops and premium delivered by United Parcel Service (UPS) or the on partic brands of packaged specialty coffee, including U.S. Postal Service. Frequent customers were given 18 percel Seattle's Best, Millstone, Green Mountain Coffee the option of joining a "coffee club," which offered who were Roasters, and First Colony Coffee and Tea. Some monthly delivery of one to six bags of preselected site. The producers such as First Colony had difficulty gain- coffee. Purchases of three or more bags qualified for tion level ing shelf space in supermarkets and concentrated on Mystic M free shipping. The Mystic Monk Coffee website also private-label roasting and packaging for fine depart- featured T-shirts, gift cards, CDs featuring the mon- ate's com ment stores and other retailers wishing to have a pro- expandec astery's Gregorian chants, and coffee mugs. prietary brand of coffee. Mystic Monk Coffee's target market was the wholesal Specialty coffees sold under premium brands segment of the U.S. Catholic population who drank might have been made from shade-grown or organi- coffee and wished to support the monastery's mis- cally grown coffee beans, or have been purchased sion. More than 69 million Americans were mem- from a grower belonging to a World Fair Trade Orga- bers of the Catholic Church-making it four times nization (WFTO) cooperative. WFTO cooperative larger than the second-largest Christian denomina- growers were paid above-market prices to better sup- tion in the United States. An appeal to Catholics to port the cost of operating their farms-for example, "use their Catholic coffee dollar for Christ and his WFTO-certified organic wholesale prices averaged Catholic church" was published on the Mystic Monk $1.55 per pound. Many consumers who purchased Coffee website. specialty coffees were willing to pay a higher price for organic, shade-grown, or fair trade coffee Mystic Monk Coffee- because of their personal health or social concerns- organic coffees were grown without the use of syn- Roasting Operations thetic fertilizers or pesticides, shade-grown coffee After the morning religious services and breakfast, plants were allowed to grow beneath the canopies of Brother Java roasted the green coffee beans delive larger indigenous trees, and fair trade pricing made ered each week from a coffee broker in Seattle. CASE 01 Mystic Monk Coffee C-5 : to pay Washington. The monks paid the Seattle broker the egment Mystic Monk's Financial Performance prevailing wholesale price peclassRoom Use only "crafting & Executing strategy CASE 01 to leave the 1 bishop for me member. The little resemble Mystic Monk Coffee monasteries c tory that had connect home and an been donated There we and worship Since the fou David L. Turnipseed there had bee men consider University of South Alabama Father Prior ] 30 monks wl A s Father Daniel Mary, the prior of the Car- wishing to donate to the monks' cause. Father Prior 19 to 30 anc melite Order of monks in Clark, Wyoming, Daniel Mary did not have a great deal of experience However, the "walked to chapel to preside over Mass, he in business matters but considered to what extent the monaster noticed the sun glistening across the four-inch snow- the monastery could rely on its Mystic Monk Coffee ing certain tl fall from the previous evening. Snow in June was not operations to fund the purchase of the ranch. If Mys- the vows of