Running Head: 5-1 Milestone Five

5-1 Milestone Five: Assumption and Contingency

Abstract

The implementation plan contains assumptions; for which ought to be questioned and analyzed.

Future competitors are finding vast success in the ready-to-drink coffee market. Thus, Juan

Valdez, as a brand, has differentiated itself amongst its competition. The success of the product

is highly dependent on the differentiation strategy. The differentiation strategy has given the

brand a place of its own in the coffee industry. The success of the product will be determined by

how it is marketed. It is of importance that what makes the brand different amongst all others be

portrayed on the concept. For it is not only that quality that sets the brand apart from all others,

but also its values, mission, and processes.

Assumptions

The implementation plan presumes to be sound; thus, it makes certain assumptions.

Thus, they can be identified as uncertainties and or risks, for they are assumed for. But, different

can happen. To recognize the assumptions, is to acknowledge the risks that come with the

opportunity.

Financials are assumed to be sound. It is assumed that the investment can be funded by

Juan Valdez—the access to equity capital and sufficient finances are assumed. Conversely, it is

assumed that 5.76 million units will be sold across all of Juan Valdez business lines in the course

of 3 years. More importantly, the company is assumed to break even and make profit from the

implementation after investment has been paid. The soundness of these assumptions also

assumes a steady economy, absent a major recession. The implementation plan also assumes the

continuous access to raw materials as well as environmental soundness; for the quality of

Colombian coffee is dependent on special topographical and agronomical conditions. Fixed

costs, such as utilities, insurance, payroll, and others are assumed to remain unaltered. While

many assumptions were made; they are all for the most part conservative at best. For they are on

the basis of unaltered conditions.

Contingency Planning

It is of importance to plan for the assumed to go as not expected. In response to such

events, a set zone has been established. Thus, a 15% negative deviation from projected returns

and expected sales will be accepted for both financial objectives and sales (Holcomb, Kenkel, &
5-1 Milestone Five: Assumption and Contingency

Blan-Byford, 2006). Thus, if returns and sales objectives are of less than 85%, certain actions are

ought to be undertaken. However, fewer sales are expected during cold winter days.

Juan Valdez will combat the probable issue of unacceptable sales during its first year by

doubling its in-store promotions. The promotions ought to be undertaken during peak shopping

times. If increased sales remain unforeseen within two months; then Juan Valdez will also

double its advertising during chosen days. After four months of marketing, sales ought to be

evaluated. If sales are still undesirable; Juan Valdez will contract marketing specialists within

each of its areas to push the product. The contractual relationship between marketing specialists

and the brand ought to be based on commission of sales (Holcomb, Kenkel, & Blan-Byford,

2006)..

Unacceptable business liquidity would be combated by examining accounts receivable

procedures so that it could be assured that periods of payments are not unjust and that payments

are received within the expected timeframe. Furthermore, cash flow projections will be

evaluated in order to identify unforeseen cash expenses that may be a hindrance to the financial

health of the brand. Combating small margins with small price increase may be considered, but

only in elected locations. However, this option may be unsuitable; for competitors may attempt

a combative pricing strategy. Therefore, assessment of opportunities, such as minimizing

production costs or analyzing different marketing/distribution alternatives may be considered.

In the worst-case scenario; such as disasters, or recession, it may be considered to lessen

production and concentrate on very specific performing markets (Holcomb, Kenkel, & Blan-

Byford, 2006).

Cross-cultural, Economic, and Geopolitical Factors

Brighter days are upon the coffee industry of Colombia; for its government signed an

agreement of peace with the FARC (Revolutionary Armed Forces of Colombia). The military

group controlled two-thirds of Colombia’s coca crops. The absence of such control has created a

worrisome consequence—there is power for the taking. On one hand, the violence has

decreased, but on the other is an increased amount of cocaine (Miroff, 2017). This creates a

fickle environment; for peace is apparent, but uncertainty remains.

Coffee remains to be one of the world’s most traded agricultural commodities; decisions

at the government level may have a tremendous impact on coffee prices and international

business. Coffee’s vulnerability to decease is of threat to the business environment for coffee

leaf rusts can have a disastrous impact on the coffee industry Coffee prices may also be impacted

by coffee inflation; which would take a toll on the coffee industry as a whole. However, Juan

Valdez sources its own coffee and does not need to buy it from a distributor. Therefore, strategic

planning in such case may prove to have a beneficial outcome from such difficult circumstances.

Origin specific products may also be impacted by the preference of made in America products.

It is within the culture of America to occasionally prefer products made in America.

Legally and Ethically Compliant Environment

All products stating 100% Colombian Coffee must meet quality scrupulous standards.

The coffee’s recognitions and certifications (PDO, GI, CM) earn the coffee brand a strong

worldwide worldly reputation (World Intellectual Property Organization, n.d.). Out of these

certifications, the Certification Mark is the one that pertains to the US. It is a type of trademark

which is informs consumer that the particular product has undergone rigorous processes. The

recognitions come with a responsibility—to adhere to its placed stringent processes. The ready-

to-drink cold brew coffee must align itself with such standards. Thus, Juan Valdez would be
5-1 Milestone Five: Assumption and Contingency

operating within the beverage industry which come with different regulations, permits, and

patents. The implementation would require different regulations to be followed through; thus,

the product is unlike anything in the current portfolio. Therefore, it may need to apply for new

licensing.

Juan Valdez is a participant of the largest corporate sustainability initiative in the world

—the United Nations’ Global Compact (United Nations Global Impact, n.d.). The participants

of the initiative adhere to enforcing an alignment between operations and processes with

universal principles on the environment, human rights, labor, and anti-corruption (United

Nations Global Impact, n.d.). This same culture ought to be symbiotic with the processes

executed in the implementation of the ready-to-drink cold brew.

Stakeholder and Customer Diversity

Juan Valdez has recently teamed up with DDB Worldwide—a worldwide marketing

communications network. The two entities have recently teamed up again (had teamed up back

in 1959 when the iconic character began his stardom) after parting ways in the late 1990s

(McAteer, 2018). The project will incorporate customer diversity through the marketing

communications network. With giants, such as Starbucks, already marketing a cold brew coffee;

the product must cut through the resonance and target the new generation of coffee drinkers;

whilst closing the gap between consumers in the 40s and 50’s who know and have been exposed

to Juan Valdez and the younger Millennials and Gen Xers who have yet heard of it. Juan Valdez

has yet to resonate within the American market; but, it operates over 99 stores in 14 other

countries.
5-1 Milestone Five: Assumption and Contingency

Juan Valdez’s vision is “to be the premium Colombian coffee brand preferred globally by

its quality and the well-being that generates around it (University of San Diego, 2014). The

brand seeks to emerge the consumer with the roots of Colombian coffee and to create well-being,

a level of satisfaction, and to create emotions around the best coffee in the world (Norton &

Dann). To incorporate customer diversity; these strategies will be executed with the

implementation of the ready-to-drink cold brew coffee.

Corporate Social Responsibility

The brand Juan Valdez is a means for the coffee growers to create value with their coffee.

But, the federation does more than that. For it has built thousands of schools, funded numerous

amounts of infrastructure road projects, hospitals, and clinics (Department of Environmentally

and Socially Sustainable Development, 2002). The federation also arms the coffee growers with

the necessary technical assistance to increase quality and quantity. All meanwhile executing

processes that are good to this world. Buying from Juan Valdez makes a direct impact on the

welfare of thousands of coffee-growing families. The small-scale coffee growers of Juan Valdez

are actual shareholders. Thus, Juan Valdez is the only coffee brand in the world that belongs to

the growers (Department of Environmentally and Socially Sustainable Development, 2002).

Corporate Social Responsibility is not just some slogan for Juan Valdez—it is part of its identity.

It is an instrument of social responsibility and peace. Adding this concept to the portfolio of

Juan Valdez would only enhance these efforts hence it would increase its exposure to its

consumer base.

Conclusion
5-1 Milestone Five: Assumption and Contingency

The assumptions made were very safe and not very risky. It could be assumed that a

great product would perform well across the four different value streams of Juan Valdez. Thus,

Juan Valdez has accumulated vast amounts of success since its inception. Its values and

practices are major components of its long-tenured existence. The practices adhere to its

differentiation strategy. While all these factors are predictors of a successful implementation;

there is always a need to plan for contingency. The contingency plans are to attempt different

strategies before fully exiting a very exciting and viable opportunity. Absent tragic

circumstances, if executed with precision; there aren’t many reasons for failure. The concept

would be well differentiated and of superior quality. It is the marketing that is more of concern

and is assumed to be executed with precision and success. Besides the previously mentioned

cultural factors that may impact the implementation; what also may impact the implementation is

the fact that the product derives directly from Colombia. While the coffee from Colombia is

commonly known as being of superior quality; other domestic brands like dunkin’ donuts or

Starbucks could be chosen over Juan Valdez simply for being domestic, for some consumers

prefer domestic products. However, other factors, like its values, quality, and impact may

compensate for this weakness; thus, other coffee brands can’t boast such practices.
5-1 Milestone Five: Assumption and Contingency

References

Department of Environmentally and Socially Sustainable Development. (2002). Colombia:

Coffee Sector Study. Colombia Coffee Sector. Retrieved from

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nucci1et1al01PUBLIC1.pdf?sequence=1&isAllowed=y.

Holcomb, R., Kenkel, P., & Blan-Byford, L. (2006, January). A Sample Business Plan for Small

Food Businesses. Retrieved from

https://www.uvm.edu/vtvegandberry/Pubs/SampleFoodBusinessPlanOklahomaState.pdf

McAteer, O. (2018, September 6). DDB Welcomes Back Iconic Juan Valdez After 30-Year

Absence. Retrieved from https://www.campaignlive.com/article/ddb-welcomes-back-

iconic-juan-valdez-30-year-absence/1491632

Miroff, N. (2017, May 08). A Side Effect of Peace in Colombia? A Cocaine Boom in the U.S.

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side-effect-of-peace-in-colombia-a-cocaine-boom-in-the-us/2017/05/07/6fb5d468-294a-

11e7-9081-f5405f56d3e4_story.html?utm_term=.8f843debd59a

Norton, M., & Dann, J. (2013). Juan Valdez: Innovation in Caffeination. Harvard Business

School. Retrieved from file:///C:/Users/jeisa/Downloads/513090-PDF-ENG (1).PDF.

University of San Diego. (2014, November 18). The Man, the Country, the Brand: Juan Valdez

Café. Retrieved from http://sites.sandiego.edu/ahlers/2014/11/18/the-man-the-country-

the-brand-juan-valdez-cafe/

World Intellectual Property Organization. (n.d.). Making the Origin Count: The Colombian

Experience. Retrieved from http://www.wipo.int/ipadvantage/en/details.jsp?id=2617