Mystic Monk and the Business Decision Case Study

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Summary

Father Prior of the Carmelites in Wyoming wanted to expand the cloister by purchasing a large 500 acre plot of land for $8.9 million. His plan to be able to afford the purchase was based primarily on using the cloister’s niche coffee business—Mystic Monk Coffee. Mystic Monk was a success coffee business run by the monks in the cloister. Marketed as a premium coffee brand and sold over the Internet, the coffee drew interest largely by word of mouth. The target market consisted of coffee drinking Catholics in America, and since there were nearly 70 million Catholics in the U.S., the target market was quite large. However, in order to be able to afford the 500 acres that Father Prior had set his heart on, he would have to either receive a larger donation from patrons of the cloister or grow the coffee business and make it even more successful than it already was. Considering that there were only 13 monks in the cloister at present and only one of them was a Master Roaster, Father Prior could not very well expand operations by putting more hands on deck. The goal was to buy the land, grow the cloister and have more monks join (up to 30 total).

The question of what to do now weighed on Father Prior. He considered his costs in the business and the benefactors who were already willing to donate a significant amount of money to the cloister. One donor had pledged a quarter of a million dollars so far. If Father Prior could find more benefactors like that one, the problem of growing the business could wait until there was room and more men to help with the roasting at the new cloister. If Father Prior could not find the donors, he would have to come up with a business-oriented solution that would allow him to take Mystic Monk Coffee to the next level, which would then allow him to purchase the land he required in order to make his vision for the cloister a reality.

Strategic Recommendations
Cut Costs

Currently, Father Prior’s Mystic Monk Coffee is only netting 11% of revenues.

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If he could increase that by 5% or even double it to 22%, he would be bringing in an additional $75,000 per year right off the bat. Looking at his expenses, it is not difficult to see where costs could be cut and net revenue could be boosted. For example, he could reduce cost of sales by 4%, cut shipping costs by 4%, and eliminate broker fees altogether by purchasing the beans direct and relinquishing the services of the coffee broker charging the monks 3%. That right there would add 11% to Father Prior’s net revenue and boost it from 11% to 22%--a much better and impressive net revenue by any standard.

Shipping costs could be negotiated or at least examined anew so as to see if there is any possible way to get them down. With enough work, it is quite possible to imagine that these could be reduced—or at least costs could be passed on to the customer. At $9.95 per bag, the coffee is not overpriced and most customers are not likely to balk at a price tag of $10.95.

Increase the Role of Benefactors

It is unlikely that Father Prior would like investors, as he is running a cloister primarily—not a commercially thriving business (although it is that in one sense). However, he could appeal to benefactors, patrons and donors. Since the cloister is there to pray and to pray for souls, Father Prior could use the other great product that the monks produce—prayers—as an incentive to attract benefactors and donors. By offering to pray for the intentions of donors, Father Prior could possibly increase the largesse that has come his way in the past. This would allow him to focus less intensively on the success of Mystic Monk, which is really only a secondary concern of the cloister (the first concern being the life of prayer and contemplation that the monks must maintain).

Grow the Business

If Father Prior would like to focus more….....

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