Cool Pastures Dairy: Kenya's Changing Milk Market (A)
(7 pages of text)
This three-part case highlights the strategic decision-making and growth management challenges in the suddenly liberalized Kenyan dairy industry. Following the 1999 collapse of the nation-wide distribution system on which small-scale dairy farmers in Kenya relied to reach the market, the resulting gap in the value chain between supply and demand created an opportunity for one entrepreneur. Cool Pastures Dairy was later founded in 1999 and rapidly expanded in an atmosphere of not only little competition but also corruption and lack of infrastructure, especially poor roads, limited banking, and almost non-existent cell phone accessibility. Although the company considered various alternatives to expanding, the business was overcome by problems with inefficient or corrupt retailers and accountants, as well as the owner’s lack of business experience, and went bankrupt. When conditions improved as the government invested in infrastructure, the entrepreneur considered restarting his business. Is this a viable enterprise in light of improved conditions? Which expansion alternative should the resuscitated company pursue? The B case 9B13M045
discusses managing corruption and the C case 9B13M046
re-considers the business model.
After completion of this case, students will be able to:
- Understand the importance of strategic decision-making.
- Consider the path of dependency.
- Use quantitative (return on investment, payback period, basic income statement projection) methods.
- Focus on the implications of internal and external analyses.
- Understand developing countries business environment in the 1990s and early 2000s.
- Consider the importance of background checks in hiring employees.
Agriculture, Forestry, Fishing and Hunting
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