Question

In: Psychology

A friend of yours is thinking of starting an organic farm in Kakani that supplies vegetables...


A friend of yours is thinking of starting an organic farm in Kakani that supplies
vegetables to restaurants and hotels in Kathmandu. You are supposed to suggest her if
that is a good idea by doing an industry analysis using Porter’s five forces model.

Solutions

Expert Solution

Starting an organic farm is very good idea. Now people are becoming health conscious so they prefer organic vegetables rathers then chemically prepared vegetables.

This is very good business accordingly to the requirements of this generation:

I can prove this by using Porter’s five forces model:

1. Competition in Industry:

The first step to plan and start an business is to analyse the competition in the market. Right now there is no big name or big company in this industry. This is the best business to start now and this business can be started with low investment by making partnership with small scale farmer. By this you get quality product and farmers gets more value then they get in big markets.

2. Potential of new entrants: In this business anyone can enter. This business has no such boundary but according to my experience no big name is going to enter in this business because they invested their amount in chemical products. So they can't move themselves from that industry easily. This requires lots of courage to leave that well-established industry for new forming industry.

3. Power of supplier: Power of supplier this is an big factor for sustain a company for long term. In this business powers of supplier are not so high. Company can easily switch to new suppliers without so many difficulties and company maintains it's profits in longer run.

4. Power of customers: This is also an big factor for product based company. In this case company no need to spent much on finding new customers. This is because as I said earlier consumers are now becoming health conscious that is why they are looking for such products. If any new organic product launch in the market then they definitely go through it and company establish his base in the market.

5. Threats of substitutes: There is no such threats of substitutes because organic products need special methods of techniques and materials which are costly for those who starts this on small scale and this is very difficult to maintain quality. This is why no newcomer in this industry spent too much initially if he spents so much then also this is very difficult to maintain quality compared to the well established company who is working in this field for longer time.

These are the Porter's five forces model for this organic farm.

Hayet Jeridi answered 6 months ago
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