The Revolutionizing Fresh Produce atFreshTec - Case Study Example

? Fresh Tec Table of Contents Table of Contents 2 External factors affecting the industry 3 Best approach by Fresh Tec 4 Target audience of Fresh Tec5 Need to train the growers 6 Growth Plan (fast aggressive or slow aggressive) 7 Does the disruptive nature of Smart Pac affect its launch path 7 References 9 External factors affecting the industry The main environmental issues affecting the fresh produce industry is related to the fresh produce senescence problem. The fresh produce is often damaged before being delivered to the destination. During the process of transpiration, the mother plant loses water. But these plants cannot replace this lost water from the fruits and vegetables after the harvest. Due to the loss of water, these fruits and vegetables lose weight, the cellular structure and begin to decay. The growers of fresh produce always compete against senescence. The growers have a tendency to harvest the fruits and vegetables before they are ripened in a proper manner. This in turn has a negative impact on the nutritional value and the quality of these fruits and vegetables. The loss of fruits and vegetables after harvest was an issue globally. The high content of water as well as the soft texture of the plants and vegetables increased the chances of physical injury. The fruits and vegetables were affected by the injury caused due to the extreme hot and cold temperature. This resulted in significant effects like rapid decay due to the freezing or high temperatures. Moreover, in the post harvest produce diseases are caused by bacteria and fungi. It is generally spread by various microscopic spores. As a result it is not often visible by the producers, packers and the retailers. The main purpose of fresh produce is to supply fresh food worldwide (Fresh Tec, 2011a). It has come up with the Smart Pac Systems solution to provide a solution to the aforementioned issue. Fresh Tec has come up with a technology which is distinguished from the other technologies because of its two aspects (Fresh Tec, 2011b). The effective way of exchanging heat from the box complied with that of the industry pressurized cooling has a positive impact on the fresh produce. It also has a natural oxidation purification system which cleans as well as sterilizes the produce while it is in transit. This technology will help to reduce the damage caused due to the environmental factors. The Passive Modified Atmosphere Packaging provided by Fresh Tec extends the life of the fresh produce. It also helps to pick the fresh produce after its ripening and deliver it to the customers with improved quality and cheaper means of transport. The natural oxidation system of Smart Pac has a food safety solution which is differentiated from that of the traditional MAP systems. The strict standards related to the quality, ripeness and food safety will help Fresh Tec to succeed in its purpose. However, there are some other factors which might act as a barrier to the success of Fresh Tec. One such barrier is the consumer switching costs. Moreover there is an increasing rivalry from the existing companies in the fresh produce industry. This arises mainly because of the price competition and high values of fixed costs. The increasing rivalry among the existing companies in the fresh produce industry can create a barrier in the success of the company. As already mentioned earlier, the rivalry among the existing companies in the fresh produce industry can act as a barrier to the success of Fresh Tec. The company hopes to attract and win the customers because of the quality, subsidiary servicing and brand imaging. The company needs to choose the right strategy in order to achieve competitive advantage over its competitors. The Smart Pac technology is a unique technology in the fresh produce transporting chain. Fresh Tec is having the advantage to lead the industry by effective utilization of this technology. The right strategy to acquire a leading position in the market is by implementing the Smart Pac technology, which will protect the produce from getting damaged at the time of delivery and will also increase the longevity of the freshness, but at lower cost so that it is easily affordable by the growers, retailers etc. Best approach by Fresh Tec Fresh Tec has a new and innovative product which has not been identified as a technology to revolutionize the fresh produce industry. It should implement an appropriate strategy which points out the issues that is needed to be resolved. The company can involve a partner having the capability of cooperating with a project that can bring an extreme change to the present supply chain system. The food service businesses will have to implement the technology of Smart Pac into their present supply chain gradually. The advantages of this technology are greater than the other existing packaging solutions. The long lasting freshness and the resolution to the global shipping issue will result in the increase in the demand of the technology in the market (Fresh Tec, n. d.). Fresh Tec will provide education to the growers, brokers, customers and packers in order to adapt to the logistical changes. These advantages are the positive factors which will give added value to the partners for entering into a partnership business with Fresh Tec. It can implement another strategy for approaching to the industry with the new technology by partnering with the growers and facilitating their needs for proper packaging solutions. It would attract the local growers and farmers everywhere which will help to expand the operations of Fresh Tec. This strategy has good opportunity because the new technology would help the company to enter into the fresh produce market easily. The company has a third option to act as a buyer and run a buy to sell operation. It might involve a large number of logistical challenges. It should focus on the farmers or the growers and the countries which could not reach to the emerging markets. According to Ping (1993), McLaughlin (1995) and Shaw and Gibbs (1996) there have been dynamic changes in the buyer to seller relationship in the fresh produce industry due to the increase in the share of multiple retail market. The company will have to select the best option which can give the best value to the Smart Pac Technology. Long term strategy for the company to acquire a leading position The right strategy for the company, while approaching the industry with the new technology, is to enter into a partnership with another company having the capability to cooperate with a project implementing the Smart Pac technology in the existing logistical system. It will increase Fresh Tec’s operations rapidly along with the increasing demand. Target audience of Fresh Tec The target audiences for Fresh Tec are the farmers, retailers and the brokers. Retailers, wholesalers and food service operators typically control the regional distribution centers where the produce is initially delivered, merged into mixed loads, and trucked to various stores in that area. This allows retailers to control delivery process to the stores and ensure an efficient supply of product. Supermarkets made a gross profit of 25% to 55% approximately on fresh produce; which was significantly higher than that of other products being carried to the stores. The reason for the difference in the margin was due to the perishable nature of these produce and requirement of correct timing and proper controls. On an average, fresh produce accounted for almost 10% of total supermarket sales. The global nature of this market enhanced the supply. Farmers or growers are mainly the suppliers to a bigger company, and are actually the independent dealers. Larger growers dominate the export market, whereas the smaller growers focus on the domestic market in order to earn their living. Some of these big growers own packing houses; some others work closely with a packer of the fresh produce who handles, maintains and packs the produce before it is sent to the destination point. If the packing station has not been owned by the farmer, it would have been owned and operated by a broker or a trader. A trader is the one who purchases the produce from the grower, cleans it, packs it, and finally delivers it to sellers like supermarkets or wholesalers, and other food service operators. In some cases there is an additional link in between called commissioning agent. The commissioning agent works with a farmer or a trader. The commission agent is often advantageous for the growers as well as the traders, as these agents are well connected and can easily find markets that will be ready to pay higher prices for produce rather than burdening the farmer. The growers, retailers and brokers are very important in the fresh produce industry. Thus the company should focus on the growers, traders and the commission agents as their target audience in order to achieve a remarkable position in the fresh produce market. Need to train the growers The growers harvest the fruits for export purpose before they are ripened. This early harvest does not allow the fruits to ripen in the natural process and results in the decrease in their nutritional value, quality and taste. Fresh Tec should train these growers to pick the fruits when they are ripe. This will maintain the actual quality and the nutritional value of the fruits when delivered to the customers. The mother plants undergo the process of transpiration during which they lose water. The process of respiration by the plant cannot replace the lost water after harvest and as a result the fruits lose weight, cell structure etc. Growers are always in a competition and race against senescence. This decreases the quality of fruits. The growers need to slow down the senescence rate of fresh produce in order to prevent the alteration in the taste, quality and nutritional value of the produce. The loss of fruits after being harvested is the major concern of the growers worldwide. Moreover, the developing countries lack proper infrastructure that is required for the harvesting purpose. Thus Fresh Tec should make an attempt to reduce the damages caused to the fruits due to the early harvesting done by the growers. The packaging should be done based on the technique of later picking times of the fruits. This will allow the fruits to have optimum amount of sugar to acid ratio and also retain the vitamin content in them, without being damaged, when delivered to the customers. Growth Plan (fast aggressive or slow aggressive) The best strategy that should be implemented by Fresh Tec to approach its new technology in the fresh produce industry is by entering into partnership with another company which can cooperate with the project of Smart Pac Technology. It should focus on a less aggressive growth plan in order to launch its new product in the market. A fast aggressive growth plan for launching the product can be risky. The product should initially be marketed in the domestic market. If the response of the customers in the domestic market is positive then the company can expand its operations in the international market as well and serve the purpose of longevity of the fresh produce globally. According to Mackintosh (1977), Caspar (1987), Islam & Subramanian (1989), Islam (1990), Hinton (1991) and Sparks (1992) the export volume of fresh produce changes based on the dispersion by the country and the type of the product. If the company initially plans for the launch of the products in the domestic as well as international market then the increasing demand of the customers will be a pressure for the company. Moreover starting the operation with a very high production leaves chances for some errors. If the company faces any failure in the logistical system or the management then it can affect its reputation. It should start with the operations in the domestic market and slowly expand its operations so that no fault arises and the customers of the target market get satisfied. Does the disruptive nature of Smart Pac affect its launch path Even if the Smart Pac is a disruptive technology but it has good opportunities which will help to prevent the barriers in the launch path of its products. The company has chances to make good amount of profit as the new technology is unique and will be implemented by the most of the growers and retailers gradually. The environmental issues related to the fresh produce are increasing the concerns of the growers and the retailers which in turn are increasing the opportunity of Smart Pac technology. This technology has provided a solution to the global shipping issues. Moreover it has provided the ability of shipping from markets involving low labor costs. There are some challenges that can obstruct the success of the company. The cost of Smart Pac boxes is almost double as compared to the traditional boxes. This can lead to the reduction in its demand. The implementation strategy which will adjust with the present financial and non financial factors of the company is still to be decided. The company should find ways to face such challenges and overcome them in order to achieve a leading position in the fresh produce industry. References Caspari, C. (1987). European Fruit and Vegetable Markets and Trade. Agra Europe special report, 35. Fresh Tec. (2011a). The Smart Pac Systems Solutions is right on time. Retrieved from http://mfvs.cc/freshtec-html/index.html. Fresh Tec. (2011b). The SmartPac System incorporates three key innovations. Retrieved from http://mfvs.cc/freshtec-html/smart-pac-system.html. Fresh Tec. (n. d.). Why work with Fresh Tec? Retrieved from http://www.freshtec.co.uk/freshtec.html. Hinton, L. (1991). The European Market for Fruit and Vegetables. London: Elsevier. Islam, N. (1990), Horticultural Exports of Developing Countries: Past Performances. Future Prospects, and Policy Issues, International Food Policy Research Institute, research report, 80. Islam, N., & Subramanian, A. (1989). Agricultural Exports of Developing Countries: Estimates of Price and Income Elasticities of Demand and Supply. Journal of Agricultural Economics, 40(2), 221-231. Mackintosh, M. (1977). Fruit and Vegetable as an International Commodity: The Relocation of Horticultural Production and its Implications for the Producers. Food Policy, 2(4), 277-292. McLaughlin, E. (1995). Buying and selling practices in the fresh fruit and vegetable industry in the USA: a new research agenda. International Review of Retail, Distribution and Consumer Research, 5(1), 37-61. Ping, R. (1993). The effects of satisfaction and structural complaints on retailer exiting, voice, loyalty, opportunism and neglect. Journal of Retailing, 69(3), 320-352. Shaw, S., & Gibbs, J. (1996). The role of marketing channels in the determination of horizontal marketing structure: the case of fruit and vegetable marketing by British growers. The International Review of Retail, Distribution and Consumer Research, 6 (3), 281-300. Sparks, A.L. (1992). Impact of the Targeted Export Assistance Program on US Exports of US Apples, US Table Grapes, and California Citrus. Journal of International Food & Agribusiness Marketing, 4(2), 1-22. Read More