The paper describes the case analysis of Technoserve and the Tanzanian Specialty Coffee Industry. The issue in the case is important as it reveals how foreign investment and business partnering in today’s world helps to boost sustainability.
Technoserve and the Tanzanian Specialty Coffee industry
Key issues in the case
Tanzania has the ability of producing coffee in large scale for competition in the world market. Previously, Tanzania had the ability to produce coffee in bulk until 1990 when the production fell drastically and it faced the challenge of being phased out in the world market because of obsolete technology and system of production (Parrish, Luzadis, & Bentley, 2005).
It was until a Washington-based non-governmental organization named Technoserve came into assistance. Technoserve’s goal is to partner with entrepreneurs and business men in the world’s poor areas and assist in income creation, opportunity utilization, and economic growth (Technoserve, 2004). The USDA/USAID funded organization assisted the industry stakeholders to develop and implement ways in which Tanzania’s coffee can rejuvenate to the top position in the world market (Parrish, Luzadis, & Bentley, 2005). For the project to succeed, effective governance, proper delivery of service, trust, capacity building, competitiveness market linkage, and sustainability had to be instilled by Technoserve as they lacked in Tanzania’s business execution.
Technoserve has helped the farmers in Tanzania to increase their income, as well as helped the industries to come up with modern methods of production. This has helped in improving the quality of coffee that is being produced. The approach has enabled the farmers to get high profits from their produce and as a way forward it has improved their live hoods and enhanced their entrepreneurial skills through training and education (Technoserve, 2004)
Additionally, Technoserve approached the Tanzanian government and negotiated a reduction of import and export taxes on the coffee product as this was initially high. The taxes were reviewed and amended in order to match the other world producing coffee nations, thus boosting competition.
Paul Stewart model for calculating rate of return on the investment
Paul Stewart is the financial and business advisor of Technoserve in the coffee production and has worked for 7 years in Agribusiness activity in East Africa making him knowledgeable the strengths, weaknesses, opportunities, and threats of investing in the region (Linton, 2005). Paul Stewart could set up his model for calculating the rate on investment by establishing a timeline for cost returns.
Stewart had to identify the stakeholders who were sustainable in coffee movement and analyze their goals and interest, review the existing goals and labeling, evaluate the experience of existing coffee initiatives, and assess demand for new common set of standards which he had to examine the feasibility and at long last led him to develop strategic recommendations for promoting sustainable coffee (Linton, 2005). Already, over 550,000 small scale farmers were organized to 300 cooperatives which simplified the process.
Capturing uncertainty of the investment
Stewart could capture the uncertainty of the investment, whose lower side could be caused by misappropriation of funds and generally poor business governance (Linton, 2005). Technoserve’s supplement on the investment encouraged business ethics, promotion of value of specialty coffee to consumers, consciousness of the environment, and its sensitivity, which was being supplemented by spirit of cooperation and commitment to quality.