FreshTec, Revolutionizing Fresh Produce - Case Study Example

Freshtec: Revolutionizing Fresh Produce Affiliation) Introduction Most new technologies that are developed daily foster improved product performance. These new technologies can be either sustaining or disruptive. Accordingly, they can be sustaining in the sense that they improve the performance of the existing products. On the contrary, disruptive or rather discontinuous technologies more often than not result in worse product performance (Christensen, 2013). In effect, Fresh Tech, a commercial packaging firm has developed a disruptive or rather a discontinuous technology, which keeps fresh farm flowers and produce fresh for longer period. As such, the company faces important strategic growth decisions thus CEO Bob Write must decide how best to bring this unique packaging product to the market. This new technology holds promise since there has been a long development phase. However, packaging using this new technology is quite expensive and therefore Wright and his team must convince the stakeholders and the industry at large about the packaging’s value. As such, this paper seeks to analyze FreshTec’s new SmartPac technology in terms of how the company is going to exploit their innovation based on the external affecting their industry. Moreover, the paper seeks to address the main challenges the new products faces as well as the viable solutions or alternatives that the company can adopt to overcome the challenges. Central Problem and Objectives. Primarily, the company’s problem is securing market acceptance this new technology known as SmartPac. Moreover, the potential market has not deviated away from the conservative growing practices and the universal standardized packing solution. Consequently, the company’s objective is to implement SmartPac into both the local and international market. Any new and advanced technology gives the company a competitive advantage and as such, SmartPac would allow consumer expectations to be met. Furthermore, production and numerous purchases will increase at the retail level since the quality and standard of produce would have increased (Christensen, 2013). Additionally, expanding exports to third world economies and new untapped markets would increase international and domestic interest in the new packing technology. In fact, accessing new markets that is distant is often obtained through a cheaper maritime shipping rate; this is relative to the existing practices. The second objective that this new product is aimed at achieving is to improve both the quality and safety of fresh farm products to the consumer. Accordingly, the use of SmartPac would allow the produce to ripen through its natural ways as opposed to the manmade processes. Again, reducing senescence using dry oxidizers is equally important for the company. Additionally, through the packaging design, SmartPac reduces physical injury of the produce as well as post-harvesting losses (Christensen, 2013). On the same point, the design enhances safety since it prevents bio-terrorism and provides accountability. Thirdly, the company’s objective is to reduce Carbon footprint of the produce shipping. Lastly, on objectives, the company through SmartPac, aims to obtain and sustain momentous competitive advantage in the market modernization. In addressing this problem, the company has to highlight the constraints at hand. High costs are the primary constraint associated with this new product. In effect, the SmartPac boxes cost is relatively considerably higher than the already existing packaging. Secondly, is the production capacity? Due to the design of SmartPac, large volume orders are required for the operation to be sustained. Consequently, the company has to bring operations to one level to accommodate demand. The market in third world countries are populated though they have relatively lower incomes. Thirdly, changing the famers’ common philosophy of “Pick when ripe” would be challenging. The firm will have to change this philosophy to one which advocates for later picking times. Further, the company needs to change the growers’ method of increased fixed costs such as distribution arrangement systems (Alvarez &Johnson, 2011). Ultimately, it would be hard for the company to expand the product’s use beyond luxury or high end retailers. External Factors facing Fresh Tech Consumers around the world would always demand for fresh and quality produce. For this reason, Fresh Tech is always devoted to pick a market segment out of this demand. In order to successful compete for the segment, the company has to unceasingly plan for implementation strategies. In this case, the strategy would be aimed at revolutionizing the fresh produce market with SmartPac technology (Alvarez &Johnson, 2011). The analysis highlights the concept of strategic positioning through using Michael E. Porter’s five factors that dictates the industry profitability. The five factors or forces aim at providing the basis under which competition and profitability is expected. These five forces include the bargaining power of buyers, rivalry among existing competitors, bargaining power of suppliers, the threat of entry and the threat of substitutes. When Fresh Tec aimed at getting a portion of the farm produce packaging markets, using the SmartPac, they faced numerous entry challenges that would otherwise effect on the profitability of the company. Before Fresh Tec could explore the market and compete with their rivals they had to overcome the many challenges, they faced which include, temperature injury, physical injury and even post-harvest loss. One barrier that the firm faced was switching costs. Very huge retailers have main logistical information system already. Farmers would change the picking times and fix the current process in order to allow for ripening. Moreover, they will have to get used to a shorter term of decreased yield turnover so that they compensate for the post-harvest loss. As an ordinary producer in the industry, one has to follow a few rules and regulations that cover the production of packaging boxes and productions necessities. Accordingly, hopes that it has taken the necessary measures to prevent their products from being imitated thus preventing any competitor with a packaging box almost the same as SmartPac (Alvarez &Johnson, 2011). Though the patent extend to the US, Mexico, South American and US, the patents in some foreign states cover modified packaging atmosphere (Alvarez &Johnson, 2011). Moreover, the US patents cover only the style of sealing, lid on the specific type of box to be used together with the lid. However, this patent does not include the main concept of Map packaging, as it is required by foreign patents. Consequently, this may allow a competitor to start using the Fresh Tec’s concept in other states where the patents are unattainable for and therefore ship to America. The patents have geographical barriers thus if they can prove to be too weak, the Fresh Tec Company would soon suffer. Additionally, is the supply –side economies of scale barrier. The current leading fresh producer, Dole, at the moment applies a grower-to-retailer supply chain, in that, Dole deals with growers and packers to distribute and market the units to almost a hundred countries at every level in the industry, be it wholesalers, supermarkets, merchandisers and food servicers. There is unequal entrance to the distribution channels and as such, it becomes a barrier of entry Fresh Tec since the industry is uniformed in terms of low cost of packaging. Solutions Since the industry is still stuck to the static growing practices and universal packaging solutions, the primary issue that comes out is the supply chain transformation. For the company to determine the most profitable processes in order to have a sustainable and reliable supply chain, the firm needs to come up with a significant strategy in order to attain the required scale of operations and logistical system. The valid logistical system would help in obtaining and upholding a substantial market segment. SmartTech is a new technology that has not been seen or perceived as a product that would transform the while industry. The firm should therefore respond to the issue through implementing a chain of strategies. Additionally, the best or appropriate strategy possible should always be implemented. The firm would be required to find a partner who is experienced in coordinating a new project that would change the existing supply chain system (Alvarez &Johnson, 2011). Though the food services and retail services would have to initiate SmartTech slowly with time, the partner would help create an impression that the new technology or product in place is an ideal choice for increasing the volume of their orders since their operation would be increased. However, if the firm’s operation is not ready to keep up with demand, it could be risky. Any business that starts with high operations allows no room for an error. Thus, if Fresh Tec has a crisis in manufacturing, management or logistics, it could soil their reputation thereby setting the company for a big failure. A partnership with such an organization would probably help Fresh Tech to be viewed as a major competitor in the industry and as such, the characteristics of the brand will go unquestioned: quality, visually appealing, long lasting, freshness and tastiness. It would take the firm an extensive training effort to make growers adopt the new packaging. As such, collaborating with an already established company in the industry would allow the company to concentrate majorly on educating the farmers on the proper use of the new packaging product and adopt the new technology into their existing supply chain. While the partner would be going by its usual business, an education team from the firm together with the CEO could be as well concentrating on educating the growers. Dividing labor ensures maximum efficiency while at the same time reducing the amount of risk for the company. The cost of SmartPac made the executives to be worried of being locked into the luxury market. Proper marketing of the product helps the company to escape into markets through differentiation thus extending the scope of the product mix. It would take the firm a great deal of salesmanship for it to convince companies the advantages the new technology would bring to their shipments. Fresh Tec would need to explain to these companies of benefits such as shipping within markets with reduced labor costs, which had been previously mad unfeasible by the huge shipping costs. The second benefit would be the ability for SmartPac to reduce post-harvest loss of farm produce. The new technology comes along with many costs. Since the advantages of SmartPac are far much greater than those of traditional packaging solutions, the demand will have to go high because of the greater preferences for the new products. Again, the untapped international market can be reached since the new product comes along with lasting freshness a resolution for the international shipping issue. Furthermore, the lighter packaging material, the bulk loads, technology and design possessed by the new product allow for flexible shipping options while also reducing carbon and externalities. The new technology also reduces repackaging yield loss, rejected loads and the need for repacking. These are some of the advantages that will contribute towards the added value of the partner willing to collaborate with FreshTech. The second alternative that Fresh Tec may want to adopt is partnering with the local growers to initiate or facilitate their needs for packaging solution for their farm produce. This alternative could be attracting since it appears to be less stressful and demanding as far as transition from the traditional practices is concerned. Additionally, this alternative will make the company a revenue-producing firm at a much slower rate. This option also would capture the attention of the local farmers everywhere since they would be involved practically. This alternative is also opportunistic since starting the new technology domestically would allow the firm to penetrate the market in much easier way than trying to expand internationally. Moreover, important aspects such supervision and monitoring would favour the firm’s managers than it would to the purchaser, as well. Since the management would be working without salaries, the need for am cheaper root would be of concern here. Conversely, such a partnership would slow the immediate firm’s growth that it had apparently sought. Regardless of what option the Fresh Tech would think to be the beast suitable, a learning curve of any option will always be overcome by the customer so long as it is new to his/her environment. The farmers themselves would have to learn this technology of packaging. Furthermore, the famer’s cost of operation would considerably increase. A closer look to the farmers’ financial records shows that an average farmer’s household income from the farm produce has always declining (Scranton, 1994). The new technology would be a sign of relief to these farmers whose income is on falling end, in that, since it reduces post-harvest losses, a sizable quantity to the international food supply will be added. As such, a reduction in the intensity of food production would be of essence in future. The looks forward to being a major contender for a relatively larger market segment by upholding its motto of staying green, helping domestic and international market, and giving the consumer a tasty and quality fresh produce. Another alternative for Fresh Tech incorporates diversifying the market at the same time differentiating the current SmartPac products. This would involve a method that would make Fresh Tech to behave or act as a broker between the farmers and the consumer to cannel the new technology product to the market. Accordingly, the firm would buy the produce from the farmer at a negotiated wholesale price and later on supervise the packaging of the product. Further, the company would in turn sell to the retailer at the same price then again delivering a better tasting produce thus beating the firm’s competitor. Immediately Fresh Tec buys the produce from the farmer, it would clean, pack and deliver the fresh farm produce to all sellers be it supermarkets or food service operators. This brokering aspect diversifies the market through focusing on the new untapped markets while also connecting with consumers worldwide. Various farm products can come from all over the globe, however, delivering undamaged and fresh product can as well be challenging due to transportation loopholes or flaws. These flaws mount to huge wastes and spoilage. As the CEO suggest, eliminating repackaging costs, which the brokers are already paying would the most important step to take since it would save a lot of money in the days to come. Brokerage would also enable the firm to reach out to nations and growers that had not gotten the opportunity to exist the already established global market (Scranton, 1994). However, this alternative or option poses to be a challenge since it would require the CEO and his team to allocate for a much larger up-front investment that would as well incorporate logistical challenges. The opportunity to connect an untapped market such as the regions of South America to tapped markets such the U.S would push the firm to reconsider expanding the international trade amongst consumers worldwide. The main agenda here will be to keep the produce fresh for the longest time possible. Additionally, food supply chains have nowadays become stretched over enormous distances of time-space. This huge network has enabled new power relations between “the local” and “the global” in food production in both the retail and consumption. Based on research and development numerous SmartPac packaging can be designed popularise and market the products in supermarkets or food stores. The firm can collaborate with supermarkets to allow the packaged farm produce to be sold their stores in a specific section within the supermarket. Putting the firm’s packages in a specific position helps in building the brand name company. Moreover, separating the company’s produce from the regular farm produce in the supermarket will be the best way to attract customers to all products the store sells in that line. This option will discourage and even eliminate repackaging costs the existing brokers are always paying therefore making and saving money for future use. Moreover, this option enables Fresh Tec to reach out to countries and famers that had not been fortunate to exist in markets that had been implemented already. Again, this option sets limitless boundaries. The best alternative strategy for FreshTec is look for a teammate with the ability and experience of cooperating with a particular project, which can adopt the firm’s new technology into the existing logistical system. The adoption or implementation should be assist in bring the company’s operation to scale more rapidly (Oosterveer, 2005). For the new technology to be adopted, the firm needs to first establish primary food wholesalers or a main self-distributing farm produce retailer. Subsequently, the firm should consider partnering with wholesaler or retailer, however, the self-distributing retailer have been found to move more produces per hour compared to traditional wholesalers. Like any other, this strategy has its merits and demerits. However, the strategy that has more advantages to disadvantages is considered the best. Furthermore, the best strategy should be the one, which addresses the objectives, goals and solves the main problem of the firm. The best strategy should have a greater of ration of benefits in terms of profitability, long-term sustainability and reaching the desired scale (Oosterveer, 2005). Though, challenges such as high switching costs might exist, the firm’s chosen character will always provide many advantages that are geared towards achieving the company’s objectives. On the merit side, whenever the partner wishes to expand into a larger geographical location, revenue is never a problem since it often available. The partner can think of expanding when the chain of supply has been proved to be significantly effective and successful. In spite of the advantages that seem to be surrounding partnership alternative, some disadvantages may exist. One major challenge that the firm would face is finding a willing and patient partner. However, compared to other alternatives that demand for an immediate change of harvesting aspects, getting a partner to work on a smaller scale would relatively provide a simpler barrier to overcome (Oosterveer, 2005). Therefore the bigger the operation or project the harder the partnership. In case the new the new technology succeeds, this would an immediate demand of the new packaging. While responding to such a huge and rapid demand, problems of producing huge volumes would start trickling in. Ultimately, compared to the previous alternatives, scaling with a partner in such situations guarantees the least amount of risk as well as the cost of assuring implementation. Through placing the firm in an already existing supply chain, expenses from other alternatives would never have incurred the risk can equally be reduced through an immediate market entry. Entering into a preceding chain provides for a minimal cost in running the product and helps the firm’s brand to be marketed to successful players that are already in the market. When a partner is handling eighty percent of the implementation, Fresh Tech would be able to concentrate on the supply of additional attention to training growers and any other individual in the supply chain about emerging harvesting techniques and philosophies. For the SmartPac technology to be successfully implemented, the firm should establish a manageable and effective implementation plan. This plan must include the firm’s goals, aspirations to meet in a realistic as well as timely manner so that the firm can control, and effect on the results. The C.E.O and his team must implement the above mention alternatives in time in order to capture the already blue market. This will help the firm not be threatened by any potential competitor coming in with the same idea. References Alvarez, J., & Johnson, R. (2011). Fresh Tec: Revolutionizing Fresh Produce. Harvard Business School Entrepreneurial Management Case, (511-059). Christensen, C. (2013). The innovators dilemma: when new technologies cause great firms to fail. Harvard Business Review Press. Oosterveer, P. (2005) Global Food Governance (Doctoral Dissertation), Wageningen University, Wageningen. Scranton, P. (1994). Conceptualizing Pennsylvanias Industrializations, 1850-1950. Pennsylvania History,6-17. Read More