1.

0 Introduction
The report Business Plan of RedBerries Bangladesh has been prepared to outline a business plan as a partial requirement for the course Entrepreneurship,W201 instructed by Mr. Sheikh Morshed Jahan, Assistant Professor, IBA , University of Dhaka. This report focuses on outlining an entrepreneurship venture into the strawberry cultivation industry of our country. This is a very new industry in our country, and while the growth has slowed down in the last years, this industry still provides entrepreneurs with potentially massive returns.

1.1 Objectives
The primary objective of the report is to Outline a business plan for production and cultivation of strawberries in Bangladesh.

Some specific Objectives include: Develop an overview of the strawberry industry Run the financial analysis to develop ten year forecast Analyze the demand supply Dynamics of this industry Identify the Double Helix forces in the industry Look for innovative ways for technological and production superiority in the industry Portray Risk Management and Contingency Planning

1.2 Scope
This report deals with the business plan for strawberry production at RedBerries Bangladesh. It has been prepared by analyzing the present situation of the strawberry producers in the local market. Also involved are the current marketing strategies, the product and marketing mix and the distribution network used by the various companies. The relevant business data which were used were collected from enterprises located at Tangail, Ashulia, Mymensing , Rajshahi and Dinajpur

1.3 Methodology
This report uses data collected mainly from primary sources. The primary data has been collected from interviews conducted with relevant stakeholders at different companies, Ministry of agriculture Bangladesh and BSA (Bangladesh Strawberry Association). Various entrepreneurs in this industry

were also interviewed for primary data. Secondary data collected from relevant literary texts, official websites of companies, journals etc are also used to construct the business plan.

1.4 Limitations
Some of the shortcomings faced while collecting the information and compiling the relevant data for the report are: There is lack of written material on the strawberry industry in Bangladesh. The current producers in the market were reluctant to share some of the information The strawberry subsector of the Bangladeshi Agricultural Industry is fairly unorganized It was difficult and in some cases impossible to sort out relevant data. Due to inadequate knowledge of economic analysis, it was difficult to examine the determinants and nature of demand and supply.

2.0 RedBerries Bangladesh

The firm RedBerries Bangladesh is to be established to produce quality strawberry and sell them in the market. The market, according to the recent surveys, is still far from being saturated and still relying on imports. Our business plan includes Production of Strawberries Sale in the Local Market Accumulate capital for increasing production and Exports

The reasons for selecting this venture are Like other countries the demand for strawberries is increasing in Bangladesh. Analysis of existing ventures revealed that profit margin is relatively higher compared to the capital requirements and it is more than feasible to run this business. Strawberry is easy to grow and our country is fast developing methods to produce grade strawberries with the capability to replace the imported varieties.

This is a very attractive market to invest in, and we are very much looking forward to establishing our brand in the strawberry market and earn

Mission To provide the community with quality strawberries at reasonable prices while maintaining the health and environmental standards

Vision Our vision is to be the leading domestic producers of strawberries in Bangladesh, while promoting the art of strawberry cultivation among small farmers in the country. We aim to make strawberry farming a major force in poverty alleviation among poor farmers in our country. Goals Annual Production and sales reach 2000 kg within 3 years Hold significant domestic market share within 5years Expand into the international market within 5 years

3.0 Overview of the Industry

Strawberry farming has made gradual progress over the last decade throughout the various regions of Bangladesh. Although strawberry is primarily a producer of the cooler climates of the west, the innovations and modifications carried out by Scientists has made possible the commercial production of strawberries in Bangladesh. Three varieties of strawberry are invented RB-1, RB-2 and RB-3. The demand scenario for strawberries in Bangladesh has changed drastically in recent times. It is currently used as edible fruit and its use in the commercial sector has also increased. All the large agro-based markets and the super shops have identified this trend and hence maintaining constant shelf space for the product. It should also be noted that that the potential for growth of agriculture for exports is far from negligible. Market saturation is not widespread, on the contrary, for some segments of the fruit and vegetable markets there are strong prospects for growth linked to lifestyle changes, and the inward-focused aspect is no longer an option with current extent of globalization. A huge opportunity of the industry lies in the tenure of the production period in Bangladesh. At present it is being produced during October to March, when most of the countries producing strawberries have unsuitable weather. Therefore if this gap could be bridged strawberries, being widely popular all over the world could be exported in large scale to achieve comparatively grater profit margins. The strawberry farming is gaining ground in the northern districts, including Rajshahi, Panchagarh, Gaibandha, Rangpur, Dinajpur, Thakurgaon, Pabna, Natore, Naogaon and Chapainawabganj districts as it brings profit to the growers. In addition to these some of the firms are being established in the outskirts of the Greater Dhaka for convenience in Marketing and Sales. According to sources in the Association of Strawberry Cultivation, a total of 500 farmers after taking training on strawberry farming from the association started cultivating strawberry on 800 bighas of land. The current market demand is about 60 tonnes where over 30tonnes are supplied by the local producers .Nevertheless there are several risk factors including the likes of adverse weather, perishable nature

of the product and the initial requirement of large capital.

4.0 Market Analysis

4.1 Market Segmentation

The products of our company are generally targeted towards the upper and upper middle class of the society. The cost of our products is such that it is difficult to target income groups below the mentioned levels. However RedBerries Bangladesh looks forward to have comparative advantage over the imported materials in terms of price the core features of our product will be- reasonable price, high quality, non-compromised nutrients value, etc. That is why we have picked our target market accordinglyDemographicsAge: All ages Sex: Male/Female Income Segment: Upper &Upper- Middle class Geographic Location: Dhaka; specifically high income areas like Banani, Dhanmondi, Gulshan etc.

Psychographics: The final consumer for RedBerries Bangladesh constitute of people who have liberal attitude and looks forward to taste something new and the trend setters in the society. In general we are targeting people whose culture is somewhat mixed owing to the extent of globalization. Life Style: The products of RedBerries Bangladesh are targeted towards individuals with affluent lifestyles. This is where the issue of hygiene, eco-friendly production and nutritious content becomes more critical

4.2 Market Positioning

Our target will be to position our product in a unique way in the market so that our consumers know or take our name when it comes to pick an option from strawberries. We are going to perform different attempts in order to gain brand identification in the market. Our targeted market segment is small, a number of areas of Dhaka City only. So we want to appear as a brand to them so that our consumers identifies our name at any point of time. Our positioning strategy will be based on the benefits that our product offers. The psychographic of our consumers indicates that our market

segment wants added values along with the product so that it adapts with their lifestyle. Our Positioning will show that are the best available in the market where health standards and hygiene is strictly maintained.

4.3 Strawberry Markets in the past

Although the commercial cultivation of strawberries has not started in Bangladesh until 2005, the use of strawberries as edible fruit and ingredients for others is not new. It has been going on for several years. The chief exporters of strawberry to Bangladesh are India, Thailand and the United States of America. Although these are products of premium quality it can never match the attributes freshly produced ones in the field given the distance the products need to travel to reach the final consumers.

4.4 Current scenario

The market for strawberries at present is under rapid growth owing to easy availability in Bangladesh, Changing Lifestyles of people, rising environmental awareness and health consciousness. The demand for Strawberries in our areas of operation i.e. Dhaka City over the last few years can be summarized as

Demand in Dhaka City in Tonnes

50 45 40 35 30 25 20 15 10 5 0 2007 2008 2009 2010 2011

Figure shows demand in Dhaka city in tones (Primary Sources)

4.5 Market growth Rate

For Calculating the Market Growth the initial data was ignored as it is too low and should yield misleading results. However if the data for the last three years are considered

Compound Annual Growth Rate, CAGR= ((Last Year/first year)^(1/n-1)) -1.=((45/40) ^(1/2)) 1=1.0606 -1 =0.0606=6.06 % This is the Market growth for strawberries in Dhaka city only.

Supply of Strawberries Opposed to Demand

At present at least 50 percent of Strawberries which are currently consumed in the country are imported from various countries such as Thailand India USA and Egypt. However, much of this is in the form of industrial value added products like syrup. The Market is long way away from being saturated. Since imported products are always higher priced than the locally produced ones, there is still room to accommodate the new entrants. However if the supply increases at a faster rate compared to the demands there might be a situation where the price of the products will fall below the favorable level. To minimize this risk factor it is essential for the firms to diverse into processing of the products. Another feasible option could be expansion into international markets.

4.6 Factors Affecting Demand

Apart from economic factors, social factors have considerable impact on demand. Price is not the only factor that determines how much of a good that people will buy. However it is extremely critical as the products demand is expected to fall if the price increases. The various factors affecting demand of strawberries are described as follows:

No of People in the High Income Groups: The demand for strawberries and other luxurious food items should increase if the National Wealth increases i.e. more people enter the highincome earning group. Percentage of income spent on product: It is not only enough to observe the income level of the consumer, to accurately judge the market position of the product, the percentage of income spent on fruits and vegetables must also be noted..So as health awareness of Bangladeshis improve the demand should also increase Importance of product (Priority): Consumers also base their decisions on how important the product is in their list of priorities. Bangladeshi consumers would not put excessive thought over a product such as strawberries. But with changing lifestyle this trend is gradually removed Opportunity Cost of Strawberries: If the probable substitutes such as grapes and leeches o becomes widely available, the demand for the product might fall. Advertisements: In these kind of products the advertisements and word of mouth from retailers plays a critical decision in influencing consumer behavior Social Factors which Influence Buying Behavior: Family members can strongly influence buying behavior. In Bangladesh, buying decisions in grocery shopping are strongly influenced 6

by the buying practices of their mothers or other family members/relatives. Moreover the demand is expected to increase as the fruit becomes more widely known in the market

4.7 Factors affecting Supply

The supply curves for the Strawberry industry is inelastic in the short run. The level of inelasticity is duo to the fact that industry and product supply are not responsive to changes in price and demand in the short run. This is particularly true because of the perishable nature of the produce. However, in the long run supply is more elastic as the producers will undertake their decision based on the profits they earn. Cost of Production: An increase in costs will mean that the company will be able to supply less at the same price. So, when a certain factor cost rises firms try to readjust others to keep the price stable. The main parameters in this regard could be the Government Policies and the cost of Inputs Profitability of Alternate Products: Long run supply of Strawberries would to an extent depend on the demand, supply, and price changes of substitutes such as grapes and leeches. However if the company can produce other products with greater profitability using the same plant, the supply is bound to decrease

4.8 Competitor Analysis

After producing strawberry our first challenge will be the competition 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. Many of them include enthusiastic growers in various regions and small farmers looking for a quick profit. Large scale commercial production is not very common in this sector yet. These are our direct competitors. Among them, we have identified our main competitors. A.R. Enterprise Phone: 01711402525 This farm is located at Kaliakoir in Gazipur. They 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 Tk350 per kg. They mainly supply strawberry in all the branches of Nandan super shop and some fruit markets of Banani and Gulshan area. Their main competitive advantages are:

Low transportation cost, ability to supply fresh 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. Good marketing nous of the owner

King Sons Farm Phone: 01711892164

This farm is located in Mymensingh. They are farming strawberry from the year 2009 on 4 bighas 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 Tk350 and selling price is around Tk400 for per kg of strawberry. They supply strawberry in different super shops of Dhaka and have a good working relationship with various Shopno outlets. Some of their competitive advantages are:

Good relationship with Shopno stores

Garden Fresh Strawberry Phone: 01731402766 This farm is located in Ashulia, Dhaka. They are faming strawberry from 2009 on 9 Bigha of land. They are the most influential commercial strawberry producer in the greater Dhaka region. There annual production is around 16000 kg with a daily production of 100 kg. There production cost of per kg of strawberry is around Tk220 and selling price is around Tk. 350. There are 16 workers working in this farm. They supply strawberry to the super shops, local markets 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, especially some restaurants which use strawberry in their products. Regular suppliers to most branches of Agora

Hafiz Enterprise Phone: 01198159050 Their farm is located in the Sadar Upazila of Panchagarh. They are the leading farm among a small cluster of strawberry farmers in the area. They started operations in 2008 with 1 bigha of land, which has now expanded to 4 bighas. Their production is around 7000kg. They only employ 2 permanent employees and prefer to sell to agents who transport the produce to Dhaka to sell to local fruit markets. Their production cost is quite low, and they sell the fruit as low as TK300 per kg. Some of their competitive advantages are: Very low labor cost, resulting from few workers and high involvement of the owner Lower cost and selling pricing compared to other competitors

Small farmers We have some competition with small local growers all over the country, who are the new entrants sensing the profitability. Due to their lack of marketing skills and inaccessibility to a guiding hand, they soon became scared whether they would be able to sell these 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 in recent times. These small farmers lack the knowledge required to produce and maintain quality products, and thus their influence in our target market can be overcome with our superior quality.

4.9 Porters Five Forces Model

Bargaining Power of Suppliers: Medium

Bargaining Power of Customers: Medium

Intensity of Competitive Rivalry: Low

Threat of New competition: High

Threat of Substitute Product or Service: Low

Figure: Porters Five Forces Model for Strawberry Production in Bangladesh (based on own analysis and others opinion)

Intensity of Competitive Rivalry: Analyzing the intensity of competition among the players of industry, we have found out that competitive rivalry is low here. There are little of innovation or product differences. As a result, all the producers are producing one generic product- fresh strawberry. Industry is growing at a high rate, whether the philosophy of brand is not quite established in this industry. The most important thing we have found out in this industry is that, competitors are mutually helpful and working hand on hand to fulfill the demand of the growing customers. Threat of New competition: The threat of new entrants in this industry is relatively high as the barriers to entry are low. After acquiring proper training upon strawberry production, people can start their own firm with small capital. Also the high profitability of the industry is attracting many people. Moreover if you dont succeed in the business, the exit cost and barriers are also low. All these are indicating high threat of new competition. However, a change in the present demand-supply

Sustainable competitive advantage through innovation - low Powerful competitive strategy no Product differences- low Brand Identity- low Industry growth - high

The existence of barriers to entry (patents, rights, etc) Low Switching costs or sunk costs - low Capital requirements - Low Access to distribution easy Customer loyalty to established brands moderate Industry profitability - high 9

scenario can influence this significantly. Threat of Substitute Product: Threat of substitute product is relatively low in this industry. The main substitute product of strawberry can be the fruits which grow at the same time, i.e. grapes, orange, apple etc. The main reason of these products posing less threat to strawberry is the identical taste of our product. Buyer propensity to substitute - low Relative price of substitute low Buyer switching costs - low Perceived level of product differentiation - high Number of substitute products available in the market less/none

Bargaining Power of Customers: Because its a B2B business, the customers of strawberry producers are basically the super shops and retail fruit sellers. Strawberry is mainly consumed by upper and upper-middle class people. This is making the volume of buyers/customers very low and increasing their buying power. However the local supply is less compared to demand and every year almost 50% of demand has to be fulfilled by the imported strawberries. This is giving some edge about the bargaining power with their customers.

Degree of dependency upon existing channels of distribution - low Bargaining leverage low Threat of backward integration - low Buyer volume - low Availability of existing substitute products - low Buyer price sensitivity - low

Bargaining Power of Suppliers: The main plantlets suppliers of strawberry are Bangladesh Strawberry Association, BRAC, Square, Private nurseries etc. Most of these are working towards the development of the strawberry industry. As a result, they are supplying the raw materials to producers at reasonable price. The other raw materials (i.e. fertilizers, pesticides, agriculture equipments) are available locally. Analyzing all these factors we can clearly understand that, commercial cultivation of strawberry is a very attractive industry in our country. If proper strategies can be taken depending on the analysis of Porters model, one can really achieve significant success in this industry.

Degree of differentiation of inputs - low Impact of inputs on cost or differentiation - high Presence of substitute inputs - low Strength of distribution channel - low Supplier competition - ability to forward vertically integrate and cut out the BUYER - low

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4.10 Market Survey

Nandan Daily sales Price Buying price Sources 12 kg 450Tk 350Tk NW(j)4, Kamal Ataturk Avenue, North Avenue Gulshan Dhaka 1212 Tel: 9862637, 88850049 E-mail: Gulshan@nandan megashop.com

Shopno 5kg 400Tk 300Tk Emrul Kayes Supervisor & manager Gulshan-2

Agora 10 kg 450Tk 360Tk Gulshan Branch 101, Gulshan Avenue, Plot # 5, Road # 37 Tel: 9893652

Meena Bazar 8kg 400Tk 300Tk Dhanmondi Branch Meena house, 719/A, Satmosjid Road, Dhanmondi, Dhaka-1209 Tel-9145023

Banani local fruit shops 12 kg 500-600Tk 250-300Tk Various fruit shops in Banani Bazar and surrounding areas

Mob: 01974163015

Dhanmondi Branch 80, Riles Square, Road-2. Dhanmondi, Dhaka Tel: 9665143

We conducted a survey among our main target market that is superstores and fruit markets of Dhaka city. When we analyzed the data and talked with different assistant managers of different superstores we found out that the market for strawberry is growing very fast and for that we have found that import of foreign strawberry has decreased substantially. This is a very good indication for our strawberry industry. In near future demand of strawberry is expected to increase significantly.

4.11 Industry Clockspeed

At present the strawberry Industry can be considered as the one with perfect horizontal structure. SMEs are the dominant players in the market. In Bangladesh the trend of the forces of Double Helix is already noticeable in several agro based products. For instance, in the Broiler Chicken Sector AFBL has become the largest producer by stretching their business from the collection of the Parent Stock to the transfer of the final product to the consumers. These allow the firm to have greater flexibility and also more security in terms of

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finance and insurance. The similar trend is noticeable in the Dairy Farms where most of produce of Brac Dairies constitute of products from Contract Farming. The Contact Farmers in Crops, Vegetable and Fruit Sector obtain preorders from conglomerates such as Pran and Brac of guaranteed sales provided that the quality standard is maintained. In such way the conglomerates can obtain quality products at cheaper prices and the farmers are aided through timely finance, technical assistance, minimal post harvest loss etc. Moreover some of some of the super shops such as Agora and Nandon are facilitating contract farming by engaging farmers in remote areas. The quality of the products is strictly maintained and the products are marketed under the brand name of the respective retail outlets. Since there is no compromise in quality the final price for the consumers can be kept similar to that of the popular brands. However, the profit for the sellers is increased as there is one less member in the value chain. Similarly the Double Helix Dynamics in the strawberry subsector of the agricultural industries is expected to pressurize to alter the current status quo. Some of the major factors which might expedite the integration are: The large scale buyers like super shops, ice-cream factories etc have the comparative advantage in the value chain. They have greater control over the supply chain. However as the producers grow in size the dominant position of the aforementioned buyers will be threatened and it is typical that these buyers will want to buy out their backward linkages to maintain their leverage. This will be particularly evident in cases of small scale producers who are unable to achieve favorable economies of scale themselves. On the other hand, as the size of the strawberry producing firms increase, the growers will naturally want to add more value to the product and cut out the middleman. Strawberry can be a potential export and processing the products can increase the profits substantially. Therefore the large producers will look forward to adding more value to the product and reaching the final consumers themselves. Therefore instead of supplying the products to retail outlets, the growers would want to achieve greater profit margin through exporting, processing and retailing of the products through exclusive outlets. The firms which have multiple agro products might lead this trend. Moreover as the number of producers increase the completion in the market should also be enhanced. And if the current trends continue it will not be long before establishment of several strawberry processing plants in the country. As the competition increases companies will strive for specialized infrastructure and vertically integration so that they are able to keep control over every step of the production and distribution process to maintain superior quality compared to the competitors

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5.0 Production Plan

Our production process will begin in Alenga, Tangail in the month of October, 2012. Two Bigha land will be bought for our operations. Strawberry cultivation does not need much land and takes time not more than two and a half months.

Agro-Climatic Requirements Strawberry grows well under temperate climate. Some cultivars can be grown in subtropical climate. Daylight period of 12 hours or less and moderate temperature are important for flower-bud formation. Each cultivar has a different day length and temperature requirement. Some farmers in Tangail have already started cultivating strawberry in the region, and thus have proven the areas geographical suitability for production.

Land Preparation The soil will be ploughed during summer with a soil turning plough which is followed by repeated ploughing to make soil friable, remove weeds and stubbles. Soil fumigation with a mixture of methyl bromide and chloropicrin has to be carried out to increase root system, reduce fertilizer requirement and control the weeds. Strawberries prefer a well drained soil, high in organic matter.

Varieties Cultivated In 2003, three varieties yielded encouraging results and were found suitable in local climate. These varieties of strawberry that have been produced in our country are Rabi-1, Rabi-2 and Rabi-3. In recent times tough, it has been seen that Rabi-3 is most suitable for production, and results in the best size, taste and flavor. We will start our production using this RB-3 variety of strawberry.

Manufacturing Practices Different strawberry production systems can be adapted to organic strawberry production, including the matted row system, which is lightly mulched with straw in the planting year to reduce weeds, and the plasticulture system. Weed control is a challenge for both conventional and organic strawberry growers. A biologically active soil resulting from green manures and cover crops will have large reserves of nutrients to feed the crop. Nutrient reserves are built over the years and then maintained for the most part with composts. Natural sources of plant nutrients can be used to supplement nutrient needs. Insect pests can sometimes be controlled by crop rotation. For example, crop rotation is the only way to control strawberry rootworm. However, crop rotation doesnt help with tarnished plant bug control. Damage from this pest can be reduced by managing vegetation on land around the field. Row covers and black plastic mulch are allowed in organic production.

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5.1 Production Technology & Procedure

Planting Material: Usually runners are most common propagating material for strawberry but now a day due to more prevalence of different strains of virus tissue-cultured planting material is preferred which is developed and produced under the Plant Breeding and Gene Engineering Laboratory at Botany Department in Rajshahi University. The runners are selected that formed after the blooming season. The plants may be allowed to set as many runners as possible but not allowed to set any fruits. All the plants with good root system should be utilized to set a new plantation. Given the best attention and care, a single plant usually produces 12 to 18 runners. In some places propagation has been noticed by using seeds and stem cuttings also. Disease-free plants are important to successful strawberry production. To insure disease-free plants, we will buy healthy, virus-free plants directly from nurseries of Dr Manjur and Quamruzzaman in Natore. Planting Season The ideal time of planting runners or crowns is mid October. If the planting is done too early, plants lack vigour and result in low yield and quality of fruits. If planted very late, runners develop in March and crops are light. Runners are uprooted from nursery, made into bundles and planted in the field. These can be kept in cold storage before transplanting. The soil should be frequently irrigated to reduce water stress in the leaf. Defoliation suppresses the plant growth, delays fruiting and reduces yield & quality. Spacing Planting distance varies according to variety and type of land. For commercial cultivation of strawberry, raised bed cultivation is found quite feasible which ensures proper drainage, easy intercultural operations and facilitates installation of micro irrigation system. After land preparation, beds of 25 cm height and 105 cm width of convenient length should be made at a distance of 50 cm. Planting of runners should be done at 30 cm x 30 cm spacing with four rows of plants per bed. In our scheme, a spacing of 30 cm. x 30 cm, with a population of 8000 plants per Bigha has been considered as it is recommended by Bangladesh Strawberry Association. Planting Depth We aim to plant strawberries on a cloudy day or during the late afternoon. The strawberry plant is set in the soil so that the soil is just covering the tops of the roots, not covering the crown. After four or five weeks, the plants will produce runners and new daughter plants. Nutrition A fertilizer dose of 25-50 tonnes farmyard manure, 75-100 kg Nitrogen, 40-120 kg P2O5, 40-80 kg K2O will be applied according to soil type and variety planted. Irrigation Strawberry being a shallow-rooted plant requires more frequent but less amount of water during irrigation. Excessive irrigation results in growth of leaves and stolons at the expense of fruits & flowers and also increases the incidence of Botrytis rot. Irrigation is applied in furrows between the rows. Trickle and sprinkler irrigation systems are becoming popular nowadays. In case of trickle irrigation, 30% water and energy are saved.

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Irrigation Infra-Structure For effective working with drip irrigation system, it is necessary to install a tube-well with diesel/electric pumpset and submersible motor. Training Four different types of training systems viz. matted row, spaced row, hill and plastic mulch are used to train the strawberry plants. We will use the matted row system during our cultivation. Intercultural Operations The field will be kept weed free during the first season by harrowing & ploughing, applying herbicides or plastic sheet. Weeds are a major problem in strawberry production and one of the main reasons that a planting declines in productivity over time. Inter-cultural practices are continued till the straw mulch is applied.

5.2 Plant Protection Measures

Insect Pests Slugs and attack the crop. Areas where strawberries are to be planted should be free from these. They feed on ripening berries, leaving holes that can be anywhere on the fruit, especially under the cap. Application of endosulfan (0.05%) or malathion (0.05%) on appearance of caterpillars has been found to be effective in most cases. Diseases Main diseases reported are leaf spot and grey mould. Application of carbendazim/ thiophanate methyl has been found to be effective in most cases. Disorders Albinism (lack of fruit colour during ripening) is a physiological disorder in strawberry. It is probably caused by certain climatic conditions and extremes in nutrition. Fruits remain irregularly pink or even totally white and sometimes swollen. They have acid taste and become less firm. Albino fruits are often damaged during harvesting and are susceptible to Botrytis infection and decay during storage. Harvesting and Yield Strawberries are generally harvested when half to three fourths of skin develops color. Picking will be done every day usually in the early morning hours. Strawberries will be harvested in small trays or baskets. We will keep them in a shady place to avoid damage due to excessive heat in the open field.

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5.3 Value Chain Analysis:

Export Market

Domestic Market Consumers

Supermarkets and Retail Shops

Consumption Retail

Consumers
Retail Chains

Processing

Processors

Wholesale

Importers/ Wholesale

Wholesale/Exporters

Final Processing

High Value-added Processing (Frozen retail, juices, pulps, purees etc.) Large Cold Stores Small Cold Stores
Sorting, Freezing, Packing Bulk

Primary Processing

Sorting, Freezing, Packing Bulk

Assembly

Assembly Points/ Buying Agents/ Traders

Hand Picked (Paid Workers/ Family Members)

Harvesting

Growing

Large Growers

Small & Medium Growers

Input Supplies

Fertilizers, Chemical, Agricultural Equipment, Seedlings, Large Equipment and Packaging Materials

Figure: Global Value Chain of Commercial Cultivation of Strawberry

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Countries which are in the top of global production and export of strawberry are Spain, USA, Belgium, Mexico, France, China, Netherlands, Poland etc. The above mentioned value chain of commercial cultivation of strawberry is the one seen in most of the top producer countries of strawberry. The most important factor to notice here is the difference in the value chain among large scale producers and small & medium scale producers. Most of the large scale producers do the post production management (storing, export etc.) at their own. On the other hand, the small and medium scale producers generally sell their production to buying agents/traders, who then do the post production activities. Another most important factor is that, most of the large scale strawberry producer countries have other related industries as well other than the fresh strawberry industry (i.e. strawberry juice, pulps, flavor, and purees). Export Market Consumption Retail Consumers Retail Chains High Value-added Processing (Frozen retail, juices, pulps, purees etc.) Importers/ Wholesale Domestic Market Consumers Supermarkets and Retail Shops

Final Processing

Buying Agents/ Traders Sorting, Packaging Import

Primary Processing

Harvesting

Exporters

Hand Picked (Paid Workers/ Family Members) Strawberry Producers

Growing

Input Supplies

Fertilizers, Chemical, Agricultural Equipment, Seedlings, Large Equipment and Packaging Materials

Figure: Industry Value Chain of Strawberry Production in Bangladesh

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If we compare the industry value chain of strawberry production of Bangladesh to the global one, two most significant differences to notice are the absence of storage system and the absence of middle man (buying agents/traders)

The existing producers of strawberry in Bangladesh produce in small scale. As a result, the cold storage system, which had been established for other agricultural/fruit products, has not yet been established. As a result, the locally produced strawberry perishes quickly and producers face numerous difficulties due to this. Moreover, as it is already mentioned, most of the producers in Bangladesh are small scale producers; there is hardly any buying agents or traders between the producers and retailers. As a result the producers sell their products directly to the fruit markets and retail shops. However with the increase of production and increase of many small and medium scale farmers in many districts, gradually these middle men are coming into play. Although the export market is not that flourished yet, there is a huge potential of this. Already producers from Magura and Savar have started to exploit this opportunity and are exporting to countries like USA, UK and India in small scales.

Domestic Market Consumers Supermarkets and Retail Shops

Sorting, Packaging

BSA/BRAC

Saplings Fertilizers

Hand Picked (Paid Workers/ Family Members) Strawberry Production

Local Dealers/BRAC

Pesticides
Agricultural Equipment

Figure: Value Chain for RedBerries Bangladesh

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5.4 Marketing Mix

Product: Our product is Strawberry which is a sweet fleshy red fruit. Strawberry belongs to the family Rosaceae. Strawberry is a very popular fruit around the world. It is getting popularity in Bangladesh only recently. Strawberry production has increased significantly around the year 2005 and 2006. Mainly three varieties of strawberry are cultivated in Bangladesh. They are: RABI I RABI II RABI III Among these RABI III is the most profitable for commercial cultivation. We will also start our production with this variety. However more variety is expected to come soon in production with higher quality. For example, the widely popular variety- Camarosa is expected to be produced in Bangladesh within 2 years. In case that happens, we will have to go for high quality strawberry (Camrosa) production. And after a few years of operations the RedBerries Bangladesh looks forward to expand into processing sector of the industry. Packaging: Another important factor associated with our product is the proper packaging. Packaging 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. The harvested strawberries will be sorted into three packages: One for the big sizes which will be delivered to super shops. The other two consists of small and medium sized berries. The packaging has to maintain health standards in addition to being attractive. A plastic basket shall be used along with cellophane papers to ensure the quality of the products. The baskets are cheap and can be recycled. Each eco-friendly basket will cost 2TK 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. Each package will contain 250 gm of strawberries. Unlike the competitor products in the market every each package would have the nutritious values, expiry dates mentioned. The use of harmless pesticides/herbicides/preservatives shall also be acknowledged. . A transparent basket full of fresh & red strawberries with our firms name and pictures should also create the brand image gradually Pricing: Appropriate pricing is necessary to measure our projects profit in the short run and the growth of our company in the long run. For measuring this sensitive factor we have used current market information and analysis of the production cost. As the situation stands currently, the control of pricing is solely owned by the owners of super shops. Producers have little say in the pricing of their products. Whatever the super shops ask, the producers have to sell at that price, as they can hardly deny selling because of the perishable nature of the product. Although the super shops dont force to sell at a loss, they do make a higher profit by selling the products (around 25-30% of the selling price). As a result, the profit margin of individual growers is somehow 19

curtailed. In case of selling the production to the local fruit markets, there is a scope of bargaining and the producers and fruit sellers usually settle at a reasonable price for both parties. Pricing strategy will be competitive. That means we will set the price of our product similar to that of our competitors. Currently good quality strawberries are sold at around 300-400 taka in the whole sell market. So our product will be sold at around 350 taka. Placement: The target markets of RedBerries Bangladesh which consist of Super shops and fruit markets in the various posh areas of Dhaka City are:

Super shops (upper class and upper middle class) Agora(4 outlets) Nandan(5 outlets) Shopno (5 outlets)

Fruit Market of Banani, Dhanmondi and Gulshan

As strawberry is an expensive fruit, only upper and upper-middle class people can afford to have it. So we will mainly target the super shops, as these are the main marketplace of our target customer. We will also target the local fruit markets of Banani, Dhanmondi and Gulshan region, as people shopping from these markets are usually upper and upper-middle class people.

Promotion: In general the marketing practices of RedBerries Bangladesh will consist of both Push & Pull strategies with extra emphasize on the push strategies it will be mostly BTL as it should be more cost effective since the market is fairly niche. Moreover BTL techniques are customizable, trackable and will have more personal contact

Direct Marketing: Serving better quality strawberry directly to super shops and retailers. It would allow the RedBerries Bangladesh to cut out the middlemens profit. Given the perishable nature of the product timeliness can also be maintained to keep up desired quality. Moreover it should also minimal misunderstanding in cases of customer grievances and complaints Emphasis on distribution channel: The distribution channel plays a very important role for marketing of perishable products. And it should be more critical when the number of producers in the industry increases. Majority of the produce of RedBerries Bangladesh will be distributed through personal distribution channels.

Sales at Discount: Sales discount will be offer in cases of bulk buying so that the volume of the sales increases. It should allow RedBerries Bangladesh to increase its market share and hence bargaining power. In addition to this, it should also help achieve 20

favorable economies of scale. However it shall also be maintained that the brand image is not affected adversely because of this

Relationship building: The disciplines in cases of orders delivery and other operations shall be maintained strictly. It should help to improve the customer loyalty. We will understand our customers wants and needs and react accordingly as soon as possible.

Creating Brand Image The standards in quality will be maintained strictly. Our indirect customers i.e. the final consumers will be contracted to earn their feedbacks. Free Samples will be provided for schools and promotional activities through social media and personal websites will be initiated to enhance the awareness among the target audience. Once the customers feel the strawberry is of better quality and brand image is established, the customers usually become loyal to the brands Attractive Packaging: The packaging will be attractive, and more protective given the nature of the product. Customers will be able to differentiate the better quality of our packaging. It should also be able form a lasting impression which aides in the buildup of brand image.

Point-of-sale Displays: In Metropolitans, the shopping habits of Individuals are facing constant change prefer big retail outlets Most of the decisions of buying are taken by the virtue of pointof-sale displays in these retail outlets. Therefore if the shop branding of small sections of these retail outlets is arranged then the sales should increase substantially

6.0 Human Resource Planning

Management team: As it is a partnership business, all of us have planned to get heavily involved in the operations of the business. One partner will deal with the aspects regarding farming and will lead one supervisor who will oversee the cultivation process like preparing soil, seed plantation, irrigation, pest control, plucking fruits etc. One partner will oversee distribution, warehousing and packaging. Under him there will be a team of sales and purchase officers. The other remaining partner will oversee all marketing and sales activities. The local farmers will be employed according to need and seasonal demands Training All the partners and the employees will undergo a training program in Rajshahi University. The technical staff will attend regular workshops held by the Bangladesh Strawberry Association. Labor Requirements Varying numbers of labor is required during the different stages of production. One permanent skilled labor will be employed and he will reside within the farm premises. Unskilled labor will be employed according to needs during ploughing, planting, irrigation and harvesting. These labors will

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be paid on an hourly basis.

6.1 Human Resource Structure

Designation

No. of personnel

Duty

Technical staff:
Production Manager 01 Manage and oversee the whole cultivation process. Ensure efficient use of fertilizers, pesticides and plan against risk factors such as diseases and viruses. Also ensure proper size and color of the produce. Permanent Labor 02 To do the bulk of the manual labor during production, and help lead the unskilled labor

Administrative staff:
Sales & Distribution officer 01 In charge of coordinating orders and distributing to customers. Also overseeing packaging and warehousing activities. Marketing Officer 01 In charge of promotion of our brand, and acquiring customers for our product, such as super shops and various fruit vendor outlets Driver 01 06 Help in distribution

Total Personnel

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7.0 Financial Feasibility Calculations

Several calculations were done to check the financial feasibility of our project. These included OpEx and CapEx budgets Pro-forma Financial statements ( Income, Balance Sheet, Cash Flow) Financial Analysis ( Breakeven, NPV, IRR) Four Risk and Contingency Scenario Analysis

Due to the extensive length of these calculations, they have been shown in the appendix. The major findings of these calculations are shown below: Gross Profit 571600 569780 952360 950540 948720 3078240 3076420 3092800 3074600 3070960 Net Profit 266300 248685 496027 466965 444652 2184467 2141087 2108497 2073905 2021184

CapEx OpEx 2012 1633000 305300 2013 321095 2014 456333 2015 483575 2016 504068 2017 288000 893773 2018 935333 2019 966103 2020 998875 2021 1049776

COGS 408400 410220 1147640 1149460 1151280 2381760 2383580 2385400 2387220 2389040

The Figure above shows some important findings from our report. We see a CapEx in 2016 as it is when the company will be expanding into export and will require certain capital spending. OpEx here shows that with time and increase is production capacity due to expansion, the operating expenses are increasing. As we can see, after entering the export market, the firms net profit increases substantially. This can be attributed both to the expansion in 2016 to 8 bighas, and the higher selling price per kg to the foreign market. We can observe that the cost of goods sold increases by small amounts. This is because the amount of production is limited to the capacity, which also limits the revenue. The NPV of this project, calculated after 10 year projection, is 33,294,606tk. NPV is an indicator of how much value an investment or project adds to the firm. Such a high NPV value is really attractive to an entrepreneur. This certainly indicates that our strawberry project will be a sound investment according to our calculations. The IRR of the project is 38.27%. Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a project's internal rate of return, the more desirable it is to undertake the project. So this IRR is quite high, thus this project is desirable. The Breakeven volume is 10237 kg. This amount has to be sold to breakeven.

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Four contingency plans were considered as part of scenario analysis 1st Scenario: Local demand for strawberry decreases significantly Change is Strategic Action: -Go for export market as early the third year, filling the supply gap in foreign markets during that season -Put emphasis on promotional activities(direct marketing) with importers and with buyers

2nd Scenario: Failure to Access in the Export Market Local Market has increased significantly Change in Action: -All the production sell In the domestic market at a favorable price -Emphasis on promotional activities

3rd Scenario: Failure to Access in the Export Market Local market has not increased Wastage of production will increase Change in Strategic Plan: Go for penetrative pricing Decrease Costs (packaging, fixed cost)

4th Scenario: Higher quality variety doesnt come in production Accessing the export market will be difficult Local demand doesnt increase significantly Change in Strategic Action: Will not increase production No new land leased More Emphasis on distribution channel

The new revenue analysis for these scenarios are done in the Appendix

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8.0 Legal Analysis

RedBerries Bangladesh will be formed as a General Partnership under the Partnership act 1932.The partnership will be voluntary as there are no specific lifespan. It also follows that the partners are entitled to unlimited liability under the current framework. The registration of such firm is optional. But if registered, a partnership firm can enjoy some legal rights and facilities. Among these the most important are A partner of the firm can bring a suit to enforce a right arising from a contract or conferred by the Partnership Act against the firm or his co-partners. A registered firm can file a suit, or take other legal proceedings, to enforce a right from a contract, or to claim a set-off in any suit filed against it.

The route of Registration comprises of the following steps Online verification of Proposed Name with RJSC

Payment of requisite fee to designated bank

Present necessary documents to RJSC ( FILLED UP FORM & DEEDs of Partnership)

Register with VAT and Tax Authorities

Create A Seal

Registration Route
Since RedBerries Bangladesh is situated at Tangail the Dhaka Office of RJSC will be the concerned authority for the legal formalities. The requirements are filling up and submission of Form-1 as specified by RJSC and Submissions of the deed of agreements of Partnership. The required payments of fees stipulated by RJSC are also made during this period. A Bank account shall be created in the name of the firm for business purposes RedBerries Bangladesh will be starting with 3 partners sharing investments profits and losses equally .The Dhaka office will be located at Kalabagan The taxable income in case of RedBerries Bangladesh is the profit which is passed to the owners. The machineries which will be imported will enjoy tax benefits arising from governments policies of promoting SMEs. At the current level of expected turnover the requirements VAT is not expected for the first two years. However the formalities are completed with NBR during the inception of the partnership

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Continuation of the Business

Every partner is bound to attend diligently to his duties Decisions to be based on Majority Opinion Every partner has a right to have access to all the documents Since the partnership is at will, any partner can retire if he intends

Settlements after wining up

The winding up will be carried out as specified in the deed of agreement Paying the debts of the firm to third parties Surplus distributed among partners as per agreement Deficits will be paid equally by partners as per agreement

Trade License
Trade License will be obtained introduced in Bangladesh under the City Corporation Taxation Rules, 1983. The process is managed by the City Corporation or city council where the business exists. In case of RedBerries Bangladesh two licenses from Dhaka and Tangail shall be collected a renewed Trade License is provided by the concerned staff of the zonal taxation office.

BSTI Seal
The packaged products shall need a BSTI mark for access to all the outlets. To obtain that all the legal formalities shall be undertaken. A license is normally valid for 3 years under the payments of stipulated fees license is to pay fees in favor of BSTI which is known as CM fee. The constituents of the CM fees are as follows 1. Application Fee :Tk.50 for new 2. License fee :Tk.200 per year 3. Marking Fee: Marking Fee : Tk. 0.07% of Ex. factory price for fruit items

Export Requirements
The substantial documents which are needed for the export of the products are ISO Certificate Export registration Certificate (ERC)
Draft or Bill of Exchange; Commercial invoice Bill of lading or airway bill Marine insurance policy.

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In addition to these some of the auxiliary documents are also required for the export of strawberries under the Bangladeshi laws.

9.0 Action Plan

Carry out legal procedures to set up the firm Renting Office in Dhaka Buy land in Tangail HR Planning

2012 2013 2014 2015 2016

Job Selection Training and workshop under Bangladesh Strawberry Association Buying Capital Machinery Start of Production process with Rabi-III in September Harvesting and selling till February

2 Year harvest

nd

Acquiring newly produced Camarosa variety of strawberry from Dr Manjur Workshop to gain more knowledge about this new variety Promotional activities directed at highlighting the benefits of our new strawberry variety- better taste and longevity/shelf life Extensive branding to gain a competitive edge in this revitalized market Leasing 2 bighas of land to increase capacity 3 Year Harvest
rd

4 Year Harvest

th

5 year harvest

th

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Leasing 4 bighas more land Acquiring all legal requirements for exporting Contacting various channels to facilitate export

2017 2018 2019 2020 2021

Buying Capital Machineries to fulfill the requirements of the expansion Contacting local firms specialized in freezing and preparing strawberries for export 6 season harvest Storage in cold storages Export to foreign markets
th

7 season harvest Innovative promotional activities

th

8 season harvest

th

9 season harvest

th

Market research to be carried out to learn the viability of vertical expansion into the strawberry value added industry 10 season harvest
th

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10.0 Future Outlook: Growth Potential, Risk Factors, Contingency Management

Strawberry is being produced in 71 countries worldwide on 506000 acres. At present major producing countries include USA, Spain, Russia, Japan and Korea. On the other hand Japan Germany, France, Canada, USA, UK and Italy are the major importers. The current domestic market demands for strawberries in Bangladesh about 50 tones where 25 tones are supplied by the local producers. It is predicted that there will be significant growth in the Bangladeshi Strawberry, through both the domestic market and potential export markets.

Annual Demand in Tonnes

60 40 20 0 2007 2008 2009 2010 2011

Figure- Annual demand in tones (primary sources) The growth probability of strawberry markets in Bangladesh could be attributed to the following parameters Changing Lifestyle of Individuals: The extent of globalization is such that it is not reasonable to focus on the market of a single country. Rather the whole world is transformed into single interrelated market. Bangladeshi consumers are increasingly aware of the hygiene and nutritious content of the product as well as the eco-friendly mode of production. Therefore a surge in the demand for fresh strawberries produced by organic fertilizers is quite likely to happen. In addition to this the demand for strawberries in the food industries is also rising Export Potential: The brand image of the Bangladeshi products in the international arena is particularly favorable for initiating more exports from the country. This has resulted from the success of Bangladesh Products at Agricultural, Pharmaceuticals and the RMG sector. Therefore if the inherent brand image of the country can be utilized Strawberry could form a major export to countries such as Japan, Malaysia whose off-season for cultivating strawberries start just at the right time for Bangladesh.

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Contingency planning

Risks
Price risk in the local markets

Contingency Plan
Trend analysis indicates a stable pattern. Professional management backed with superior quality fruit would enable the project sponsors to diversify their local markets by targeting high end markets, hyper markets, hotels etc. Since the amount harvested will be largely based on preorders and initial contracts the risk is not substantial The RedBerries Bangladesh is not currently focusing on exports. However when the exports are initiated, price fixing would be done on periodic basis which would relieve the sponsors from everyday price fluctuations. In spite of this if fluctuations persists further diversification into multiple markets will be undertaken to mitigate the risk Strawberry is already being grown in Tangail and there is sufficient availability of skilled labor. There might be a need for further capacity building which could easily be done at commercial production / export stage. The production technique is somewhat similar to that of potato and Brinjal. Therefore unskilled labour can easily be trained to undertake the operations This risk is there for all agriculture activities. However, crop insurance and proper advance preparation to deal with any unforeseen eventuality would reduce this risk. The probability of this is quite low. However crop insurance will cover the risks if it arises somehow The domestic demand is expected to increase. At least it is extremely unlikely to fall in the next few years. However, after that if the domestic demand does not increase the volume of exports would be stretched, may be through compromising price If this situation comes up, then the produce shall be sold in the local market at reduced price just required to meet the break-even point The produce of the RedBerries Bangladesh will be based largely on pre-orders and initial contracts. This mitigates the issue to some extent However after two or three years operations, RedBerries Bangladesh will itself look for forward linkage to undertake export, processing etc.

Price risk in the international markets

Availability of skilled labor

Weather risk

New-Unknown Pests

Demand does not increase sufficiently

Supply increases disproportionately higher than demand

Vertical Integration

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11.0 Conclusion
The business plan for RedBerries Bangladesh was constructed keeping mind the rise in demand for strawberries in Bangladesh and the arable nature of Bangladeshi Soil. The proposal made through this report is not only a viable business proposition but has the potential of revolutionizing the horticulture production and export industry of Bangladesh by becoming a model for modern age horticulture supply chain. However the sector could be benefited greatly if the following measures are considered by the Government Stabilization of Input Price Increase tariff on Imports of Strawberry Allow tax-free imports of capital Machinery

RedBerries Bangladesh had already estimated various possible threats that should have been taken into account. After the first 5 years of our business operation for further expansion (export) will be undertaken .The calculations of NPV and IRR has yielded positive favorable results. The venture in the related are can create employments, save valuable foreign currency and in the long run form a viable source of earning foreign currency.

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APPENDIX

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Table of Contents
1.0 Introduction ...................................................................................................................................... 1 1.1 Objectives...................................................................................................................................... 1 1.2 Scope ............................................................................................................................................. 1 1.3 Methodology................................................................................................................................. 1 1.4 Limitations..................................................................................................................................... 2 2.0 RedBerries Bangladesh ..................................................................................................................... 2 3.0 Overview of the Industry .................................................................................................................. 3 4.0 Market Analysis ................................................................................................................................. 4 4.1 Market Segmentation ................................................................................................................... 4 4.2 Market Positioning ........................................................................................................................ 4 4.3 Strawberry Markets in the past .................................................................................................... 5 4.4 Current scenario............................................................................................................................ 5 4.5 Market growth Rate ...................................................................................................................... 5 4.6 Factors Affecting Demand............................................................................................................. 6 4.7 Factors affecting Supply ................................................................................................................ 7 4.8 Competitor Analysis ...................................................................................................................... 7 4.9 Porters Five Forces Model ........................................................................................................... 9 4.10 Market Survey ........................................................................................................................... 11 4.11 Industry Clockspeed .................................................................................................................. 11 5.0 Production Plan ............................................................................................................................... 13 5.1 Production Technology & Procedure .......................................................................................... 14 5.2 Plant Protection Measures.......................................................................................................... 15 5.3 Value Chain Analysis: .................................................................................................................. 16 5.4 Marketing Mix ............................................................................................................................. 19 6.0 Human Resource Planning .............................................................................................................. 21 6.1 Human Resource Structure ......................................................................................................... 22 7.0 Financial Feasibility Calculations ..................................................................................................... 23 8.0 Legal Analysis .................................................................................................................................. 25 9.0 Action Plan ...................................................................................................................................... 27 10.0 Future Outlook: Growth Potential, Risk Factors, Contingency Management .............................. 29 11.0 Conclusion ..................................................................................................................................... 31 APPENDIX .............................................................................................................................................. 32 33

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