Date post: | 01-Jan-2016 |
Category: |
Documents |
Upload: | francine-dean |
View: | 216 times |
Download: | 1 times |
1
Even’ Star Organic Farm
By Chasedream
The Association for Accountants and Financial Professionals in Business
Case Overview
3
Demand & Supply
• Lower yields than planned
• Larger potential customers
Sales & Service
• Restaurants• Community-supported agriculture• Farmers’ market
Production• 10 Acre of land
• High-quality organic vegetables
Profit
maximization
(best market
share)
Proposal III
Case Analysis
Profit
maximization
(best cash flow)
Proposal II
Profit
maximization
Proposal I
0 5000 10000 15000 20000 25000
Restaurant profit
CSA profit
3800
8597.21
12254.28
13631.34
15388.41
17145.47
11395.36
10124.12
8852.89
7581.65
6310.41
6
7
8
9
10
11
Restaurant Customers
87
77
67
58
43
25
CSAsubscribers
12666.59
Proposal I—profit maximization
When serving 6 restaurants 87 CSA subscribers, the farm get
the HIGHEST PROFIT.
CSAsubscribers
0 5000 10000 15000 20000 25000
Restaurant profit
CSA profit 13176.46
14628.68
12660.91
7581.6
6310.4
3767
2
3
4
5
6
7
Restaurant Customers
90
90
81
71
62
528059.7
5362
9892.0
5397
5039
11344.23
5432.4
5467.4
5502.4
5537.5
Farmer Market (Sunday)
When serving 3 restaurants, 90 CSA subscribers and Sunday farmers’ market, the farm can get highest profit under the
precondition of highest cash flow
Proposal II—Cash Flow
0 5000 10000 15000 20000 25000
Restaurant profit
CSA profit 7389.7
8835.3
10660.9
7581.6
6310.4
3767
2
3
4
5
6
7
Restaurant Customers
83
73
64
54
444417
5039
5811
Farmer Market (Sunday)
8165.6
8344.2
8522.8
8694.0
8855.1
9016.1
Farmer Market (Sunday & Saturday)
CSAsubscribers
Proposal III—Sales Channels
When serving 2 restaurants, 83 CSA subscribers and both
farmers’ markets, the farm can get highest profit under the
precondition of three channels
9
Three Proposals—Summary
These three proposals are our strategy to overcome the low yield and high demand problem in the short-term.
We prefer the second proposal for its abundant cash flow and relatively high profit. Additionally, three channels have been covered in this way.
10
CSA and farmers’ market can generate
high cash flow for restaurant’s
development.
Restaurant10 customers to 20
Profit proportion is about 57% ,which is high.
BCG long-term development
We should increase the market share for
restaurants in the long run.
11
Market risk Future Contract
Financial risk CSA Channel
Environmental Risk
Legal protection
How to solve?
Even’ star can sign future contract with
restaurants to reduce market risk. Subscription from CSA channel can relieve cash flow
pressure.Seeking legal
protection is the best way to defense contamination.
Risks
Market demand fluctuates and may not consistent with
production.
Low demand will lead to cash flow problems.
Adverse weather and potential pollution will
reduce production.
12
Case Analysis
Package Communication
ProductDelivery
12
HIGH
LOW
Process complexity
HIGHLOW Strategic importance
Harmon’s Matrix
Technology improvement--irrigation
Production expansion
Product
Environmental protection
On-line sales order processing
Automatic reply
Communication
Manual regular check
Automatic delivery reminder
Outsourcing to logistic companies
Delivery
Experienced staff to increase efficiency
Regular contact with order and delivery system
Package
13
Social responsibility
Organic farm Providing more job
opportunities
Crop rotation, intercropping can benefit the land.
Landscape for Recreation for the
public
Ecological balance—no harm to hilly land and soil and
water conservation
14
Advice & Tips
• Provide a more free choice platform for customers.
• Utilize the unused land.
• Adopt more accurate weather forecast.