FarmFresh Logistic Company - Case Study Example

 Business Plan for a Logistic Company TABLE OF CONTENTS Statement of Intention 3 Executive Summary 5 Business Objectives 5 Mission Statement 6 Success Measures 7 Bringing Indian Farmers to Mainstream 7 Financial Report 8 Financial Plan and Income Statement 9 Start-up Summary 10 FarmFresh products 10 Marketing Plan 11 Marketing Channels 12 Corporate Partner 13 Better Utilization of Resources 13 Our Corporate Social Responsibility 14 Conclusion 15 References 16 Letter/ Statement of Intention The idea of ‘FarmFresh’ that we present to its stakeholders will be an enlightening business step forward as it would be welcomed wholeheartedly. It is not just a plan to start a business and market its goods with the traditional perspectives or prevailing marketing set-ups, but a breakthrough that FarmFresh generates and approaches a new market segment within US food market. We discover a new segment of the market for supplying fruits and vegetables that was untouched or poorly served by other businesses. Basically, the growing concerns of US customers for consuming ‘fresh, premium and hygienic’ foods has been considered for assessing our market demand. FarmFresh finds the opportunity for an exceptionally effective logistics from the prevailing market circumstances that none of them can fulfill the growing needs of customers towards ‘fresh’. From being a sort of foods supplier from an already available and established manufacturer, FarmFresh attempts to make use of those hundreds of local farms that have been less marketed due to a number of local and environmental difficulties. FarmFresh will be socially responsible to their problems and thus we propose to provide assistance to these farmers in order to make them competitive and to work together. The advanced cold storage, high preservation and fast transporting facilities would help us keep our goods always as fresh as in the farm. FarmFresh, more specifically, is a link between ‘Farms’ and ‘Fresh’; linking Asian farms to US customers who increasingly need fresh fruits and vegetables. With a mission to continually add vitality to the life by meeting every day needs for fresh and premium quality goods and a vision based on ‘customer focus’, FarmFresh would be able to build its brand loyalty through its own markets and to achieve greater growth in its marketplace within the first two years itself. Our market forecasts and financial targets show that we would be able to generate a reasonable net profit of more than 12% of its total revenue within the first year and to provide a reasonable return to our share holders. It is pleased to give you the idea of FramFresh with an intention of welcoming you to our business stakeholders and to the greater opportunities that we offer. We will work with all of our stakeholders in good faith to grow as a corporate group with a growing reputation for the excellence in providing ‘fresh and premium’ quality fruits and vegetables to our customers. Executive Summary ‘FarmFresh’ will be a unique logistics and exciting experience of supplying fresh products designed to fulfill the specific goal of providing the target market with a ‘fresh’ and premium quality goods. The emphasis of FarmFresh is given on best quality and fresh fruits, vegetables and other crops that are directly supplied from various local markets and farms in Asia like Bharti Del Monte India Pvt Ltd and in direct technological assistance offered to the local farmers who need helps in marketing their products. The company is expected to start on August 2009 in San Francisco. Though food products labeled ‘fresh’ are available widely in the market, still there is a growing need from customers as all these food products including fruits and vegetables fail to provide ‘fresh’ and ‘premium’ qualities and thus to satisfy customer needs. FarmFresh would certainly uncover this market segment and develop a market of its own through a more strategic and innovative implementation of technologies. The highly advanced cold storage and post harvesting preservation and effective transportation facilities with refrigeration, that are unique in the field, would form part of our supply channels especially linking local market Farms. This not only would bring out a new segment for premium quality food but also enable us to make use of Asian farms by providing facilities for marketing their products. Business Objectives The main objective of FarmFresh is to serve business people and individuals in fulfilling their growing need of finding fresh food products. The business objectives must cover both long and short term expectations and these should be typically measured in dollars or other tangible ways. (Sharon L Fullen, p. 56) The FarmFresh financial management targets to attain a net profit of 10% of gross revenues by the end of the first year. We propose to uncover a hidden segment of the market – We utilize the recourses, especially excess agriculture products that have been of no use as farmers from Indian remote villages did not effectively market their products due to fewer facilities or decreased demand or reduced prices for their goods. FarmFresh would certainly satisfy these farmers by providing financial aids for post harvesting preservation and transportation facilities. We increase demand for their good. We value their products and return fair prices for agriculture goods. We will create a market for these premium and fresh quality goods in parts of America. Statistics show that consumption of fresh vegetables and fruits have increased significantly in America within last few years showing a 21 % increase from 1990. Increased concerns about diet and health show positive signs to FarmFresh products. According to Allen F. Wysocki the average American consumes 740 pounds of fruits and vegetables and in total Americans spend about $76 billion on buying these fruits and vegetables”(2003) The customer satisfaction especially in regard to maintaining fresh and premium quality goods will be assessed regularly by quality assurance department. Internal and external surveys and outsider inspection will help us identify customer satisfaction. Mission statement In order to achieve our mission, FarmFresh will conduct our business based on certain keys: We will provide premium quality goods, take care of our corporate and individual customers, take care of our affiliate partners, help farmers in India technologically and reward our share holders. In order to maintain the premium quality and food safety standards, we will partner with those who provide quality assurance and we will make our goods available for quality and safety checking by concerned authorities. FarmFresh goods will be market fair-trade so that customers can trust our goods. Our website and blogs provide an opportunity to the customers to openly discuss and review our products. Success Measures FarmFresh takes measures to achieve great success in its business. FarmFresh aims: To facilitate greater space of storage for the goods imported To use modern technology in facilitating cold storage and other transporting necessities and to provide these to the farmers in India who are in greater need of this on the basis of financial aids. To reduce numbers of transportation by increasing quantity to be transported (Gerald Schwetje, p.104) To provide ongoing education about food products needs of fresh and quality goods and regarding hygienic goods both to our customers and farmers in India. To take cooperative strategies instead of taking competitive corporate strategies and wasting efforts. Bringing Indian farms to mainstream Indian farmers play a crucial role in our business. We do not just think of marketing goods, or just import from Indian companies, but instead we put maximum efforts in bringing Indian farmers to the business mainstream. It would be an exceptional marketing strategy that we uncover a hidden opportunity for utilizing excess resources from India and making it available for growing needs of Americans. Even though bringing goods from India involves greater risks and expenses, it would be compensated with the fact that Indian farm products are cheaper compared to that of most other countries. This would also be interesting for media and researchers who increasingly concern about fair-trade issues and social responsibilities that many firms fail to comply with. We show our social responsibility towards Indian farmers who were deprived of fair marketing return on their products. Financial Report We believe that FarmFresh can achieve its financial success only by providing high quality customer oriented services through continuous supply of premium quality fresh goods and by reducing operational expenses. The financial analysis shows that FarmFresh will increase sales by more than $10 million by the end of third financial year while maintaining a gross margin of more than 40%. Even though the start up is so crucial in a more challenging market where financial downturn affected more firms severely and are facing fierce competition, our belief of the management to the potential investors will be to pay a fair rate of return. Once FarmFresh becomes strong and effective in the marketplace we will be able to pay an improved return of capital by an increased rate of 13.5% to 18.5%. Financial Plan and Income Statement The FarmFresh financial model basically looks at the business concept of ‘plan for the best and manage for the same’. The first year financial projections anticipate a more than 12% profits on total sales volume. Income Statement for the first 2 years Income statement for the first two years- in $   Year- 1 Year- 2 Revenues 25,00,000 65,35,000 Cost of sales 17,00,000 45,08,000 Gross profit 800,000 20,27,000       Advertising and promotion 64,500 139,000 bank charges 32,000 84,500 insurance 92,500 128,500 maintenance 41,000 108,000 Other expenses 94,000 143,000 salary 93,000 152,000 Depreciation expenses 54,000 54,000 Rent 24,000 82,000             Net Income 305,000 11,36,000 Start-up Summary FarmFresh aims at starting its business in August 2009 turning back a reasonable profit at thee end of the first year. We plan to start our business with a total of $4.5 million in capital and $3 million as a loan to start up the business. FarmFresh Products It is highly important to any starting up business organization to clearly identify and specify the nature and features of the products and services it offers to the customers in order to plan its business in a more successful way (Rhonda Abram and Eugene Kleiner, p.64). FarmFresh products would be unique in the US market as it focuses mainly on the premium quality of the goods. The goods including fruits, vegetables and other crops that are directly imported from Indian Farms in collaboration with Bharti Del Monte India Pvt Ltd would satisfy increasing needs of both large and small scale retailers to provide exceptional quality goods that they offer to their customers. In Collaboration with ‘filedfresh’, the supply chain business run by Bharti Del Monte India Pvt Ltd, our fast and advanced transporting enables us to supply a wide range fresh quality fruits and vegetables that are listed in the site http://www.fieldfresh.in/index.php?id=products. The US food market is extremely concerned about growing issues regarding fair-trade and safety matters. FarmFresh takes all measures that can make our goods different and exceptional in the prevailing market environment so as to make our goods fair-trade, safety and super quality marked by concerned authorities. Marketing Plan Our market is segmented in to four categories: Manufactures who need fruits and vegetable as raw-materials, Large scale retailers like supermarkets and groceries who order bulk quantities Small retailers who order in small quantities Individuals who buy directly from FarmFresh or order online For the corporate customers, FarmFresh will provide its fastest transporting services with advanced refrigeration facility that is designed to maintain the freshness of the goods. We propose to create a new arena in the food market and hence to be able to compete with several kinds of supply chain businesses. Instead of waiting for our corporate customers to come, we will focus on them and provide information regarding the exceptional features of the goods we offer to them. Manufactures and retailers of California would form a major part of our market accounting to be approximately 44% of the total market. FarmFresh aims at supplying fruits and vegetables to different states of the country accounting to be 30% of our total market strength. The ‘e-farm’ facility provided by FarmFresh, that is designed to sell our fresh goods online, would help customers find their best options and to make convenient purchases online. Apart from this, customers would be able to review and discuss their opinions regarding FarmFresh goods, services, fair-trade, safety and quality issues regarding our goods in a more open way through ‘discussion forum’. Marketing Channels The FarmFresh distribution system consists of ‘FarmFresh delivery’, individuals and agencies, large and small scale retailers. ‘FarmFresh delivery’, is designed to facilitate fastest delivery of vegetables and fruits with utmost care of preserving goods in refrigerator and other advanced cold storage systems. ‘FarmFresh delivery’ vehicles would be available on request for large and small scale retailers within and outside California. ‘FarmFresh delivery’ operates like an ‘own feet’ transporting system and at the same time it forms to be the basic channel as it keeps goods fresh and in its natural quality rather than any other mode of distributing. Individuals and agencies are those business affiliates who work as referrals and collect orders from large and small scale retailers. They are responsible for preserving and delivering the goods. The ‘FarmFresh website’ also would help us collect orders from corporate customers and to facilitate our deliveries. The website facilitates customers to view our goods, place orders and comment on the qualities of goods. Retailers and groceries can place orders through ‘FarmFresh’ website. We will start ‘FarmFresh’ cold storage warehouses at different regions of California with ‘cash and carry’ facilities, so that corporate buyers can make direct purchases from our warehouses by their own deliveries. Corporate Partner ‘Safeway’ super market chain will form parts of our main distribution channels and it would be our corporate partner in providing prompt supply of premium quality vegetables and fruits to the customers. FarmFresh distributes fruits and vegetables on bulk quantities to ‘Safeway’ supermarket chains and this would be helpful to reach mass audiences. This provides wide potential markets for our goods because ‘Safeway’ super market chains operate through 1775 stores within throughout USA. Safeway supermarket has been known for quality ingredients for lowest possible prices. The corporate relation of ‘FarmFresh’ and ‘Safeway’ will contribute vitality to the values of Safeway because FarmFresh goods will be known as Premium and best quality foods for lowest prices. Better Utilization of Excess Recourses FarmFresh will be a model for how effectively excess and unused resources can be brought forward and thus utilized for both consumer and corporate needs. ‘Limited recourses but unlimited wants and needs’ have been considered to be the biggest problem for the economies. FarmFresh looks at how effectively the excess resources especially from Indian local farms can be utilized for the better marketing practices. We collaborate with ‘fieldfresh’ in helping supply fruits and vegetables across US retail and wholesale markets. We do distribution of fruits and vegetables that come ultimately from Indian farms and do marketing of these through our marketing channels. Excess resources of both vegetables and fruits from ‘fieldfresh’ will be taken for various purposes like preserving them and keeping for fertilizing or for supplying to manufacturing companies in USA who produce various kinds of products like fruits juice and vegetable products. This in turn helps Indian local farms to come to the mainstream business and to be recognized by emerging world markets. Our Corporate Social Responsibility FarmFresh discovers a hidden market segment for supplying best quality foods in US with the farms in Asian markets; it provides facilities to the local farmers and thus brings them to the mainstream, it provides fair returns and it attempts to utilize the resources that are excess or otherwise not used show that FarmFresh is socially responsible towards our customers. FarmFresh ensures welfare of both our employees and customers and we provide protection of the environment concerned. Our supply chain business will be conducted in accordance with Corporate Code of Conducts and both Indian and US business, health, safety and environmental laws. We would provide information to all of our stakeholders regarding our marketing strategies, company’s values, products specifications, quality assessments and reviews and effectiveness of the supply and distribution in US markets. Formal audits will be conducted according to the rules. All these show how we value social responsibilities and how we take measures in order to be socially responsible in our marketplace. Conclusion This paper presents a detailed business plan for FarmFresh logistics that supplies premium quality goods to both individual and business customers. This plan provides business objectives , mission statement, start up summary and marketing plan for the proposed company. 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