Detailed Business Model Analysis of Sprout Stacks for MGMT Course

This report provides a comprehensive business model analysis of Sprout Stacks, an innovative AgTech company focused on revolutionizing farming through indoor production. The analysis utilizes the Business Model Canvas to examine key partners, activities, resources, value propositions, customer relationships, channels, customer segments, cost structure, and revenue streams. The report highlights Sprout Stacks' commitment to sustainability, quality, and nutritional value, targeting environmentally conscious consumers. It explores the interrelationships between different components of the business model and identifies critical success factors, such as channel diversification and customer segment expansion, along with potential downside risks like technological dependence and electricity costs. The report concludes with recommendations for market development, improved customer relationship management, and a stronger online presence to enhance Sprout Stacks' market penetration and overall success in the AgTech industry.

Running head: MANAGEMENT
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Author Note

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I. Introduction
Innovation is very important in the modern day, even when it comes to agriculture.
The farming industry is facing great troubles, for which it is very important to take note
the factors such as labor, quality, nutrients, supplies, preferences of customers as well as
sustainability without affecting nature (Sproutstack.co., 2020). Recognition of
agricultural technologies and innovations are on the rise, which is enabling business to
meet modern day challenges (Bonazzin & Zilber, 2014). Many companies have
incorporated technology into farming, among which Sprout Stacks is one and is intending
to revolutionize production and distribution of freshly grown products, mostly indoors
(Giller, 2015). However, in the developing industry, the competition faced by Sprout
Stacks is also intense as innovative ways are emerging and several AgTech companies
are incorporating the trends in their businesses to enhance farming.
II. Business Canvas Model
A. Building Blocks
1. Key Partners
Sprout Stacks in on the mission to revolutionize how farming can be done as well
as the fresh produces be distributed. The key partners of Sprout Stacks include some
of the premiere electronic and print media, where they promote their products and
services and create awareness about their initiative to achieve sustainability and make
difference in the farming industry (Sproutstack.co., 2020). This partnership has been
effective to reduce negative impact such as health issues of the customers, as well as
the nature. Sprout Stacks also have partnerships with various cafes and restaurants,
whom they provide supplies all throughout the year. Some of the partners include

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Country Growers, Arena’s DeliCafe and Cucina, Harris Farm Products, The
Alchemist Espresso and Harbord Growers (Sproutstack.co., 2020).
2. Key Activities
The primary activity of the company is to offer great standardizing of the products
and offer innovative solutions to farming. The produces of Sprout Stacks are grown
and offered in the market by ensuring quality as well as quantity without having to
compromise of sustainability (Sproutstack.co., 2020). Sprout stacks amalgamates
technology along with nature in order to come up with produces which have
maximum freshness, nutrition as well as taste (Paull, 2015). The company aims to
control every aspect which is related to nature and sustainability without having to
use pesticides or varieties of GMO products.
3. Key Resources
Spout Stacks primarily have several indoor farms, where the produces are grown
as well as sold. The customers can place their orders and get the fresh produces by
placing orders over phone, or from local partners who sell their products. One of the
greatest resource, alongside the fully automated farms, is the website, which offer
every important information as well as online purchase options, from where,
customer can make their purchases (Sproutstack.co., 2020). The great technologies
which the company has on board, add to their resources to proceed with their
innovative farming methods and gain competitive advantage in the market (Bonazzin
& Zilber, 2014).
4. Value Propositions

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Spout Stacks is offering the market with revolutionary techniques to farming. The
partners to whom the company offer supplies as well the customers who make
purchases are ensured with excellent quality products which help them achieve
nutritional value through the food products (Benke & Tomkins, 2017). The company
is adding great value to the customers as health hazards and sustainability concerns
are being paid attention to (Paull, 2015). People do not have to compromise on nature
and health by choosing daily staple supplies which are grown with the use of
pesticides, which are very detrimental for health as well as nature.
5. Customer Relationships
Customer relationships maintained by the company is really commendable.
People who are eager to get in touch with Sprout Stacks can use their website as the
platform. The various social media channels maintained by the company ensures all
queries, complains and concerns are heard in order to enhance the processes, after
purchase and ensure that the customers have satisfactory experiences from the
company (Joyce & Paquin, 2016). The online mediums are used by the company to
increase awareness and engagement as well as take valuable feedback. The online
mediums has served to be very beneficial, as the company rely on their online
platforms to engage in interactions and maintain effective customer relationships.
6. Channels
Sprout Stacks grown produces can be purchased by the interested customers
through their website, from where they also sell products. The company distributes its
products to various restaurants and cafes all the year round, which partners into the
mission of serving with quality and nutritional food (Benke & Tomkins, 2017). The

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produces can also be bought from the some of the partners, who sell Sprout Stacks
products such as Harris Farm Markets, Country Growers, Harbord Growers and so
on.
7. Customer Segments
Customers who are more aware about sustainability and environmental concerns
are being targeted by the company (Giller et al., 2015). Sprout Stacks is currently
operating in the urban spaces, therefore, people who are aware and conscious of
quality and nutritional benefits are being targeted primarily as they also intend to
enlarge the customer segment with time.
8. Cost Structure
Spout Stacks is owned privately and thus the costs which include in managing the
business and meeting demands in the market include farming from the very basic
level (Dudin, Kucuri, Fedorova, Dzusova & Namitulina, 2015). Technological costs
are heavy as the system is entirely electrically automated, which also include artificial
lighting for farming with LEDs. The company also emphasizes on infrastructure and
design of the business, for which large expenses are dedicated.
9. Revenue Streams
The primary revenue stream of the company is sales of their products to the
products and the distribution channel which they maintain with their various
shareholders (Joyce & Paquin, 2016). The company maintains privacy policies about
their revenue earnings, which makes this statistics not accessible for usage. Their
initiative for venture capital is another source of funding for Sprout Stacks, as the

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company intends to grow all throughout Australia and not be restricted to some of the
urban spaces solely.
B. Interrelationships
The most significant relationship within the system of operation of Sprout stacks
in between their customer segments and key activities which are carried out by the
company in order to offer them with the best of products and services. The target
segments are to be catered to, with the help of the key activities of the company, which
ensure effectiveness. In other words, Spout Stack will be able to success and posit itself,
in spite of the growing competition, and position themselves, as one of the pioneer
companies offering freshly grown and quality products, only how effectively they are
catering to the target customer segment in the market. It should be dealt with, with utmost
importance that the company needs to enhance their key activities as well as cost
structure, as it involves heavy investment and expenses on technology, electricity and
automation of the processes (Dudin, Kucuri, Fedorova, Dzusova & Namitulina, 2015). If
the company expands and intends to cater to a different customer segment, it is very
important to enhance and modify the key activities accordingly (Toro-Jarrín, Ponce-
Jaramillo & Güemes-Castorena, 2016). Revenue stream and cost structure is interrelated,
because they are intertwined and influence the business and operations to a great extent
(Chavas & Shi, 2015). If the revenue generation of Sprout Stack increases, then the cost
structure of the company will be in good shape (Dudin, Kucuri, Fedorova, Dzusova &
Namitulina, 2015). Customer relationships are also to be maintained effectively in order
to ensure great revenue generation from the market through various modes of customer
management, purchase options and products and services. If the revenue generation of the

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company enhances, the management process of customer relationships is likely to
improve too.
C. Critical Success Factors
One of the most crucial factors which will determine success for Sprout Stacks is
the diversification of channels, as their products are available in the market at very
limited outlets with whom the company has built partnerships. The company also sells
their products through their website but the reach has not been effective yet. Thus, the
company should intend to enhance their business by increasing channel types, which will
enhance their business by increasing potential in the market. Sprout Stack should also
diversify their customer segments which will ensure more penetration in the market.
Thus, they will be able to increase the revenue generation from market. The company
should also should boost their value proposition which will attract more buyers. This
plays a pivotal role in determining success.
D. Downside Risks
The risks which are associated with the company is its dependence on technology
entirely. Farming processes have been revolutionized by the company by created indoor
farming camps which ensure sustainability as well as quality balances. However, the process
is entirely dependent of technology and automated system (Chavas & Shi, 2015). The
industry is seeing rapid transformation and up gradation of technology, which the company
should keep up with, in order to maintain their position and grow within the industry. The
electricity concerns of artificial lighting for indoor processes also involve risks, which the
company should aim to improve to minimize costs as well as increase profitability (Chavas &
Shi, 2015). If other companies develop cost effective operations, it can be risky for Sprout

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Stack . Identity, recognition and brand value also platy crucial role, which ensure competitive
advantage. Sprout stack should engage in more activities to promote the business, which will
lessen the risks involved whole expanding.
E. Business Model Changes
The business model canvas which have been provided will allow the company to grow
and involve positive changes in order to enhance their key activities, customer relationship,
channels, value proposition as well as customer segment (Joyce & Paquin, 2016). Sprout
Stacks can enhance their process for increased market penetration. The company can enlarge
their distribution channel and purchase options, which will change the potential customers
into successful customers. The target audience will be catered to more effectively which can
be maintained through effective customer relationship management.
III. Conclusion
The report can thus be concluded by saying that Sprout Stack is doing extremely well in
the AgTech business as they are revolutionizing farming in the urban spaces by growing their
produces indoors without the use of any GMO varieties or pesticides. However, they
maintain quality and nutrition but they should still aim to enlarge their market and expertise
to enhance the business. The factors and determinants in the process of achieving more
success have been discussed in this report. Sprout Stack will be more successful by
increasing revenue generation and reducing the risks involved.
IV. Recommendation
 Market Development initiatives will help Sprout Stack be more accessible in the
market which will increase the business in size and their target customers.

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 The company should engage in better management of relationships of customers
by taking into consideration their processes.
 The company should also make their online presence stronger, in the fast paced,
technology oriented world.

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References
Benke, K., & Tomkins, B. (2017). Future food-production systems: vertical farming and
controlled-environment agriculture. Sustainability: Science, Practice and Policy, 13(1),
13-26.
Bonazzi, F. L. Z., & Zilber, M. A. (2014). Innovation and Business Model: a case study about
integration of Innovation Funnel and Business Model Canvas. Revista Brasileira de
Gestão de Negócios-RBGN, 16(53), 616-637.
Chavas, J. P., & Shi, G. (2015). An economic analysis of risk, management, and agricultural
technology. Journal of agricultural and resource economics, 63-79.
Dudin, M., Kucuri, G., Fedorova, I., Dzusova, S., & Namitulina, A. (2015). The innovative
business model canvas in the system of effective budgeting. Asian Social Science, 11(7),
290-296.
Giller, K. E., Andersson, J. A., Corbeels, M., Kirkegaard, J., Mortensen, D., Erenstein, O., &
Vanlauwe, B. (2015). Beyond conservation agriculture. Frontiers in plant science, 6, 870.
Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design
more sustainable business models. Journal of cleaner production, 135, 1474-1486.
Paull, J. (2015). GMOs and organic agriculture: Six lessons from Australia. Agriculture &
Forestry, 61(1), 7-14.
Sproutstack.co. (2020). Home | Sproutstack. Retrieved 9 April 2020, from http://sproutstack.co/

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Toro-Jarrín, M. A., Ponce-Jaramillo, I. E., & Güemes-Castorena, D. (2016). Methodology for the
of building process integration of Business Model Canvas and Technological
Roadmap. Technological Forecasting and Social Change, 110, 213-225.

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Appendix
Key resources
Human resource
Technologies
Indoor farms
Key activities
Supply chain
process
Offer healthy
products free of
harmful chemicals.
Channels
Online channel
Online Grocery
Markets
Own Website
Customer
relationship
After sales services
Social media
presence
Customer segment
Urban based
Technologically
aware
Environmentally
aware
Value propositions
Quality
Sustainability
Innovation
Customer
relationship
Key partners
Promotional
mediums
Restaurants
Cafes
Online Grocery
Markets
Cost structure
Marketing and production cost
Automated technologically operated system
Revenue streams
Sales of agtech farm produces.
Supplies to various restaurants and cafes