Green Leaves Sme & Entrepreneurship Management

GREEN LEAVES SME & ENTREPRENEURSHIP MANAGEMENT
Table of Contents
II. Industry Analysis..................................................................................................................2
III. Company Description...........................................................................................................7
IV. Market Analysis..................................................................................................................10
V. The Economics of the Business................................................................................................17
Appendix........................................................................................................................................20
1
II. Industry Analysis
Agriculture industry is the backbone of Pakistan. 60% of the total population of
Pakistan belongs to the rural areas and are directly or indirectly related to the
agriculture sector. Agriculture sector in Pakistan contributes 14.9% to the total GDP
and provides employment opportunities to about 42.3% of the total population.
Pakistan is one of the largest producers of Wheat, rice, sugarcane among with other
crops. Agriculture industry not only involve the cultivation of crops but it also
involves the sub sectors livestock and dairy farming, growing of fruits, fiber and any
kind of food from land.
Pakistan have sufficient natural resources for example water, sun, land etc which
supports the agriculture industry. As mentioned before agriculture industry is not
solely about the cultivation of crops but it involves various steps and different kind of
businesses are associated with this industry for example processing, packaging, and
distributing the products to the end users. As the technology is advancing day by day
the agriculture industry has also undergone significant changes over the past few
2
years. The farming sector has advanced from conventional and traditional methods to
efficient and latest technologies and machinery.
Industry Trends
However, on the other hand agriculture industry in Pakistan is facing some serious
issues for example scarcity of water, fertile land, degradation of the soil, climate
changes and severe pest attacks which is creating a direct impact on the overall
production and sustainability of the industry. It is a very alarming situation as the
industry makes a sizeable contribution to the GDP of Pakistan. Despite these
problems the agriculture industry of Pakistan still continues to contribute to the
economy of Pakistan and efforts are being made to revolutionize and enhance the
efficiency, sustainability and productivity of the industry.
Nature of Participants
Overall the agricultural industry of Pakistan involves a wide range of participants
from the farmers, factories, processors, middle man’s etc who work together to serve
the market with agricultural products. The two broad categories of the participants
3
involved in the agricultural industry are primary participants and secondary
participants. Primary participants are the people directly involve in the farming
process whether they are the farmers and ranchers, the labor working in the field or
the agricultural cooperatives. On the other hand the secondary participants are the
individuals involved in the processing, packaging and distribution of the agricultural
products. These are the people who act as a bridge between the farmers and the end
users. Which is basically the idea behind our business “Green Leaves”. The food
processors who transform raw products into processed, packaged food for example
Nestle collects milk from different farmers and process the milk.
Key success factors
There are several key success factors in the agricultural industry that help farmers are
adequate capital and funding for land, labor and machinery, secondly technological
advancements, efficiency and sustainability which leads to high yield and profits,
thirdly market access which is crucial for farmers to sell their products to target
audience and last but not the least risk management also a critical success factor as
4
agricultural industry is exposed to serious risks. Effective risk management can help
mitigate those risks.
Long-term prospects
Despite the problems faced by the agricultural industry the long term prospects of
agricultural industry are positive. Due to the technological advancements it is
becoming easy for the farmers to stay up to date. Technology help farmers to increase
the overall efficiency and productivity of yield and reduce the cost leading to profit
maximization. The rapid growth in the overall population can be another reason as
with the growing population the demand for the food is also going making the
agriculture industry on of the most essential industry of Pakistan. Thirdly the
consumer preferences are also changing rapidly. People nowadays are very keen to
know where their food is coming from and how it is produced. People are becoming
health conscious due to growing health issues so they are very conscious about their
diet they are taking. Last but not the least government are also providing support to
the agricultural industry in the form of tax relaxation, incentives, subsidies and micro
5
financing to the farmers for solar panels and tractors to support them. The demand for
organic and locally grown food is increasing as consumers demand more organic and
healthy options. This trend is creating opportunities for small-scale farmers who can
provide locally grown and organic products. Moreover, the growth of e-commerce is
changing the way farmers and agricultural businesses market and sell their products.
Online marketplaces and delivery services are becoming increasingly popular,
allowing consumers to purchase fresh produce directly from farmers and suppliers.
Overall, it is expected that agricultural industry will continue to rise and play a vital
role in providing basic commodities and food to the growing population. Moreover it
is expected that the agricultural industry will continue to cater the demand with
reduced environmental impact as technological advancement and sustainable
practices are being widely used.
6
III. Company Description
Green Leaves is providing a variety of 100% natural food items under one roof to its
health-conscious customers, with free and fast delivery service. The customers will be
able to place the order online and their order will be easily and conveniently available
at their doorstep with safe packaging. The industry for natural, healthy and organic
food items continues to grow. Therefore, Green Leaves offers all the hygienic and
natural food items under one roof to all the health-conscious people out there. More
importantly, there are not many companies providing the delivery service, which is
why Green Leaves will be providing the service of delivering the food items that have
been ordered online at customers’ doorstep to fill out this gap.
Mission Statement
Our mission is to connect the farmers with the end users and provide the organic
foods at the doorstep of people who are diet conscious. Green Leaves are dedicated to
bringing you the finest quality in hard-to-find whole, all-natural and organic foods.
Our Vision
7
Green leaves envision a world where people have access to healthy, organic food. It is
just not about the products that we sell, but also the impeccable service we offer.
With the aim of sustainability, we focus on two aspects the prosperity and
productivity of the farmers.
Product
Green Leaves will sell natural, healthy and organic food items, i.e., fresh milk, butter,
desi ghee, fruits, vegetables, honey and moringa to health-conscious people. It’s not
just about the products that are being sold, but also the impeccable service and
convenience hat is being offered, that is to provide the valuable customers, fresh
products at their doorstep.
Current Status
Green leaves is currently at its initial stage of setup and recently introduced to people
of Lahore.
Legal Status
8
Business firms in Pakistan can operate different legal structures for example sole
limited liability partnership, sole proprietorship, partnership, private company, and
cooperative society. The choice of legal structure depends on different factor
including the size of the business, ownership, and management requirements.
Key Partnership
Green Leaves is a partnership as it is owned and controlled by the two individuals. A
partnership is a business structure in which two or more individuals own and manage
the business together. In a partnership, the partners share the profits and losses of the
business and have unlimited liability for the debts and obligations of the partnership.
Green Leaves is led by its founders, Osama Tahir and Daniyal Irshad. Osama Tahir
has affiliations as well as the experience in the fitness/gym industry, thus know what
health-conscious people wants, and Daniyal Irshad has contacts in the farming
industry
9
IV. Market Analysis
There has been a significant growth in the demand of agricultural organic products in
Pakistan in the past years. The industry for natural, healthy, and organic food items
continue to grow. The dynamics and trends of the market have shown a positive
change as the consumer market have become more aware of the fact that the
consumption of organic products lead to a healthier and better life. Thus, the
consumers have become more health and diet conscious.
The government of Pakistan is encouraging the farmers to enhance the use of organic
farming that has further led to an increase in the growth of organic farming. he
government of Pakistan has also taken steps to promote organic farming practices that
has further boosted the growth of the industry. According to The Express Tribune, the
National Organic Farming Policy was initiated in 2018 to support farmers to indulge
in organic farming, resulting in the rise of organic products exports. Pakistan has a
10
high potential in this sector as it is a major producer and exporter of milk (dairy),
fruits, spices, etc.
The industry for natural, healthy, and organic food items continue to grow. Therefore,
Green Leaves will take the advantage of these opportunities and tap into this market
by offering all the hygienic and natural food items under one roof to all the health/diet
conscious people out there.
Market Segmentation and Target Market Selection
Market segmentation and target market selection are significant and key stages in the
development of an effective marketing strategy for agricultural organic products in
Pakistan. Market segmentation refers to the process of dividing the overall population
into subsets of similar characteristics, i.e., demographics, geographic, psychographic,
and behavioral factors. People in urban cities, especially those who are more educated
and have more knowledge about the benefits of organic products, and those with
higher income levels, tend to be more concerned about their eating habits and the
quality of food they eat, as majority of the food items are processed, e.g., Tetra Pak.
11
Buyer Behavior
The buying behavior for agricultural organic products in Pakistan can be influenced
by various factors. There are several factors that can affect consumers' purchasing
decisions. Many people in Pakistan are becoming health and diet conscious preferring
and requiring healthy, natural, and organic food items in their daily life routine, due
to high health benefits and environmental sustainability. The organic products that
they demand are free of certain chemicals, pesticides, and genetically modified
organisms (GMOs) that are used to enhance the output/quantity, thus safe and
beneficial for their health. Green Leaves tend to focus on fulfilling the demand of
these consumers by providing all natural food products.
Moreover, trust and reputation of the brand can play a critical part in customers’
buying decisions for agricultural organic products in Pakistan as already established
and reputable brands in this sector may be preferred over lesser-known or new entrant
brands. This will be a huge challenge for Green Leaves as it’s a new brand and
12
entrant in this market. One of the major and key aspect that can influence the buying
behavior of consumers is the products’ price and value for money. Organic products
tend to have a higher price than conventional products in Pakistan due to higher
production costs associated with organic farming practices. Although, the target
market of Green Leaves is upper or upper-middle class who are willing to pay extra
to have a healthy lifestyle.
Furthermore, social and culture influences the buying behavior as well, e.g., word-of-
mouth, social media, food bloggers, foodies r us, etc. Therefore, Green Leaves
focuses on quality as well as a separate expenditure for advertisement and
promotions. The main focus of Green Leaves is on availability and accessibility of
organic products for the consumers without compromising the quality, as this can
greatly impact the purchasing decisions of consumers.
Personal Values and Lifestyle: Consumers' personal values and lifestyle choices may
also influence their buying behavior for agricultural organic products in Pakistan.
Those who prioritize sustainable living, environmental conservation, or have specific
13
dietary preferences, such as vegans or vegetarians, may be more inclined to purchase
organic products. Packaging and convenience of use can also influence consumers'
buying behavior. Consumers may prefer organic products that are conveniently
packaged, easy to use, and have clear labeling indicating their organic status.
Therefore, understanding the buying behavior of consumers for agricultural organic
products in Pakistan can help businesses tailor their marketing strategies, product
offerings, and communication to meet the needs and preferences of the target market,
and effectively tap into the growing demand for organic products in the country.
Competitor Analysis
The agricultural organic products’ market in Pakistan that is being targeted by Green
Leaves have several competitors, though less innovative and convenient for the
consumers. Green Leaves have fused the technology with convenience by making
online social media pages and planned to launch the app in the near future, where the
consumers can order a variety of products with the click of a button and the products
will be delivered at their step. It’s not just about the delivery time as the competitors’
14
products might be readily available at the retail shops, it’s about the quality and
freshness of the food items as the consumers in this particular market segment are
more sensitive towards the quality and freshness rather than delivery time or
availability and being price sensitive.
The competitors who are selling organic food items include Amna’s Naturals and
Organics, Haryali, Naturals, Engro Foods Limited, Phool Nagar Farms, Organic Co.,
Health Homie and Health Hut. Haryali Organic Store provides natural and healthy
food products through its retail outlets in Lahore. Though, the outlet sells different
brands products, such Amna’s Naturals and Organics food items. Amna’s Naturals
and Organics sells natural and organic food items through different retail outlets, e.g.,
oils, spices, dried fruits, etc. Naturals is one of the organics shop of fresh fruits and
other pure products, as they claim. It has retail outlet in DHA. Phool Nagar Farms
operates in Phool Nagar that is a city of the Kasur District. They produce and sell
organic food items like fruits and vegetables in Phool Nagar itself. They have less
variety as well as they operate in Phool Nagar and the nearby areas. Organic Co. is
also a retailer selling organic items in the city Lahore.
15
Engro Foods Limited is one of the leading dairy and agricultural companies in
Pakistan that produces organic dairy products under their brand "Organic Milk." They
offer a range of organic dairy products, including milk, yogurt, and cheese, sourced
from organic farms in Pakistan. Green Leaves is not operating at the level of Engro
but can provide competition to the brand.
Estimates of Annual Sales and Market Share
The agriculture industry is a major provider to Pakistan's economy. However,
estimating the annual sales and market share of the agriculture industry in Pakistan is
a difficult job because of the extensive variety of crops and livestock produced and
the different sizes of agricultural businesses. Also, the agriculture industry is highly
fragmented, with a large number of small-scale farmers, which makes it challenging
to estimate market share accurately.
16
V. The Economics of the Business
Revenue Drivers and Profit Margins
Revenue drivers refers to the various ways a firm can generate income, revenues, and
profits. In the context of Green Leaves, the revenue drivers are fresh milk, butter, desi
ghee, fruits, vegetables, honey and moringa.
Profit margin refers to the amount of income a firm saves or keeps aside from the total
sales. Profit margin is where the profit is divided by sales. Profit margin on sales is -13%
in year 1 but becomes positive in the following years, with 2% in year 2, 7% in year 3,
11% in year 4, 14% in year 5, 16% in year 6, 17% in year 7, 18% in year 8, 9 and 10.
Where profit in year 1 is (582,210) and sales revenue in year 1 is Rs 4,331,250.
Fixed Costs and Variable Costs
Fixed costs refer to the costs that a firm must incur whether the production is not taking
place. Fixed cost per month includes the rent of warehouse that is 35,000 rupees, the
salary of operations manager that is 22,000 rupees, salary of the guard of 18,000 rupees
and salaries of both the workers of 15,000 rupees each. The total fixed cost is Rs 202,767.
17
The variable costs are the costs that vary with the level of production. The variable cost
per unit is Rs 96.01.
Operating Leverage, and its Implications
Operating leverage is used in cost accounting and is a formula which measures how much
firm can increase their profits by increasing their revenues. It is very essential part of
financial analysis as it tells if the changes needed are in sales or the costs of the firm. The
firm can concentrate on the right area to increase their profit margin once they know that
profit won’t increase by increase in sales so they will lower their costs to increase their
profits. The projected sales revenue for year 2 is Rs 6,114,281 and the projected revenue
for year 3 is Rs 7,249,791 which is a 18.57% increase in sales. The operating profit for
year 2 is Rs 260,375 and for year 3 it is Rs 608,188 which shows a 133.58% increase.
The formula to measure operating leverage is to divide %age change in operating income
by %age change in revenue. The operating leverage for Green Leaves is 7.19%.
Start-up Costs
18
Startup costs is the total cost which will be incurred when the business starts and these
costs include all the costs (building, machinery, legal & etc.). The total cost which Green
Leaves will incur when setting up is Rs 660,000. Green Leaves will incur Rs 315,000 in
capital costs which will include some legal costs. Rs 105,000 will be incurred as upfront
building rent costs and when starting up a total of Rs 240,000 will be needed in terms of
cash.
Break-even Chart and Calculation
Break-even point is the point where your firm’s revenue equals the cost there is no profit
or loss at this point. Break Even analysis is very important for firms which shows them
the position at which they are standing. The quantity produced per month is 2,475, sales
price per unit is 175 rupees, fixed cost is 202,767 rupees, variable cost per unit is 96.01
rupees, contribution margin per unit and contribution margin ratio are 78.99 and 45%
respectively. Therefore, for Green Leaves to break even, the break-even point units per
month should be 2,567.
19
Appendix
20
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26

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GREEN LEAVES SME & ENTREPRENEURSHIP MANAGEMENT

II. Industry Analysis..................................................................................................................2

III. Company Description...........................................................................................................7

IV. Market Analysis..................................................................................................................10

V. The Economics of the Business................................................................................................17

II. Industry Analysis

Agriculture industry is the backbone of Pakistan. 60% of the total population of

and provides employment opportunities to about 42.3% of the total population.

kind of food from land.

supports the agriculture industry. As mentioned before agriculture industry is not

efficient and latest technologies and machinery.

production and sustainability of the industry. It is a very alarming situation as the

industry makes a sizeable contribution to the GDP of Pakistan. Despite these

problems the agriculture industry of Pakistan still continues to contribute to the

efficiency, sustainability and productivity of the industry.

Overall the agricultural industry of Pakistan involves a wide range of participants

involved in the agricultural industry are primary participants and secondary

individuals involved in the processing, packaging and distribution of the agricultural

Key success factors

mitigate those risks.

agricultural industry are positive. Due to the technological advancements it is

agriculture industry on of the most essential industry of Pakistan. Thirdly the

Online marketplaces and delivery services are becoming increasingly popular,

reduced environmental impact as technological advancement and sustainable

practices are being widely used.

III. Company Description

been ordered online at customers’ doorstep to fill out this gap.

productivity of the farmers.

products at their doorstep.

limited liability partnership, sole proprietorship, partnership, private company, and

cooperative society. The choice of legal structure depends on different factor

including the size of the business, ownership, and management requirements.

Green Leaves is a partnership as it is owned and controlled by the two individuals. A

IV. Market Analysis

consumers have become more health and diet conscious.

fruits, spices, etc.

conscious people out there.

Market Segmentation and Target Market Selection

development of an effective marketing strategy for agricultural organic products in

into subsets of similar characteristics, i.e., demographics, geographic, psychographic,

these consumers by providing all natural food products.

buying decisions for agricultural organic products in Pakistan as already established

to have a healthy lifestyle.

focuses on quality as well as a separate expenditure for advertisement and

promotions. The main focus of Green Leaves is on availability and accessibility of

greatly impact the purchasing decisions of consumers.

Those who prioritize sustainable living, environmental conservation, or have specific

dietary preferences, such as vegans or vegetarians, may be more inclined to purchase

Therefore, understanding the buying behavior of consumers for agricultural organic

availability and being price sensitive.

also a retailer selling organic items in the city Lahore.

but can provide competition to the brand.

Estimates of Annual Sales and Market Share

The agriculture industry is a major provider to Pakistan's economy. However,

fragmented, with a large number of small-scale farmers, which makes it challenging

to estimate market share accurately.

V. The Economics of the Business

Revenue Drivers and Profit Margins

ghee, fruits, vegetables, honey and moringa.

Where profit in year 1 is (582,210) and sales revenue in year 1 is Rs 4,331,250.

Fixed Costs and Variable Costs

per unit is Rs 96.01.

Operating Leverage, and its Implications