Business Plan on Strawberry FarmingSubmitted forSaif
RahmanSubmitted By:1. 1. Nayma Alam 0711850302. 2. Nazmul Ahsan
0724400303. 3. Shams E Rifat Rinthia 0712470304. 4. Naima Bari
0711790305. 5. Talhatul Islam 0723880306. 6. Lutfun Nahar Lopa
073099030LETTER OF TRANSMITTAL8th April, 2010.To,Saif RahmanSchool
of Business,North South UniversityBashundhara, Dhaka.Subject:
Submission of new business Strawberry farming. Dear Sir,It is a
matter of pleasure and honor for us to have the opportunity to
submit our Group 7 project on Strawberry Farming as a part of our
academic activities.We have put in our maximum effort in this group
project. We show our uttermost gratitude for the opportunity you
gave us to implement our analytical thinking and interpretation
skills that will help us in building future career.We therefore
would like to place this case analysis to you for your kind
consideration.Yours Sincerely,_________________________________
______________________________Shams E Rifat Rinthia Naima Bari(071
247 030) (071 179 030)_________________________________
______________________________Nayma Alam Nazmul Hasan(071 185 030)
(07244030)_________________________________
______________________________Talhatul Islam Lutfun Nahar
Lopa(073099030)Table of ContentExecutive summary5-7
Introduction8
The opportunity9
The product Description10-12
Market Analysis13-17
Industry analysis18
Competition Analysis18-20
Marketing plan21-27
Management team28
Manufacturing process29-30
Financial Projection29-30
Conclusion30-37
Executive Summary:Strawberry (Fragaria vesca) is an important
fruit crop and its commercial production is possible in temperate
and sub tropical areas of Bangladesh. The countrys weather proved
suitable for strawberry farming although this delicious fruit is
normally produced in countries having cold weather, particularly in
the West.Professor Dr. M Monzur Hossain is the pioneer of
strawberry cultivation in Bangladesh. In the early 1990s, Dr Manzur
was in Japan, having his PhD, when Quamruzzaman joined him in a
one-year training session. After finishing of their training, they
together planned the cultivation of the strawberry in
Bangladesh.There is opportunity for this industry. The current
market demand is about 50 tonnes where 25 tonnes are supplied by
the local producers. Yearly turnover rate was about 10 crore taka
in 2009.Imported strawberries are being replaced by the local ones.
So the market is increasing. In near future, it is very much
possible to export this fruit after meeting the local demand.One
cup (144g) of strawberries contains approximately 45 calories and
is an excellent source of vitamin C and K. Strawberry also contains
water, energy, protein, minerals, amino acid etc. Strawberry takes
good care of eye, strengthens teeth and also removes harmful toxic
from blood. Medically, it is also known as an antiviral remedy. It
is also beneficial for diabetic patients if processed
accordingly.Our value proposition will be created based on better
quality, strong distribution channel, attractive packaging, valued
customer, different promotional offers and marketing programs.A
thorough market research, industry and competitor analysis has been
done. We did the market research through doing survey(sample size
45). We found the growth rate of market demand is 42.85%Our niche
target markets are: Super shops (upper class and upper middle
class) Agora(4 outlets) Shopno(among 41 outlets ,we will target
only 5-6) Lavender(1 outlet) Nandan(4 outlets) Fruit Market of
Bannai and GulshanAs strawberry is an expensive and foreign fruit,
it is not well known about the general people. So we have targeted
gulshan banani area where literacy rate, income level and number of
foreigner is very high compare to other areas.We are starting our
business in 1 bigha land in the first year. From 1 bigha, we can
get 2000 kg strawberries in a season. But for many reasons (natural
calamity and diseases) .it might happen that we lose some fruits.
So we narrow down our target to 1625 kg by which we can capture
3.25% share of the market.There are many direct and indirect
competitors of us. So we have to compete with them very strongly.
To get the market share more strongly we need to create brand image
in the mind of customers. So we have a marketing plan which
includes clippings in the tv, articles in newspapers, promotional
activity in the supers hops and packaging with companys name and
picture. Our pricing strategy will be market penetration. We will
charge a price which is lower than the market price. Our cost par
kg is 123 taka, so even if we charge 500 tk, our profit margin will
be very high.Initial investment will need 1,033,500 tk.6 partners
will initially invest in the business.1.15 lakh tk each and for the
rest we will seek for loan(33%0 with an yearly interest rate of 9%
for 3 years. In the management team,2 partner will work in the
field along with two more worker. Another 2 partner will be
responsible for packaging. The rest 2 will be doing the
distribution and marketing along with 2 more worker under them and
1 van driver will be appointed for transportation.We will buy a
land of 1 bigha in Tangail, patrail village.In the 3rd year we will
go for expansion and for that we will take lease of 1 more bigha
land for 3 years.We will reach our break even in 2year and 5 months
where break even sales are estimated to be 1,021,499 tk and break
even units are estimated to be 2853 kg.Though it has risk factors
(rotten behavior, small farmers, sour taste of the fruit), it has
the scope for expansion. Strawberry can be used in industrial
production of ice cream, jam, jelly, juice, taste and color. Rather
than only taking as fresh fruit, if these usage of strawberry can
be started, then this business will prosper more.Any business
should have a clear exit strategy before it goes for operation. If
we really need to shut down our business of strawberry farming,
first thing we will do is we will give out our land for lease to
any interested party. Land itself has its own value. So giving
lease(getting party to take lease) would not be a problem. More
over, it will generate a fixed income par year. Others equipment
and van will be sold or will be given rent based on the cost
benefit analysis.1. Introduction Strawberry (Fragaria vesca) is an
important fruit crop and its commercial production is possible in
temperate and sub tropical areas of Bangladesh. The countrys
weather proved suitable for strawberry farming although this
delicious fruit is normally produced in countries having cold
weather, particularly in the West. Professor Dr. M Monzur Hossain
is the pioneer of strawberry cultivation in Bangladesh. In the
early 1990s, Dr Manzur was in Japan, having his PhD, when
Quamruzzaman joined him in a one-year training session. After
finishing of their training, they together planned the cultivation
of the strawberry in Bangladesh.In 1996 at the time of returning
home, Manzur brought along eight varieties of saplings and
Quamruzzaman collected six varieties from Japan and America. But
none of them sustained in Bangladeshi environment. But they do not
gave up. They started doing experiment on it and at last Manzur
developed some new varieties through tissue cultures at his Botany
departments Plant Breeding and Gene Engineering Laboratory, while
Quamruzzaman did the same in Natore. After five years of research,
in 2003, three varieties yielded encouraging results. Out of the
three, the RU-3? and Modern-3? variety have proved to be very
impressive in all aspects of size, taste, and flavor, with each
fruit weighing from 20 to 25 grams. At present, the methods are now
more developed, following successful cultivation over the last five
years. In this way strawberry starts its journey in Bangladesh.2.
Opportunity Current demand 50 tones par year, we grow half of the
demand locally Yearly turnover Tk10 cr. countrys weather proved
suitable for strawberry farming It is in the introduction stage
.Market demand is increasing significantly Gradually developing its
variety, successfully grown two American varieties with 75 gram per
fruit weight. Slowly but strawberry market is spreading outside of
Dhaka. Imported strawberries can be replaced by the locally
produced strawberries. After meting local demand, foreign exchanges
can be earned through doing export. Strawberry business falls into
SMEs category. Present government is giving many subsidies on SMEs
to promote the growth of GDP.3. Product Description Our product is
Strawberry which is a sweet fleshy red fruit. Strawberry belongs to
the family Rosaceae. It is a low perennial herb with many runners
and bearing white flowers followed by edible fruits having many
small achiness scattered on the surface of an enlarged red pulpy
berry. This is the only fruit which carries seeds on the surface.
Garden strawberries are a common kind of strawberry cultivated
worldwide and is a well-known fruit mostly in western countries.
Various usage of strawberry in addition to being consumed fresh is:
Strawberries can be frozen, made into preserves, as well as dried
and used in such things as cereal bars. Strawberries are a popular
addition to dairy products, as in strawberry flavored ice cream,
milkshakes, smoothies and yogurts. Strawberries are also used to
prepare pie, juice, jam etc.Strawberry also has a high nutrition
value. One cup (144g) of strawberries contains approximately 45
calories and is an excellent source of vitamin C and K. Strawberry
also contains water, energy, protein, minerals, amino acid etc.
Strawberry takes good care of eye, strengthens teeth and also
removes harmful toxic from blood. Medically, it is also known as an
antiviral remedy. It is also beneficial for diabetic patients if
processed accordingly. Strawberry pigment extract is used as a
natural acid/base. As a kitchen remedy, strawberry removes
tartar.Value Proposition: Whenever someone starts a business that
will prosper only if, it creates any value to its target market.
Though Strawberry farming is new in Bangladeshi market, it has
potential competitors that can be one of our main threats. We will
overcome these threats if our farm creates any particular value to
our customers which has not created by any other strawberry farms.
Our value propositions can be: Valued customer:We will make sure
that some portion of our target market becomes our valued customer,
and we will try to serve them in a better way. Offers:For marketing
we are offering many things like free recipe with every packet,
showing cooking processes at superstores and many more. We will
continuously come up with this kind of different offers so that we
can grab and hold our potential customer. Marketing programs:So far
no strawberry farm did enough marketing program that can attract
customers thats why a huge number of people are still unaware of
this fact that in Bangladesh strawberry farming is possible and the
benefits of this fruit. Our main aim of marketing programs will be
to make people aware of this beneficial fruit with attractive
marketing programs. Distribution channel:We are going to distribute
the strawberry to the superstores and other fruit markets by our
own people. We are not involving any third party in our business
for distribution. So distribution will be heavily monitored by us.
Quality:At Bangladesh Agricultural Research Institute (BARI) we
took a short course on how to start a strawberry business and that
made us able to chose best strawberry seeds and plant it in a
proper way and fertilize it in such a way that best kind of
strawberry will be seen in the plants. Also we know the best way to
store them which will help us to provide best quality strawberry to
our customers Packaging :Packaging is going to be very different
and attractive than our competitor. Using baskets which will be
wrapped with cellophane papers will keep the strawberry in a good
condition and also it is very attractive.4. Market AnalysisMarket
of strawberry in Bangladesh is growing now. The stage of this
strawberry industry is growing very fast. To analyze the market we
need to determine few things. These things are Growth rate Target
Market and justification Target market size Market Survey1. a.
Growth Rate:Strawberry is a growing industry of Bangladesh; we
analyzed the market and observed that in 2009 the market demand for
strawberry was 35 tons. And next year it went up to 50tons. From
these we can calculate the growth rate of strawberry in Bangladeshi
market.Growth rate = Changes in demand from previous year/demand of
last year= (50-35) tons/35tons= 42.85%, so the market has grown by
42.85%.Justification For Growth Rate: As we know strawberry is very
new in Bangladeshi market and people gradually getting known about
this fruit, so first few years the growth rate will be higher but
in upcoming years the demand will not grow that much because
industrial or other usage of strawberry in Bangladesh has not
started yet. If we take the growth rate of 42.85% next year in year
2011 the demand will be 71425tons. For year 2012 we are assuming
that the growth rate will be 45% and demand will be 103566tons.
After 2012 the growth rate will be steady as many farmers will
start producing strawberry.b. Target Market and Justification:Our
niche target markets are: Super shops (upper class and upper middle
class) Agora(4 outlets) Shopno(among 41 outlets ,we will target
only 5-6) Lavender(1 outlet) Nandan(4 outlets) Fruit Market of
Bannai and GulshanAs par 1991 Bangladesh census, Gulshan had a
population of 281,337. Many of Dhakas richest reside here. 21.59%
of residents are occupied with commerce while 40.92% are service
professionals. Average literacy rate of the area is 59.7% for
people over the age of 7 against the national average of 32.4%.Most
of the foreign diplomatic missions in Bangladesh area are located
in Gulshan or Baridhara Diplomatic zone.All international brand
stores like Movenpick, Baskin Robins, Coffee World, Roll Express,
Pan Pacific Hotels and Resorts, Westin Hotels are there in
Guslhan.So we can clearly understand from the above information
that people of Gulshan Banani belong to the upper and upper-middle
class society. Their income and education is very high compare to
other areas of Dhaka city. Foreign Diplomatic Missions are situated
here means there are foreign population in this area. As strawberry
is an expensive and foreign fruit, it has its acceptability in this
market. They already know about the fruit and they have the ability
to but this expensive fruit.In the super-shops (different outlets
in Dhaka city), generally upper and upper-middle class people come
to do their shopping. Strawberry is now in the introduction stage
and it is highly expensive. So it is tough for middle class or
other people to keep strawberries in their consumption basket. That
is why our target market is the super-shops and Banani-Gulshan
fruit market initially where foreigners, upper and upper-middle
class people usually do their shopping.c. Target Market size and
justificationStrawberry growers and traders in Bangladesh are
expecting Tk10 cr. in annual turnover, as they go into its
first-ever commercial cultivation in 2006.Rajshahi University
professor Dr. Manzur Hossain, who developed the fruit nearly a
decade ago, expects nearly 25 tonnes of output from about 8.5 acres
of land in 45 districts until April.The initial commercial
production will meet 50 percent of the gross annual demand for the
fruit. At present, the demand for the fruit stands at 50 tons, said
Hossain, also the general secretary of Bangladesh Strawberry
Farmers Association, which monitors the fruits cultivation in the
country.So the market demand for strawberry in Bangladesh is 50
tonnes (1 ton=1000kg, 50 tonnes=50,000 kg).As we are just starting,
we will do the cultivation in a land of 1 bigha size only. Per
bigha land we can plant 6000 seeds. In other words, 1 bigha land
has a capacity of 6000 strawberry plant.Each strawberry plant bears
around 300 to 350 grams of fruit.So, we can harvest 1800 kg
(6000*300gm) to 2100kg (6000*350gm) of strawberries from one bigha
land in a season. By doing this we can capture 3.6% to 4.2% of the
market share.3.6% of 50,000 kg= 1,800 kg4.2% of 50,000 kg= 2,100
kgAs we are producing for the first time, we do not have any
experience and it might happen that some trees will not give fruits
or fruits are not properly grown. Natural calamity (rain, storm)
can also harm some trees. So we might loss some of our
fruits.Suppose 1000 seeds/plants are unproductive. Then:5000*300 gm
= 1,500 kg5000*350 gm = 1,750 kgThus we are narrowing down our
target market size from 3% (1,500 kg)-3.5% (1,750), on average
3.25% (1625kg).X% of 50,000kg=1500So, x = 3%X% of 50,000 kg= 1,750
kgSo, x = 3.5%(3.5%+3%)/2 = 3.25% (Target Market share)3.25% of
50,000kg= 1,625 kg (Target Market Size)d. Market
Survey:NandanSwapnoLavendarBanani local fruit
1.Daily sale5to8 kg1.5to2 kg2to3kgaproximately 5 kg
2.Price700to800 tk700to800 tk600to700 tkaround1000to1200 local
strawberry
3.Buying priceDidnt mentionAround 500 taka20% less than their
selling prince ( 450-500)They said their buying price 800 to 900
taka. I think it is fake price. It would around 450 taka because
quality is bad than the super shop.
4. sourcesNW(j)4, kamal Ataturk Avenue,North Avenue Gulashan
Dhaka 1212Tle: 9862637, 88850049E-mail: Gulshan@nandan
megashop.comEmrul KayesSupervisor & managerGulshan-2Mob:
01974-1630151.Md. Atiar RahmanMob:01916-0414912.Murad
ChowdearryMob:-01711781782Not availabale
We conducted a survey among our main target market that is
foreigners and superstores of Dhaka city. When we analyzed the data
and talked with different assistant managers of different
superstores we found out that he market for strawberry is growing
very fast and for that we have found that import of foreign
strawberry has almost stopped. This is a very good indication for
our strawberry industry. In near future demand of strawberry will
increase significantly.5. Industry Analysis Commercial production
of strawberry has started in the year 2006 in Bangladesh and
currently there is a demand of 50 tons of strawberry in Bangladesh.
Currently local producers are growing only 25 tons which is only
half of the total demand. And the rest half is being imported from
other countries. So there is good scope available for local
producer to grab the market and supply according to the demand.
Observing the market scope many local farmers have already started
and planning to start growing strawberry at a large scale. This is
good news, because if production increases than we will not have to
import strawberry in future. But there is another factor that
should be taken into consideration. If our local production rate
increases like this, in future this will exceed the industry demand
growth rate. So, there will be, excess supply in the industry
compare to the demand although there is a shortage now. To get rid
of this problem, we have to increase the usage of strawberry along
with fresh consumption. For this, please see our extension
plan.From the survey of other producers of strawberry in the local
market, we found their year to year growth and by taking average we
found the industry average which is 42.85%.6. Competitor
AnalysisAfter producing strawberry our first challenge will be the
competition in the market. We have both direct and indirect
competitors in the market. There are a lot of competitors already
in the market who are producing and marketing strawberry in
Bangladesh for last few years. These are our direct competitors.
Among all direct competitors existing in the market, we have
identified our main competitors and below there is a brief
description about our main direct competitors.A.R. Enterprise
(Phone: 01711402525)This farm is located at kaliakawr in Gazipur.
They have started strawberry farming from the year 2004 and farming
on approximately 7 bigha of land with an annual production of
around 14000 kg and daily production of around 80 kg. There are 3
manager level employee and 10 workers working in this farm. Their
production cost per kg of strawberry is around Tk180 and selling
price is around Tk400 per kg. They mainly supply strawberry in a
all the branches of Nandan super shop and some fruit markets of
Banani and Gulshan area. There main competitive advantages are: Low
transportation cost, ability to supply strawberry at a faster rate
as the farm is located close to Dhaka. Ability to sell at a lower
price as they have achieved economics of scale.King Sons Farm
(Phone: 01714352223)This farm is located in Maymanshing. They are
faming strawberry from the year 2009 on 4 bigha of land. Their
annual production is around 7500 kg with a daily production of
around 40 kg. In this farm 5 workers are working now under a
manager. There production cost is around Tk210 and selling price is
around Tk400 for per kg of strawberry. They supply strawberry in
different super shops of Dhaka city along with retail fruit
markets. Some of their competitive advantages are: Low labor cost
Comparatively competitive selling price.Garden Fresh Strawberry
(01731402766)This farm is located in Ashuliya, Dhaka. They are
faming strawberry from 2009 on 1 Bigha of land. There annual
production is around 2000 kg with a daily production of 13 kg.
There production cost of per kg of strawberry is around Tk280 and
selling price is around Tk400. There are 9 workers working in this
farm. They supply strawberry to super stores, local market as well
as in restaurants in Dhaka. There competitive advantages include:
Low transportation cost as the farm is very close to Dhaka. Strong
connection with buyers.Indirect Competitors:We have some indirect
competition with small local growers, who have recently produced
strawberries seeing the high profit initially but after they have
produced strawberry, they are scared that whether they would be
able to sell this strawberries in the market or not, so they have
started selling at a very lower price. As a result, the overall
prices of the strawberry have decreased at a significant rate
recently. These small farmers are also our competitor because now
we have to beat them in case of price, quality and we also have to
make profit. This is also a big challenge for our farm. Another
indirect competition for our strawberry is, it have to compete with
other fruits in the market. As, strawberry is new and not very
familiar among all, so this will be also a challenge.7. Marketing
PlanMarketing is a process by which companies create value for
customers and build strong customer relationships in order to
capture value from customers in return also it helps to grow
customers by delivering satisfaction. For our strawberry we will go
for traditional marketing processes as well as few innovative
promotional activities will be doing by us. Our brand will be
created later on but before creating a brand image we have to let
our target people know about the features and benefits of this very
famous foreign but locally grown fruit Strawberry.In Bangladesh,
strawberry farming has been started for couple of years and its
growing almost every year. Fruit is always a good thing to have.
But there are other farms in the strawberry industry so our
marketing plan programs should be done by keeping that in mind. Our
marketing plan consists of few steps and those steps are described
elaborately below:Step-1: Situation AnalysisBefore entering any
market we have to analyze the advantages and disadvantages of that
market. Though strawberry market is new in Bangladesh still we have
competitors. So the advantages and disadvantages are:Advantages -
Our quality is better than the competitor.- Our distribution is
stronger- Our packaging is betterDisadvantages - Small farmers have
started growing strawberries- Few people still think foreign
strawberries are of better quality.- We have to grow strawberry for
a particular span of time (September-March)Rest months of the year
we will be sitting idle.Step-2: Key Planning Decision1. Advertising
objective: Our objective for advertising will be to provide our
customers fresh, locally grown, well-packed, tasty strawberries
which are cheaper than imported strawberries but have the same
quality and taste.2. Target Audience: Target audience for our
advertisement will be-- Superstores (Swapno, Agora, Lavender,
Nandan)- Foreigners.- High and middle income people of Banani,
Gulshan, Baridhara area.1. Competitive Product advantage:-We will
promote our strawberries along with the numerous benefits it has,
we will promote the attributes rather than the product.- The
quality of our strawberry is better than the competitors.- Also the
packaging of our strawberry is going to be better and different
than the competitors. Present strawberry farms in Bangladesh
provide their product in a plastic packet which is not that much
strong. We are introducing a new packaging for strawberry and that
is fruit-baskets and the picture is shown above. Though this
packaging will cost only 1.5 taka more than of those plastic
packets but the benefits of these baskets are not unknown to the
customers. These baskets look very attractive and strong. Also
these baskets can be re-used. And in each basket there will be a
free strawberry recipe. As we are thinking for extension and
expansion, we need to create brand image and brand loyalty among
customers. This packaging will help us to achieve that.1. Product
Image :1. e. Personality and benefits: The personalities of
Strawberry are: Strawberries are high in Vitamin C & K. Vitamin
K is very rare, so or strawberry can provide people this rare
vitamin very easily and we all know vitamin C can prevent numbers
of infectious diseases. Research shows that if one heart patient
can eat 8-10 strawberries, his blood pressure can significantly
decrease. Strawberries also reduce risk of cancer; enhance memory
function, and rheumatoid arthritis. Strawberries also take good
care of our eyes and teeth. It removes harmful toxin from your
bloodThere are lot more benefits of the great berry, Strawberry. We
will use these personalities and benefits to promote our product to
the target market. Showing these attributes to the customer can be
one of our main and strong marketing strategies as no farm ever did
this.1. f. Product PositioningWe know the development of strawberry
has been done in Bangladesh. Now the stage for the market is
Introduction. We know during introduction stage Marketing programs
has to be done more.Step-3: Tactics and the Media StrategyThe
tactics of our advertisement of Strawberry are:1. Superstores:When
we will start supplying our products to the superstores, in a
corner there will be some of our marketing people who will interact
with the customers and will tell them about the benefits of
strawberry .Two of us will show people some quick recipe of
strawberry and will serve them free for the first month of our
promotion.1. 2. Decorated Shelves in the Superstores:In the
superstores, we will provide our own decorated shelves to display
our Strawberry-Zones Strawberry. Those shelves will be colorful and
attractive so that it can drag customers attention. Super shops
will allow us to do the marketing because it will bring customers
for their shops too.1. 3. Newspapers: In the 2nd or 3rd month of
our production, we will, publish an article on our strawberry
cultivation and the importance of strawberry in Prothom Alo and
Daily Star. Thus people will come to know about strawberry in a
large scale and by describing our firm/s business we will also
create an image on customers mind.1. 4. TV:When we will get few
responses from the customers we will grab the TV media. We will not
go for any advertisement for our product as that will be very
expensive; rather in different agricultural programs like Ridoye
Mati o Manush in different channels we will show our work as a
feature.1. 5. Posters : Posters will be posted in different areas
showing the colorful bright red image of strawberry.Step-4:
Creative StrategyCreative strategy includes two things. Firstly
what is the message we are trying to deliver to our target market,
its more like a Specific Slogan for our product. Secondly what is
main concern of our product that will attract our customers to
frequently buy our product? The Message: the message or the slogan
for our strawberry can be:Real Juicy & Tasty Strawberries for
YOU! The main Concern: the main concern of our product is to make
people aware of their health and many human-health problems like
eye problems, teeth problems, skin diseases, infectious diseases
and most importantly heart problems. After awaking them about these
problems we will tell them what strawberry can do to prevent these
problems.Step-5: Pricing Strategy (market penetration)As we have
stated earlier that we have done a market as well as a competitor
analysis, we analyzed that industry average price for per kg
strawberry is 716.67 taka. We have found that our cost of goods
sold per kg is 123taka and we are selling at a rate of 500taka/kg.
Our selling price will be a lot less than the competitors. This
pricing strategy is called Market Penetration. We are asking for
low price to grab the target market.PackagingPackaging will be done
in such a manner so that it will create value to our product. We
will first separate the strawberries according to its size, color
and weight. Three kinds of Packaging will be there.One for the big
sizes which will be delivered to super shops. One for small sizes
only and the other one will be mixed of both sizes. Packaging will
be done on the basis of customer demand (small, big and medium
sizes).Each package will contain 250 gm of strawberries. A green
basket full of fresh & red strawberries with our firms name and
pictures will also create the brand image gradually.Each green
plastic basket will cost 2 tk and the wrapper with the name and
picture printed on it will cost 1.5 tk. So the total cost of par
packaging will be a total of 3.50 tk.DistributionOur Distribution
strategy should be our competitive advantage. We will keep the
distribution channel very simple. As this is a start-up business,
no distribution agents will be used primarily as it will increase
the cost.Before harvesting, distributor will contact with the fruit
shops and super-shops to know the demand of that day (which branch
of super-shops will need what amount of strawberries).They will do
it on a daily basis. As strawberry is an extremely perishable
fruit, it is necessary to deliver the fruit as soon as possible. So
all contracts (how many kg to which outlet) should be done before..
Then strawberries will be collected from the firm in plastic
crates. We will use the public transportation to take those fruit
crates from the firm to Dhaka location (where we will do the
packaging).2 people will be responsible for the packaging. Then
these packets will be delivered through the marketing people&
distributor (4 people) to the destinations. We will use van to
distribute which will reduce our transportation
cost.StorageInitially we do not need to store as we will distribute
as soon as we will harvest based on the demand. But gradually when
we will expand in the upcoming years (3rd year of our production),
we will need storage system. Fruits can be stored in storage at 32
degree Celsius up to 10 days if necessary.. For distant marketing,
strawberry should be pre cooled at 4 degree Celsius within 2 hours
of harvesting and kept at the same temperature. After pre cooling
they will be shipped in refrigerated vans.8. Management teamOurs is
a partnership business. We are six people in the business. Two of
us will be in the farm, Tangail to supervise the cultivation
process like preparing soil, seed plantation, irrigation, pest
control, plucking fruits etc. There will be two workers working
under them. Rest four of us will be in Dhaka. Tow of them will do
the packaging of our strawberries that will come from Tangail. Rest
two will supervise the distribution of strawberry to different
super shops and retail shops in Gulshan and Banani region. The
marketing process will be also controlled by them. There will be
tow more workers working under them. Moreover, there will be a van
driver who will take the strawberries to super shops and retail
market.9. Operation and Delivery processOperation process of
farming strawberry starts with preparing the soil. Preparing soil
will start from the month of June then it will take approximately
three months to prepare the soil. On the month of September we will
plant strawberry seeds and then from September to December the
plants need to be take care like fertilization and irrigation. By
December the plants will be fully grown and fruits will be ready to
pluck. After that, we will have to start marketing for our product,
take orders, do packing and distribute as per requirements to
different super shops and local fruit markets. We will have to do
this till April.10. Financial ProjectionsInitial investment:Land56
decimal*6000tk700,000 tk
Van1*6,000 tk6,000 tk
Irrigation Pump1*12000 tk12,000 tk
Strawberry Seeds6000*10tk60,000 tk
Fencing60,000 tk60,000 tk
Legal Expenses(Memorandum, BSTI)9,000 tk9,000 tk
Insurance5,500tk5,500 tk
House For Labor1,50,000tk1,50,000 tk
Organic Herbicides ,Pesticides5000 tk5,000 tk
Training Expense2 person*3000tk6000 tk
Cash in hand for other expenses(first months labor salary,
electricity, gas bill payment and other day to day expense)Labor
cost:11,000tk*2=22,000 tk*3 months=66,000 tkElectricity,gas and
other expense:14,000 tk80,000 tk
Total Investment1,033,500 Tk
LandWe will buy 56 decimals or 1bigha of land in Tangail at
Patril village. It will cost us 700,000 tk. We will buy the land
instead of taking lease like other competitors because we have done
a thorough market and industry analysis. We have found that in
Bangladesh strawberry has a potential market and in near future it
will be possible to export it in other countries of the world. So
if we have our own land then we can produce at least a fixed amount
of output even if we can not go for expansion. We dont have to be
worried about the lease period or lease renew or lease contract
cancellation for which many competitors business may get harm. So
owning of land is a competitive advantage of ours over the
competitors.VanIn Dhaka, if we use public transportation, then for
20 kg, par day transportation cost is from 350-400 tk range.So
weekly 2,450-2,800 tk.Monthly 9,800-11,200 tk, which is costly.If
we buy a van spending 6000 tk which is a fixed asset, and then
paying a van driver 3,000 per months, our total cost goes down. It
is economic to buy a van and keep a van driver for the distribution
purpose.Irrigation PumpIt will cost around 12,000 tk.Strawberry
Seeds We will buy the strawberry seeds from a nursery in BARI
(Bangladesh Agricultural Research Institute). Par seeds will cost
10 tk. As 1 bigha land has a capacity of 6000 plant, to use the
full capacity we will plant 6000 seeds. It will cost 6000*10tk=
60,000 tk. Once we buy the seeds, do the plantation, after
harvesting we can reuse it.FencingFencing can be done for 5 years
durability .To protect the firm and to protect the plants from
birds, it is need to do the fencing which will cost 60,000 tk.Legal
ExpenseTo get the memorandum for doing strawberry business and For
BSTI permission, it will cost 9000 taka.InsuranceInsurance should
be done. Crops get damaged for various reasons(diseases, natural
calamity etc.). For this, insurance should be done which will cost
5,500 tk par year.Organic herbicides and PesticidesStrawberry is a
very vulnerable plant. It may get attacked by different diseases.
To protect from these diseases, we need to use organic herbicides
and pesticides which will cost around tk 5,000 par season.Training
ExpenseFramers need to be trained to grow quality fruits. Many
farmers just do the farming without knowing the technology and the
process. That is why they do not get the optimum output or quality
is not up to level. So here we will create our value proposition
and it will be another competitive advantage. Two of our farmers
will be trained from Rajshahi Universitys training center where
strawberry was first cultivated. This will cost 3,000 tk each. So a
total of 6,000 tk will be included in the initial investment.House
for LaborWe need to built a one shaded room (brick built, tin
shaded) for the labors and for keeping pump and other equipments.
It will cost 150,000 tk.Cash in hand & Total Initial
InvestmentInitial Investment is now of 953,500 taka. We need some
cash in hand to operate day to day activity and for first three
months salary, electricity, gas, water and other expenses. If we
keep cash in hand for about 80,000 tk then our initial investment
end up with an an amount of 1,033,500 tk.Funding Source: Each of us
(6 partners) will invest 1.15 lakh tk. For The rest of 3.435 lakh
taka, we will seek for bank loan at an interest rate of 9%. So we
are financing our business with a combination of equity and debt
financing. Equity 67% and debt 33%. As strawberry businesses falls
under small and medium enterprises (SMEs), it has the opportunity
to get a bank loan. The present government is giving many
facilities for these SMEs to achieve higher GDP growth rate.
Strawberry production is in the introduction stage and earlier we
have already discussed that it has many opportunities to grow in
Bangladesh. It can also go for exporting after meeting the local
demand. So growth in this sector means growth in GDP for which
banks are giving loans to promote these kinds of
businesses.6members* 1.15 lakh tk = 6.9 lakh takaInitial
investment- equity financing= 1,033,500-690,000 =343,500X% of
1,033,500=3.435 lakhSo, x = 33%We will seek for bank loan of 343,
500 tk (33% debt) for 3 years at an interest rate of 9%In the 3rd
year, when we will go for expansion, we will go for lease which is
also a form of financing. We will take lease of 2 more bigha of
land at an expense of 15,000 tk per year per bigha.Annual
ProductionYear 1 = 1625 kgYear 2 = 2000 kgYear 3 = 3500 kg
(extension of production by taking lease 1 bigha of land)Year 4 =
4000 kg (using full capacity of 2 bigha land)Break Even Point
Analysis:Our initial investment will be 1033,500 tk. Total fixed
cost is 1,021,500 tk. Total variable cost 230,700 taka So if we
produce 1625 kg in the first year then out variable cost par unit
or par kg is 142 taka. We have set price at 500 tk par kg. If we
calculate the break even point in term of unit of out put then we
get at 2853 kg, it will reach the break even(no loss-no profit).In
term of sales volume it is taka 1021499.716.This quantity or volume
of sales will be reached at 2 years 5 months. So, after 2 years 5
months, our business will start earning profit.Break Even
analysis(volume and sales)
Fixed Costtk
Land700,000
Van6,000
Irrigation Pump12,000
Fencing60,000
Legal Expense9,000
Insurance5,500
House for labor150,000
Training Expense6,000
Pipeline set up4,000
Piping for water40,000
salaries22,000
water3,000
gas4,000
Total Fixed Cost1,021,500
Varieble Cost
seeds60,000
slaes salaries13,000
Electricity7,200
Packaging24,500
Transportation76,000
Mulching15,000
Fertilizer5,000
Digging5,000
Soil Leveling25,000
Total varieble Cost230,700
Varieble Cost par unit(kg)142
Price per unit(kg)500
Qb=FC/p-vc2853.106738
or 2853 kg
S*=Fc/1-VC/S1021499.716
Break even at2.445428571
2 years 5 months.
Qb= Break Even quantity
FC=Fixed Cost
vc=variable cost par unit)kg)
p=price par unit(kg)
S*=Break even point (sales taka)
VC=Total variable cost
S=total sales
Expansion ScopeStrawberry is also used as a raw material for
juice production, for jam production, in ice cream factories for
flavor, in beverages like milk shakes and other soft drinks. So, if
we can produce enough quantity and of better quality, then we can
grab share of these markets too which was primarily dominated by
imported strawberries. We can make new uses of strawberries and we
have to make this uses, the business scope will increase. We will
be the pioneer in the industrial usage of Strawberry(as a raw
material supplier for juice, jam, ice cream , beverages, flavor and
color) and export in other countries.Risk FactorsWhenever there is
a business, unconditionally there will be few risks. When we
started planning for farming strawberry, few certain risks we could
assume are: Rotten Behavior: Strawberry is very perishable in
nature, it gets rotten very easily, so if we cannot deliver them
properly, they will be rotten and our production will be hampered,
so this characteristic of strawberry is going to be a risk factor
for our business. Taste of the fruit: Bangladesh is a country for
very sweet & juicy fruits like Mango, Lichi, Jackfruit, etc.
Bangladeshi people love sweet fruits more than sour tasted fruits.
Though strawberry is very juicy and sweet, it has slightly sour
taste, which Bangladeshi people may not like very much. Small
farmers: Small farmers of Bangladesh have also started producing
strawberries in their fields and that may significantly decrease
the price of per Kg strawberry as they are not aware of the market.
So our competition will be higher and as our cost will be higher
than of those small farmers, so eventually our price will be high,
but our target market will be seeking for lower price, so at that
point if our customers do not understand our brand image, we will
lose them.11. Exit PlanWhenever we plan for a business to start,
along with the plans for continuing the business we also need to
prepare or think of an exit plan. We need an exit plan because, for
every business there are two possibilities, it may work out or it
may not work out properly.For our strawberry farming we need more
fixed assets than variable assets. Our fixed assets include 1-Bigha
land, van, water-pump, and equipments. If we really need to shut
down our business of strawberry farming, first thing we will do is
we will give out our land for lease to any interested party.
Leasing this land is beneficial in many ways. If we give our land
for lease it will bring a good amount of regular income for us.
Land is a very powerful natural resource. Land itself has its own
value. A piece of land will never lie idle; it can be used in many
ways. So value is already created to other parties who are
interested to take it as a lease. In future if we can see any
profitable business that can be done using this 1-Bigha land, we
can start that business after the lease period is over.Next fixed
asset we have is the Van and the Water-pump. We can either sell the
van or we can just give the van to interested people for rent. We
will sell the water-pump to another party as well the other
equipments.12. Conclusion:Keeping all uncertainties in to our mind,
our company had already over estimated every possible threat that
should have been taken into account. By considering every possible
threat we wish to keep up quality control to perform regular
research upon our strawberry plant. In addition, our profit margin
is a perfect encouragement for future expansion. Gradually after
the first 3years of our business operation we would definitely like
to go for further expansion(industrial usage of strawberry and
export). Provided if things act into our behalf we would possibly
stretch our product line(strawberry juice, jam). By ensuring our
company to outplay this sector even in the next decades, we would
easily lower our product price to outrage any present
competition.