Guajilote Cooperativo Forestal

Guajilote Cooperativo Forestal

Guajilote Cooperativo Forestal

Guajilote Cooperativo Forestal was a forestry cooperative which operated out of a small village in Honduras. This cooperative was the end result of a series of programs initiated towards the promotion of developing countries via use of its natural resources. Founded in 1991, the Guajilote was a project geared helping Honduras develop by concentrating on their vast forestry filled with mahogany trees. The cooperative was given permission by the Honduras government to use only mahogany trees fallen by natural causes within a given zone. Over the years, the cooperative faced several challenges that could present future growth problems in the upcoming years (Wheelen, 2004). Taking a closer look into the cooperative, we can examine Guajilote more thoroughly and answer a series of questions surrounding the findings.

Is Guajilote a Good Business Venture or Not?

By all accounts, the idea of trying to help underdeveloped countries help themselves is always a fundamentally good idea. However, the key to the success or failure of these plans lies within how the plan is to be executed. While the concept of expanding trade with Honduras mahogany was a good idea, the execution of the operation was not very sound. The most important failure the agreement reached on how the wood would be secured. By limiting to only fallen trees, the company had a great deal of difficulty finding fallen trees, which aided in the overall financial situation of the cooperative. With very little monies placed back into the cooperative for upgrades or wages, it would seem that Guajilote was not a very good business venture.

Guajilote's SWOT Analysis

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors (www.marketingteacher.com). With a SWOT analysis one could also readily identify a company's competitive competencies, which are the particular capabilities and resources that a form possesses and the way in which they are used (Wheelen, 2004). After careful review of Guajilote, the following is a SWOT analysis of this company:

Strengths

* Networking -leader has political influence.

* Community Backing

* Improved Financial Position of Members

Weakness

* Speed to Market - due to the rather rugged tree positions and time required to process the wood, cannot readily support a huge demand

* Management Style - non-democratic with little input from lower-level employees

* Lack of Business Education -Santos Munguia, the leader, only holds a primary school education. Although he has several fine managerial qualities, lack of a formal business education in this day and age is definitely a pitfall to any successful firm.

* Operations - crude means of moving product (wood is moved by animal and human labor)

Opportunities

* Demand of product

* Possible overseas demand for furniture products.

Threats

* Government regulations- future changes in government or even leadership of Guajilote could pose a threat to the cooperative's future

* Foreign trade hindrances - changes in trade agreements, threat of tariffs

* Limited amount of mahogany and limited growth in future of this product - confined to downed trees only

* Lack of transportation - inadequate means of moving product to meet an increase of demand

* Legal restrictions to downed trees

* Inability to reach the wood; illegal logging and slash and burn agriculture.

* Open settlement areas to peasant farmers.

* Restriction by CITES.

* Environmental issues- deforestation

Does Guajilote Hold a Competitive Advantage?

A competitive advantage occurs when a firm can sustain profits that exceed the average for its industry. A competitive advantage exists when the firm is able to deliver the same benefits as its competitors but at a better costs, or deliver benefits that exceed those of competing products. One could state they hold a competitive advantage when they are able to create superior value for its customers and superior profits for itself (www.quickmba.com).

In the case of Guajilote, this fir m clearly does not hold a competitive advantage in the mahogany wood industry. According to the resource-based view, in order to develop a competitive advantage in mahogany wood industry, Guajilote would require the resources and capabilities that are superior to its competition. With the human and animal labor, lack of equipment upgrades, and inability to place capital back into the cooperative, Guajilote will never accomplish this advantage over other mahogany processors, both domestic and international alike (www.quickmba.com).

Guajilote's Value Chain

A value chain is defined as a series of interrelated genetic activities common to a wide range of firms. A firm creates value by performing these activities in order to create an competitive advantage. The primary value chain activities include: