Tech-Serve

Research Paper:

Submitted to: Shan A Garib

Submitted by:

1) Introduction: It is a hybrid model in which 50% for profit and 50% nonprofit

organization.

Our VISION is to create a value chain in such a way that the unemployed youth in the rural

communities will opt for farming as a profession than migrating to urban areas in search of

employment.

Our MISSION is to create farming as a profitable business model even for the tenant farmers.

Our GOAL is to fill the shortage of labor market with the aid of technology in the

agricultural sector.

Management Message to Investors:

We as a startup company, one would expect a lot to happen in no time and instead of being more

optimistic in our views after our due diligence, we also gave preference to the risks and rewards

to make our business viable in the initial years.

We know that we be under limelight as a new entrant and as a new business model into the

market. We only seek for long term investors with high moral values to build trust in each other

and just not money. We keep up our promises quarter by quarter to our investors and we

selectively choose the opportunities that we have with utmost consideration to the hurdles we

face alongside with more practical approach.

3/5

a) Where the firm is now (e.g., situation)b) Where it intends to be (e.g., goals) ; andc) How it will get there (e.g., strategy and programs) -1

2) Introduction to the company:

Name of the Company Tech-Serve

Corporate Head Quarters Bangalore

Industry Agriculture

5/5

3) Introduction to products: The products and services are only for the residents of India,

customized solely for small and marginal farmers and for the betterment of their communities.

Name of the Product/Service

Forecast on major food crops

Forecast on commercial crops

Predicting market movements (both domestic and international)

Assisting in documentation for loans

Soil testing

Assistance in all the operations such as furrowing, seeding, weeding, application of

fertilizers, pesticides, fungicides, insecticides, herbicides, harvesting, drying, storing,

processing, packing, Transportation to markets, Assisting in Exports, Marketing the produce

Renting equipments

Facilitating ware houses and cold storages,

Minute-Minute information on Commodity market prices in local markets

Weather information

Provide timely information in order to identify the impacts of climatic variability on water

supply.

5/5

4) Reason for selecting: One is developing country and another one is under developed country

and both have huge potential in agricultural sector and (80%) of the population depends on

agriculture. The climatic conditions support the farming communities.

4/5 WHICH COUNTRIES ARE YOU REFERING TO?

5) Research Plan:

We sorted out all the possible odds that could occur through the pilot scale studies conducted

at four different regions of the country. And in each region we varied the factors that could

greatly influence the results. This helped us to optimize the process to a greater extent before

even launching

Objectives: We are expecting the cash flows from the 1st quarter of 2014 as the first two quarters

would be registrations, legal formalities, capital investments like infrastructure (central and

regional offices), HR( Hiring and Training), strategic alliances, Raising finance from Financial

institutions and or investors etc...

From the Q1 of 2014 to Q3 of 2014 we expect to grow at an annual rate of 100% -120% per

quarter. Q4 -2014, Q1, Q2- 2015 projected growth rate would be around 70-75% per quarter.

Q3, Q4 2015 around 30% per quarter (as the average estimated rainfall for this time year would

be lower than expected. Q1, Q2 of 2016 would be at the rate of 25% and then on the expected

fiscal growth rate would be 15%.

The expected break even would be at the 3rd year (Q4-2016).

Hypothesis: The outcome would be interestingly India as a viable option and Uganda is not

a viable option as of now.

Research Questions: The political scenario in Uganda has to be answered as the most liberal

in the country’s history has turned to be the worst dictatorial and there are no answers for this

as of now. That’s why we are opting out Uganda as a viable option.

Information sources:

Primary: Pilot scale studies

Secondary: Ministry of Agriculture, Research from Universities, NABARD, ICRISAT, NOKIA

LIFE, KISSAN Call Center.

Research Data Gathering Tools:We conducted both qualitative and quantitative research.

Quantitative research: we relied on random sampling techniques and structured data collection

instruments that fit diverse groups into predetermined categories. From this data we estimated

the size of each group and how much resources that we need to pool up to serve these groups are

estimated.

In this case, we rooted out the option of behavioral studies as we serve the high context cultures.

Qualitative research: we gave them an opportunity to categorize into one of these

predetermined options: a) Tenant Farmer b) Peasant with 4 acres or less c) Marginal Farmer with

4-10 acres d) Land lord.

From these options we have given open ended questions with less structured protocols as we

can’t generalize the qualitative aspect.

We also conducted personal interviews to seek the patterns among the variations and to add more

support and meaning to the quantitative findings.

These findings helped us to develop our product protocol and customize much for the needs of

the customer.

10/10

6) SWOT Analysis:

India has 275 crops and commodities with 7000 markets and 12 languages.

In India majority of the agriculture is fragmented and is considered as fragmented farming. The

big players find it hard to penetrate into the market as their model is to deliver the whole pizza

but the service we promise is “we even deliver just the toppings” if the customer just wants a

topping. The big players can’t enter and penetrate into the market especially with this kind of

business model.

Strengths: Now a day’s, Information is abundantly and readily available but to get a relevant

information one has to spend ample time to create market advantage which adds value to his

produce moreover the market dynamics change every minute and it’s hard for the poor peasants

to keep up with the trends.

When we talk about Porters 5 forces, in commodity market, there is very little “threat from

new entrants” as there is no product differentiation. There is little scope of “substitute

products” for the produce. When we talk about the “bargaining power of suppliers”, we try

to create value chain through our services which brings them on a single platform to take

advantage of the economies of scale. When we touch the “Intensity of competitive rivalry”,

our transparency is our strength. Finally when comes to “bargaining power to customers” as

most of them will be at retail level, there will be little scope.

We as a hybrid enterprise would encourage the people to volunteer.

Weakness: As a start up hybrid, we face many challenges from the market dictators and apart

from that we have our own weakness. The major would be financing; as we know in developing

countries like INDIA, one has to go with the collateral which would limit our rapid growth in the

initial years. Once the Financial institution understands the feasibility and profitability of the

product, new competition may arise within the industry.

The Indian Banks are not enthusiastic in giving loans to the small scale producers and

this situation makes them drive towards money lenders and traders at cripplingly high interest

rates (varies from 48-28%) with a condition that they need to sell their produce back to them.

This in turn creates them the right to fix the price for produce.

As we mentioned that it is a hen picking business, we don’t see lump sum amounts for

aggressive expansions and at the same time we have to go annuity which increase our interest

rates. We are in service industry which is intangible in one way but on the other side, it has very

short time frame to perish as most of the similar crops has to be harvested during the same time

and we could miss the customers if we don’t have the potential to handle the crowd. This service

is like a hen picking and needs utmost care and there will be peak season and off season so to

sustain, the cash flow is the key to success. The lending rates to these institutions would be

higher as they would generally be term payments than monthly payments.

Opportunities: As there is a quote in Mahabharata that there are 100 reasons for Karna’s death,

similarly we have many reasons that created us this opportunity. Many factors caused the gap

which are quiet common in the developing countries and the major factors include here are

India is the second largest country in the world in terms of agricultural output.

Economic reforms in 1991 by then Late Prime Minister Shri P.V Narisimha Rao

liberalized the trade reforms and adopted free trade.

Following these major reforms, former Prime Minister Atal Bihari Vajpayee, focused

on developing the national infrastructure such as the Golden Quadrilateral project and

the country's economic growth progressed at a rapid pace, with relatively large

increase in per-capita incomes.

As a developing country majority of the farm laborers has shifted to the cities to build

large scale infrastructure projects and also to educate their children etc… Due to these

reasons the markets has experienced severe labor shortages and which would be our

major reason.

Market stats and weather Information is provided by Nokia Life with 18 service

providers across the country but the customer needs assistance in implementing this

information.

The narrow mindedness and eccentricity created by modern Indian education system

disintegrated joint family system. “Ruining one’s own families; how can one develop

broader outlook”?

The concentration of various sectors in urban area created Cosmos, metros and mega

cities and drawn the educated youth out of the rural communities which added fuel to

fire.

Aging population in the farming community needs assistance which means

combining physical and mechanical power with integrated technology. They need

someone reliable business model that they can delegate their work and have peace of

mind and this created a biggest opportunity to serve the down trodden community.

We have an opportunity to educate them to form self help groups to increase their

bargaining power. As a group they will be much qualified for a loan at a special

interest rates which normally are below the regular rates. The industries can see them

as an asset, the retailers can see them as suppliers and they could get discounted

prices for their input and better prices for their output.

Government spending on food for work to certain minorities of the society who are

mostly employed as agricultural laborers caused the intense labor shortage which no

one ever taught and has been criticized by many as government couldn’t provide

work and at the same time need to pay. This in turn demoralized the agricultural

laborers to return to work and they remained to rely on government. Now the

government can’t cut back on this; it will decide the UPA’s fate for the next election.

Food security bill is another factor that demoralizes the labor market from joining the

work force.

Agricultural Debt Waiver and Debt Relief Scheme by government, is not effective as

it cannot reach the bottom of the pyramid.

The government policies act as a growth catalyst to favor the marginal and small

scale farmers.

In all one can conclude that “for every possible way the system gets exploited, there

is a possible reason for the feasibility of this project”.

Threats: Government Spending: The aggressive spending of government is a one factor that

could ruin the efforts to uplift the bottom of the pyramid.

Government Lobbying: The other can be from the government lobbying by the private sectors,

to provide subsidies for the farm mechanization; we may loose our market in this area. This is

because the subsidy has to pass many layers in the pyramid to reach the bottom part.

Government Cuts: This can be treated as a threat to as it will make them more vulnerable

within the system.

8/8

7) Market survey:

India Uganda

Poverty head count ratio 29.8% 24.5%

GDP 1842 billion 19.88 billion

Improved water source 90% 72%

Children born/woman 2.59 6.05

Dependency Ratio 0.53 1.04

Urbanization 2% 6%

Population 1237 million 36.35 million

Category Low middle income Low income

Per captia Income 1489 547

PPP 4716 billion 51 billion

Rank Interms of PPP 3 90

Agriculture GDP Share 17% 23%

5/5

8) There are no direct competitors head to head as of now but there are competitors that

could compete at every stage.

Country1 and 2: Farm mechanization products are provided by 20 companies and the most

prominent in the market were

 Eicher,  HMT Tractors, John Deere, Mahindra Gujarat Tractor Limited (MGTL), Massey

Ferguson, New Holland Fiat India, Sonalika (International Tractors Ltd.), TAFE, VST Tillers

Service: Nokia Life, Kissan call center.

6/6

9) ECONOMIC, POLITICAL, AND GEOGRAPHIC CONDITIONS:

Comparative Analysis between India and Uganda

The Infrastructure was poor in Uganda when compared to India. The average GDP growth for

Uganda was better than India for the last decade and it did well especially in 2008 it recorded a

growth rate of 7%.

The demand increases many folds in the agriculture sector as the two have substantial growth in

the coming future.

Economy

COUNTRY #1

In India it’s down to about 17% due to substantial growth witnessed by IT, service and

healthcare in recent years.

COUNTRY #2 Uganda is one of the poorest countries in the world in which 37% of the people

living in less than a 1.25$ a day and 86% of the population still live in villages and about 82% of

the population rely on subsistence agriculture.

In 2000, Uganda was included in heavily indebted poor countries (HIPC) debt relief initiative

and Paris club debt relief and by 2006 it has paid back the Paris Club Debt.

The agricultural contribution for GDP in Uganda has been dropped to 23% because of growth

witnessed in other sectors such as service and industries especially oil, but it still contributes to a

major share.

In general the fall in contribution doesn’t mean that there is lack of growth, it means that growth

is taking place in other areas such as industries, service, IT, healthcare etc…

POLITICS: Uganda is no worse than India.

They are similar in both the countries and it’s hard to differentiate. Uganda relies on agricultural

exports and donations coming from the developed countries like Canada and India on FDI’s and

Human exports. There is an endless stimulus for the corruption as long as the money is pumped

in or when the power is taken for granted. Majority of the government spending will be diverted

into their personal accounts abroad.

Both continue to face challenges of corruption, poverty, gender differentiation, women

empowerment, child labor, malnutrition, infrastructure, public healthcare.

When the world is talking about Global terrorism, these two countries face additional threat from

home grown terrorism or rebels that they couldn’t solve because of vested interests in politics.

India facing threat from infiltration of terrorists while Uganda facing threats from rebel groups

from South Sudan and Democratic Republic of the Congo (DRC).

Laws were passed in the parliament about child laborers and domestic slavery but the

government failed to strictly enforce the laws. Lack of Transparency, Accountancy and strong

Judiciary systems are other cancerous reasons for corruption.

Country1: India has a multi party system with 1508 political parties registered with election

commission of India. Currently 38 political parties made their way to gain a chair in LOK

SABHA. In 1980 when Late Prime Minister Smt Indira Gandhi centralized the power in

appointing the chief ministers of the states and high-handedness in state politics caused a rise of

regional parties for their power and pride. Now the regional parties play a major role in

supporting or dissolving a coalition government.

Because of the rise of regional parties, the national interests are compromised at times and

introduction of bills in the parliament are being delayed. Clearing bills is the biggest hurdle and

even if cleared, the opposition when forming the government may act against it. Apart from

political instability, the FDI’s are very cautious in their approach towards India. One can see

huge market fluctuations in recent times.

Country 2: Uganda has rebounded from civil wars and economic catastrophe in 1980 after the

dictatorial rule of Idi Amin. In 1986 Yoweri Musevni has introduced democratic reforms that

increased human rights which in 1990’s the west backed up with solid economic reforms that

produced growth. WHO, NGO’s and the developed nations played a major role in reducing the

HIV population from 30% to 7.3%.

There are 38 political parties registered, as declared by Election Commission of Uganda.

In 1995 constitution of Uganda suspended all political parties in contesting the elections.

Yoweri Museveni is in power as the President for 27 years and been criticized for several

reasons. Once thought a reformer, turned to be the 6th worst dictator as listed by Forbes. The

elections last held weren’t transparent enough and any protests against the government have been

suppressed by the lethal military and police systems. He appointed his son as head of the military

and after his death or retirement; one could expect him to come to power.

Geography:

COUNTRY 1): India is a peninsula with a coastline of 7500 kms of which 2000kms are

contributed by the Andaman and Nicobar and Lakshadweep Islands. The Himalayas and the Thar

Desert drive the country economically and culturally for summer and winter monsoons. The

Himalayas protect from the extreme cold winds coming from the Central Asia “Katabatic winds”

and the Thar Desert attracts the monsoon between June-October and it enjoys 4 different climatic

conditions.

It is a home for several great lakes and the most prominent were Ganges, Brahmaputra

drain to Bay of Bengal. Ganges has several tributaries of which Yamuna, Kosi are prominent.

The major peninsular rivers include “Mahanadi” which is The Godavari, The Krishna and

The Cauvery which also drains into Bay of Bengal. The Bhagirathi, Bhavani, Indus, Krishna

Raja Sagara, Koyna, Narmada ,periyar, Sutlej, Tapati and Tungabadra are among other

prominent rivers.

It’s not just the religious prominence but they are also considered as the lifelines of Indian

economy. Due to agricultural growth, the demand for irrigation increased several folds and one

can see the water wars within the states and regions due to persistent water shortages. There is a

proposal in 1972 by eminent International expert on irrigation Engineering, a member of the

Central Water Commission and a Union Minster for Irrigation and Power Shri. K. L RAO and

many notable civil engineers to inter link the rivers to reduce floods and increase water storage

capacity and generation of electricity but due to lack of political interests the projects were still

pending.

COUNTRY 2: Uganda is a land locked country with an average of 1100 meters above the sea

level and it slopes steadily downwards to the north. It is the home for great rivers like Nile,

Victoria, Kyoga, Albert, Edward etc … and receives most of the rainfall in march-June and

November-December. The South part is not well drained when compared to the north.

11/12

10, 11) Distribution channels, Sales and Marketing Entry Strategy:

Country 1 and Country 2: We have our offices in all the municipalities to serve the

surrounding countryside. We employ the rural unemployed as they are the ones to have a strong

hold in their close knitted communities. As our business is mainly concentrated in high context

culture which is countryside, the word of mouth can easily draw customers to us. We firstly

target the unsophisticated peasants and tenant farmers as they are the seasonal producers and

most vulnerable within the system. Secondly we target the marginal farmers who always seek

help in their operations. This way we can align them on one platform to deliver our service,

building the scales of economy and by keeping the fragmented buyers and suppliers away from

exploiting them.

We define investment, work and social activities as they are undifferentiated and

unspecialized for them thus far. Defining these terms helps them to differentiate and calculate

the value of their contributions towards their elatement socially and economically.

7/8 DISTRIBUTION CHANNEL?

12) Competitive Intelligence: We are a hybrid model and our biggest strength lies in our

area of service as it is one of the first of its kind. Our service starts from semi automation to

fully automation of farming in which we optimize the man power using machines. This saves

the cost of laborers to the customer (farmer). The customer can reduce his costs from

anywhere between 25-40% depending on the crop. The timely available information and

support services are unique and eliminate the middle layers.

1/4 COMPETITOR?

13) Competitive Advantage: As tech-serve is like a hen picking business and most of the

big corporate giants can’t afford to do these kinds of businesses, there is no question of direct

competition.

Most of the existing businesses are like proprietary and is like one man army and they might

be good in doing for their own businesses rather than outsourcing some technology to the

others who are in need and anyway this only accounts to a decimal fraction in the market.

These are low income countries and most of them can’t afford to have their own resources.

We as a hybrid business model, and as per the laws of economic scales, we have our own

advantage.

As our focus is mainly service oriented and we charge the customer depending on the

amount he saved. We charge 30% on the savings that he made in opting us which is a

win-win situation.

Low skill workers are enough for the daily routine and unemployed graduates to look

after the operations. Technical workers like mechanics are paid as per the best in

industry standards.

Distribution is not a problem as it is a service oriented.

Legal/Political pressures may come up to see how ethical the business is as it is a

hybrid model and first of its kind. Transparency is what we have to overcome form

such pressures.

11/12

14) Conclusion: As most of the rural community lives with less than a dollar a day, the

wages will increase only when there is a growth in other sectors. As of now it is not viable to

launch in Uganda and we have to witness a positive shift in the other sectors towards the

contribution of GDP. This shift has to create a shortage of agricultural laborers so that the

wages rise dramatically as we have witnessed in India. The wages increased many folds up to

$10-12 per day and even $20 during seasonal demands. The farming community can’t afford

these pay days because of marginal prices set up by the GOI for their produce and this has

created a business opportunity for serving the community.

Action Plan: Our Plan is to cut down the costs in every possible way that adds value to the

farming community. We use all our resources to expand in the length and breadth of the country

to create an easy access even to the remote peasant out there from Kashmir to Kanya Kumari and

from Lakshadweep to Andaman and Nicobar Islands.

8/10 STEPS?

15) Bibliography:

1) http://www.indianexpress.com/news/why-india-has-so-many-parties/1109357/

2) http://www.ec.or.ug/regdparty.php

3) http://eci.nic.in/eci_main/ElectoralLaws/OrdersNotifications/AmendmentNotificationEnglish

18102013.pdf

4) http://www.apo-tokyo.org/publications/files/pjrep-sem-28-01.pdf

5)

http://www.gsma.com/mobilefordevelopment/wpcontent/uploads/2013/03/GSMAmAgri_

Nokia_Case_Study.pdf

6) http://data.worldbank.org/indicator/NY.GDP.PCAP.CD

7) http://data.worldbank.org/country/uganda

8) http://data.worldbank.org/country/india

9) http://data.worldbank.org/indicator/SP.POP.DPND

10) http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

11) http://www.tradingeconomics.com/india/indicators

12) http://www.tradingeconomics.com/uganda/indicators

13) https://www.cia.gov/library/publications/the-world-factbook/geos/ug.html

14) http://en.wikipedia.org/wiki/File:Porters_five_forces.PNG

15) http://www.bbc.co.uk/news/world-africa-14107906

16) http://www.forbes.com/pictures/mim45eeke/uganda-president-yoweri-museveni/

17) Http databank://.worldbank.org/data/views/reports/tableview.aspx

18) Best reserved for the last as per lecture notes, slides, text book and more importantly guidance from

the Instructor.

3/5

Which source belongs to what information?

87/100