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TEACHING NOTE
CASE 1
Mystic Monk Coffee
Overview
This 4-page case requires that students consider the future direction of a monastery located in Clark,
Wyoming and evaluate the vision, strategy, and business model of the fledgling Mystic Monk coffee
business. As the case unfolds, students will learn of Father Daniel Mary’s vision to build a new Mount
Carmel in the Rocky Mountains and transform the small brotherhood of 13 monks living in a small home used as
makeshift rectory into a 500-acre monastery that would include accommodations for 30 monks, a Gothic church,
a convent for Carmelite nuns, a retreat center for lay visitors, and a hermitage. Father Daniel Mary had identified
a nearby ranch for sale that met the requirements of his vision perfectly, but its listing price of $8.9 million
presented a financial obstacle to creating a place of prayer, worship, and solitude in the Rockies. Father Daniel
Mary hoped to fund the purchase of the ranch through charitable contributions to the monastery and through the
profits of its Mystic Monk coffee business, which had earned nearly $75,000 during its first year of operation.
Suggestions for Using the Case
This case was written as a leadoff case and was carefully crafted by the case author to require students to draw
upon most all of the concepts discussed in Chapters 1 and 2 to sufficiently prepare for a class discussion of the
case. The case involves issues relating to mission, vision, objectives, strategy, business models, and decisive
strategic leadership; the need for an action plan is obvious—these are the very things one looks for in a good
leadoff case. And the nature of the case virtually guarantees the stimulating kind of class discussion one needs to
get the course off on the right foot.
We think Mystic Monk Coffee (MMC) is an excellent leadoff case for the course (another good choice is Robin
Hood—which also requires that students draw upon the material covered in Chapters 1 and 2). The unusual topic
of the business ventures of cloistered monks, student familiarity with the coffee industry, and the very close
connection between the case and the material in Chapters 1 and 2 make this an especially good leadoff case. You
may want to consider covering Chapter 1 in your first day’s lecture, Chapter 2 on your second day’s lecture, and
then assigning Mystic Monk Coffee for class discussion on Day 3.
We suggest use of a teaching plan that focuses on Father Daniel Mary’s strategic vision for the monastery and
its coffee operations and Mystic Monk Coffee’s strategy and business model. Of course, there is the opportunity
for students to make recommendations regarding the strategic issues confronting the monastery and its coffee
venture.
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The assignment questions and teaching outline presented in upcoming sections of this TN reflect our thinking
about how to conduct the class discussion of the Mystic Monk Coffee case.
It is really very difficult to have an insightful and constructive class discussion of the Mystic Monk Coffee case
unless students have not only read the case but also conscientiously worked their way through a set of well-
To facilitate your use of study questions and making them available to students, we have posted a file of the
Assignment Questions contained in this teaching note for the Mystic Monk Coffee case on the instructor
resources section of the Connect Library.
You may also find it beneficial to have your class read the Guide to Case Analysis that immediately follows Case
31 in the text. Students will find the content of this Guide particularly helpful if this is their first experience with
Auto-Graded Connect Case Exercise. The 20th edition includes a fully auto-graded Connect case exercise
for 17 cases included in the text. The auto-graded exercises closely follow the assignment questions and analysis
included in the teaching note for the case. The auto-graded exercise for the Mystic Monk Coffee case requires
that students answer a series of multiple choice questions related to Assignment Questions 1-5. Question 6 is
left as an open ended question that allows students to fully discuss recommendations concerning improvements
to the company’s coffee operations, changes in its long-term direction, objectives, strategy, or approach to
strategy execution.
Students should be expected to spend about 30-45 minutes to complete the exercise, assuming they have
done a conscientious job of reading the case and absorbing the information it contains. All of the questions
are automatically graded, and the grades are automatically recorded in your Connect grade book, which
makes it easy for you to evaluate each class member’s ability to apply many of the concepts discussed in
Chapters 1 and 2.
The length of the case makes it ideal for an in-class written case or a final exam case. Our suggested written
assignment questions are as follows:
1. As a new business school graduate who has relocated to Cody, Wyoming and supports the local foundation
to benefit the Wyoming Carmelites, you have been asked to prepare a strategic review and action plan
for the Father Daniel Mary’s consideration. Your report to Father Prior should include an evaluation of
the monastery’s mission, its vision for Mystic Monk Coffee, objectives for the monastery and the coffee
2. Cody, Wyoming business owners have noted your quickly developing skills of analysis and growing
business acumen and have asked that you prepare a report for Father Daniel Mary that evaluates Mystic
Monk Coffee’s mission, vision, strategy, business model, and operations. Your report should also make
recommendations concerning strategic issues related to:
n The vision and mission of the monastery and its coffee operations,
n MMC’s strategic and financial objectives,
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Assignment Questions
1. Has Father Daniel Mary established a future direction for the Carmelite Monks of Wyoming? What is his
vision for the monastery? What is his vision for Mystic Monk Coffee? What is the mission of the Carmelite
Monks of Wyoming?
2. Does it appear that Father Daniel Mary has set definite objectives and performance targets for achieving his
vision?
3. What is Father Prior’s strategy for achieving his vision? What competitive advantage might Mystic Monk
Coffee’s strategy produce?
4. Is Mystic Monk Coffee’s strategy a money-maker? What is MMC’s business model? What is your assessment
of Mystic Monk Coffee’s customer value proposition? its profit formula? its resources that enable it to create
and deliver value to customers?
5. Does the strategy qualify as a winning strategy? Why or why not?
6. What recommendations would you make to Father Daniel Mary in terms of crafting and executing strategy
for the monastery’s coffee operations? Are changed needed in its long-term direction? its objectives? its
strategy? its approach to strategy execution? Explain.
Teaching Outline and Analysis
1. Has Father Daniel Mary established a future direction for the Carmelite Monks of
Wyoming? What is his vision for the monastery? What is his vision for Mystic Monk
Coffee? What is the mission of the Carmelite Monks of Wyoming?
Students should have little trouble recognizing that Father Daniel Mary’s vision for the Carmelite Monks of
Wyoming is to recreate Mount Carmel in the U.S. Rocky Mountains and transform the small brotherhood
of 13 monks living in a small home used as makeshift rectory into a 500-acre monastery that would
If you are using this case as your lead-off case for the course, you may find that many students don’t
distinguish between the monastery and MMC and believe the Prior’s general vision applies to the monk’s
coffee operations. To clear up this confusion and to illustrate the lack of an appropriate vision for MMC,
please have students compare Father Prior’s vision to Howard Schultz’s vision for Starbucks. Howard
Schultz’s vision of bringing the Italian Espresso bar experience to America very accurately described his
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You’ll likely find that most students readily recognize that the ultimate mission of the cloistered monks is to
worship God. Some may wish to begin a debate on the role of the monastery’s coffee operations in pursuit
2. Does it appear that Father Daniel Mary has set definite objectives and performance
targets for achieving his vision?
Students will find it very difficult to argue that Father Daniel Mary has set definite objectives or performance
targets for achieving the vision. Other than the broad goal of obtaining funds to purchase the $8.9 million
3. What is Father Prior’s strategy for achieving his vision? What competitive advantage
might Mystic Monk Coffee’s strategy produce?
Students will generally agree that Father Daniel Mary is relying on charitable contributions to the monastery
and profits from its Mystic Monk Coffee enterprise to fund the purchase of the Irma Lake Ranch. Students
should also recognize that MMC does have a deliberate strategy, although it may be only tacitly understood
n Exclusive use of high quality fair trade Arabica and fair trade organic Arabic beans
n Variety of blends, roasts, and flavors to appeal to a broad range of coffee preferences
n Focus on U.S. Catholic consumers and those wishing to support the mission of the Carmelite Monks
of Wyoming. An appeal was made to Catholics “to use their catholic coffee dollar for Christ and his
Catholic church.”
n Product line extension that included sales of T-shirts, mugs, gift cards, and CDs featuring the monastery’s
Gregorian chants
Students will generally approve of MMC’s focused differentiation strategy and suggest that it is capable
of building competitive advantage. The use of high quality coffee beans, the variety of blends, roasts,
and flavors and the Mystic Monk image produce a number of tangible and intangible benefits for MMC
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4. Is Mystic Monk Coffee’s strategy a money-maker? What is MMC’s business model?
What is your assessment of Mystic Monk Coffee’s customer value proposition? its
profit formula? its resources that enable it to create and deliver value to customers?
Even though MMC’s business model has a compelling customer value proposition, there is reason for
students to challenge the overall soundness of the business model. MMC’s attractive differentiating features
and competitive pricing create a strong customer value proposition, but its profit formula is suspect. Other
than the lack of labor expense, MMC enjoys no cost advantage and many of its non-differentiating activities
involve higher than normal costs because of its low production volume. The company’s cost of sales of 30
Students are also likely to note that MMC generates losses on all sales coming from affiliate Web sites since
the company pays an 18 percent commission on these sales, but has a net profit margin of only 11 percent.
Students will also question whether the monastery possesses sufficient resources to operate a thriving coffee
roasting and sales business. Current monthly sales of $56,500 suggest that MMC sells about 4,250 pounds
of coffee each month at a retail price of $9.95 per 12-ounce bag. The capacity of the coffee roaster will allow
for production of 540 pounds per day, which is about 22.5 pounds per hour. Brother Elias (Brother Java) is
Students’ overall assessment of the business model should recognize its flaws and conclude that MMC’s
current business model severely limits its ability to make a meaningful contribution to the purchase of Lake
5. Does the strategy qualify as a winning strategy? Why or why not?
There’s merit in directing students to the three tests of a winning strategy presented on page 9 of Chapter 1
n Does the strategy fit the company’s situation? You should find the class more or less evenly divided
in whether to classify MMC’s strategy as a winner. The strategy fits the external situation nicely since
the market for specialty coffees had grown at an annual rate of 32 percent between 2000 and 2007
n Has the strategy yielded a sustainable competitive advantage? There should be little disagreement that
the strategy has the potential to yield sustainable competitive advantage, although it’s debatable if such
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n Has the strategy produced good financial performance? Students’ assessment of MMC’s ability
to pass the third test of a winning strategy depends heavily upon their perceptions of “excellent
company performance.” Students who are impressed with MMC’s average monthly sales of $56,500
We tend to agree with students who find that MMC’s strategy is a winning strategy and that its limitations to
generate sufficient funds to purchase Irma Lake Ranch result from flaws in its business model. All evidence
6. What recommendations would you make to Father Daniel Mary in terms of crafting and
executing strategy for the monastery’s coffee operations? Are changes needed in its
long- term direction? its objectives? its strategy? its approach to strategy execution?
Explain.
Student recommendations are likely to fall into two groups, with one group suggesting that the vision be
Students arguing that Father Daniel Mary’s vision should be scaled back drastically will be able to support
such a recommendation with several facts from their analysis:
nThe monastery does not have the human resources necessary to roast, package, and ship the volume of
nAdditionally, Father Daniel Mary nor the other Carmelite brothers have the necessary business experience
nThere is nothing in the case to suggest that the Carmelite brothers share Father Daniel Mary’s vision
to build a new Mount Carmel in the Rockies. It is quite likely that the brothers would prefer to pursue
nMystic Monk Coffee’s operations are capable of supporting the expenses of the existing monastery
nFather Daniel Mary could choose to use the monastery’s recent $250,000 donation to expand the current
rectory to provide additional living space for existing monks and any new monks joining the monastery.
Students arguing that Father Daniel Mary should stick with his current vision must make a number of
recommendations for improving Mystic Monk Coffee’s strategy and business model. Appropriate
recommendations include:
nBefore making specific recommendations to revise MMC’s strategy and business model, students must
first determine to what extent donations can be relied upon to generate funds necessary to purchase
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nFather Daniel Mary should request that the Catholic Church send priests or others not constrained by a
cloistered life to develop a strategy with Cody, Wyoming business people to maximize the potential of
nFather Daniel Mary should also utilize the resources of the Catholic Church to find major donors willing
nAssuming that charitable giving will account for 50 percent of the funding requirements to purchase the
$8.9 million Irma Lake Ranch, it would take MMC nearly 67 years to accrue $5 million in earnings if
nThe purchase of the larger 130-pound per hour roaster will not allow MMC’s annual profits to increase to
$1 million since Brother Java’s 6-hour shift will allow only 780 pounds of coffee to be roasted each day
(130 pounds/hr x 6 hours). This level of production would allow MMC to sell up to 1,040 12-ounce bags
of coffee each ((780 pounds x 16 ounces)/12 ounces = 1,040 12-ounce bags). This level of production
nStudents should recommend that MMC use its improved bargaining power stemming from any volume
increases to negotiate better terms with its suppliers, shippers, and its coffee broker. The case doesn’t
provide enough detail for students to make an exact determination about to what extent cost of goods
nUtilities, telephone, and Web site maintenance are indirect expenses that will increase as sales and
production increase, but still might offer some economies of scale opportunities. Students should be
nStudents making the assumption that increased volume will allow MMC’s net profit margin to improve
from 11 percent to 15 percent – 19 percent, will note that MMC’s daily net profit will increase to $1,552
– $1,996 based on daily sales of $10,348. The improvement in margins would result in an annual net
nStudents should also recommend strategies that will allow MMC to increase sales to support higher
levels of production. Possible recommendations include:
• Send e-mails to Catholic churches in the U.S. asking that MMC coffee be used for church events
and that parish members be told of MMC’s Internet coffee sales.
• Provide churches purchasing MMC coffee with a sign promoting MMC that could be placed near a
coffee urn. The sign could improve awareness of MMC among members of Catholic parishes.
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nSome students may recommend that MMC change its business model because of its resource limitations
discussed in Assignment Question 4. Father Daniel Mary could adopt a business model that would
allow the monks to develop new blends, roasts, and flavors at the monastery and have the production
and shipping performed by a contract manufacturer such as First Colony Coffee and Tea. Such an
arrangement would allow MMC to receive royalties much like First Colony’s fine department store and
nStudents supporting contract manufacturing may also suggest that First Colony or similar coffee
nStudents who argue forcefully against contract manufacturing should be challenged by the instructor to
consider the logistical problems should the Wyoming Carmelites be able to purchase Irma Lake Ranch
nAs a final question to the group of students who may be against contract manufacturing, you should ask
if MMC’s increased volume would present a conflict with the overall mission of the monastery. How
Epilogue
Mystic Monk Coffee has added several new blends and coffee accessories at its Web site since the close of the
case. You can visit www.mysticmonkcoffee.com to see the monastery’s latest coffee offerings.
The monastery had also established the New Mount Carmel Foundation, Inc. to support Father Daniel Mary’s
vision of creating a new Mount Carmel in the Rocky Mountains. The foundation website (http://www.
newmountcarmelfoundation.org) provides photo galleries, videos, news and other information related to the
foundation’s efforts to develop funding to build the mountain monastery.