Company Business Opportunity Analysis - Assignment Example

? Business Opportunity Analysis for the Lowbush Blueberry Moisture Sensor Table of Contents Executive Summary 3 Market Research & Analysis 3 Market trends and needs 3 Market Segmentation 4 Product 4 Product Description 4 Timeline for development 6 Competition Analysis 6 Identification of competition 6 Financials 6 a.Forecasted Income Statement 7 b.Forecasted Balance Sheet 8 c.Profit Margin for 3 years 9 Executive Summary Growing lowbush blueberries as a commercial crop is a fairly complex operation (Moore, 2010). Usually, it involves a grower with a large acreage with a host of production activities from spring to fall. The steps involve pruning, insect and disease control, weed control, pollination and harvesting. The Lowbush Blueberry Moisture Sensor comes in at the stage of insect and disease control, which is a vital process. Commercial production of lowbush blueberry in Nova Scotia, New Brunswick, Prince Edward Island, Quebec (Canada) and Maine (US) is known to be susceptible to a serious fungal disease, called Monilinia blight, which causes significant economic loss annually. A team of agriculture researchers developed a technology in the form of an apparatus that can be used to effectively predict the risk of infection in fields. The apparatus functions with an algorithm that accurately indicates the state of infection or risk of infection caused by wetness as captured by a moisture sensor. The technology is to be licensed, with exclusive rights to enhance and commercialize the technology. Market Research & Analysis Market trends and needs Lowbush blueberry has come a long way to take its position as one of the most significant horticultural crops in the province of Nova Scotia Canada (Benoit et al, 1984). Commercial development today, which is done on a large scale, started in forties and fifties. The industry has grown in leaps and bounds since. For instance data shows that only 1,125,000 pounds was produced with a farm value of $152,000. Average annual production from 1992 to 1996 was over 29,000,000 pounds. In 2000 over 32,000,000 pounds of lowbush blueberries were harvested with a farm gate of over $20,000,000 and an economic value of Nova Scotia surpassing $50,000,000 (Wild Blueberry Network Information Centre, 2012). Market Segmentation The target market for Lowbush Blueberry Moisture Sensor will be all the farmers in lowbush blueberry, who combined, have a farm value of over $20, 000,000. They are the ones is known to affected by the serious fungal disease, called Monilinia blight, which causes significant economic loss annually. Product Product Description Lowbush Blueberry Moisture Sensor is an apparatus that predicts the risk of fungal infection in blueberry fields. The apparatus functions with an algorithm that accurately indicates the state of infection or risk of infection caused by wetness as captured by a moisture sensor. The technology is to be patented, with exclusive rights to enhance and commercialize the technology. This technology will be attractive to manufacturers who: have manufacturing capabilities of small plastic and metal parts; have excellent knowledge of the existing agricultural production, marketing systems, sales and infrastructure in the region; and Can incorporate the sensor and the algorithm with remote communication software, in a self-contained unit. Potential for Commercial Enhancement & Adding Value Remote communications Customarily remote in location, blueberry fields are often near forested areas that are geographically situated at different terrains exhibiting different micro-climatic conditions. Information, on the wetness of the fields, that is made available regularly at the convenience of the growers’ home location, is beneficial in the timely control of this damaging disease. In this light, a remote communications technology attached to the moisture sensor is potentially capable of enhancing such usefulness of the apparatus. Other farming techniques, other crops – The technology, when incorporated with a remote or satellite communications system, can lead to the development of other farming techniques in which the precision of measuring environmental parameters over large production areas within a limited duration of time is integral to obtaining successful economic returns. Further, the technology may also be adapted for use to other crops, e.g., apple, potato and strawberry, because the sensors can attach well to broad-leafed crops. Timeline for development Once funding is availed development of the basic prototype for moisture sensoring should begin and take place for a month. A test on it in the fields should take 2 months after which, once the product is fully functional then mass production of the sensors will take place. After pricing and advertisings, sales should take place from thereon Competition Analysis Identification of competition Being the first of its kind, the lowbush blueberry Moisture Sensor will be the first of its kind in the industry. The competition is therefore minimal or none at the moment. Where there are various methods of dealing with the blight, there are virtually non-tested scientific ways of detecting moisture in the blueberry farm fields. This product will also be patented or licensed to keep competition at bay. Financials Below are the financial projections of the income statement, balance sheet and the profit margin for the first three years of operation. It is assumed that the business will receive a loan with a 10% fixed interest rate. Sales revenue will grow at 10 percent per year. Tax rate is assumed to be 30 percent. a. Forecasted Income Statement 1 2 3 Revenue from sale of sensors $5,000,000.00 $7,500,000.00 $10,000,000.00 Operating Expenses       Salaries for consultants $1,27,500 $1,27,500 $1,27,500 Salaries & Wages for other employees $35,000.00 $35,000.00 $35,000.00 Advertising $75,000.00 $82,500.00 $90,750.00 Depreciation & Amortization $75,000.00 $75,000.00 $75,000.00 Insurance $50,000.00 $50,000.00 $50,000.00 Patents & Fees $37,500.00 $37,500.00 $37,500.00 Meals & Entertainment $12,500.00 $12,500.00 $12,500.00 Miscellaneous $5,000.00 $5,000.00 $5,000.00 Office Expense $4,500.00 $4,950.00 $5,445.00 Telephone $7,500.00 $8,250.00 $9,075.00 Training & Development $10,000.00 $11,000.00 $12,100.00 Travel $9,500.00 $10,450.00 $12,018.00 Utilities $5,000.00 $5,500.00 $6,050.00 Other $2,500.00 $2,750.00 $3,025.00 Total Operating Expenses $329,000.00 $340,400.00 $353,463.00         Operating Income $4,671,000.00 $7,159,600.00 $9,646,537.00         Interest Expense $10,000.00 $15,000.00 $20,000.00         Income Before Taxes $ 4,661,000.00 $ 7,144,600.00 $ 9,626,537.00 Taxes $ 1,000,000.00 $ 2,000,000.00 $ 3,000,000.00 Net Income $3,661,000.00 $5,144,600.00 $6,626,537.00 b. Forecasted Balance Sheet   1 2 3 Assets:       Current Assets       Cash & Equivalents $14,50,000 $11,09,510 $12,26,643 Accounts Receivable $50,000 $5,77,500 $6,35,250 Other Current Assets $2,80,450 $4,80,450 $6,80,450 Total Current Assets $17,80,450 $21,67,460 $25,42,343 Fixed Assets       Office $35,00,000 $35,00,000 $35,00,000 Less: Accumulated Depreciation $75,000 $1,50,000 $2,25,000 Net Fixed Assets $34,25,000 $33,50,000 $32,75,000 Total Assets $52,05,450 $55,17,460 $58,17,343         Liabilities       Current Liabilities       Accounts Payable $0 $46,790 $48,096 Salaries wages payable $0 $12,750 $12,750 Other liabilities $0 $2,500 $2,500 Total current liabilities $0 $62,040 $63,346         Long term liabilities       Loans $0     Total Liabilities $0 $62,040 $63,346         Equity       Paid in Capital $49,50,000 $50,00,000 $50,00,000 Retained Earnings $2,05,450 $4,55,420 $7,53,996 Less: Owner's & Investor's Draws $0 $0 $0 Total equity $51,55,450 $54,55,420 $57,53,996         Total liabilities & equity $51,55,450 $55,17,460 $58,17,343         c. Profit Margin for 3 years Profit Margin % Year 1 Year 2 Year 3 Net income / Sales revenue 0.7322 0.685947 0.662654 References Benoit, G.R., W.J. Grant, A. A. Ismail, and D.E.Yarborough. (1984). Effect of soil moisture on the potential and actual yield of lowbush blue-berries. Can. J. Plant Sci. 64:683 689 Moore. J.N. (2010). Research on highbush and rab-biteye blueberries in Arkansas. Proc. N. Amer.Blueberry Work Conf. Michigan State Univ.,E. Lansing. p. 40 44. Wild Blueberry Network Information Centre (n.d.). Wild Blueberry Production and Marketing in Nova Scotia. Retrieved March, 10, 2013, from http://nsac.ca/wildblue/facts/ptwb9701.asp Read More