Guajilote Cooperativo Forestal, Honduras

1. What is your impression of Guajilote as a business venture?

Guajilote is a growing business but the organization of this company does not have a steady foundation due to the political structure of Honduras. Guajilote also the amount of mahogany wood was limited and was being threatened by forest fires, illegal logging, and slash and dash burn agriculture. Wood trade was even restricted internationally. Guajilote was force to take lower price for its wood due to that there was only one distributing area. Most if not all of Guajilote employees had any education beyond primary schooling, and some were even illiterate. This made it very hard for Guajilote operations because if Guajilote employees were illiterate and had no education then the group knew little about the market or business practices.

Santos Munguia put political pressure on the only distributor in the market and began getting better prices for the shipment of Guajilote's wood. Even though Munguia turned the company around he was often revered, feared, and hated at the same time. Munguia handled and made all decisions for Guajilote Cooperativo. Even though Munguia makes all the decisions and the employees are fine with it, there should also other members of the cooperativo involved in the decision-making. This way the cooperative would not look like a dictatorship. There was also talk that Munguia was paying himself and his second in charge (his nephew) more then the other members in the cooperative.

2. Conduct a SWOT Analysis of Guajilote.

A SWOT Analysis is a powerful technique for identifying Strengths and Weaknesses, and for examining the Opportunities and Threats you face. What makes SWOT particularly powerful is that with a little thought, it can help you uncover opportunities that you are well placed to take advantage of. By understanding your weaknesses, you can manage and eliminate threats that would otherwise catch you unawares.More than this, by looking at yourself and your competitors using the SWOT framework, you can start to construct a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market.

Strengths

The only venture in Honduras: The Guajilote was given the right to exploit naturally fallen mahogany trees in la Muralla's buffer zone.

Strong Leadership: Santos Munguia negotiated price increase for the exchange of wood by putting political pressure on Suazo. Munguia leadership played a big part in Guajilote's maturing in a work group and in business.

Employee relation: Due to the leadership of Munguia the members of Guajilote quality of life improved and the bonds between each member strengthened.

Weakness

Limited education: Guajilote members only had primary schooling and some were even illiterate. They had no business skills; they did not know how to conduct business.

Leadership: Even though Santos Munguia is a strong leader and turned things around, the employees should also make decisions about the future of their company; there should be some delegation of authority. If Munguia were to go into politics, he would have less time to spend at the organization.

Lack of transportation

The cooperative is unable to secure capital to buy trucks. Guajilote do not have a line of credit. The cooperative felt as if even though Munguia had negotiated a better price then that had in previous years, they felt as if they were still not being paid for what the wood was worth. Because they did not have transportation they had not choice but to accept what Juan Suazo had given them.

Opportunities

Skipping the distributor completely: Guajilote would do better financially by skipping the distributor. They can borrow loans from its customers who consider the company as a profitable business venture, purchase trucks and hire drivers to transport the wood.

Selling Furniture: The cooperative can get skilled workers to make mahogany furniture, which will produce profits for the cooperative.

Threats

Deforestation: Fires and illegal logging of mahogany as well as cutting is a threat for the Guajilote as a whole. Fires were set to prepare soils for planting and helped clear the area for cultivation, but they were not being well supervised, and even burned out of control, which created bad forest fires.

People migrating: When people migrated to Olancho the cleared the forests for cultivation, cut wood for fuel and building houses. They were using all the wood that was literally the means for Guajilote survival.

CITIES Restrictions: If mahogany continued to decrease due to trade there would be a tighter restrictions on trade of mahogany or an outright ban altogether.

Finding mahogany: The organization's size and production potential is limited by the amount of mahogany it can produce in a year. Mahogany is fairly rare in a forest and Guajilote is legally restricted to downed trees. Moreover, with the difficulties of finding, processing by hand, and then moving the wood out of the forest, Guajilote was further restricted in the quantity of wood it could handle

Capital: Guajilote doesn't invest enough in capital expenditures. A very small percentage of the funds are held back for capital improvement purchases due to the operation's simple material needs. Capital expenditures for 1997 included a mule plus materials needed to maintain Guajilote's large cross-cut saws. Inadequate funding limits the growth potential of the business.

3. Does Guajilote have a competitive advantage and/or a competitive strategy? Justify your answer.

Guajilote is almost like a monopoly in its industry since