Executive while upholding their culture of promoting social and

Executive summaryThe Maya Mountain Cacao company was making good progress in achieving its set objectives and visions. This was evidenced by their increasing profits, positive training programs and ever-increasing numbers of waiting customer orders for cacao supplies. The management through the leadership of its managing director, Emily Stone, had to plan for the future and had three working priorities which included initiating further governance of the value chain, production upgrade for extended growth and changing the company’s shares and administration layout. They believed that if the stated three priorities were well met, the company will achieve its primary aim of generating large amounts of profit while upholding their culture of promoting social and environmental aspects. The greatest challenge of the company was to strike a balance between the inflow of the cacao supplies from the farmers and the demand from the huge numbers of waiting buyers. The second challenge for the company was to improve on their profit margins while ameliorating the living standards of the cacao farmers. The management was concerned with maintaining their strong business position in the markets, and they had to adopt unique and efficient measures to face off competition. For the company to sustainably retain its competitive position and remain on course to achieve its set goals and missions, Stone suggested three alternatives which included: expansion and production improvements, distribution and brokerage, and profit-sharing and governance structure. Necessary backgroundAlex Whitmore, having been inspired by cacao making techniques of the Mexican locals, determined to start a cacao company in his native America known as Taza chocolate, in 2005. He collaborated with Emily Stone, an advocate for the environmentally focused capital management firm and were joined by Jeffrey Pzena, a Belize-based chocolate maker and starter of the Moho Cocoa LLC, which led to the founding of the MMC. Belize is known for its vast production of cacao, a feat that inspired Stone and her colleagues to help the Belizean communities resolve their longstanding failure in development and to aid their efforts. In late 2010, Stone relocated to the small coastal town of Punda Gorda where she met a cacao farmer Gabriel Pop, and together they founded a fermentation and drying facility. By 2014, MMC become the largest cacao exporter in Belize and, through a training program, more than 300 farmers received the organic certification, which increase their incomes. In addition, a waiting list increased more than 70 companies worldwide (see Appendix B). MMC entered the bean-to-bar chocolate segment with the producers governing the chocolate making process from the farm to the customer. They majored on the social and environmental impact where the farmers were substantially involved in the production process with their knowledge being considered vital. Environmental protection was core to their activities with reforestation being key and use of pesticides greatly discouraged. MMC has their own trade model, which disrupts traditional trade initiatives helping farmer eliminated certification costs. They reinforced the direct associations in the value chain and also highlight the product quality. MMC adopted ways to cope with the changes in the market to prevent possible competition. They sourced from external financiers, the Agora partnerships and adopted a high technology investment vehicle called the demand dividend to help in capital flows. Analysis of AlternativesExpansion and production improvementsStone found ways to extend the company’s operations to the neighboring countries and communities and rise production as that was the primary long-term target for the company. This was achieved through two ways namely (1) extending the company to work with the local farmers from the neighboring Alta Verapaz Department in Guatemala (2) setting up a 100 acres of an organic agroforestry demonstration farm, also deciding on a suitable location for the organic agroforestry demonstration farm.Option 1 This freed up Guatemala which was a larger producer of cacao than Belize.  The drawbacks for this option is that the entities in Guatemala was yet to be connected directly to farmers with the bean-to-bar chocolate market or supply chain in the United States. The tremendous success was expected for this venture to adapt to Uncommon Cocoa’s portfolio of companies well if undertaken with distinct leadership and having external financing opportunities by lower investment from holding company.  Option 2. The agroforestry farm was to serve as a training area for farmers to learn grafting and other farming techniques with the primary aim of boosting production. In addition, the farm was to be used to train stakeholders on all information about cacao. Moreover, the farm could also be used as a touring site for demonstrating the works of MMC to the local people and industrial staff. They would like to systemically monitor the work in order to maximize impact data by each individual area in order to track the farms and facilities. For the location, they find four separate parcels of land. The parcels represented some of the highest quality soil in the Toledo district, in spite of their being erosive and disruptive. Because the parcels were inaccessible by road and large, it is difficult to manage. Even though they can absorb the aggregate purchasing price to acquire more assets, materials, services, and capital, it would require additional investment to help them achieve their autonomous objective. Distribution and brokerageMMC hiring Ecom Trading/Atlantic Cocoa (ETAC) as a direct buyer in cocoa exporting arrangements. ETAC distribute cacao to Taza chocolate and other chocolate makers. ETAC provided MMC with the bridge to enter the quickly developing specialty chocolate market as well as offer transit support for distributing the product. This means ETAC assume the risk of transportation and importation. Taza Chocolate distribute microbatch chocolate from other origins because of the considerable profit from the microbatch chocolate. Taza Chocolate collaborates with ETAC to manage the importation and warehousing as well as Taza controls all its sales and pricing. Uncommon Cocoa realizes this sale arrangement they used limited margin growth and sustained the transparency in its value chain. Therefore, Uncommon Cocoa would like to control the distribution and brokerage process. The option is establishing a distribution and brokerage division. The benefit for this option is if the company can control the distribution and brokerage process by themselves, they would leverage this capability to do beneficial negotiation on the table. The company would vertically control each step in its supply chain, then they also maintain transparency. Moreover, Uncommon Cocoa can directly sell their cacao to small-scale bean-to-bar chocolate makers to make more profit. The drawback for this option is that the company would manage each step of supply chain and this would increase the cost and the company would have to take the risk of delivery and importation. Profit-sharing and governance structure With different Uncommon Cocoa’s portfolio companies aiming to achieve higher value for its local farmers and communities, Stone aimed to change the profit-sharing mode to increase value-added income for indigenous farmers through the following three ways: (1) adopting a strong and powerful profit sharing structure (2) making the salary cap for all employees (3) coming up with an updated governance layout. Option 1 Change in the structure of profit sharing begins at the local level. This change is influence by “capital expenditures and reinvestment of net profit” (8). MMC and Cacao Verapaz will give the highest share to the indigenous farmers and local communities from the rest the portion of profit. The benefit for this option is the profit sharing structures could ensure all levels of staff salaries are well defined and the farmer’s benefits are well outlined ensuring the long-term success of the company. This could also allow tracking of production trends when rewarding good performance. There is one drawback for this option. According to the income statement it shows the company is still loss by 2014 (see appendix 1). If the company gave the majority share to local farmers and communities, then the flexibility of cash flow may get held back. Option 2 Uncommon Cocoa provides a salary cap for their employees and employees from their portfolio companies. Every employee position in the company will get a salary by following this limitation. This option can provide more fairness and avoid corruption from the top management. Option 3 Except securing future monetary success, MMC and Cocoa Verapaz enhance the feedback cycle and the input in order to ameliorate the livelihood of indigenous farmers. The governance structure will assign clear roles and responsibilities to all the staff and stakeholders which will aid the smooth run of the company. RecommendationExpansion and production improvementsThe best option for Maya Mountain Cocoa was option 1. Extending its production to the neighboring communities and countries such as Guatemala will provide a large customer base and a vast number of farmers. This will enable the tapping of the numerous amounts of cocoa in Guatemala and also serve to raise the lives of many farmers. The company has to make sure that they hire the new leadership for expansion into Guatemala to ensure manage the growing operation.Distribution and brokerageCreating a strong working relationship between the distributing bodies for the cacao and defining their roles in distribution will make the process effective generating good revenues. However, Uncommon Cocoa not really familiar with how to manage the supply chain, they need to commend specialty knowledge to better manage each step of supply chain. Because the company is not achieving profitability, control the supply chain by themselves will incur great expense. This is important status quo that the company need to pay attention to prevent capital scarcity.  Profit-sharing and governance structureThe company can implement option 1 after they start getting profitability. The best option for MMC is option 3. A good governance structure will ensure the smooth running of all company’s operations and good response to loopholes in management aiding to continued success (see exhibit D). MMC desired to increase the cacao farmer income and ameliorate their livelihood. Ensure that the various representation of stakeholders will to keep truthfully and fairly. Current statusToday, Uncommon Cacao further develop its supply chain to maximize the producer groups’ value at the origin. The company distributes high-quality cacao by sourcing and trading with their partner. Uncommon Cacao aims to increase the income of their farmers and improve their livelihood. In 2016, there were 2620 farmers in the network and more than 214 farmers were trained. From 2014 to 2016, the annual farmer revenue increased from $328 to $604 and the certified organic (ha) increased from 475 to 2676. This data evidence shows they effort to ameliorate their farmers live. This increase shows the life of farmers improved and the company is meeting the goal.  In addition, more than 300 farmers work for Maya Mountain. The average sales per farmer are 93 kg and the average annual revenue from cacao for each farmer is $411. Today, MMC has increased farmer incomes by 20%, as well as they increased farmer children’s school attendance by 85%. and the farmer children’s school attendance is increased to 85%. However, there still has 69% of the local community live a poor life. MMC needs to strive hard to improve the regional poverty as well as continue to drive up margins.