Guayakí: Securing Supplies, Strengthening the Mission

Abstract

The case reviews the rise of Guayakí, a company that sells energy drinks produced with leaves from Yerba Mate trees, and a significant decision it now faces.  Guayakí’s drinks offer a natural alternative in the energy drink industry, which is dominated by large players selling products mainly made from water and chemicals.  The company started very small, had several “near-death” experiences, but eventually thrived, reaching $27 million in sales in 2014.  Its products are highly differentiated in the energy drink industry.

From the beginning, Guayakí has had a commitment to social justice and environmental restoration in South America.  Mate is grown best under the canopies of rainforests.  Difficult to cultivate, it is found natively in a region where Argentina, Brazil, and Paraguay meet.  Guayakí has engaged with several local communities that live in or near rainforests, to try to create a downstream market for mate that they harvest.  The company’s goal is to create 1000 jobs in this region, and to restore 200,000 acres of rainforest by 2020.

The case provides information that can be used to analyze the energy drink industry, and to appreciate the depth of Guayakí’s commitment to social and environmental goals.  The key focus, however, is on the company’s supply chain.  As Guayakí has grown and begun to require increasing amounts of mate, its model of social engagement with communities is coming under pressure.  How can it acquire enough mate to fuel its growth and yet still retain its social and environmental programs?  The case identifies and provides significant information on three options open to the company: continuing as now and scaling up via organic growth; purchasing land to secure its supply of mate, which might require restoration prior to the growing of mate; and collaborating with a land owner that shares its view of social and environmental stewardship.

AuthorsMichael Russo and Michael Crooke
InstitutionUniversity of Oregon, US
Competition Year2016
PlaceFirst Prize
TrackCorporate Sustainability
Key WordsCorporate sustainability, Entrepreneurship, Supply Chain, Energy Drink Industry
CoursesStrategic Management, Entrepreneurship, Supply Chain Management
Target AudienceMBA
Permission rightsThis case is part of the oikos free case collection. Download a free online copy below. If you are a faculty member and you are interested in teaching this case, you can request a free teaching note by sending us an email to freecase@oikos-international.org.
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posted June 27, 2016

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Terra Nova (A)

Abstract:

In three years, a small team of engineers led by a visionary entrepreneur Mr. Christian Thomas has developed a new process for producing iron, aluminum, copper, as well as gold and silver in commercial quantities, from electronic waste. The small team of senior engineers who started this venture had been brutally terminated upon the failure of a big lead processing plant. Out of a job, they developed the idea of recycling electronic waste and tested it, while two associates worked at finding financing and legal authorizations for the developing project. Once all the pilot tests had been conducted, it took two more years to set up appropriate supply routes and to build a plant to do phase I, i.e. extracting plastic, iron and aluminum. The effluent at that stage is rich in rare metals and attractive for the smelters who do the further refining. The rich output is hence sold to the copper smelters until phase II is in place. The case presents an interesting example of a technologically sophisticated recycling operation because it generates positive income with zero emissions and without ultimate residue. Progressively dominating complex chemical processes with a series of innovations, and surviving with some successful consulting jobs for the industry, the team completed the set up by January 2012. This development took place during the financial crisis years, in the competitive environment of five global copper smelters.

This case is part of the oikos Free Case Collection. Instructors can request the teaching note at freecase@oikos-international.org

Authors: Gilles van Wijk and Alireza Ahmadsimab
Institution: Essec Business School
Competition Year2014
PlaceRunner-Up
TrackCorporate Sustainability
Key WordsSustainability, PCB recycling, greentech, entrepreneurship
Coursesstrategic management, sustainability, entrepreneurship
Target AudienceMBA
Purchase InformationPlease contact the authors, Gilles van Wijk for permission rights.
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posted June 26, 2014

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Asia Meet

oikos Asia Meet 2014 will be hosted by oikos Pune at the main campus of Symbiosis International University, Pune. The theme of the Meet is ‘Innovation in sustainability‘. Registration is open!

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posted April 7, 2014

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TerraCycle

Case Abstract

In 2001 Tom Szaky, a Princeton freshman, founded TerraCycle in the hope of starting an eco-capitalist company built on waste – worm waste to be exact. Tom and his small team had little experience in building a business, but all possessed entrepreneurial spirit. Eventually, Tom dropped out of Princeton to pursue his dream of eliminating waste. Surviving on the goodwill of family, friends – both old and new – and a tremendous amount of dedication, the team had to constantly keep developing new ideas to keep the business from bankruptcy.

The company eventually moved into partnering with companies who would sponsor the collection of waste associated with their brands, and TerraCycle would transform that waste into affordable, high quality products. In 2006 Inc. Magazine named TerraCycle “The coolest little start-up in America” and Tom “The no. 1 CEO under thirty.”

By 2011 Tom had successfully built TerraCycle into an icon for environmental sustainability that was projecting US$16 million in annual revenues. However, sustained profits continued to elude the company, and though Tom was committed to eliminating waste, he was beginning to question whether TerraCycle had the right business model to achieve the triple bottom line.

Authors: Jan Lepoutre, Stuart Read, Philippe Margery
Institution: Vlerick Leuven Gent Management School, Belgium; IMD, Switzerland
Competition Year2012
Place1st place
Track Social Entrepreneurship
Key WordsEntrepreneurship, Effectuation, Strategy, Sustainability
Permission RightsAn inspection copy of this case is available here. This case can be purchased from ecch: Part A (IMD-3-2262), Part B (IMD-3-2263), Part C (IMD-3-2264), Part D (IMD-3-2275), Part K (IMD-3-2286) and Part "Outsmarting Waste" (IMD-3-2311).
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posted June 30, 2012

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Sustainable Development at PepsiCo

Case Abstract

This case is about the sustainable development initiatives of one of the world’s leading food and beverage companies, PepsiCo. Faced with various criticisms on the social and environmental fronts, PepsiCo adopted the ‘Performance with Purpose’ strategy in 2009 under the leadership of its CEO Indra Nooyi (Nooyi). This strategy was based upon the philosophy that the company’s financial performance should go hand in hand with its responsibilities toward society and the environment.

The new sustainable development program contained 47 commitments that PepsiCo made toward society and these were divided into four broad areas: Performance, Human Sustainability, Environmental Sustainability, and Talent Sustainability. The first component was to its shareholders, committing itself to good returns. The other three were to other stakeholders. PepsiCo took various steps to fulfil its commitments toward its stakeholders. It increased the content of healthy ingredients in its products like fruits, vegetables, nuts, grains, and low-fat dairy in its global product portfolio. To counter the allegations that its operations were leading to water shortages in the areas in which it was operating, it achieved a positive water balance in India and tried to achieve the same in other places in which it operated. It introduced several new nutritious products which were also cheaper and hence affordable to the underprivileged sections of society. To reduce the environmental impact of its operations it reduced the use of electricity and fuel in its operations. To understand the different markets in which it operated, it increased the diversity of its workforce around the world.
However, since mid-2011, Nooyi had come under fire from key stakeholders such as shareholders and bottlers who contended that her focus on ‘Performance with Purpose’ had come at the cost of positioning of the company’s products and had hurt sales. They felt that its archrival, the Coca Cola Company had gained the upper hand during Nooyi’s tenure.

Authors: Debapratim Purkayastha, Adapa Srinivasa Rao
Institution: IBS Hyderabad, India
Competition Year2012
PlaceFinalist
TrackCorporate Sustainability
Key WordsSustainable development, Corporate social responsibility, Balancing excellent operating performance with sustainable business practices, Theory of externalities, Stakeholder theory, Performance with Purpose strategy, Human sustainability, Environmental sustainability, Talent sustainability, Triple bottom line, Social criticism, Environmental criticism, Food and beverage sector, PepsiCo
CoursesStrategic Management, Business Ethics
Target AudienceMBA
Permission RightsPlease contact Debapratim Purkayastha for permission rights.
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posted June 30, 2012

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Tropical Salvage: From Recession to Expansion

Case Abstract

Tim O’Brien, Founder of Tropical Salvage, was ready to launch a growth strategy for his company.  He had spent ten years building the sourcing, production and marketing capabilities of Tropical Salvage.  And he had worked successful with a not-for-profit partner to establish the Jepara Forest Conservancy to further the social and environmental missions that had provided the primary motivation for the company.

O’Brien had many key business decisions to make to actualize his growth strategy, including how to finance a new branded retail store, the best ways to build brand awareness of the products, and whether or not to extend the product offerings. The inspiration for Tropical Salvage came to O’Brien during a week of trekking in Indonesia in 1998. O’Brien had encountered stunning biodiversity juxtaposed with wasteful exploitation of natural resources and underutilization of craft traditions. As his travels continued he noticed old wooden structures being replaced by more secure structures built from concrete and rebar. In many instances no plan existed to re-use the old beams, boards and poles. The idea for Tropical Salvage struck – salvaging wood from deconstructed buildings can be a significant source of raw material for hardwood furniture production.
O’Brien started Tropical Salvage based on a conviction that “a reasonable and promising market-oriented strategy can contribute to positive change in a part of the world beset by extraordinary challenges.” Tropical Salvage uses only salvaged, or rediscovered, wood to build its line of furniture. The company uses a variety of wood salvage strategies – including demolishing old buildings, bridges and boats, recovering logs from rivers and lakes, mining entombed trees from the ground and taking trees from diseased plantation timber.  Salvaged wood is cut into lumber, treated for insects and kiln-dried.  From the kiln, woodcrafters construct the furniture. The product catalog includes roughly 150 different models and the company also builds one-of-a-kind custom pieces and furnishings built to commercial specifications. Tropical Salvage’s products are sold in its own warehouse as well as through retail partnerships in the US and Canada.
Although O’Brien is convinced he needs to expand through branded retail, he is aware of some significant challenges. First, there is an abundance of quality salvageable wood in Indonesia but as Tropical Salvage seeks additional sources it will need to ensure efficient salvage and transport processes to maintain the high margins that are important to its expansion efforts. Second, Tropical Salvage lacks a formal computer-based system to track and control its incoming and outgoing inventory. This approach may be strained with the introduction of one or more branded retail locations.  Third, increased demand for its furniture is necessary in order for Tropical Salvage to expand its operations.  O’Brien considers marketing to be his greatest challenge. And, finally, O’Brien needs to determine how to finance the expansion – through retained earnings, debt financing or venture capital. Each option presents different pros and cons and he needs to weigh each before moving forward.
This case study provides students with the opportunity to analyze a social enterprise operating in an intensely competitive global industry.  Background is provided on the competencies of the company, the competitive dynamics in the industry and the challenges and opportunities presented by O’Brien’s intended approach to growing his business.  Students will be tasked with looking at many facets of the business – sourcing, operations, marketing, distribution and finance – to derive recommended actions.

Authors: R. Scott Marshall, Lisa Peifer, Erin Ferrigno
Institution: Portland State University, USA
Competition Year2011
Place3rd place
TrackSocial Entrepreneurship
Key WordsSocial Enterprise, International Operations, Growth Strategy, Hardwood Furniture
CoursesStrategy, Marketing, Entrepreneurship, International Strategy
Target AudienceMBA, Senior Undergraduate Students
Permission RightsThis case is part of the oikos free case collection. Download a free online copy below. If you are a faculty member and you are interested in teaching this case, you can request a free teaching note by sending us an email to freecase@oikosinternational.org.
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posted June 30, 2011

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The ReUse People: Scrap to Sales

Case Abstract

This case discusses The ReUse People, an organisation that specialises in deconstruction of buildings, with the aim of reusing as much of the materials as possible, hence keeping them out of landfill. The organisation is facing a classical growth-related dilemma: should it grow organically, keeping most of the work in-house but hence limiting its growth rate, or should it “franchise” its deconstruction approach by certifying other companies in the deconstruction process? The mission of The ReUse People is squarely environmental, but the organisation is increasingly aiming to provide social benefits too by reaching out to community organisations and providing employment opportunities.

Authors: Charles J. Corbett, William G. Powell
Institution: UCLA Anderson School of Management (USA)
Competition Year2009
Place2nd place
TrackSocial Entrepreneurship
Key WordsDeconstruction of Buildings, Reuse, Managing Growth, Organic Growth, Franchising
Permission RightsPlease contact Charles Corbett for permission rights. This case is also part of the oikos Case Collection book (Volume 2): Case Studies in Social Entrepreneurship and Sustainability published by Greenleaf.
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posted June 30, 2009

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Exiting in a State of Grace: Can Death be Sustainable?

Case Abstract

By August 2007, Deborah Cairns and Fran Reilly had been in business just a year and their alternative, family-directed funeral business had already won a regional sustainable business award. Based in Auckland, New Zealand, State of Grace offered clients socially and environmentally friendly alternatives including involving families where possible in keeping the deceased at home without embalming, and the use of natural products including eco-caskets.
Deborah and Fran appreciated there were plenty of challenges in providing more socially responsible, natural alternatives to traditional funerals and current modes of burial and cremation. Now their fledgling business is gaining momentum, the two women were trying to find the balance between how much and how fast to grow the business, and at the same time meet their family commitments and stay true to their sustainability values. There is an underlying issue surrounding their prioritisation of whom and what needed sustaining most.

Authors: Eva Collins, Kate Kearins, Helen Tregidga
Institution: University of Waikato, Auckland University of Technology, New Zealand
Competition Year2008
PlaceFinalist
TrackCorporate Sustinabiity
Key WordsGreen burials, Start-ups, Sustainable business, Sustainability, New Zealand, Socially responsible funerals, Environmentally friendly funerals, Alternative funerals, Family-directed funerals
Permission RightsThis case was published in: Collins, E., Kearins, K. & Tregidga, H. (2009). Exiting in a State of Grace: Can Death Be Sustainable? International Journal of Sustainable Strategic Management, 1(3): 258-284.
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posted June 30, 2008

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TEMBEC Inc.: Creating Value by Managing Stakeholder Tension

Case Abstract

Throughout the 1990s there was increasing competition for Ontario’s forest land. The forest industry, including Tembec Inc, demanded from the Ontario government more certainty in the lands available to them. To reach a consensus on strategic land use, the government launched Lands for Life process and undertook extensive public consultations. Unfortunately the consultation process resulted in a polarization of stakeholders, and the 242 controversial recommendations threatened to spark a ‘war in the woods’, primarily between the forestry industry and environmentalists.

Tembec’s chief executive office foresaw this conflict and was determined to take a different course of action that would bring a real solution that would meet both the objectives of the forestry industry and environmentalists. He was cognizant that losing access to timber would have a devastating effect on his company, but confident that a consensus could be reached if a rational approach were followed. Students will learn to recognize the long-term opportunity associated with sustainability, and the short-term risks associated with ignoring it, to illustrate the opportunity for stakeholder consultation and partnerships, and to introduce the best practices on stakeholder collaboration and innovative problem solving.

Authors: Tima Bansal, Tom Ewart
Institution: Ivey School of Business, Canada
Competition Year2007
PlaceFinalist
TrackCorporate Sustainabiity
Key WordsStakeholder Analysis, Environmental Business Management, Negotiation, Human Resources Management, Canada, Forest Industry
Permission RightsThis case can be purchased from Ivey Publishing or the Case Centre (9B05M051).
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posted June 30, 2007

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Seventh Generation: Balancing Customer Expectations with Supply Chain Realities

Case Abstract

The case focuses on Seventh Generation, a maker of environmentally-sensitive household nondurables such as soaps, detergents, paper products, and diapers. Faced with the prospect of being without a product when a contract manufacturer could no longer make its natural baby wipes, the company substituted conventional wipes. But some of the ingredients in these conventional baby wipes proved unacceptable to its customers. The case provides a broad background on the industry in which Seventh Generation competes, and the developing green niche within it. A history of the company’s circuitous journey to become the leader in its field is then presented, with special reference to the importance of its corporate values to strategy and staffing. The case closes with a meeting to decide what to do about the baby wipes problem.

Authors: Mike Russo, Dan Goldstein
Institution: University of Oregon, USA
Competition Year2007
Place1st place
TrackCorporate Sustainability
Key WordsHousehold goods, Baby wipes, Corporate values, Values-driven organisation, Environmental differentiation, Managing sustainability-oriented tradeoffs
Permission RightsThis case is part of Environmental Management: Readings and Cases (by Sage) and oikos Case Collection book (Volume 1): Case Studies in Sustainability Management and Strategy (by Greenleaf).
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posted June 30, 2007

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