Question 5: Does the strategy qualify as a winning strategy? Why or why not?

According to the 3 tests of a winning strategy, a strategy which qualifies as a winning

strategy need to answer 3 questions.
The first question is: does the strategy fit the companys situation? It is clear that the
strategy fits the external situation nicely since the market for specialty coffees had grown
at an annual rate of 32 percent between 2000 and 2007 to reach $13.5 billion. Moreover,
the retail sales of organic specialty coffee had grown to $1 billion by 2007. Mystic Monk
Coffee focus on Catholic consumers in the U.S. represents a large market for MMC - and
one that would arguably become very loyal customers.
The second question is: has the strategy yielded a sustainable competitive advantage?
Although there might be little argument that the strategy has the potential to yield
sustainable competitive advantage. However, at that time of the case, the advantage
achievement can be recognized through the companys $56,500 average monthly sales,
which suggest Mystic Monk Coffee has a growing and loyal following among Catholic
consumers.
The last question is: has the strategy produced good financial performance? As
mentioned above, Mystic Monk Coffees average monthly sales of $56,500 and its
average profit margin of 11 percent might show that the strategy has produced good
financial performance. However, if we consider about the need to generate profits
sufficient to generate funds to purchase the Irma Lake Ranch, Mystic Monk Coffees
strategy has failed the test.
In conclusion, MMCs strategy is a winning strategy and that its limitations to generate
sufficient funds to purchase Irma Lake Ranch result from flaws in its business model. All
evidence supports that the strategy is a winner, but that the business model must be
revised substantially.