SunafterstormACaseStudyonEven’StarOrganicFarmDreamChasersFromSunYat-senUniversityZHANGWeiHUANGPeilongPENGWeijianLIUMengningIntroductionMembersofIMAManagerofEven’StarBrettOutlineGoal:TohelpEven’StarOrganicFarmmaximizeprofitsinthelongrun.A.CaseOverviewB1ASTORMFrameworkB.CurrentSituationAnalysisD.StrategyPositioningE.Utilization&ImplementationF.uNcertaintyA1StormbeforeSunC1QuantitativeMethodC2QualitativeMethodC1ADifferentiationStrategyC.ApportionAnalysisE1Short-TermDecisionE2Mid-TermPlanningE3Long-TermStrategyF1WeatherConditionsF2PetrolPriceIncreaseA1CaseoverviewStrategyAnalysisUtilization&ImplementationuNcertaintySocialConditionsTechnicalConditionsOrganizationalConditionsRevenueConditionsMarketConditionsASTORMFrameworkAnalysisASUNSolutionCurrentSituationStrategyAnalysisCaseOverviewUtilization&ImplementationuNcertaintyApportionAnalysisApportionAnalysisIndustryRetrospect:GrowingConsumptionofOrganicProducts

HugeGapbetweenSupplyandDemand:B1SocialConditionsStrategyAnalysisCurrentSituationCaseOverviewOrganicProducthasabloomingfutureIntroductoryGrowthMaturityOrganicFarmingTotalMarketSalesDeclineUtilization&ImplementationApportionAnalysisuNcertaintySTORMFrameworkCoveredwithblackplastic$133peracreStoredincontainersIrrigation$50peracreInthegreenhouse$1perseed$700peracreB2TechnicalConditions–PlantingProcedureSeedsSeedlingsContainersProduce1234YieldisseriouslyinfectedbyweatherconditionsStrategyAnalysisCurrentSituationCaseOverviewUtilization&ImplementationApportionAnalysisuNcertaintySTORMFramework180miles70miles220miles6hours2hours8hoursDistanceTimeB2TechnicalConditions–TransportationTransportationofProductTruck$7000VariableCost:$0.13+$0.21=$0.34perMile

DepreciationofTruck$7,000for100,000MilesStrategyAnalysisCurrentSituationCaseOverviewUtilization&ImplementationApportionAnalysisuNcertaintySTORMFrameworkRestaurantisthemosttimeanddistanceconsumingB3OrganizationalConditionsPlantingWorkTransporta-tionWorkPackingWorkBrettBrettBrettPart-timeLaborers$10perperson$44perweek3daysperweek4daysperweekBrettworksalmosteverydaywithoutrest.StrategyAnalysisCurrentSituationCaseOverviewUtilization&ImplementationApportionAnalysisuNcertaintySTORMFramework50+EveryweekB4MarketConditionsSellingPriceHighLowCommunity-SupportedAgricultureFarmer’sMarketRestaurantsUpscalerestaurantsFixedproductcatalogueeveryweekHighrisk/highreturn10%spoilagerateRestaurantCSAFarmer’sMarketCSAisgettingpopularintheUSAdvantagesforfarmers:1.Gettospendtimemarketingthefoodearlyintheyear2.Receivepaymentearlyintheseason,whichhelpswiththefarm'scashflow3.HaveanopportunitytogettoknowthepeoplewhoeatthefoodtheygrowStrategyAnalysisCurrentSituationCaseOverviewUtilization&ImplementationApportionAnalysisuNcertaintySTORMFrameworkB5RevenueConditions–ChannelsStrategyAnalysisCurrentSituationCaseOverviewUtilization&ImplementationApportionAnalysisuNcertaintySTORMFrameworkRestaurantCSAFarmer’sMarketRestaurantsmakeup56%oftherevenueRestaurantshavethehighestmarginperweekRestaurantshavethehighestmarginandrevenueperweek.B5RevenueConditions–ChannelsStrategyAnalysisCurrentSituationCaseOverviewUtilization&ImplementationApportionAnalysisuNcertaintySTORMFrameworkRateofReturn(Revenue/Variablecost)TimeismosteffectivelyusedinRestaurantsCSAsharesthehighestrateofreturn.MoretimeofCRMcanbespentintherestaurantchannelandtheCSAhasthehighestpotentialofProfitability.B5RevenueConditions–ProduceStrategyAnalysisCurrentSituationCaseOverviewUtilization&ImplementationApportionAnalysisuNcertaintySTORMFrameworkFarmer’sMarketProfitstructureofeachBreedCSARestaurantsYieldTomatoes’outputhasfarexceededtheothersanditselasticityofdemandisrelativelylittle.SocialConditionsTechnicalConditionsOrganizationalConditionsRevenueConditionsMarketConditionsSTORMConditionsStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyApportionAnalysisStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyClassifyRelevantCostandNon-relevantCostsCostofseed&seedlingFertilizercostPlant,care&harvestPackagingFuelMaintenance&repairDepreciationoftangibleassetsCommunicationcostCostofseed&seedlingFertilizercostPlant,care&harvestPackagingCostofseed&seedlingFertilizercostPlant,care&harvestFuelMaintenance&repairDepreciationoftangibleassetsCommunicationcostFuelMaintenance&repairDepreciationoftangibleassetsPreparationforthetruckRelevantCostNon-relevantCostTheRestaurantChannelTheCSAChannelTheFarmers’MarketChannelWeshouldfocusontherelevantcostStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyCaselotforCSAItemsPercentageofLastSeasonPercentageofThisSeasonTomatoes(large)12.50%12.50%Tomatoes(small)8.25%14.12%Watermelon10.00%5.00%Okra5.00%9.00%Basil5.00%7.00%Cucumbers16.67%5.00%Sweetpotatoes10.00%11.00%Wintersquash18.75%21.68%FoundationofAdjustment:DifferentprofitmarginofdifferentcropsVariabilityandAbundanceLongtermCRM(FocusonCSA)C1.QuantitativeAnalysis–LinearProgrammingTomatoes(large)WatermelonBasilTheRestaurantChannelTomatoes(small)CucumberSweetpotatoesWintersquashOkraTheCASChannelTheFarmers’MarketChannel2.175X3.5X0.4X0.15X0.2X0.9X0.33X0.225X0.125Y0.141Y0.05Y0.094Y0.07Y0.15Y0.11Y0.22Y31-(2.175X+0.125Y)45-(3.5X+0.141Y)13.33-(0.4X+0.05Y)5.6-(0.15X+0.094Y)4.8-(0.2X+0.07Y)22.33-(0.9X+0.15Y)7.11-(0.33X+0.11Y)8.88-(0.225X+0.22Y)StepOneListalltheconstrainedconditions&objectivefunctionStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyConstrainedCondition0≤130.06-(7.883X+0.8617Y)≤40

0≤5+1.183X+0.6208Y≤24

1.Constrainedbyproducts2.Constrainedbyworkinghours3.ConstrainedbytruckcapacityObjectiveFunction0≤31-(2.175X+0.125Y)≤310≤45-(3.5X+0.141Y)≤450≤13.33-(0.4X+0.05Y)≤13.33

0≤5.6-(0.15X+0.094Y)≤5.60≤4.8-(0.2X+0.07Y)≤4.80≤22.33-(0.9X+0.15Y)≤22.330≤7.11-(0.33X+0.11Y)≤7.110≤8.88-(0.225X+0.22Y)≤8.88QuantitativeAnalysis–LinearProgrammingZ=3081.47-32.918X-0.62601YStepOneListalltheconstrainedconditions&objectivefunctionStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyStepTwoFeasibleRegionwithintherestrainedconditionsQuantitativeAnalysis–LinearProgrammingStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertainty（8.98，31.63）QuantitativeAnalysis–LinearProgrammingStepThreeOptimalsolutionoflinearprogrammingBecauseofintegerprogrammingOptimalsolution:QuantityofRestaurantsserved:X=9QuantityofCSAsubscribers:Y=32Maximizedrelevantprofitsperweek:Z=3081.47-32.918×9-0.62601×32≈$2764.18StrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyQuantitativeAnalysis–PlannedSalesStructure

CasesTomatoes(large)19.58Tomatoes(small)31.50Watermelon3.60Okra1.35Basil1.80Cucumbers8.10Sweetpotatoes3.00Wintersquash2.03TheRestaurantChannelTheCSAChannelTheFarmers'MarketChannelAverageWeeklyRestaurantDeliveryComposition(Totalfor9Customers)AverageMake-upofaSingleCSA“Box”(Totalfor32Subscribers)AverageWeeklySales

Approximate%ofaStandardHarvestCaseTomatoes(large)12.50%Tomatoes(small)14.12%Watermelon5%Okra9%Basil7%Cucumbers5.00%Sweetpotatoes11%Wintersquash21.68%CasesTomatoes(large)7.43Tomatoes(small)8.98Watermelon8.13Okra1.24Basil0.76Cucumbers12.63Sweetpotatoes0.44Wintersquash0StrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertainty932QualitativeAnalysisStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintySolvencySignificantdebtTimeofCash-inFlowRestaurantChannel:CSAChannel:Receive$400fromeachsubscriberatthebeginningofthe15-weekseason.Farmers’MarketChannel:

Cashsale

Tobuyandbuildthefarm,Brettspentalotfromsavingandassumedsignificant

debt.IncreasethesalesofCSAchannelandFarmers’marketwhiledecreasethesalesofrestaurantchannel.ToimprovethecashflowperformanceOpportunityCostBretthopethefarmwouldbecomeprofitableenoughtosupportthembothcomfortablyinthenearfuture.ChannelTimeconsumed(hoursperweek)Therestaurants14.83CSA8.9Farmermarkets27Intotal50.73QualitativeAnalysisStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyPersonalSatisfactionProperworkinghoursandscheduleshouldbemade.e.g.workinghours≤48hperweekQualitativeAnalysisTrendofDifferentChannelsTherestaurantchannel:

additional10potentialrestaurantsinthecomingseasonStrategyAnalysisApportionAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyTheCSAchannel:

33to90potentialsubscribersgrowthrateof220%ofCSAchannelingeneralThefarmers’marketchannel:

highriskandhighprofitwithlargedemandVeryGoodGoodIncreaseIncreaseCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyApportionAnalysisStrategyAnalysisStrategyVISION:toprovidehigh-quality&hi-endorganicproductFoodwithhighquality

1.Ahugegapinthemarket2.Asharpincreaseinpotentialcustomers

AsharpdecreaseinyieldnextyearuncertaintiesinweatherandotherrelatedfactorsSWOTInternalExternalDifferentiationStrategyStrategyAnalysisCaseOverviewCurrentSituationuNcertaintyApportionAnalysisUtilization&ImplementationShort-termdecision–PlannedSalesStructure

CasesTomatoes(large)19.58Tomatoes(small)31.50Watermelon3.60Okra1.35Basil1.80Cucumbers8.10Sweetpotatoes3.00Wintersquash2.03TheRestaurantChannelTheCSAChannelTheFarmers'’MarketChannelAverageWeeklyRestaurantDeliveryComposition(Totalfor9Customers)AverageMake-upofaSingleCSA“Box”(Totalfor38Subscribers)AverageWeeklySales

Approximate%ofaStandardHarvestCaseTomatoes(large)12.50%Tomatoes(small)14.12%Watermelon5%Okra9%Basil7%Cucumbers5.00%Sweetpotatoes11%Wintersquash21.68%CasesTomatoes(large)7.43Tomatoes(small)8.98Watermelon8.13Okra1.24Basil0.76Cucumbers12.63Sweetpotatoes0Wintersquash093832Slightadjustmentduetostrategicconcerns.TheResturantChannelTheCSAChannelFarmers'MarketChannelTotalRevenue2113.99921.001298.824333.81Costofsales(includingpackaging)(1233.26)(385.59)(481.84)(2100.69)Grossprofit880.73535.41816.982233.12LessOperatingexpenses:Depreciationoftangibleassets(15.05)(4.90)(20.30)(40.25)Fuel(45.15)(14.70)(60.90)(120.75)Maintanceandrepair(27.95)(9.10)(37.70)(74.75)Generalandadminstrativeexpense(communicaiton)(3.69)(0.70)0.00(4.39)Totaloperatingexpenses(91.84)(29.40)(118.90)(240.14)Operatingprofitforweek788.89506.01698.081992.98Short-termdecision–ForecastIncomeStatementStrategyAnalysisCaseOverviewCurrentSituationuNcertaintyApportionAnalysisUtilization&ImplementationBrett’sTimetable6:00-7:007:00-8:008:00-9:009:00-10:0010:00-11:0011:00-12:0012:00-13:0013:00-14:0014:00-15:0015:00-16:0016:00-17:0017:00-18:0018:00-19:0019:00-20:0020:00-21:00MondayTuesdayWednesdayThursdayFridaySaturdaySundayFarmers’MarketFarmers’MarketLeisureDayPackingCommunication(CSA)TEL(Restaurant)Transportation(CSA)FarmManagementFarmManagementFarmManagementStrategyAnalysisCaseOverviewCurrentSituationuNcertaintyApportionAnalysisUtilization&ImplementationSaveunnecessarytimesoastotakecareofthefarmandrestMid-TermPlanningSensitivityAnalysisVariableValuePriceAddedperUnitLimitationIncrementAllowedDecrementAllowedTruck’sCapacity4054062.7712.97Advice:PurchaseaNewTruckin2yearsEstimatedCost:$10,000Capacity:30CasesperTripValueAdded:$5×30×2=$300perWeekStrategyAnalysisCaseOverviewCurrentSituationuNcertaintyApportionAnalysisUtilization&ImplementationPurchaseanewtrucktoenhancecapacity.Analysis:TransportationtoRestaurantsperWeek:GasolineCost:$0.21×220=$46.2Depreciation&MaintenanceCosts:($0.07+&0.13)×220=$44TimeConsuming:3.5+0.5×10=8(hrs)OpportunityCost:$10×8=$80(Basedon10restaurantsandgasolinepricestays)Advice:OutsourcetheTransportationtoRestaurantsCostAdded:$150perweekProfitAdded:$46.2+$44+$80-$150=$20.2perweekMid-TermPlanningTransportationOutsource Thenumbersofrestaurantsareincreasing. Oilpricesaresoaring!!StrategyAnalysisCaseOverviewCurrentSituationuNcertaintyApportionAnalysisUtilization&ImplementationOutsourcetransportationtorestaurantstosavetimeandcost.StrategyAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyApportionAnalysisuNcertainty-WeatherConditionsWorstConditionBestConditionAverageCondition1.WeatherWeather:rainyResult:halfproductsunsold;50%ofunsoldspoiled.Weather:normalResult:overallspoilagerateisabout10%.Weather:sunnyResult:selloutalltheproduct.WeatherofSummer(JuntoAug)inSouthMaryland:Averagerainfall/precipitation:286.5mmAveragerainydays:22.3daysStrategyAnalysisCaseOverviewUtilization&ImplementationCurrentSituationuNcertaintyApportionAnalysisuNcertainty-WeatherConditionsBestAverageconditionRevenue&Pr