CASE
6
Guajilote Cooperativo Forestal, Honduras Prepared for Harun ur rashid
Prepared by Name: Masud Rana ID: 11102205 Section: D Program: BBA
IUBAT- International University of Business Agriculture and Technology
Introduction Guajilote was founded in 1991 as a component of a USAID (United States Agency for International Development) project. The project attempted to develop La Muralla National Park as an administrative and socioeconomic model that COHDEFOR (the Honduran forestry development service) could transfer to Honduras’ other national parks. Guajilote Cooperativo Forestal was a company based in Honduras, whose main operations revolved around handling of fallen mahogany trees in the local rural area, and selling them through the distributor to the wood-processing companies like furniture shops, etc. The company had exclusive right for such activity. It was situated in a rural province called Olancho in the buffer zone of La Muralla National Park.
Current Performance When assessing the performance of the company, it is necessary to note the special features of the country where the business was operating. The level of economic growth, technological development, and average education of the labor force is very different in Honduras when compared to those in more developed countries. Honduras has a high level of poverty among rural population, and therefore most of the employees at the Cooperative were not sufficiently educated. Also, the level of technological development in Honduras at the time of company operations was significantly low. Top Management The leader, Santos Munguia, did not delegate most of the work in the company. A very negative aspect of the company appears to be the insufficient education of the employees. Most of the workers employed at the company had the most basic education, while some were illiterate, which makes it impossible to effectively and efficiently manage the business
External Environment 1.Economic Honduras has a high level of poverty among rural population, and therefore most of the employees at the Cooperative were not sufficiently educated. 2.Technological Guajilo has very little technology. They use large cross-saws, mules, and human power, taking advantage of local streams whenever possible to help bring out the processed mahogany. The members have little or no formal education: this limits what technology can be utilized.
3.political and legal The Honduras government is not politically stable and the permit issued to Guajilote has the potential to not be renewed
Internal Environment Corporate Structure- When founded, the cooperative had been composed of 15 members. Members were initially selected for the cooperative by employees of USAID and COHDEFOR. In 1998 there were 16 members in the cooperative. Human Resource Management (HRM) the cooperative had been composed of 15 members. Members were initially selected for the cooperative by employees of USAID and COHDEFOR. The number of employees has held steady over time.. There have been strong bonds formed amongst the members. The profits are purportedly evenly distributed amongst the members. (However, there is some speculation that Santos Munguia and his nephew, Miguel Flores Muguia, were taking a bigger share than what was being paid to the other members.) 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 contacted an exporter to assess the viability of adding furniture making to their operations.
Financial Situation Guajilote’s 1997 revenues were approximately 288,000 lempiras (US$22,153). Guajilote’s 16 members was paid an average of about 1,500 lempiras (US$113) per month in 1997 and 1,300 lempiras (US$100) per month in 1996. SWOT Analysis: Strengths 1. This business has committed and determined members and employees. There also exists a strong relationship among the members. 2. There is limited capital outlay to maintain the equipment.
3. There will be a steady increase in price when the world-wide supply decreases. 4. A change in direction of the cooperative can be made quickly. 5. Good Leadership: Santos Munguia, the current leader of Guajilote, has been able to negotiate better pricing for the mahogany and increase revenue for the cooperative. 6. Environmental Friendly: Only fallen mahogany trees are harvested. 7. Economic Growth: Guajilote members quality of life increased.
Weaknesses 1. There is no educated leadership. 2. All staff needs more training and education 3. They cannot get a loan to buy the needed large equipment for further growth and efficiency. 4. There are limited distribution channels. 5. They have limited financial capital. 6. Lack of Transportation: Mahogany is transported by mule and human power and sometimes floated down a river or stream 7. Limited Market: Due to a lack of transportation for the mahogany Opportunities: 1. Increase in Value for Product: Mahogany is difficult to grow and rare and can command a high price in the world market. 2. Proper Transportation: If this cooperative had the means to move the wood they find faster, it could reach a larger quantity of people to offer its product. 3. The global demand for furniture made of mahogany has increased. 4. There is at this time no local competition. Threats: 1. Limited Mahogany: Due to forest fires, illegal logging, the availability of mahogany has been limited 2. Government Regulations: The Honduras government is not politically stable and the permit issued to Guajilote has the potential to not be renewed. 3. Illegal logging is taking place thereby reducing available trees. 4. There was an unusually large number of forest fires last year and have been predicted for next year.
5. These fires have killed the trees, young and old, as well as their seeds. This reduces further production of mahogany
Recommendation 1. The cooperative would benefit greatly from purchasing a truck for transporting the mahogany to distributors. 2. An investor should be brought in to obtain the necessary supplies needed to operate efficiently and profitably. 3. they should training programs to further the education of the members to better run the cooperative 4.They should hire educated leadership. 5. they could add transportation division in order to reduce dependence upon monopolistic distributor.
