Harvard Case - Mountain Hazelnuts: Social Entrepreneurship in Bhutan
"Mountain Hazelnuts: Social Entrepreneurship in Bhutan" Harvard business case study is written by Hau L. Lee, David W. Hoyt. It deals with the challenges in the field of Entrepreneurship. The case study is 24 page(s) long and it was first published on : May 23, 2011
At Fern Fort University, we recommend Mountain Hazelnuts (MH) adopt a multi-pronged strategy focusing on product differentiation, market expansion, and building a strong social impact brand. This strategy will leverage MH?s existing core competencies in organic farming, community engagement, and sustainable practices while navigating the challenges of the emerging market of Bhutan.
2. Background
This case study focuses on Mountain Hazelnuts, a social enterprise in Bhutan aiming to empower local farmers and promote sustainable agriculture. Founded by Tashi Dorji, MH faces challenges in scaling its operations, securing consistent market access, and navigating the complexities of international business.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Unique product: Organic, high-quality hazelnuts with a strong social impact story.
- Strong community engagement: Empowers local farmers and promotes sustainable practices.
- Government support: Access to resources and favorable policies.
- Growing global demand: Increasing consumer interest in organic and ethically sourced products.
Weaknesses:
- Limited production capacity: Scaling up production to meet growing demand is a challenge.
- Lack of marketing and branding: Limited awareness and reach in international markets.
- Financial constraints: Limited access to capital for expansion and marketing.
- Limited technical expertise: Need for expertise in international business, marketing, and supply chain management.
Opportunities:
- Expanding international market: Tap into growing demand for organic and ethically sourced products.
- Developing new products: Explore value-added products like hazelnut oil, flour, and confectionery.
- Leveraging technology: Utilize digital marketing and e-commerce platforms to reach a wider audience.
- Strategic partnerships: Collaborate with international retailers, NGOs, and industry experts.
Threats:
- Competition from established players: Competing with larger, established hazelnut producers.
- Price fluctuations: Vulnerability to global market price fluctuations.
- Environmental challenges: Climate change and other environmental factors impacting hazelnut production.
- Political instability: Potential impact of political instability in Bhutan on business operations.
Porter?s Five Forces Analysis:
- Threat of new entrants: Low due to the specific conditions of organic hazelnut farming in Bhutan.
- Bargaining power of buyers: Moderate, as MH relies on a limited number of buyers.
- Bargaining power of suppliers: Low, as MH works directly with local farmers.
- Threat of substitutes: Moderate, as other nuts and seeds can be substitutes.
- Competitive rivalry: Moderate, as MH faces competition from established players in the international market.
Value Chain Analysis:
MH?s value chain includes:
- Inbound logistics: Sourcing organic hazelnuts from local farmers.
- Operations: Processing and packaging hazelnuts.
- Outbound logistics: Distributing hazelnuts to retailers and consumers.
- Marketing and sales: Promoting MH?s products and brand.
- Customer service: Responding to customer inquiries and feedback.
Business Model Innovation:
MH can innovate its business model by:
- Direct-to-consumer sales: Selling products online and through farmers? markets.
- Subscription model: Offering regular deliveries of hazelnuts to customers.
- Value-added products: Developing and selling a range of hazelnut-based products.
- Partnerships with NGOs: Collaborating with NGOs to promote sustainable agriculture and social impact.
4. Recommendations
Product Differentiation:
- Develop a unique brand identity: Highlight the social impact story and the quality of organic hazelnuts.
- Offer value-added products: Expand product offerings to include hazelnut oil, flour, and confectionery.
- Focus on premium pricing: Position MH products as a premium offering with a higher price point.
Market Expansion:
- Target niche markets: Focus on consumers interested in organic, ethically sourced products.
- Develop a strong online presence: Utilize e-commerce platforms and social media to reach a wider audience.
- Explore international markets: Identify potential markets with high demand for organic hazelnuts.
- Strategic alliances: Partner with international retailers, NGOs, and industry experts to expand reach.
Building a Strong Social Impact Brand:
- Transparency and traceability: Provide clear information about the origin and production process of hazelnuts.
- Community engagement: Continue to empower local farmers and promote sustainable practices.
- Social media marketing: Showcase the social impact of MH?s work and engage with consumers online.
- Partnerships with NGOs: Collaborate with NGOs to raise awareness and promote MH?s mission.
5. Basis of Recommendations
- Core competencies and consistency with mission: The recommendations align with MH?s core competencies in organic farming, community engagement, and sustainable practices.
- External customers and internal clients: The recommendations cater to the needs of consumers seeking organic and ethically sourced products and empower local farmers.
- Competitors: The recommendations differentiate MH from competitors by focusing on social impact, product quality, and niche market targeting.
- Attractiveness: The recommendations are expected to increase revenue, market share, and brand awareness, leading to long-term profitability and growth.
6. Conclusion
By adopting a multi-pronged strategy focusing on product differentiation, market expansion, and building a strong social impact brand, Mountain Hazelnuts can achieve sustainable growth and create a positive impact on the lives of local farmers and the environment.
7. Discussion
Alternatives:
- Focusing solely on domestic market: This would limit growth potential and expose MH to market fluctuations.
- Adopting a cost leadership strategy: This would require significant investment in production efficiency and might compromise quality and social impact.
Risks and Key Assumptions:
- Market acceptance: The success of the recommendations depends on consumer acceptance of MH?s products and brand.
- Competition: The recommendations assume that MH can effectively differentiate itself from competitors.
- Financial constraints: The recommendations assume that MH can secure sufficient funding for expansion and marketing.
8. Next Steps
- Develop a detailed marketing plan: Outline target markets, marketing channels, and budget.
- Secure funding: Explore options for securing funding for expansion and marketing.
- Develop new products: Invest in research and development to create value-added products.
- Establish strategic partnerships: Identify and build relationships with potential partners.
- Monitor progress and adjust strategy: Regularly assess the effectiveness of the recommendations and make necessary adjustments.
Timeline:
- Year 1: Develop marketing plan, secure funding, and launch new products.
- Year 2: Expand into new markets and build strategic partnerships.
- Year 3: Consolidate operations and achieve sustainable growth.
By implementing these recommendations, Mountain Hazelnuts can position itself for success in the global market while creating a positive social impact.
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Case Description
Mountain Hazelnut Venture Limited ("Mountain Hazelnuts") was founded with economic, social, and environmental objectives. It planned to distribute young hazelnut plants at no charge to a large number of subsistence farmers in Bhutan. The farmers would plant the trees in fallow or degraded land, tend them, and sell the resulting nuts to the company at a price negotiated between the Bhutanese government and the company. If successful, this would generate a financial return for investors, greatly increase the cash income of participating farmers, help preserve rural Bhutanese communities, and improve the environment by stabilizing hillsides, reducing erosion, and providing other benefits. Mountain Hazelnuts was the first 100 percent foreign direct investment company in Bhutan. By early 2011, when the case is set, Mountain Hazelnuts had successfully established a nursery in rural eastern Bhutan, with a capacity to produce millions of plants. It was preparing to distribute its first trees to Bhutanese farmers-a project that would involve 10 million trees over five years, and involve about 15 percent of the country's population. This case is intended for use in a course on supply chain management, but can be used in classes focused on the environment, entrepreneurship, social entrepreneurship (for instance, within a philanthropy course), global business, or business in developing economies.
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