Guajilote

Case 8: Guajilote Cooperativo Forestal, Honduras

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

The Guajilote Cooperativo Forestal was founded in 1991 to improve economic development in developing countries. The COHDEFOR (the Honduran forestry development service) issued Guajilote the right to exploit naturally fallen mahogany trees within the buffer zone of La Muralla National Park in Honduras. This business venture has been able to improve the economic welfare and quality of life of its members. "One member stated that before he joined Guajilote, he was lucky to have made 2,000 lempiras in a year, whereas he made around 1,000 to 1,500 in month as a member of the cooperative" (Wheelen & Hunger, 2006. Case 8-3).

Santos Munguia, Guajilote's leader since 1995, has been able to negotiate a better product price per foot of mahogany and thus nearly doubling the lempiras earned per sale. With the depletion of mahogany trees around the world and the deforestation of mahogany trees the value of mahogany should increase over time (Wheelen & Hunger, 2006).

Guajilote however does have some drawbacks in its management and operation styles. The cooperative is not run democratically. Munguia makes all final decisions and handles all financial records concerning Guajilote. Also there are no public financial records available to access the economic welfare of the cooperative. "As head of the cooperative, Munguia kept informal records" (Wheelen & Hunger, 2006. Case 8-4). Operations for Guajilote are very simplistic. Due to the lack of proper transportation, the cooperative is limited to one distributor to sell the mahogany to and thus not being able to move up in the value chain.

The members of Guajilote lack a formal education and "none of Guajilote's members had any education beyond primary school. Many of the members had no schooling at all and were illiterate. As a whole, the group knew little of markets or business practices" (Wheelen & Hunger, 2006. Case 8-3). The cooperative also lacks skilled workers and cannot manufacture furniture itself to distribute around the world.

By weighing the pros and cons of the organization, Guajilote has been only mildly successful in certain aspects of economic growth. However, because of its lack of formal training for its administrative staff the cooperative has not been able to reach its full potential in terms of business growth and relies heavily on one man's decision making process.

2. Conduct a SWOT Analysis of Guajilote?

Strengths:

* Monopoly: Guajilote Cooperativo Forestal was granted the sole permit to harvest fallen mahogany trees by COHDEFOR.

* 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.

* Community Loyalty: Guajilote members due to a common background and the present improvement in quality of life "have strengthened the cooperative members' personal bonds with each other" (Wheelen & Hunger, 2006. Case 8-4).

* Environmental Friendly: Only fallen mahogany trees are harvested.

* Economic Growth: Guajilote members' quality of life increased. Members averaged 2,000 lempiras annually before joining Guajilote and currently average 1,000-1,500 lempiras monthly.

Weaknesses:

* Treacherous Terrain: The buffer zone in La Muralla is known for its steep and treacherous terrain. "La Muralla means 'steep wall of rock' in Spanish" (Wheelen & Hunger, 2006. Case 8-2).

* Lack of Transportation: Mahogany is transported by mule and human power and sometimes floated down a river or stream (Wheelen & Hunger, 2006).

* Administrative Incompetency: Primary education is the extent of Guajilote's members' formal education. Some members have received no schooling at all.

* Lack of Skilled Carpenters/Furniture Makers: Currently Guajilote's membership does not included skilled tradesmen.

* Lack of Proper Tools: The processing of the mahogany is done by hand and the moving of the mahogany was limited due to lack of transportation.

* Limited Market: Due to a lack of transportation for the mahogany.

* Limited Membership: Originally when the cooperative was founded in 1995 there were 15 members and currently there are 16 members.

Opportunities:

* Rare Commodity: Mahogany is a rare wood and is found in elevations of up to 1,800 metes "and normally singly or in small clusters of no more than four to eight trees per hectare" (Wheelen & Hunger, 2006. Case 8-2).

* Increase in Value for Product: Mahogany is difficult to grow and rare and can command a high price in the world market.

* Proper Transportation: If this cooperative had the means to move the wood they find faster, it could