FEATURE
PAPER
Circumventing
the Environmental Constraints: A Case Study of Rosemary's
Poultry Farm
The
following paper was witten by Norma Juma of Washburn University,
School of Business and Jennifer Sequeira of University of
Southern Mississippi and was presented at
the 2008 United States Association for Small Business and
Entrepreneurship (USASBE)
.
Abstract
This case
presents a real-life example of issues facing women entrepreneurs
in developing nations. It provides fertile ground
for courses that cover opportunity recognition, social and
human capital, cultural diversity of entrepreneurship, family
business/small
business management, cultural issues in international
business, the dynamics of evolving external environment and
the inevitable realignment of the internal structures and
strategies of a firm. It can be used for both
undergraduates and introductory courses at the graduate level.
Introduction
This case
outlines an entrepreneur’s journey from opportunity
recognition to a successful business launch. The entrepreneur
details how she acquired her seed capital and initial marketing
through a women’s group. She has a lot to be
proud of including a lifestyle she sought. However, a large
scale commercial farmer just moved into town and her business
model is severely threatened by the new player’s low
price strategy. The entrepreneur invites a local Small Business
Consultant to her farm to help her redefine her business model.
According to the entrepreneur there are just two options: either
increase her operation to a much larger scale or find a way
to drastically
cut her costs in order to breakeven at the competition’s
prices. The case stops shy of the consultant’s recommendation(s).
The students will have to assume the role of the consultant
and come up with recommendations. Hopefully the students will
be able to generate more alternatives beyond those identified
by the entrepreneur. This case is particularly important in
terms of illustrating the enormous impact of the dynamics external
environment on business models. This case clearly depicts the
inevitable realignment of the internal structures and strategies
of a firm in hypercompetitive environment.
Read
the Entire Paper...
TIP
OF THE WEEK
I.
The Business Idea
• Description of Your Business
What business are you really in? Describe your product or service
in the most concise way you can, and think beyond the characteristics
of the product or service to the experience that you hope
the customer receives from buying the product or service. • You, Your Firm, and Your Fit
What do you bring to this idea or business? How well does this
product or service fit with your knowledge, skills, abilities,
networks and experience? How determined are you to bring
this product or service to market? If you are already in business,
how does this idea fit with the other products or services
you sell?
II.
The Product/Service
• Unique Features: Benefits
What are the unique features of the product or service?
How do these features meet your customers’ needs
or preferences? What are the benefits of this product
or service very simply,
and use photos or drawings to illustrate how it works. • Unique
Features: Limitations
What are the specific shortcomings of the product or service?
Can it become obsolete soon? Is it perishable, difficult
to use or install, or are there legal restrictions? An honest
assessment of your product or service is extremely important
during this analysis. You do yourself no favor by being
in denial, or failing to see the disadvantages before you go into
the business. Noting them now will help you prepare solutions
or ways to minimize these issues.
• Stage
of Development
Is the product still in the idea stage, or is there a model
or working prototype available? Have any samples been
manufactured? If it is still in the ideas or prototype stage, what is
the time frame for getting it ready for production?
• Legal
Restrictions and Rights
List any patents, copyrights, trademarks, or licenses that
apply to your product or service. If you are entering
into a franchise agreement, partnerships, distributorships,
etc., these should be discussed in this section. Seek the assistance
of patent attorneys or intellectual copyright specialists
for assistance. Also list the government regulations you must adhere
to, such as FDA, EOA, OSHA, IRS, Secretary of State,
etc., and research zoning restrictions carefully. If you will
be home-based and your clients will be coming to your house,
will this be impacted by your neighborhood’s zoning restrictions?
• Insurance
Requirements
Research the liability of your product or service and consult
an insurance specialist to be sure you are protected
adequately. This will depend on the nature of your business. A flower
shop that sells floral arrangements is in a different liability
situation than a pet grooming business, for example.
If you have employees, you will need insurance to protect them from
harm also, along with any insurance benefits you
want to provide your staff.
• Trends
Related to the Product or Service
How will you keep your finger on the pulse of change in your
product or service area? What trends are likely
to occur in the way product is used, or what features it offers, for example? • Production
or Service Delivery Costs
Will you be producing or sub-contracting out the manufacturing
or delivery of your product or service? List all the costs,
including labor, supplies, shipping, repairs, etc.
III. The Industry and
Market
• Current Industry
Describe the industry as specifically as you can. There are
some excellent sources in your college or public library
that can help you determine the size of the industry, location of
the industry (local, regional, national or global), and average
sales and profitability for the industry. For example, the
Risk Management Association provides industry-specific data
based on the SIC (Standard Industry Classification Code)
that can tell you what the average revenues are for a particular
industry, and what profits you might expect to earn.
• Market
Potential for this Industry
Is the industry in a period of decline, stability, or growth?
What is the market demand likely to be for the next 1 to
3 years? Talk to people in the industry as well as potential
customers for their ideas about where the industry might
affect the market potential for the business. Research trends in the
industry.
• The
Competition
Who are your primary competitors, and what are their distinct
advantages and disadvantages? Consider not only your
direct competitors, but also your indirect ones who might be selling
a substitute for your product or service or bundling
your product with something else they provide.
• Your
Customers
Who are your customers? Demographic information tells you about
your customers’ personal characteristics, such as where
they live, how much household income they have, and how many
children they have. You can find very specific information
in your library or on-line using zip codes for communities.
What are your customers’ preferences, values, attitudes
that relate to your business? How will you find out what your
customers think or intend to buy? How can you find out what
problems they have, what they need, or what they want that
they don’t know yet! Use your creativity to learn as
much as you can about your potential customers. If you have
more than one target, do this for each market segment. It’s
important to note the different benefits and limitations for
each customer group.
• Market
Penetration
How will you reach your target customers? What forms of distribution
or selling will you use? How will your potential
customers become aware of your business? How will you advertise? IV. Financial Projections
• Pricing
How much will you charge for your product or service? Do a
break-even analysis, and list all the assumptions behind your
pricing.
• Sales
Revenue Forecast
How much of your product or service will you expect to sell?
What will your gross revenues be? What percentage of market
share do you think you will reach in one year? Three years?
• Cost
Forecast
What does it cost to produce, distribute, deliver, etc., your
product or service? If you plan to manufacture goods,
consider the cost of raw materials, labor, and delivery of goods.
If you plan to retail or wholesale goods and services, consider
mark-up, inventory costs, and freight. Refer to the RMA
(Risk Management Association) studies for more information to help
you compute these costs.
• Gross
Profit
What are your sales minus cost of goods sold? Do this for each
product or service and compare to industry averages.
• Operating
Expenses
What marketing expenses (advertising, etc.), administrative
(clerical and management), and general expenses do
you expect in incur? Be sure to state your assumptions about these figures.
• Profitability
What is your expected net profit? After you have derived your
gross profit above, subtract other expenses you
expect in incur, such as rent insurance, and salaries. This will help you determine
your net profit.
V. Future Action Plan
• Start-up Capital
How much money do you need to start the business? In addition
to the cost of goods sold that you calculated
and your marketing and administrative expenses, what additional costs do you
have, such as renting space, utility expenses, and salaries?
• Sources of Start-up Capital
Where can you obtain the money you need to start the business?
Consider all the sources available to you,
such as personal savings, family and friends, bank loans, investors,
etc.
• Further Information Needed
What are you uncertain about? Whom could you ask? Where can
you find this information? Your analysis
is incomplete if you haven’t considered what it is don’t yet know.
• Writing
a Business Plan
The feasibility analysis will help you get started writing
your business plan. You will have the information
you need to address the competitive advantages and disadvantages
of your business and the strategies you will use to meet your
goals.
• Support
Needed
List the individuals or groups you could consult for advice.
Consider developing an advisory board
consisting of people with experience in your industry and professionals from
other industries who might be expert marketers, for example.
Do you have an attorney, accountant, Web site designer,
etc., who could help you when needed? Make a list of all the supporting
actors your business may need in the
future.
Entrepreneurial Small Business
Jerome Katz, Richard Green
Copyright 2009, 2007 by The McGraw-Hill Companies, Inc.
Pgs 91-94
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ANNOUNCEMENTS
2008
SBI Registration Form
The Small Business
Institute will be hosting their Annual International Conference
at the Handerly Hotel in San Diego, California. Click
here for more information and hotel arrangements.
National
Urban Inititiatives Competition
Clark University
is hosting the National Urban Inititiatives Competition.
They are seeking proposals that have practicality, creativity,
and are well rooted in theory. Proposals should trnslate
from theor to model or vice versa. Furthermore, it should
be feasible to enact into legislation.
An award of $20,000 will be given to each winner of the three categories:
1. Affordable and
sustainable housing.
2. Neighborhood based
economic development.
3. Financial services
to low income communities.
All applicants must
be from a institution of higher education and must team with
one or more of a local government entity and/or non-profit
organization.
Submission of Step
1 proposals are due January 25, 2008.
For more information
please click
here.
SBANC would like to apologize. We have recently
been having technical issues with our newsletter. We apologize
for any inconvenience.
SBI
Journal - Request for Papers
The Small Business
Institue is now requesting papers for the Small Business
Institute Journal. If you are interested in submitting a
paper, please let us know. The first issue is to be printed
April 2008. For more information please click
here or email us at sbij@uca.edu.
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