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Case Study Of Mystic Monk Coffee

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Question:

Discuss about the Formulation and Implementation of Strategy in all Types and Size of Organizations within Private, Public, and Third Sectors.
 
 

Answer:

Introduction

This report is based on analyzing the case study that is ‘Mystic Monk Coffee’. The company strength and weakness has been analyzed. The external environment is also been analyzed that is PESTLE. This report also examines the corporate and business level strategy of MMC. It also discusses the strategic change of the company through different leadership styles. This report also discusses SWOT analysis of Mystic monk coffee. It also discusses corporate level strategy of Mystic monk coffee.  Report also explains structure and control system of MMC.  The report also varies strategic change as well as evaluation of different leadership styles in order to manage the strategic change. It also evaluates the driving demand in the coffee industry.

Overview of Coffee Industry

Mystic monk coffee is a company that was developed by Father Daniel Mary in the year 2007 by the Carmelite order of monks in Clark, Wyoming. It was the humble beginning as the customers who are coffee drinkers are enjoying the coffee. It consists of delicious taste and because of its delicious taste, most of the customers become regular (Mystic Monk Coffee, 2017). Today, the Mystic Monk Coffee has become the delightful sip of the customers as 85% of the customers are repeated customers that orders for the coffee. The company relies on the word of mouth for producing coffee. For the customer positive reviews, the roasted monks are highlighted and rated by Kenneth David. Mystic Monk coffee is sold on the monastery’s websites that are (www.mysticmonkcoffee.com). Its target market was the USA segment that is a catholic population who are the lovers of coffee.  Its first year of operation in the USA is about $56,500 per month. Its revenue is about 30% and the shipping was about 19% of the revenues as well as broker fees were 3% of revenues. Its profit margin averaged was 11% of the revenues.

Identification of strengths and weaknesses of the company

There is a various strength as well as the weakness of the company such as the company provides coffee at a reasonable price as it is sold for $7 to 10 dollars per 12 ounce package. Its average is $9.95 per 12 ounce bag as well as buying over $25 qualifies for free shipping. The other strength is that it has the differentiated brand that clearly defines the target market with no taxation policy. The company’s employees have the same goal to further expanding the further business. On the other hand, there are various weaknesses that the company faces in the internal environment (Hitt, et al., 2012) It has the cloistered environment as well as limited labor hours and marketing. There are various customers who are unknown about the coffee but taste it because of the high quality as well as because of the good price.

SWOT analysis of Mystic Monk Coffee

Strengths: Mystic monk coffee has different strengths as it delivers coffee at a reasonable rate.  Its average is $9.95 per 12-ounce bag and over $25 that is qualified for free shipping. It has the differentiated brand by the target market is clearly defined. Its employees also aim at expanding further the business in order to serve the coffee to more and more customers. It also attracts a large number of customers especially the coffee lovers.

Weaknesses: It has a limited production and many of the customers are unknown about the coffee they taste it because of high quality and reasonable price. It also consists of limited hours of labor as well as capital and marketing (Rothaermel, 2015).

Opportunities: It is expanding its coffee business into related markets as well as there is a decline in the world coffee prices. The company Mystic Monk has its unique approach towards coffee as it is marketing towards the Catholics US population. It has the opportunity as its price is in range in comparison with the other brands.  

 


Threats: There are various threats that are faced by the Mystic Monk Coffee as because of the background as well as meaning many of the Christians do not purchase it. The brands are established and there is variability in the price.  

PESTLE analysis

There are various factors by, which coffee industry that is Mystic monk coffee can be affected that is political, economic, social, technological, legal and environmental and these are described as below:

Political: The different kinds of political factors can affect the coffee industry that includes attitudes of the government. It also includes the relationships of the trade between the countries that are producing coffee that is to be exported. The manufacturer in the country has to look in the relationship of the trade of the other country.

Economic: The economic factors also affect the coffee industry that also affects the spending power in the particular area. The chains of the multi-national as well as exchange rates are affected of the country UK as it also affects the pricing strategy (Keupp, et al., 2012). The sale is affected negatively to the other company. The corporation is affected by the exchange rates those countries import raw material. The import can become the expensive as when there is a higher exchange.

Sociological: The coffee industry of the country UK can also be affected by the consumption of coffee in the country that is health. There is high caffeine in coffee that may lead a problem for the people such as sleep disorders, the problem of a migraine. It may cause to avoid people beverages that can have negative impact on the coffee.  The attitude of the different cultures of the people of different countries affects the sales of the coffee.

Technological: The coffee industry of the country is also affected by different techniques that is better which is more efficient that allows the countries coffees manufacturers to realize higher profit. The coffee machine development means that there is no limitation of expanding the coffee to the larger companies. The smaller companies also adopt the better brewing technique that increases the competition within the industry of the UK country.

Legal: In the country UK, the coffee industry can also be affected by different laws as the import and export of the goods. If there is an export and import of the raw material of the coffee industry to another country then, it requires knowing about the laws regulating exports and imports. All types of industry are affected by the minimum wage laws in context of the bribery and corruption in the countries (Ho, 2014).

Environmental: It also affects the country environmentally that includes earthquake, rain, drought, and poor harvest. The coffee industry is also affected by the weather and it increases the consumption of coffee in the winter and the sale is affected positively.

Corporate Level Strategy of Mystic Monk Coffee

The Mystic Monk Coffee adopts the Father Mary’s strategy that it purchases the 130 pound per hour roaster as a money maker. Its strategy is to target the catholic population of USA in order to make maximum profit. This strategy helps in increasing the production of coffee from 540 pounds per hour to 780 pounds per hour. At the 540 pounds per hour, its profit margin is 11% as increasing the 240 pounds as there should be an increase in the profit if there is an acceptance of 17 monks into the monastery (Mystic Monk Coffee, 2016).

 


Mystic Monk’s Coffee Business Model is adopted by the company that is it begins with the customer value proposition. The company’s approach is encompassed by the customer value proposition in order to fulfill the needs of the buyer’s of coffee. It provides the coffee to its customers at the reasonable price (Buller, and McEvoy, 2012). It offers different variety of flavors of coffee as well as high quality of Arabica organic coffee bean. On the purchase of three or more bags with the competitive prices, the customers get free shipping that attributes to the customer value proposition. MMC strategy can be called as the money maker it consists of niche target market.

The Mystic Monk’s Coffee Business Model second element is the profit formula as the father Mary’s is planning to purchase $35000 roaster that would be helpful in increasing the production. Unfortunately, it cannot be called as the winning strategy as it was failed in the fit test of the strategy winner. But, the mystic coffee monk is considered as the well-matched product into the coffee industry. Hence, it is qualified as the winning strategy as the Mystic Monk Coffee provides the quality products that attract the customers to their brand. In the coffee market, the mystic monk limits itself (Jackson, Schuler, and Jiang, 2014). It has to boost the advertising of coffee ino the market. The loyal customers help the company to win the strategy in the external situation but there is a missing of opportunities. The competitive advantage of MMC Company is to provide a high quality of coffee at a reasonable price. It is easy to avail the coffee to the customers and the coffee is promoted by the word of mouth.          

Business Strategy of Mystic Monk Coffee   

The Mystic Monk Coffee adopts differentiation strategy Differentiation strategy is the strategy that is making products and services different from that of the competitors. The differentiation strategy depends upon different factors such as customer base, the market as well as industry. The company who pursues the differentiation strategy can control the price of the products and services (Rosenbaum-Elliott et al., 2015). The differentiation of the product also helps in increasing the loyalty of the buyers towards the product. It is suitable for the place where there is no price for sensitive target segment. There is a risk of pursuing this differentiation strategy as competitors can attack.

It produces unique coffee so as to attract the customers for the coffee. It also focuses on the quality of the product as well as the experience. It innovates different types of products so as to attract the customers in the various countries. Its aim is to provide customers with innovative tastes of the coffee. It organizes its company by meeting the customer needs (Drnevich, and Croson, 2013). It secures with the competitive advantage and produces the differentiated quality of the product as well as the services in the coffee industry. It is essential for the company to identify the strategic customers as there are various customers that have different requirements. It is important to fulfill the needs of the customers.

Customer requirements and competition for identifying opportunities in competitive advantage

MMC has the competitive advantage in order to identify the opportunities.  The MMC produces the high-quality trade as well as organic Arabica beans with a different variety of flavors and blends. It’ sustainability is less as compare to other competitors in the industry due the coffee’s quality. It has the target market that is 69 million that helps in generating maximum profit.  In order to compete in the market, it is essential to focus on building the strong loyalty among customers (Drakulevski, et al., 2016). It is essential for the companies to focus on the requirement of the customers in order to adopt the competitive advantage. Target audience should be focused who are the lover of coffee as the company MMC targets catholic population of USA.

 

Corporate Social responsibility of MMC

MMC social responsibility is based upon the three things that are community, ethical sourcing, and the environment. The community stores are developed for the local non-profit and it aims to locate the needs of communities in, which it is located. The ethical sourcing helps to discuss the way the MMC purchases its product. It helps in focusing on the positive changes for the working communities (Winn, et al., 2012). CSR can be called as the concept of management for the operations of the business. It helps in maintaining the balance between economic and environmental perspectives.

Structure and control system of MMC

Mystic monk coffee consists of four types of structure that are functional, geographical, and product-based and teams. The functional structure consists of group-based business functions. It includes Hr department, finance department, and marketing department. It is related to the hierarchy of the organizational structure. A geographic decision includes the senior vice president of mystic monk coffee. Through this, MMC managers report to the superiors that are the geographical head and functional head. Additionally, product based divisions as it is used by MMC in its organizational structure (Priem, et al., 2012). By this division product line is addressed by the company. The other structure is a team that is used by different parts in MMC. The team helps in managing the goods and services to the customers.

Evaluation of the influence driving demand in the Coffee industry

There are various factors by, which the driving demand is influenced in the Business to business as well as business to consumer. It is explained below:

Demographic Information

This can be called as a driving demand, which is influenced by the coffee industry. It is tangible and it includes age, gender, income level as well as educational level, geographic location/size of the community (Haines, 2016). It is required for the businesses in order to expand the business.

Substitutes

Substitute products can be replaced by the other such as when the price is high of tea then the customer can prefer coffee. It will decrease the demand for tea and there will be an increase in demand for coffee as per the price of coffee is low (Cuganesan, Dunford, and Palmer, 2012).

Climate change

The climate change is also the driving demand that influences the business. The demand for coffee is according to the season as it is preferred more in the winter season (Molina-Azorin, 2012).

Standard of living

Most of the people prefer coffee as to maintain their standard of living in the high society. The people want to maintain their status in the society in, which they are living.

Strategic change and evaluation of different leadership styles for managing strategic change

There are various strategic change programs such as proper implementation of change plan and in, which the competitive position is noticed and the changes are evaluated according to the requirement. The other strategic change program is identifying the future for making advance changes in order to avoid barriers to changes. Furthermore, leadership styles are assessed for the strategic change in MMC (Mahoney, and Qian, 2013).

There are different leadership styles that are being evaluated for the strategic change in the organization. It includes charismatic leadership style which has the three elements vision, empowerment, and inspiration (Killen, et al., 2012). Charismatic leaders can help in the strategic change as when the employees will be motivated by the employer for the work then, it will gain their interest. The charismatic leaders help in the improvement. The other leadership style is operational leaders that help the employees in improving their performance. It includes incentives as a reward those who perform good.

 

Recommendations

It can be recommended to the Mystic Monk Coffee that it should adopt the innovative products in order to expand its business. Mystic Monk Coffee should be relevant to its customers for growing its market. It should also introduce the needs of the price as well as tastes, lifestyles of the customers in the market. It should also expand its business by offering beverages for the customers other than the coffee (Chen, Delmas, and Lieberman, 2015). It should provide a high quality of coffee for the people for attracting the customers towards their company. It should follow the concept of loyalty to customers.

The company should apply the gradual change for the customer’s purchasing power as well the habits. It should also improve its e-commerce strategy (Frynas, and Mellahi, 2015). The company should also add different value chains to its website in order to link with its stakeholders that are customers, management, employees, and suppliers. It should also adopt product diversification strategy in order to expand the business for long-term. It should also support local events in order to expand its business in the international markets.

It can also be recommended to the company to maintain its price and provide the coffee to the customers at reasonable price. The company must promote its product by promoting by doing advertising on different social sites. It should have a competitive advantage in order to compete with different competitors in the market. It should consider changing its objectives in order to include the new and advanced equipment (Kapferer, 2012).  It should also increase its capacity of producing the monk coffee’s roaster for producing up to 540 pounds. The production should also be expanded with time. It should also maintain its quality of the coffee so that more and more customers may be attracted and come to drink coffee.

Moreover, it can also be recommended to the Mystic Monk Coffee to increase the production by purchasing the new coffee roaster as it produces in the large capacity. It would also help in increasing the demand in the future. The cost should be managed properly for improving the net profit margin (Galliers, and Leidner, 2014). The distribution and current price for the coffee bags are required to be re-evaluated. It should also expand its market as well its marketing strategy. It also requires to take advantage of the current target market of Catholics.

For pricing competitively in the market, the company has to focus to be closer to reduce the waste and sales cost of cutting. The word of mouth should be used by the company to attract the customers. It should hold a competitive advantage among the competitors so that the coffee industry can compete in the market. The workers those who are working in the company should be motivated in order to have continuous improvement (Vogel, and Güttel, 2013). It should also monitor the development of the business in order to achieve the goals. It can also be recommended to the MMC for the marketing strategy that would help to focus outside Catholics current target market.

Conclusion

From the above discussion, it can be concluded that the MMC is the most successful company in the world. It has been analyzed from the above discussion that the company has adopted the differentiation strategy as it produces the unique products than the other competitor. The customers are attracted by its coffee as it provides the good quality coffee to the society. It can be recommended to the company to expand its business by producing the innovative and different flavors of coffee to the customers in order to attract them.

 

References

Buller, P.F. and McEvoy, G.M. (2012) Strategy, human resource managementt and performance: Sharpening line of sight. Human resource management review, 22(1), pp.43-56.

Chen, C.M., Delmas, M.A. and Lieberman, M.B. (2015) Production frontier methodologies and efficiency as a performance measure in strategic management research. Strategic Management Journal, 36(1), pp.19-36.

Cuganesan, S., Dunford, R. and Palmer, I. (2012) Strategic management accounting and strategy practices within a public sector agency. Management Accounting Research, 23(4), pp.245-260.

Drakulevski, L. and Nakov, L. (2016) Strategic Approaches to Creating and Developing the Concept of Business Integrity. Strategic management, 21(2), pp.23-31.

Drnevich, P.L. and Croson, D.C. (2013) Information technology and business-level strategy: Toward an integrated theoretical perspective. Mis Quarterly, 37(2), pp.483-509.

Frynas, J.G. and Mellahi, K. (2015) Global strategic management. USA: Oxford University Press.

Galliers, R.D. and Leidner, D.E. (2014) Strategic information management: challenges and strategies in managing information systems. UK: Routledge.

Haines, S. (2016) The systems thinking approach to strategic planning and management. UK: CRC Press.

Hitt, M.A., Ireland, R.D. and Hoskisson, R.E. (2012) Strategic management cases: competitiveness and globalization. USA: Cengage Learning.

Ho, J.K.K. (2014) Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), pp.6478-6492.

Jackson, S.E., Schuler, R.S. and Jiang, K. (2014) An aspirational framework for strategic human resource management. The Academy of Management Annals, 8(1), pp.1-56.

Kapferer, J.N. (2012) The new strategic brand management: Advanced insights and strategic thinking. UK: Kogan page publishers.

Keupp, M.M., Palmié, M. and Gassmann, O. (2012) The strategic management of innovation: A systematic review and paths for future research. International Journal of Management Reviews, 14(4), pp.367-390.

Killen, C.P., Jugdev, K., Drouin, N. and Petit, Y. (2012) Advancing project and portfolio management research: Applying strategic management theories. International Journal of Project Management, 30(5), pp.525-538.

Mahoney, J.T. and Qian, L. (2013) Market frictions as building blocks of an organizational economics approach to strategic management. Strategic Management Journal, 34(9), pp.1019-1041.

Molina-Azorin, J.F. (2012) Mixed methods research in strategic management: Impact and applications. Organizational Research Methods, 15(1), pp.33-56.

Mystic Monk Coffee (2016) Coffee [Online] Available at: https://www.mysticmonkcoffee.com/collections/coffee (Accessed: 29 March, 2017)

Mystic Monk Coffee (2017) About us. [Online Available at: https://www.mysticmonkcoffee.com/pages/about-us (Accessed: 24 March, 2017)

Priem, R.L., Li, S. and Carr, J.C. (2012) Insights and new directions from demand-side approaches to technology innovation, entrepreneurship, and strategic management research. Journal of management, 38(1), pp.346-374.

Rosenbaum-Elliott, R., Elliott, R.H., Percy, L. and Pervan, S. (2015) Strategic brand management. USA: Oxford University Press.

Rothaermel, F.T. (2015) Strategic management. NY: McGraw-Hill.

Vogel, R. and Güttel, W.H. (2013) The dynamic capability view in strategic management: A bibliometric review. International Journal of Management Reviews, 15(4), pp.426-446.

Winn, M., Pinkse, J. and Illge, L. (2012) Case Studies on Trade?Offs in Corporate Sustainability. Corporate Social Responsibility and Environmental
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