MGMT20143 Business Model Deconstruction: A Case Study of Pure Ponics

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MGMT20143 – Think Big
Assessment 1 – Business Model Deconstruction
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Executive Summary
Organic Products are considered healthy and have many nutritional benefits with the effect the
overall health in a positive way. Before the 18th Century when people are not aware of the use of
pesticides and chemical, at that time, they grow seeds naturally with patience. Now, as the time
changes many companies make the pesticides and chemicals that produce the seeds much faster
but they hurt health. Farmers and other agricultural industries start taking the help of these
chemicals to make profits but now again when the time changes people and farmers are focusing
on growing the seeds naturally that have a positive effect on health. Although, this is the costly
method, still people enjoy organic food.
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Table of Contents
Introduction......................................................................................................................................4
Business Model............................................................................................................................5
Interrelationships.........................................................................................................................8
Critical success factors................................................................................................................9
Downside risks...........................................................................................................................10
Business model changes............................................................................................................11
Conclusion.................................................................................................................................12
Recommendation.......................................................................................................................12
References:....................................................................................................................................13
Appendices....................................................................................................................................14
Appendix 1.................................................................................................................................14
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Introduction
Pure Ponics was established in Australia by Australians with the moto of producing the farm
products. Pure Ponics is based in Geelong Victoria, Australia. Their tagline is “We care about
what you eat”, and their primary purpose is to give people fresh farm fruits and vegetable that
grows naturally without any pesticides. In this study, the business model will be discussed that
contain all nine elements. Apart from this their way of maintaining customer relationship, risk
management and success factors will also be addressed. In the end, there will be a suggestion for
Pure Ponics for making their business more secure and robust.
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Business Model
Pure Ponics business model is to give the people the benefits of fresh farm vegetables and fruits
for the exchange of money. They want to spread the awareness of eating the chemical food, by
spreading the awareness more and more people will consume the items of Pure Ponics that will
generate the income for them. The business model of Pure Ponics is generating income for them
and also helping the people by offering them fresh foods instead of pesticides items. In 2017,
their revenue was $10 million, and in 2018 their income shows a slight high of 10% and increase
to $11 million (Falguera et al., 2012).
Building Blocks: Below is the nine building blocks segments that detail about the Pure Ponics
business model:
Key Partners:
Farmers and Tropical Biology Association are the critical partners of Pure Ponics. Their key
partners are assisting the company in accomplishing there long and short term goal during the
period. They need the experience of the real farmers who have cultivated soil and other eatables;
they know how much water, sunlight, soil and time the vegetables need to grow properly. Pure
Ponics also improves the farmer livelihoods, biodiversity and increased sustainability of
agriculture (Lobo et al., 2014).
Value Proposition
It makes it easier for the consumer to consume vegetables and eat fruits without worrying about
health problems.
Pure Ponics have the regulation food ministries certificates which certify that this company is
growing pure vegetables and fruits (Paul and Rana, 2012).
Channels
A full pack of communications and marketing agency, with 9 location throughout Australia.
These agencies are fully committed towards the Pure Panic food production and distribution
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departments. They are also channelling with the institution which carries research on the
photosynthesis process and greenhouse effect.
Revenue Streams
Revenue in 2018 is more than by 10% as compared to the income in the year 2017. In 2017,
revenue of Pure Ponics was recorded at $10 million, and that goes high up to 10% which helps
this company in making the revenue of $11 million. They also get the subsidy from the
government for operating in the remote areas that accomplish their objectives of lowering the
cost down (PurePonics, 2016).
Cost Structure
They have a variety of products like beans and pluses, Dairy, Bread, Fish and eggs, Fresh fruits
and vegetables, Meat, Seed Savers, Vegetarian organic and non-organic. These prices reflect the
cost of growing, harvesting, storage, processing, and packaging. Growing natural products
require more labour and intensive management. Although in the cost structure of Pure Ponics,
indirect cost is also involved like the cleanup of polluted water, health care facilities for the
farmer, insurance, environmental cost etc. When all the costs (including direct, indirect, fixed
and variable) merge and profit of the company is added then the resultant value is the price of the
organic products (Toms, et al., 2016).
Key resources
Farmers, government agencies, print media, social networking, newspapers are the critical
resources of Pure Ponics. Like these, all help the company in accomplishing their objectives by
promoting their organic sales. The government also supports the organic business because if
people start consuming these products, then the health of the population will get the ultimate
benefit of nature. Also, these products are usually high in prices, when people purchase these
products a small amount goes to the Government also as a part of the taxes.
Customer relationships
Spread awareness for the organic farming and there benefits through the social media, by
creating many offers, they email the customers for new products and offers, distribute pamphlets,
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give advertisement in the newspapers, etc. This is how this company maintain the customer
relationship.
Key activities
Harvesting, producing, creating a greenhouse effect, growing organic vegetables and fruits are
the key activities that happen in the Pure Ponics. Their primary purpose is to grow organic
products, so all their tasks and goals are inter-related to this work only. One of their major
essential activity is to share adequate information with the farmers so they can work more
efficiently and effectively. They only appoint those farmers who have the previous experience in
this field as the experience farmers to know the time process of the vegetable to become
consumable, and they can better take care for plants than anyone else.
Customer segments
 Periphery consumers – These category consumers 15% of organic products because these
are people who just discover the few benefits of natural products but not wholly. So, they
also invest a small amount of their expenditure budget.
 Core Consumers – These people talk and know about the organic products and they
invested a little bit more than periphery consumers — around 22% of this category
invested in natural products of Pure Ponics.
 Mid-level organic consumers – This category changing their attitude towards organic
products completely as this category contribute around 63% in the natural products. This
category is aware of the benefits and importance of taking natural products rather than the
other products.
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Interrelationships
Many analysist have a vision in the long term growth of the organic product industry. Many
senior analysist have a prediction that the annual growth of this industry would be increase by
20% in the year 2020. In the global market, the growth of organic products will also show a
slight increase of 11% in the year 2020. Two international organisations have branches in
Australia name “The Institute of Marketecology” and “Skal International, Netherlands”. At
present, the organic market received the premium of 25-35% over conventional products; such
organic industry sold directly from the farmers to the end buyers. In between, they conducted the
process of inspection of the eatables, types of water they give to the plants, hygiene factors, and
they make sure that no pesticides are being used in growing the plants and they take care for
transportation and packaging (Capuano et al., 2013).
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Critical success factors
Vegetable and fruits production is the primary business for the farmers that benefit thousands of
farmers in the urban, rural area and peri-urban. Growing vegetables also create the opportunity
for the people; they can be called as self-employed. The farming business includes the following
process:
Australia’s organic sector is undertaken by the private company, government projects, grassroots
support groups, NGO’s, and corporative farmers. The success factor of the Pure Ponics mainly
depends on the farmers who agree to work with them and share their experiences. Pure Ponics
gets the real knowledge of harvesting and maintaining the crops by the actual players who are
doing this work since ages. On the other hand, they furnish the experience of the farmer too by
explaining them about the benefits and financial profits of growing the crops without using the
pesticides.
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Propagation
Production
Harvesting
Prepation
for the
market
Selling

Downside risks
The risk is involved where weak seeds need the support of pesticides and chemicals for growing,
but this company refuse to give the chemicals therapy for producing so many time seeds refuse
to grow. In seasons, Pure Ponics incurred huge loses where seeds are harvesting and watered still
they refuse to develop correctly. When one seed does not develop properly, then it affected the
other seeds also which create eventually more loss for the company. The field which grows
proper plants, the vegetables and fruits of those fields sold in the market. Pure Ponics also get a
subsidy from the government for operating in the remote areas, and they also get the rebate from
the government in the taxes.
On the other hand, the buyers who purchase their products also get benefited because their health
will be maintained. So, this is the win-win situation for everyone. Sellers and farmers are getting
their profits, tax authorities are getting their taxes on time, and most importantly buyers are
getting more and more blessed with the superior health (Capuano, et al., 2013).
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Business model changes
Most poor farmers very depressed because of the increased cost, so they employed their family
members which help them in cutting the labour cost and maintain their competitiveness in the
market. In Australia, large acres of lands are already cultivated under the eye of food associated
with the traditional production systems adopted by the farmers. The organic products are
beneficial to health also as no chemical or pesticide is used for growing the seeds, seeds grow
and take more time than usual. Pure Ponics should employ the farmers and their families as their
full-time employee; they should also raise the level of motivation so no other farmer and his
family will get depressed again (Wee, et al., 2014).
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Conclusion
It is concluded that the company “Pure Ponics” claims are the green future of Agriculture as they
are growing the fruits and vegetables naturally. They also use the Geelong aquaponics farm and
apply all there learning in growing the plants. They always focus on increasing pesticides or
chemical free eatables in the most adequate and sustainable way.
Recommendation
Pure Ponics should create more and more job opportunities for the locality and farmer, and they
should make them aware by sharing adequate information on how to operate in the fields. They
should guide the keep the hygiene factors to keep themselves and crops safe.
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