Question

This 4-page case requires that students consider the future direction of a monastery located in Clark, Wyoming and evaluate the vision, strategy, and business model of the fledgling Mystic Monk coffee business. As the case unfolds, students will learn of Father Daniel Mary’s vision to build a new Mount Carmel in the Rocky Mountains and transform the small brotherhood of 13 monks living in a small home used as makeshift rectory into a 500-acre monastery that would include accommodations for 30 monks, a Gothic church, a convent for Carmelite nuns, a retreat center for lay visitors, and a hermitage. Father Daniel Mary had identified a nearby ranch for sale that met the requirements of his vision perfectly, but its listing price of $8.9 million presented a financial obstacle to creating a place of prayer, worship, and solitude in the Rockies. Father Daniel Mary hoped to fund the purchase of the ranch through charitable contributions to the monastery and through the profits of its Mystic Monk coffee business, which had earned nearly $75,000 during its first year of operation. Suggestions for Using the Case This case was written as a leadoff case and was carefully crafted by the case author to require students to draw upon most all of the concepts discussed in Chapters 1 and 2 to sufficiently prepare for a class discussion of the case. The case involves issues relating to mission, vision, objectives, strategy, business models, and decisive strategic leadership; the need for an action plan is obvious—these are the very things one looks for in a good leadoff case. And the nature of the case virtually guarantees the stimulating kind of class discussion one needs to get the course off on the right foot. We think Mystic Monk Coffee (MMC) is an excellent leadoff case for the course (another good choice is Robin Hood—which also requires that students draw upon the material covered in Chapters 1 and 2). The unusual topic of the business ventures of cloistered monks, student familiarity with the coffee industry, and the very close connection between the case and the material in Chapters 1 and 2 make this an especially good leadoff case. You may want to consider covering Chapter 1 in your first day’s lecture, Chapter 2 on your second day’s lecture, and then assigning Mystic Monk Coffee for class discussion on Day 3. We suggest use of a teaching plan that focuses on Father Daniel Mary’s strategic vision for the monastery and its coffee operations and Mystic Monk Coffee’s strategy and business model. Of course, there is the opportunity for students to make recommendations regarding the strategic issues confronting the monastery and its coffee venture. Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education Case 1 Teaching Note Mystic Monk Coffee 257 The assignment questions and teaching outline presented in upcoming sections of this TN reflect our thinking about how to conduct the class discussion of the Mystic Monk Coffee case. It is really very difficult to have an insightful and constructive class discussion of the Mystic Monk Coffee case unless students have not only read the case but also conscientiously worked their way through a set of wellconceived study questions before they come to class. In our classes, we expect students to bring their notes to the study questions to use/refer to in responding to the questions that we pose. Students often find having a set of study questions is useful in helping them prepare oral team presentations and written case assignments—in addition to whatever directive questions you supply for these assignments. To facilitate your use of study questions and making them available to students, we have posted a file of the Assignment Questions contained in this teaching note for the Mystic Monk Coffee case on the instructor resources section of the Connect Library. You may also find it beneficial to have your class read the Guide to Case Analysis that immediately follows Case 31 in the text. Students will find the content of this Guide particularly helpful if this is their first experience with cases and they are unsure about the mechanics of how to prepare a case for class discussion, oral presentation, or written analysis. Auto-Graded Connect Case Exercise. The 20th edition includes a fully auto-graded Connect case exercise for 17 cases included in the text. The auto-graded exercises closely follow the assignment questions and analysis included in the teaching note for the case. The auto-graded exercise for the Mystic Monk Coffee case requires that students answer a series of multiple choice questions related to Assignment Questions 1-5. Question 6 is left as an open ended question that allows students to fully discuss recommendations concerning improvements to the company’s coffee operations, changes in its long-term direction, objectives, strategy, or approach to strategy execution. Students should be expected to spend about 30-45 minutes to complete the exercise, assuming they have done a conscientious job of reading the case and absorbing the information it contains. All of the questions are automatically graded, and the grades are automatically recorded in your Connect grade book, which makes it easy for you to evaluate each class member’s ability to apply many of the concepts discussed in Chapters 1 and 2. The length of the case makes it ideal for an in-class written case or a final exam case. Our suggested written assignment questions are as follows: 1. As a new business school graduate who has relocated to Cody, Wyoming and supports the local foundation to benefit the Wyoming Carmelites, you have been asked to prepare a strategic review and action plan for the Father Daniel Mary’s consideration. Your report to Father Prior should include an evaluation of the monastery’s mission, its vision for Mystic Monk Coffee, objectives for the monastery and the coffee operations, and MMC’s strategy and business model. You should also propose recommendations to improve Mystic Monk Coffee’s vision, objectives, strategy, business model, or approach to strategy execution. It is your job to convince Father Daniel Mary to pursue your proposed plan; hence your report should include full justification and arguments to support your recommended course of action. 2. Cody, Wyoming business owners have noted your quickly developing skills of analysis and growing business acumen and have asked that you prepare a report for Father Daniel Mary that evaluates Mystic Monk Coffee’s mission, vision, strategy, business model, and operations. Your report should also make recommendations concerning strategic issues related to: n The vision and mission of the monastery and its coffee operations, n MMC’s strategic and financial objectives, Case 1 Teaching Note Mystic Monk Coffee 258 n MMC’s strategy and business model, and n The action steps that will need to be taken to implement the strategy effectively. Please provide supporting analysis and persuasive argument for your recommended course of action (you must convince Father Daniel Mary to do what you suggest!) and you need to be specific about what to do and how to do it.

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?

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

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

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?

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

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.

Answer 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?

Ans. Yes, Father Daniel Mary has established a future direction for the Carmelite Monks of Wyoming. Father Daniel Mary wishes to see the monastery to be a place not only of worship but of meditation. He dreams of having a multi-building property that will allow for monks along with the lay population. He wishes to also expand their coffee business, but that requires a larger roaster. The cost of $35,000 is minor compared to the $9 million price tag. The vision of having a property such as this is one that Father Prior believes is possible. The Monks mission is of prayer and peace which they could more readily spread by having a facility that would allow for visitors.

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

Ans. Father Daniel Mary has set definite objectives and performance targets for achieving his vision. His objective was to increase the production of coffee. His performance target was to buy a new roaster that would cause an increase in coffee production.

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

Ans. Father Prior’s strategy for achieving his vision is to use Mystic Monk Coffee profit to buy the ranch for the monastery. Some competitive advantages are as follows: Mystic Monk Coffee was produced using high-quality fair trade Arabica and fair trade organic Arabica beans. Mystic Monk Coffee was promoted primarily by word of mouth among loyal customers in Catholic parishes across the United States.

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?

Ans. Locally roasted coffee is a huge fad right now. Also since they are monks it adds a certain mystique to the coffee, making it an even bigger seller. Their strategy is a winner especially if they invest in the larger roaster and continue to expand their business. Mystic Monk Coffee’s business model is to sell coffee to support their monastery. Mystic Monk Coffee prides themselves on hand-roasted coffee, they want to spread prayer and meditation through the sales of their coffee. Mystic Monk Coffee’s profit formula is to continue to sell more coffee, through the use of additional marketing and purchase of a larger roaster. Mystic Monk Coffee offers a unique product that capitalizes on the trendy specialty coffee lines. They have a lower overhead than many other businesses since they are a religious business they do not have lease fees or salaries to pay which allows them to expand their product with a little bit of work.

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.

Ans. I would recommend to Father Daniel Mary to set up a specific, measurable, attainable, rewarding, and timely (SMART) goals in purchasing the Irma Lake Ranch to materialize his vision. An amount of $8.9 million is not easily attainable with only 13 monks with monastic constraints doing the major labor processes of the coffee business. There is simply not enough time and manpower to attain this goal within a short timeframe. I would also recommend to Father Daniel Mary to review Mystic Monk Coffee’s affiliate program and to reduce the commission paid to the affiliated websites. With an 11 percent average profit margin, the 18 percent commission rate is just too much to fathom. If Father Daniel Mary is willing to scale back his vision, the Mystic Monk Coffee’s average monthly sales of $56,500 should be enough to cover the daily expenses of their existing monastery without the need for an intense growth in sales volume and revenue. He may then use the $250,000 donated money to gradually increase the size and capacity of his current monastery using the same land where it is currently built. With a scaled-back vision, the monk’s coffee operations seem to be heading in the correct direction as the business continually makes profits with its loyal consumers and supporters internal and external to its target market.