1. * Building a Value Chain in the
Organic Agriculture Sector
Second Project for Prof. Chuck Eesley's Technology
Entrepreneurship Class
Team Members: Praveen Kumar, Salma El-Banna, Sarraa Hassan, Amr Farag, Engy
Yasser, Baseem M. Wahid and Moustafa Megahed

2. *Worst Idea given to our team
1. The idea given to us was about a Green-Organic Delivery Service
2.The idea was to take organic products from farmers and deliver them directly to the consumers
3.Profit/Loss = Selling Price to Direct Consumer - Logistics Cost ( integration of information,
transportation, inventory, warehousing, material handling, packaging, and security) - Overheads
(Salaries to Employees, Fleet of Vans etc.) - Sales & Marketing Expenses (Advertising, Flyers, Monthly
publications of studies and reviews, Website etc.) - Purchase Price from Farmer
4.There is zero value addition to the product and it is a commodity
5.If the Consumer decides to buy from the Farmer's Market where Farmer comes and sells the goods
directly to the consumer, the consumer saves a lot of money
6. The price difference between Purchase Price and Selling Price at Farmer's Market is rarely more
than 5%
7. Hence the consumer would prefer to go to the farmer's market rather pay the extra premium involved
for Home Delivery. Very few businesses across the world have perfected the business of home delivery.
Even they (Pizza delivery or other food delivery) deliver a value added product (cooked food) and charge
a premium when compared to the raw material/products used while cooking
8.There is very little money to be made with potential for a huge Loss if the Costs go up

3. *Turning the Worst Idea into
the Best Idea
1. Instead of focusing only on two points (Farmer and Consumer) in the value chain, we could focus on all
points in the value chain
2.Value Chain is a concept that was introduced by Micheal Porter. He is the world's leading authority on
company strategy. He is also a professor at Harvard Business School. His concept was internally focused
to a company.
3.Value Chain Group further developed this concept into something that focuses on the entire industry.
They call it the Value Reference Model (VRM).
4.Several multi-billion dollar global companies in the Fortune 500 list are reorganizing their value chains
as per the Model and dominating their industries.
5.These companies are focusing on their core competence as per their Value Reference Model (VRM) and
working with partners to execute other business processes.

4. *Value Reference Model (VRM)
As per the model, a company can focus only one of the following:
1. Product Development - Market, Research and Develop
2. Supply Chain - Acquire, Build and Fulfill
3. Customer Relations - Brand, Sell and Support

5. * Value Reference Model (VRM) +
Food & Agriculture Industry =
Food Value Chain
1. In the Global Food & Agriculture industry, implementation of VRM across the industry by a company is
known as the Food Value Chain
2.The business model involves capturing the value at every point of the value chain that
includes:
Procure agriculture inputs (seeds, fertilizers, pesticides) directly from the supplier and
capture 10% margin
Engage various best in breed service providers to generate higher productivity, reduce labor costs
and increase profitability by at least 25%
Engaging in Contract Farming by implementing Best Management Practices (BMP) like SRI
to generate an additional yield up to 400%. This alone generates profits of more than 100%.
Implement International Standards like FSSC 22000, GlobalG.A.P, ISO 9000 across the value
chain and generate additional profits and get premium pricing from customers
Comply to all rules and regulations and become a good corporate citizen and get additional
premium in pricing from customers

6. *Profits of more than 100%
1. What started as a worst idea had been turned into the best idea by focusing on innovation at the
industry level.
2.We can produce more profits by further fine tuning the model. On the other hand, it is best
not to squeeze the partners for our profits.
3.It is best to go with a Win-Win-Win model, where we are happy, our partners are happy and
our customers are also happy.
Thank you for listening and we are happy to take any questions that you may have.