TBUS 620 Business Strategy Crookwell Lavender Farm Assessment Answer

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Question :

GROUP ASSIGNMENT (50%) – INSTRUCTIONS

Business Strategy – Crookwell Lavender Farm

 TYPE:

This is a group assignment, and students will work in teams of 5 students. Students will have to deliver two assessment parts: a written report (30%) and a group presentation (20%). Both assignment parts will require an equal contribution and participation of all team members. A confidential peer assessment process will be used to evaluate their contribution. Unless otherwise determined by the peer assessment feedback form, all team members will receive the same mark for the written report. All students must attend the group presentation in week 11. An absent student (not present during the group presentation) will receive no mark for the oral presentation, regardless of his or hers participation in the earlier stages of the preparation process.

 TOPIC:

The ‘client’ company is a family-owned lavender farm – Crookwell Lavender Farm from New South Wales, Australia. Your task is to develop a business strategy for the farm that grows lavender and produces around 100 litres of essential lavender oil per year. The farm is located 2 hours drive from Sydney and is managed by an elderly couple. Their children and grandchildren (school age) live in Sydney and visit the farm on weekends. During the harvest season they spend more time at the farm and help with production of lavender oil. Over the years the farm accumulated around 5,000 litres of lavender oil and they would like to turn this into a business operation that could potentially grow and provide a steady income.

The current price of 10ml of pure lavender essential oil in Australia is $15-21. For comparison, the prices of Australian lavender oil in China vary from $10-100 AU (or 55-510 ¥). The client company believes that the quality of their lavender oil could achieve a higher price in both domestic and foreign markets. The family was selling their products in local markets in NSW, but these markets are not providing a steady revenue stream for the farm. While the family would like to sell their products directly to Asian customers, as they feel that they could achieve higher profit margins overseas

  • they are not familiar with local regulations, consumer preferences and import procedures in various Asian countries.

CLIENT COMPANY  CURRENT ACTIVITIES

The farm is currently producing 100 litters of lavender oil per year and sells a small amount of its production in local markets (in NSW). This is not sufficient to provide a steady revenue stream that could turn this into a viable business. Currently they offer the following products:

  • Lavender oil in bulk,
  • 10 ml bottles of pure lavender oil,
  • 150 ml bottles of lavender water (natural product obtained through steaming distillation of lavender flowers).

To produce 1 litter of lavender oil takes 100 kg of lavender flowers. Currently the farm yields 1 harvest per year and produces 100 litters of essential oil, and some quantities of lavender water. In order to increase their production - it may take up to 2 years: to plant new lavender plants, for plants to mature and to start harvesting flowering plants of a good quality.

GROUP PROJECT  OBJECTIVES

For the purposes of this assignment students will assume roles of business consultants and will create an appropriate business strategy plan how this small family enterprise can grow and become a profitable business venture. Students will need to:

  • Analyse options how, and in which direction(s), this business can grow.
  • Define a market, product portfolio and appropriate strategy to enter this market – explain the market entry strategy, define how it should be executed and state all costs involved.

Option A

  • Identify a new retailing channel in Australia and develop a full business strategy proposal.

Option B

  • Identify a retailing channel for one overseas (international) market and develop a full business strategy proposal.

 WRITTEN REPORT (30%):

The word limit for this assignment is 3000 words, excluding the executive summary, exhibits and references, and will be worth 30% of the total mark. The written report is

due in week 11. The written report should be submitted online, via Turnitin. Assignments not submitted via Turnitin by due date will receive no marks. There is no alternative way to submit the assignments. All students are obliged to participate in writing the written report (business strategy plan), but there should be only one submission per group. The names of all team members and their student numbers should be listed on the cover page of the report.

 PRESENTATION (20%):

Each team will have 10 minutes to present their business strategy in week 11. This presentation should deliver an overview of the written report and should assist students to present their case – not to discuss issues that are not mentioned or analysed in their assignment. There are no limitations regarding the number or slides, and a type of presentation. Student may use any software solutions for their presentations including (but not limited to): Microsoft PPT, Prezzi, PowToon, or others. In addition to the verbal presentation the students should submit an electronic copy of their presentation via Turnitin link. Only one copy per student group will suffice and this should be submitted by the group’s communication officer via Turnitin by the due date in week 11.

 CONTENT AND STRUCTURE  GROUP ASSIGNMENT: STRATEGIC REPORT (WRITTEN ASSIGNMENT) 30%

The task for this assignment is to develop a business strategy for a lavender farm. The business strategy should include the strategy type and should deliver all necessary details that will allow the ‘client’ to understand what type of investment, materials, resources or human capital they need to invest in, in order to achieve the proposed business goals.

This is the recommended structure for the business strategy proposal. However, the students should feel free to make any changes or alterations as needed in accordance with their ideas, market research findings and proposed strategy:

  • COVER PAGE: student names, numbers, unit name and number, and client company – assessment type.
  • EXECUTIVE SUMMARY: an overview of the whole paper – all sections need to be covered.
  • TABLE OF CONTENT
  • INTRODUCTION:

Should provide an overview of the company, current situation, what type of products they are producing, industry type, their plans for the future, and business objectives (e.g. brand creation, market penetration, entry to new markets, retailing channels). Since they don’t have any significant market presence, sales or a brand, you should consider this as a family owned start-up business with some available resources (5000 litters of essential lavender oil from past seasons, land and farming equipment, facilities, farming and manufacturing know-how). You need to propose the business strategy approach that would be the most suitable for the mentioned resources and their plan to develop a model of ‘direct sales’ to consumers (PROVENANCE model). Research all available transport /delivery options, regulations, and licences needed. This section should also clearly, but briefly, state the list of expected objectives, timeline (12 months) and budget (marketing and promotions AU$ 10,000). Keep it brief - the details of this plan will be delivered in the following sections.

This section should clearly outline the problem that needs to be solved (e.g. market penetration, branding, how to reach consumers in local or overseas markets), and the proposed strategy – very briefly: which business model and strategy are the most suitable for the client company to achieve this. Use the business strategy literature to support your proposed model. Use industry trends to indicate that this is potentially a viable proposal. You need to prove that in the following sections by providing enough details and supporting arguments that it would be possible to achieve it.

  • MARKET ANALYSIS AND INDUSTRY OVERVIEW:
    • An overview of the company’s current situation (SWOT, PESTLE, major and minor competitors, growth potential).
    • Industry analysis (industry trends, market leaders and followers, the size of the current markets in Australia, China or other markets, future growth projections).
  • An overview of the Australian or overseas market; local or international consumer culture that you will be focusing on.
  • Market segmentation (consumer types and segments), what type of lavender oil based products are currently popular; which brands are currently popular and why, or among which type of consumers – what would be the best way to reach potential customers.
  • Explain the typology of consumers - the client company needs to understand what are their product/brand preferences and expectations.

For the purposes of this section you need to conduct a small market research project. This section should include your research findings as the most valuable information that will convince the client company that your team is well informed and capable to offer a level of expertise that will make their business viable. All sources should be properly referenced. The majority of references will be academic journals (e.g. consumer culture, consumer segments, marketing approach and similar), industry intelligence (e.g. production and sales of lavender oil, types of industries that use the oil in their products, product type, size, design, marketing and similar), government reports (e.g. sales per product category, projected figures of future trades, trading volumes between Australia and/or a selected country).

  • PRODUCTS:

Explain and describe what type of products the company is currently producing (or selling), if it is possible to develop any other products - explain which ones, and how these products relate to identified trends among consumer segments. Explain the new type of product(s) that you are proposing: the most appropriate product type, size, packaging, delivery, and product appeal.

This section should clearly connect with your research findings stated above – what type of products consumers prefer and how to make/design a product (or products) that will be appealing to different segments. You may also indicate: what is the best form of retail / transport / delivery /sales regarding the proposed product(s). Considering that the products need to reach consumers in a perfect condition  think strategically which shipping model would be the most profitable and the most reliable for this type of products.

  • BUSINESS STRATEGY AND IMPLEMENTATION PLAN:

Introduce the business strategy type, explain why the proposed business model ‘will’ deliver when combined with the proposed strategy, and explain how this can be put in action (marketing, sales, location and facilities, technology, equipment and tools, milestones, and key metrics). Explain the organisational structure, management, or personnel plan regarding the company’s ownership and future growth – this should cover the current situation and propose a course of action if the company decides to grow their business. (For example, if they want to hire a marketing or sales manager - how much would that cost?)

Sketch a timeline, how long will it take to deliver all phases of the project – when should the business start making profits / begin to grow / diversify. Identify their business goals clearly – and suggest how to measure the success / failure of the operation (e.g. if this is achieved by xx, the goal will be completed / or if not achieved by the suggested date it will fail).

This section should include some relevant references from the business strategy literature – use them as supporting arguments to convince the reader that you are able to synthesise the knowledge from different sources (your textbook, journal papers, industry reports, publications, government reports, etc.).

  • FINANCIAL PLAN:

Provide a brief overview of the required investment into this business venture, profit margins, revenues and sales forecast, expenses, (projected cash flow, profit and loss – only rough figures in order to get an idea about the scale of this operation). While, at this point, you may not be able to make certain projections about sales, you could make assumptions based on the company’s current production capacity and market prices.

This section should clearly outline how much will cost to deploy the proposed business strategy and achieve the proposed sales figures. The client needs to have a clear picture if this is a valid business proposal and how much it will cost, how long it will take to achieve the financial goals.

  • CONCLUSION:

Briefly list the major idea behind the plan: proposed business model, type of products, potential market(s) and market segments, major phases of the project, expected financial outcomes.

This section can be delivered in bullet points – very briefly and to the point. The conclusion should sound something like  “with this plan the investment will develop into a business in xx years, and will start making profits in xx time/or xx years”.

  • APPENDIX: there are no limitations regarding the number of appendices in this assignment.

CLIENT PITCH (GROUP PRESENTATION) 

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