Guajilote Cooperativo Forestal, Swot

The Guajilote Cooperative is an incredibly fascinating business enterprise. It has created prosperity for its members, kept the protected national forest free of debris that could cause wide-spread destruction, and keep capesinos (peasant farmers) from over-running the preserve.

Given the lack of education by its members, their success is impressive. COHDEFOR should be delighted with their experiment. Nevertheless, any future attempts to copy this model should be carefully analyzed and basic business skills, such as accounting, should be taught to members before letting them run a business.

SWOT Analysis Guajilote Cooperativo Forestal, Honduras

Strengths

This business has committed and determined members and employees. There also exists a strong relationship among the members.

They are the only cooperative in Honduras with rights; granted by COHDEFOR, to harvest rare natural resources, such as mahogany.

Munguia doubled earnings in 1995 by renegotiating the sale price to the only local distributor.

There is limited capital outlay to maintain the equipment.

There will be a steady increase in price when the world-wide supply decreases.

The heaviest harvest opportunities are during the wet season, as more trees will become uprooted during this time.

A change in direction of the cooperative can be made quickly.

Weaknesses

There is no educated leadership.

All staff needs more training and education

The record keeping is nearly non-existent.

There is no leadership succession plan in place. Munguia became the de facto leader within a year of joining the cooperative.

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Santos Munguia runs the cooperative without input from any of the other members which will limit the ability to grow.

They cannot get a loan to buy the needed large equipment for further growth and efficiency.

There are limited distribution channels.

They have limited financial capital.

They have a good local reputation, but limited means to reach further than where they are.

There are limited resources and means to retrieve the resources.

It has dangerous work conditions.

There is difficulty in getting mahogany to the marketplace.

Opportunities.

It could be possible to sell to "local" carpenters.

There is at this time no local competition.

They would like to add their own transportation division in order to market the mahogany directly without use of a distributor.

The global demand for furniture made of mahogany has increased.

Ecology issues have become of greater importance world-wide, increasing the value of eco-friendly produced furniture.

Mahogany could be further refined, adding value to the product and thereby increasing profit potential. There are a few carpenters in Honduras that do this work on a contractual basis with which they could form a partnership.

Threats

Honduras has an unstable political climate.

The harvesting area has decreased every year

The right to harvest mahogany ends in 2001.

There was an unusually large number of forest fires last year and have been predicted for next year. These fires have killed the trees, young and old, as well as their seeds. This reduces further production of mahogany.

Campesinos have been moving into the La Muralla region, clearing the land and using the wood for cooking and heating fires as well as house building. La Muralla is the area with the highest concentration of mahogany.

Illegal logging is taking place thereby reducing available trees.

It is possible that in the future, there will be tighter trade restrictions on mahogany harvesting as the resource becomes more endangered by CITIES.

The transportation from Chaparral to Tegucigalpa is treacherous, taking at least three hours over rain soaked mountain roads.

Guajilote's only strategy so far, has been the political pressure placed on the distributor, San Pedro Sula. However, they are looking to the future with the intent of not needing Suazo to distribute the wood. This shows a competitive strategy in the formation phase. However, they have not set aside any funds to make this possible. Since it is very difficult for small companies to receive lines of credit from legitimate sources, they have not continued approaching banks or venture capitalists in order to secure the necessary funding for the new capital investment and the equipment needed to expand.

Primary Activities

Inbound Logistics

The fallen mahogany is difficult to locate, process, and distribute. Fortunately the members are dedicated and hard-working, willing to face and overcome these challenges.

Operations

It is a very simple, albeit dangerous and labor-intensive, operation: locate a fallen mahogany tree, set up a temporary hand-sawmill, disassemble the tree, carry out or float out the wood. Locating a suitable location to set up the large cross cut saw needed to disassemble the fallen tree is often difficult because of the steep terrain. This is often a very time-consuming process, limiting the number of trees Guajilo members can process in a year.

Outbound Logistics

Currently Guajilote is selling the mahogany to the only local distributor. This has limited their profit potential.

Marketing and Sales

There has been very little marketing done, as there is only one distributor willing to come out to Chaparral because of its remote location and treacherous roadways. However they have