Karatu Coffee Company Case Study Question

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Must use tools for Dimond-E analysis-a tool table (I will post e-text book after selecting, each tool you could research from e-book that I will provide)

At least use 17 tools from dimond-e analysis tool table

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COM 4PA3 – Tool Kit for Diamond-E Case Analysis Using the Tool Kit:: (S – Strategy, E – Environment, R – Resources, O – Organization, M – Management Preferences). Tool Description Page S1 Role 1-3 S2 Organizational Performance Pertinent elements of case – What is it about? Who are you? Identify important operating performance metrics such as financial ratios, trends, productivity. See financial statements for historical information. Rank from 0 – 10. Consider employee turnover, goodwill and reputation. Rank from 0 – 10. Comments regarding longitudinal perspective, i.e. between “time1” and “time2”, also called the “Performance Matrix” S3 S4 S5 S6 S7 S8 S9 D-E E10 E11 E12 E13 E14 E15 R16 R17 M18 O19 20 21 22 23 Organizational Health 2x2 Matrix of Tools S2, S3 Strategy Triangle Generalizes tools S6 - S9 Categorize the goals stated in the case as Hard or Soft and whether they’re realistic or not. Include “green” environment as a soft goal. 2x2 Matrix on Market Penetration – Product Development – Market Development – Product/Mkt Diversification (Market: Existing/New, Product: Existing/New) Value How does the company compete? PFE – Price, features, execution, proposition combination, etc. Break the Value Chain into components and identify key elements. Core Activities Comment on back / forward integration possibilities. Examine the linkages and the process of strategic analysis using the Diamond – E base case Threat of new entrants, bargaining power of buyers, threat of Porter’s Five substitutes, bargaining power of suppliers, intensity of rivalry. Forces Rank each Low/Med/High, overall judgement, Include exit barriers. Don’t forget to sub-segment the markets/businesses if necessary. Political, Economic, G-Environmental, Social and Technological. PEEST Is there an inimitable advantage? For economic analysis, does the industry lead, match, or follow the business cycle? Stakeholder Identify and compare stakeholders’ interests Industry Monopoly, Duopoly, Oligopoly, Free Market. Any changes that have Structure occurred in the industry prior to or anticipated in the future. Genealogy Predecessor/defunct companies, heritage, lineage. Business How does the industry make money? Profit = Revenue – Expenses model Establish what specifically drives each variable Resource Particularly forward looking financial resources. Limiting factors on Analysis options facing company today and tomorrow. Gap analysis Matrix in Text. Where are the major gaps for the company? Mgmt. Pref. Corporate governance, corporate social responsibility, frozen Organization Structure Change Identify non-behavioural and behavioural changes needed Agenda Crisis Degree of urgency for taking action (anticipatory/reactive/crisis) Curve Alternatives Develop options (include Do Nothing), establish evaluation criteria Recommend alternative(s), develop specific tactics for S/T, M/T, L/T, Action Plan scenario planning, contingency plans, targets, style Goals 3-4 Tab 1.1 5 Tab 1.2 5 Fig 1.2 18-19 Fig 2.1 21 Tab 2.1 25-26 28 Tab 2.3 30-33 49, 56 Fig 3.1, 3.4 64-70 HBR article 63 80-83 113 122 134,137,147 174-182 220 Tab 10.1 221 Fig 10.2 238-240 242-247 Fig 11.1, 11.2 • • • • • • • • • • • CASE PDF password: bean Don’t need cover page Label tools inline at beginning of paragraph (e.g.PEEST,xxx has strength......) Analyze S1 Role, S6 Goal first Don’t need to use all of tools, but most of them Must use tools: S4 Performance Matrix, S3 Strategy triangle, o19 Organization, E10 Porter's Five, E11 PEEST, 20, 21, 22, 23 Analyze criteria, market share, profitability and what is important to company. Analyze main drive force of revenue and expense, so find profit. Analyze backward integration supply chain and foreword integration customer market. Identify each threat/opportunity as High/medium/low, and explain. Must have Decision Matrix. Total as 8 pages, 6 pages are diamond E analysis,1 page of alternative (tool 22), 1 page of action plan (tool23) Diamond E analysis • Introduce Diamond E analysis after Tool O19 Organization structure Alternative • Decision Matrix here, and explain what, why and how important of each criteria Action Plan • • Include short term (
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Explanation & Answer

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S1 Role
The case presented is about the Karatu Coffee Company (KCC) located in Tanzania. The firm is
owned and managed by Swiss-trained agronomist Fischer. Fischer started to work on the farm as
a manager in 1984, and later, in 1986, he secured the farm. The case explains the farm's history,
including its purchase during political turmoil, the establishment of Karatu Kahawa Lodge and
Zanzibar Boutique Hotel, and the later expansion of KCC. The case iterates the worldwide coffee
market. The case also explains Tanzania's history and its major cities, including Arusha, Dar es
Salaam, and Zanzibar. It describes how the development of these cities and their unique
characteristics favored the development and growth of KCC to its current glory. Tourism in these
cities is a significant focus in the case.
S6 Goal
Strategic goals are used to illustrate where the company intends to reach within a certain period.
Consider the following table showing the challenging goals and the soft goals and whether they
are realistic or not.
Hard Goals
Market position: KCC looks into expanding across
East Africa. It plans to increase its market share in the
region. KCC is also ranked to have the best hotel with
the best coffee in the whole country (Tanzania).
Profitability: The company has already attained its
profitability index. Apartment development for an
investment of $400,000 took five years to return
$600,000 in profits and continue to date. KCC already
has an ROI of 9.20% as of 2020.
Exit Tanzania: Fischer thinks of selling the company
and retiring.

Realistic Soft Goals
or Not
Realistic Management: The
company is an
autonomous
organization.
Realistic “Green” environment

Realistic
or Not
Realistic

Realistic

Realistic

Community: Contribute
to the community
through a well-thought
CSR.

Growth: KCC aims at increasing its earnings, assets,
Realistic
and sales in the next coming decade.
Table 1: Classification of Goals for KCC
S2 Organizational Performance
Performance assessment of an organization shows how the company is faring along about its
objectives and goals. If the company has attained positive results, then the company is
performing positively and vice versa. For KCC, let us consider productivity, trends, and financial
ratios. As far as productivity and trends are concerned, KCC has garnered massive profitability
over the years since Fischer acquired it in 1986. The company has always focused on opening
coffee shops, lodges, and hotels within Tanzania. It has since opened three major hotels and
motels, including Karatu Kahawa Lodge in 1990 and Zanzibar Boutique Hotel in 2005. KCC has
also invested in the apartment development business in Dar es Salaam and several roasting
facilities across the country. This proves growth and development, resulting in high productivity.
KCC has employed enough employees. Employment and the number of employees vary

Realistic

depending on the productivity level and market demand for products. The company attained an
ROI of 9.20% in 2020. It had also achieved a positive present net value of about $100,000 and a
free terminal cash flow of over $860,000 in Manyara Coffee Resort alone. The average cost of
capital for KCC stood at 13% in 2020.
Organizational Performance Element
Rank from 0-10
Productivity
9
Trends
7
Financial ratios
8
Table 2: Organizational Performance Element Ranking
S3 Organizational Health
This refers to the ability of KCC to grow positively, cope with any political, social, or economic
changes, and function effectively. Positive organizational health results in high productivity and
vice versa. Let us consider the reputation, goodwill, and employee turnover. KCC has a low
employee turnover rate. This means that the company likes to retain its employees and does not
replace those who already have experience working. Companies with high turnover rates always
exhibit added costs for employee training. The opposite is true for KCC. Since its founding,
KCC has employed 50 local employees permanently. These employees take care of the firm, and
when the harvesting season comes, 200 employees are used to work on the fields for a few days
until harvesting is complete. From the case study, the company has substantial goodwill.
Goodwill is always calculated by adding the value of the acquired company's liabilities and
assets to the liabilities and assets' current fair value. This is why Fischer is thinking of selling the
company and exiting Tanzania. The company has an excellent and positive reputation. Its hotels
and resorts have been rated to have the most tasteful and famous coffee in the whole of Tanzania.
This proves a positive and good reputation.
Organizational Health Element
Rank from 0-10
Reputation
9
Goodwill
8
Employee turnover
8
Table 2: Organizational Health Element Ranking
S4 2x2 Matrix of Tools S2, S3
Consider the following 2x2 Matrix.

Exhibit 1: Performance Matrix for KCC
S5 Strategy Triangle
A strategy triangle breaks down strategies that the company has into visible or recognizable
elements. Consider the following generalized strategy triangle:

Figure 1: A Strategy Triangle, P. 18
S7 2x2 Matrix on Product/Mkt
The company is focused on producing coffee and selling them to both local and international
markets. KCC makes its coffee and sells them at retailed prices in their hotels and coffee resorts.
It also sells coffee to supermarkets and other coffee hotels and resorts across Tanzania. It has,
however, taken root in Arusha, Zanzibar, and Dar es Salaam because it has the largest market
share in these regions. This is because these regions are high tourist destinations. Since most
tourists like coffee than the locals, the company has set up hotels and resorts in these areas.
These include Karatu Kahawa Lodge and Zanzibar Boutique Hotel. Here, the company target
tourists. Consider the following 2x2 Matrix to illustrate this.

Exhibit 2: 2x2 Matrix on Product/Mkt Focus for KCC
S8 Value proposition
The company thrives competitively by selling its coffee at a very affordable price compared to
other coffee companies. The company employs two pricing strategies: "low cost strategy" and
"high pricing strategy." These pricing strategies, however, depend on the type of coffee sold. The
low-cost method works best for local customers, and the kind of coffee is called Robusta. The
company sells it at $2.4. Low pricing is also possible because KCC manufactures its coffee
locally and does not incur any shipping fee like other international companies which have not set
shop in Tanzania. High pricing strategy applies to premium buyers or customers. This usually
includes the tourists. Premium coffee is sold at $3.7. This high pricing strategy always helps
retain high-end and premium customers while also gaining the larger market share untapped by
other coffee companies in Tanzania. This pricing strategy makes K...

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