Cool Pastures Dairy: Kenya's Changing Milk Market (A)

This three-part case highlights the strategic decision-making and growth management challenges in the suddenly liberalized Kenyan dairy industry. Following the 1999 collapse of the nation-wide distribution system on which small-scale dairy farmers in Kenya relied to reach the market, the resulting gap in the value chain between supply and demand created an opportunity for one entrepreneur. Cool Pastures Dairy was later founded in 1999 and rapidly expanded in an atmosphere of not only little competition but also corruption and lack of infrastructure, especially poor roads, limited banking, and almost non-existent cell phone accessibility. Although the company considered various alternatives to expanding, the business was overcome by problems with inefficient or corrupt retailers and accountants, as well as the owner’s lack of business experience, and went bankrupt. When conditions improved as the government invested in infrastructure, the entrepreneur considered restarting his business. Is this a viable enterprise in light of improved conditions? Which expansion alternative should the resuscitated company pursue? The B case 9B13M045 discusses managing corruption and the C case 9B13M046 re-considers the business model.