Expansion Strategy for Fresh Grower

Assignment Taken

Prepare a 2 years expansion plan, considering Finance marketing human resource and IT Tools & resources in mind. Identify & Resolve, all business-related issues according to your department

Case Understanding

Mr. Chitranjan Desai started procurement and delivery of Fresh Farm produces in Pune, in order to promote the farm to table concept as the fresh produce has higher health benefits. The idea was to procure farm produces directly from farmers and deliver to consumers. There are several problems that Mr. Chitranjan and his team are facing and some of the are: 1. Early Harvesting: Farmers tend to harvest their produce early and ripe them either through chemical process or naturally. That defeats the purpose of fresh and nutritious food. So Mr. Chitranjan has a task to convince farmers to adopt timely harvesting. 2. Partial Harvesting: Another issue Mr. Chitranjan and his team had at their hand is the partial harvesting by farmers depending on the demand. Currently, the farmers tend to harvest their complete produce at one go and save costs and efforts. 3. Organic Farming: Another challenge at hand was to convince farmers to adopt organic farming as it is sustainable, reduces the risks of health issues like cancers which are caused due to excessive use of pesticides, urea and germicide. Also, use of these harms the fertility of the farmland in the long run. 4. Time (Farm to table): The target was to procure the produces and deliver to the customer within 3 hours, but they were not able to manage the time below 6 hours, which was the best-case scenario, and it was not always easy to maintain. 5. Marketing: Another challenge for the team was the marketing challenge. Many consumers found it very convenient to purchase either from Local Vendors Or from App Based daily need ordering services. Both Local vendors & App based services claimed that they are supplying fresh produces as well. So it was essential to communicate to customers how fresh the produce that is delivered to them by ‘Fresh Grower’ is better and superior than their competitors and show the differentiation in their service compared to others. 6. Expansion: They had to strategically expand to at least 3 other cities in 2 years along with growing financially.

BCS Solution Summary

Expansion Plan: The expansion to metros will have to be decided strategically. Since metros like Mumbai, Nagpur and Ahmedabad are in the vicinity of Pune. This will help in reducing the administrative costs and help in streamlining operations. HR: The HR aspect would involve a multi-generational workforce hiring model for better talent pool. Apart from this, there will be application of external pay equity theory for competitive compensation to attract and retain talent. Marketing: The marketing along with the sales team, will have to ensure that they are able to communicate the USP of Fresh Grower about the low turn around time of 3 hours via the marketing campaign and sales processes. At the same time, a focus on CRM Process (Customer Relationship Management) would help in customer retention, better customer satisfaction, and promote word of mouth. A STP (Segmentation, Targeting and Positioning) analysis will in help in focus on a target population that are most likely to subscribe our service. Finance: Currently, there is high operational expenditure. With expansion, the operational expenditure needs to be optimised, which can be done with a centralised management through Head Office in Pune. Also, there should be focus on digital expansion due to its low cost compared to other methods. Also, a marginal costing approach should be adopted to check the breakeven point and attract VC and investors. IT and Business Analytics: A comprehensive MIS system and ERP system will have to be incorporated to help streamline operational processes. At the same time, a robust and efficient MIS system will help in the better analysis of customer buying pattern and take informed decisions for growth strategies.

Solution

Each of the problems will be required a solution and needs to be tackled strategically.

 

Expansion Plan: The expansion to metros will have to be decided strategically. Since metros like Mumbai, Nagpur and Ahmedabad are in the vicinity of Pune. This will help in reducing the administrative costs and help in streamlining operations. Other reasons for selecting these cities are Mumbai – High population and many posh areas will be a huge advantage. Along with the close vicinity with Pune is a positive point. Nagpur – Nagpur saw huge investments in the last few years with projects like MIHAAN. Also, there was influx of many IT companies and industries gave rise to increase in young working population with higher disposable income. This is an advantage. Ahmedabad is one of the fastest growing cities in the country. This will also be an advantage for Fresh Grower if operations commence in the city.

 

HR: An experienced person from agricultural or farming industry should be hired at advisor role to guide on the right crop as per the cities’ climatic needs and provide right assistance in growing crops to farmers. An experienced person from agricultural or farming industry should be hired at advisor role to guide on the right crop as per the cities’ climatic needs and provide right assistance in growing crops to farmers.

External Pay equity Theory will have to be applied for compensation management. HR Team will have to research about the pay scale that other companies are offering to the experienced salesforce in that city and decide the salary base for their sales staff accordingly. This theory will help Fresh Growers to attract competent sales team for them.

There should also focus on hiring fresh talent for internship from MBA and agricultural colleges of those cosmopolitan cities as these fresh hires are curious and passionate enough about their career goals which help them deliver better performance. Fresh hires should be hired for marketing department predominantly to build a sales team.

A better recruitment model can also be devised by HR Managers to attract the best talent by collaborating with the all the functional heads of the company to know the job skills they look for in their team. To assess the role-specific behavioural skills of the candidates, various psychometric tools (such as MBTI, Big Five personality test) can be incorporated in recruitment model to determine the right personality fit for the job role.

 

Training and Skill Development will be an important part of the company since the company is in its initial stages of incorporation. Trainings will have to be focused on Communication skills training, Product training and Sales Training.

Product training will primarily focus to give information about profitable crops, make them understand the whole organic process involved in farming and make them understand the target audience’s needs and preferences. This will help in better engagement with initial stakeholders of value chain like farmers and empower them. Also, this will increase loyalty of farmers with the company. Communication skills training and sales training will help the in engaging better with customers and increase the revenue of the company.

 

Marketing: A STP Analysis (Segmented Targeting and Positioning) needs to be done.

Initially all the different groups will have to be segmented, based on income levels, area of residence, age groups, number of family members, etc on the basis of a survey and market research. Based on this, It will help in identifying a target group that can become our potential customers. Later, our service will need to be positioned according to different target groups. For health-conscious people, we will have to position our service to communicate the message that Food direct from farm within 3 hours which helps conserve the nutritional value in the food. Whereas, for other customers, we will have to position on the freshness of the food compared to our competitors like local vendors and app-based services.

A marketing campaign focusing on the USP and differentiation of Fresh Grower’s service should help in customer acquisition who currently buy from local vendors. Marketing and sales team would help to get partnership with housing societies and Corporates. This can help increase the customer size and demand. Also, there should be initially increased focus on higher income customers.  Increased marketing on higher, Premium service to these customers can help in charging a premium over existing prices and result in revenue gains along with profitability. At the same time, a focus on CRM Process (Customer Relationship Management) would help in customer retention and satisfaction.

 

Finance: Currently, there is high operational expenditure. With expansion, the operational expenditure needs to be optimised, which can be done with a centralised management through Head Office in Pune. Also, there should be focus on digital expansion due to its low cost compared to other methods. Also, a marginal costing approach should be adopted to check the breakeven point and attract VC and investors. The profits can be expected to be negative due to expenditure on marketing, discounts and offers which are expected to increase the customer acquisition rate and retention for initial few quarters. Later on, the company is expected to generate positive cash flows and profits. Additionally, a debt-equity model will be beneficial for the owner, Mr. Chitranjan, since a higher equity ownership with VC and investors can give rise to involvement in decision making in the company and affect the autonomy of the company.

 

IT and Business Analytics: A comprehensive MIS system and ERP system will have to be incorporated to help streamline operational processes. The ERP System (Enterprise Resource Planning) should help in improving the efficiency of day-to-day operations, right from procurement. At the same time, a robust and efficient MIS system will help in the better analysis of customer buying pattern and take informed decisions for growth strategies. The ERP and MIS system will have to be integrated for better analysis and optimization of in-house processes as well as company operations.   

 

Early Harvesting, Partial harvesting and organic farming issue: Early harvesting, and refusing to partially harvest and follow organic farming by farmers is primarily due to economic reasons. If the farmer needs cash, he tends to liquidate his crops early by harvesting early to sell and ripe the crops or produce either chemically or naturally (depending on the location of transportation etc). Also, farmers refuse to harvest partially, as the cost of harvesting the whole farmland is economically feasible and requires lesser efforts. As a support, we can tie up with a microfinancing firm to get our partner farmers a financial support at a subsidised rate. Additionally, we can partner with an existing firms that rents or leases farming equipment to our partner farmers at a subsidised rate. This will help farmers adopt partial farming which can help us get fresh food regularly. At the same time, a helpline or support from company can be provided to help farmers get knowledge of modern and efficient farming methods and help them stay updated with the field. Also, a initiative campaign can be organised to enlighten farmers the benefits of organic farming and to let them know the disadvantages of using pesticides, urea and fertilizers in the long run. All this can help in addressing the issues of early harvesting, partial harvesting and organic farming to some extent. Depending on the response of the farmers, we can further decide upon other strategies for the same.

 

Turnaround time: Currently, the best possible turn-around time is 6 hours, and we have to reduce it to 3 hours. Presently, harvesting takes 2 hours and is done manually. With the machines and equipments that we will help farmers rent or lease will reduce the harvesting time by at least half(based on studies available on internet). Additionally, we will be encouraging partial harvesting, which will reduce the time further. This is expected to make harvesting time 30 minutes (saving 90 minutes).

Currently, sorting, cleaning and packaging takes 2 hours, we can train the existing employees, as well as hire a few to reduce the time by 1 hour. At the same time, capital can be invested to by faster sorting and cleaning machines or automating some time taking processes. This will save 60 minutes. Further, a route optimization model along with live traffic tracking included will have to be implemented for last mile delivery wherein, we can reduce the transportation time to consumers place by 30 minutes. Hereby saving 3 hours (1.5 hours harvesting, 1 hour cleaning and sorting and 0.5 hour transportation to customer’s place).

Conclusion

Multiple suggestions with respect to each department and improving the value chain have been suggested. These include, expanding to 3 cities; Mumbai, Nagpur and Ahmedabad. Implementing a robust Marketing plan for customer acquisition and retention. Implementing MIS, ERP and Analytics in the organization processes. Promoting partial harvesting by rental and leased equipment at subsidised rates. Microfinancing to partner farmers to encourage timely harvesting and several initiatives to promote organic farming have been suggested. Additionally, The turnaround time of 6 hours can be reduced to 3 hours by adopting mechanised harvesting, implementing route optimization model for transportation and adopting faster cleaning, sorting and packaging process.

Attached File Details