Guajilote

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

This venture has been able to improve the income and quality of life of the members of the organization as narrated in the case. The members were earning 1500 annually but now they are earning this amount per month.

Another good point is that it has been able to raise the product prices partially.

There are concerns about the following: It has not been able to move up the value chain, in that it can not easily transport the product to the other places to fetch the better prices.

It has not been able to make its own furniture and export in the global market. The Co-op has limited managerial capacity and its members have limited education.

Overall I think it has been a successful business venture. However, to remain viable and profitable Guajilote must be able to change.

2. Conduct a SWOT Analysis of Guajilote.

Situational Analysis

Strengths

* Networking

The leader has good networking abilities and enough political influence to get the work done for the organization.

* Monopoly

The Coop has the sole rights for mahogany given by the government. Being the only authorized business in the country. Guajilote is the only organization that is given the legal right to exploit natural mahogany trees in Honduras. The cooperative simply has no competitors in the domestic market. COHDEFOR's permit renewal will be granted automatically as long as the business restricts itself to downed mahogany.

* Community Loyalty

The members have a good relationship and are loyal to the Coop leader

* Financial Position

The financial position of Coop members has improved considerably.

* Mahogany wood sources are decreasing in the world

The amount of mahogany wood is limited in the world. This may lead to many threats like bans. However at the same time this is a great advantage for the cooperation in the domestic and international markets. There is a high probability that Guajilote will have more customers and take more orders in the future.

* Strong leadership

Munguia established a strong leadership in the organization and has the capability to decide quickly during critical times. He has negotiations skills and he seems to have a good understanding of politics.

Weakness

* Lack of transportation and distributors

Guajilote has no way to transport its wood to the market and the business is unable to secure the capital needed to buy its own truck due to difficulties in getting credit. Thus it is forced accept low prices for its wood from the only local distributorGuhas not been able to move up the value chain, like it can itself transport the product to the other places to fetch the better prices.

* It has not been able to make finished furniture products and export them in the global market.

* No or very little capital expenditures

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. For example the only 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.

* Limited managerial talent

It has limited managerial capacity and its members have limited education.

* Too dependent on the leader

The leader takes all the major decisions and there is hardly any delegation of responsibility.

* Guajilote has limited resources to purchase their own trucks to transport mahogany to other towns.

* Supply to single distributor

They have a single distributor which leads to less revenue realization.

Opportunities

* Skipping the distributor

Guajilote may borrow long term loans from its customers who consider the company as a profitable business venture, purchase trucks and hire drivers to transport the wood over the mountains. These customers would also benefit from this since they will be able to eliminate the distributor and buy the wood at a cheaper price.

* Selling high quality mahogany furniture

Guajilote may locally hire skilled carpenters or furniture makers on a contract basis for the organization to produce high quality furniture and attract the potential customers.

* Demographics favor the products

There is lot of demand and there will be increase in value for the product.

* International markets are unexplored

* Huge international demand for furniture products can fetch better revenues.

* Furniture making skills are locally available

Threats

* Deforestation

There is a threat of deforestation through fires, illegal logging, slash and burn agriculture. Mahogany and tropical deciduous forests are not fire resistant and fires destroy their seeds as well as killing them. . If the total number of mahogany trees continued to decline, trade in its wood could be restricted internationally.

* Political instability

Honduran politics has a mercurial nature and nothing guarantees that the organization's grant will continue in the future.

* Migration

Many Hondurans are migrating to the Olancho province, clearing the forests for cultivation, cutting the wood for fuel and for use in building their homes. Guajilote should request the government to take action to limit this migration before the whole area is occupied by these peasant farmers.

* Management

Currently