FreshTec - Factors Affecting the Industry in Which the Company Operates and Its Current Position - Case Study Example

FreshTec Case Study Introduction According to Christensen and Raynor (2003), disruptive technologies are the ethnologies which bring in a new paradigm in the market and especially the nature of the supply chain of a product or products. In this regard the FreshTec technology will definitely disrupt the supply and this will have an impact on how it is going to be received in the market. The fact that the FreshPac packaging ethnology is supposed to change the way packaging is done will mean that it will change such issues as the harvesting time, the lead time of the supply chain for the fresh supply. In this regard, it is will be necessary to ensure that all the problems have been considered and that there are no negative eventualities. The cost of the new technology is also going to be another issue which must be considered. To begin with, the farmers may not be willing to adopt the new the technology because it is twice as expensive as the technology they are using sat the moment. In this regard, FreshTec will have to be moderate in the way it adopts the new technology. External factors affecting the industry in which FreshTec operates (Question 1) Government regulation (Food safety) One of the issues that FreshTec will have to consider will definitely be issues regarding government laws and regulations on food safety. It is crucial to know that this is something that FreshTec is already facing even with its current technology. Although the FreshPac technology may be a way to deal with the problems of food safety, it is imperative to comprehend many issues which must be put into consideration. First, it will be necessary for FreshTec to guarantee that there will not be any food safety issues which will arise from the use of the FreshPac box. Recent years have seen many issues of food safety come up. These have been as a caused by the fact that the way food is produced delivered to the end consumer has changed over time (Marletto, 2013). In the modern world, food is mass produced unlike in the past when most families only used to produce their own food, only having a little surplus which could be sold within the nearest market or neighborhood. Modern food is mass produced in one area and delivered halfway around the world. Fresh food such as tomatoes gown in Asia are sold as far away as in the United States or in the east of Europe. These two issues, i.e., the mass production of food and the elongated supply chain, have introduced a lot of food safety issues. Organizations such as FreshTec which are involved in this industry are required by the law to guarantee the safety of this food. This is why FreshTec must be able to observe all the food safety issues even as it looks to introduce new technology. This technology may be a big risk in terms of FreshTec failing to comply with government requirements about food safety. This is something that FreshTec observe very well. Legal factors (Patents) These are some of the most important factors to consider. Patents are a major part of modern business because they give exclusive rights to owners of intellectual property to use this property for economic gain (Dorf, 2001). FreshTec must look at this issue of patents from two main perspectives. First, it must be assured that the FreshPac technology is not someone else’s intellectual property because this could lead to a violation of patent laws and thus lead to the firm being sued. It is absolutely necessary for FreshTec to be assured that no such patent is already filed by another individual or organization. The second way that FreshTec must be concerned about the issues of patents is by making sure that its patent on the invention is well protected by filing the patent with the relevant offices. This will help FreshTec to have exclusive rights on using the technology and thus prevent losses caused by loss of patent rights (Sople, 2006). FreshTec must understand the need to have the patents registered not only in its country of origin but also in any other counties where this may be required. This is because FreshTec is a global organization which means that its patents must be registered globally. At the same time, while checking on whether a similar patent has been registered already, FreshTec must do this in global scale to make sure that there is no such intellectual property in UK and across the world. The issue of patent has been a major issue especially with regard to technology and innovation (Bryer, 2011). In his case, it is necessary for FreshTec to guarantee that it has taken care of this area and that there will not be issues which will arise in the future. Taking care of this will mean that the firm will confidently carry on its business without many worries. It will also avoid unnecessary legal battles which would otherwise consume lots of its financial resources. Economic factors (too expensive) One of the most crucial factors with regard to the implementation of the new technology is economic issues. This comes in twofold. First, there is the issue of the farmers refusing to take up the new ethnology because it is too expensive. Secondly, there is the issue of the end users of these products not willing to pay extra for the product. It is necessary to note that all the costs in a value chain are eventually pushed to the consumer to incur. If the high cost of the FreshPac is taken up by the value chain, the end consumers will have to pay up. However, the issue here is whether the consumers are willing to pay up the cost of the new technology. This is a situation where economics play a big role because the end result will be determines by whether the end consumers of the vegetables will be able and willing to pay extra cost in order get the extra quality which is made possible by the new technology. Two issues will emerge here. First, the customers may be wiling but not able to pay up for the new technology. This means that the end consumers will be appreciative of the advantages that the new technology is brining, but not able to pay the extra cost. If a consumer buys a fresh mango from Malaysia at a cost of one pound but the mango is not so fresh and the FreshPac is able to provide the mango at double the price but a fresh one, the important thing will be if the customer can afford to pay the new cost. Some of the customers may be able but not necessarily willing to meet this new cost. At this juncture, FreshTec will have the choice to deliver a cheaper technology. At the level of the farmers, what will be important to them is to make their products to be desirable in the market, both quality-wise and pricewise. If the new technology affords them this, they will be willing to take up the new technology. This will however be determined by the attitudes it the market. Fortunately, the new trend in the market is the hype for fresh products. Customers are starting to understand the nee do each fresh products and they are therefore willing to part with a few more pounds in order to get fresh and better tasting products. This might be an important thing for FreshPac as it tied to launch the new product. Is Freshtec well positioned to succeed given these factors (Question 1 b) Despite these negative external factors FreshTec can is well positioned to implement the new technology as long as they plan their market strategy properly. There exist a few factors which will make FreshTec to be able to succeed in this endeavor. These are as follows; Experience FreshTec has a long and massive experience in the area and therefore stands to get the best in delivering this technology. This experience, if utilized properly well, will be a great source of strategic advantage. FreshTec has been in the industry for a long time and knows all about the many challenges. It also understands the many issues within the environment and this will help it to be able to navigate the waters. However, for this longtime experience to word for the good of the firm, it will have to be able to apply its strategy planning properly. The product serves an eminent need in the market The need for fresh supplies is definitely one that has been there for a long time. Consumers around the world will continue demanding for fresh produce either offseason or during their seasons. Farmers also are desperate to deliver their goods to far markets without the quality of the produce deteriorating. These two needs when merged together mean that the new FreshTec technology will eventually be accepted as the de facto way to deliver fresh goods around the world. A solution to help in the delivery of produce from one area of the world to another while maintaining quality is definitely a welcome one. However, the advantages have to exceed the costs in order for this solution to be adopted. Right strategy By using the right strategy to deliver the product, FreshTec will be able to implement its solution. This strategy will have to consider all the factors which have been considered such as a phased methodology of introducing the technology. FreshTec will have to deliberate on making sure that the technology is well understood as well as its advantages. FreshTec also try to develop the technology continually in order to continue make the technology not only better and more effective, but also cheaper and cost effective (Kroeze, Boersema & Tellegen, 2011). How FreshTec can approach the issue of industry adoption of their new packaging (question 2) The technology has a number of factors which would limit its introduction into the market. As a result, having a well laid strategy to help in making sure that the new technology will be adopted successfully by the market would be necessary. FreshTec should use the farmer as the main target of the product. This is because the farmers are the one who are most concerned about their produce reaching the market in the best quality. At the same time, the product has the most effect on the way the farmer produces his produce, such as by affecting the time of harvest. This will mean that it is better for FreshTec to deal with the farmers directly in order to have a n easy way to demonstrate the use of the FreshPac technology (this is for question 3). The following factors about the introduction strategy should be considered; Free trial method As identified in the case study, one of the major issues with the FreshPac is the high cost of buying the technology. The FreshPac box costs twice as much as the one being use by the market and this is likely to make the farmers reluctant to buy the new technology. To circumvent that issue, it would be necessary to offer free trials of the FreshPac box to farmers. This can be done in a phased method as considered above in order to make sure that the costs are kept down. By giving the FreshPac in free trials to the first phase of farmers, it will be easy to have an opportunity to demonstrate the advantages of the produce to the rest of the farmers. Once the farmers have experienced the advantages of the FreshPac box, they will then be expected to pay for the technology. Those who feel that they don’t want to continue with the FreshPac technology will be given an option to get rid of the FreshPac box. Offering incentives According to Murphy (2006), implementing a new innovation is a daunting task because people generally distrust new change. This requires that the agents of change to offer some incentives in order to lure the actors to accept the change. FreshTec can offer some incentives in order to break the barriers of cost. As identified, the major issue is the issue of high costs of the FreshPac. The challenge that FreshTec will have therefore is the challenge to make sure that the farmers have experienced the advantages of the FreshPac which definitely are way above the cost. Although this can be done using the free trials as discussed above, it will also require to be implemented in a special way such as giving incentives. For instance, those who take the FreshPac box can be given better deals in terms of the price of their products. This should be done in with the help of other stakeholders such as the buyers. A better and friendly cost structure Changing the cost structure can also be very useful for FreshTec in order to deal with the issue of cost. For instance, instead of asking the farmers to pay upfront for the Fresh Pac box, FreshTec can arrange a payment method that will be comfortable for the end consumers to be able to bear. For instance, FreshTec can consider giving the FreshPac boxes to farmers and only deducting the cost form the sales rather than requiring the customer to pay up upfront. This may have a way to improve the way the farmers will look at the cost of the new technology. The cost structure can be very useful in making sure the product has a success in the market integration. According to Murphy (2006), the way the cost of a new technology is structured is very important in determining how successful or otherwise the product is going to be. Some innovative products would be more effective in a situation where the product’s cost structure makes it easy for the consumers to use the product. However, in the case of FreshPac, the costs structure can be very useful in making sure the product has successful market integration. According to Sople (2006) the cost of technology is an issue which must be considered with regard to implementing a new technology. First, the fact that the target consumer is not the end consumer may mean that the customers may have a different attitude towards the product. The cost is generated at the retail level and the end consumer may have a difficult issue which must be considered first, a difficult issue which must be considered first, a difficult time understanding any differences in the costing of the end product. As already discussed, the extra cost could be affected by the FreshPac technology will have to be borne by the end consumers. It is therefore necessary to note that there are some things which must be considered in order to be sure that the end consumer will understand the need for the increased cost. This will mean that FreshTec will have to come up with ways to make sure that the end consumer does not feel a pinch in terms of the cost he has to bear with regard the new product. Having a phased product cost is necessary in order to make sure that there the product is well received. In costing the new product, it would be absolutely necessary to understand that the most necessary thing is the introducing the technology in the market, and not the actual marketing. Market Growth Strategy (Question 5) Phased method FreshTec should consider using a less aggressive method in the introduction of the new technology. In this regard, FreshTec must use a pahed methos which will guarantee a slow but effective adoption of the FreshPac technology. Phasing means that the technology is introduced bit by bit, starting from one area to another (Preece, 1995). For instance, in the case for the FreshPac box, the technology can be introduced to just a few farmers and then rolled out to others once it proves successful. This kind of strategy to introduce the new technology will have a number of advantages to FreshTec. First, it will be easy to convince a few people to use it as opposed to convincing all the potential users. It is also easier to bargain with a few people than many people and therefore starting with a just a few people will provide a better platform to demonstrate the usefulness of the new innovation. At the same, there are several of issues introduced in a phased method will help in avoiding mistakes in successive phases thereby reducing cost and damage. If for instance the technology is introduced to ten percent of the farmers, the mistake done while introducing this technology to these farmers can be avoided during the next phase. This will lead to savings and better cost of implementing the technology. Will the produce disrupt the supply chain? (Question 6) The FreshPac technology will definitely affect the supply chain because it will change such elements as the time it takes to pick the vegetables from the farm. As identified in the case study, in the current system, the fruits and vegetables have to be harvested earlier than they are supposed to in order to deal with the issue of senescence. Senescence refers to the process of the produce losing its quality through perspiration and respiration. Question 4 With the new technology, the problem of senescence will have been reduced greatly and therefore the need to pick these vegetables before they are ripe will no longer be there. This will mean that the FreshTec will have to ask the farmers to change the time for picking the fruits as well as the time for delivery. While this may not have a very big change in the supply chain lead times, it will definitely have an impact in the supply chain thus requiring some adjustments. This is because vegetables are very sensitive to time and any change in time even for a period as short as 12 hours may lead to a very significant difference in the supply chain. In this regard, his will have to be considered while introducing the new technology to the market. References: Bryer, L. (2011). Intellectual Property Strategies for the 21st Century Corporation: A Shift in Strategic and Financial Management. Hoboken, NJ: John Wiley & Sons. Christensen, C. & Raynor, M.E. (2003). The Innovators Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business Press. Dorf, D. (2001). Technology, Humans, and Society: Toward a Sustainable World. New York, NY: Academic Press,. Kroeze, C. Boersema, J.J. & Tellegen,E. (2011). Technology and Sustainability. New York, NY: Techne Press. Marletto, G. (2013). Creating a Sustainable Economy: An Institutional and Evolutionary Approach to Environmental Policy. London,UK: Routledge. Murphy, J. (2006). Governing Technology for Sustainability. London, 2006: Earthscan. Preece, D. (1995). Organizations and Technical Change: Strategy, Objectives and Involvement. London, UK: Cengage Learning EMEA. Sople, V. (2006). Managing Intellectual Property: The Strategic Imperative. New York, NY: PHI Learning Pvt. Ltd. Read More