1. From Sun Yat-sen University
Sun after storm
A Case Study on Even’ Star Organic Farm
Dream Chasers
From Sun Yat-sen University
ZHANG Wei
HUANG Peilong
PENG Weijian
LIU Mengning

2. Introduction
Manager of Even’ Star
Brett
Members of IMA

3. Outline
A. Case Overview
A1 Storm before Sun
B1 A STORM Framework
B. Current Situation Analysis
C1 Quantitative Method
C2 Qualitative Method
C. Apportion Analysis
C1 A Differentiation Strategy
D. Strategy Positioning
E1 Short-Term Decision
E2 Mid-Term Planning
E. Utilization & Implementation
E3 Long-Term Strategy
F1 Weather Conditions
F. uNcertainty
F2 Petrol Price Increase
Goal: To help Even’ Star Organic Farm maximize profits in the long run.

4. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
A1 Case overview
A STORM Framework Analysis
Social Conditions
Technical Conditions
Organizational Conditions
Revenue Conditions
Market Conditions
Apportion Analysis
A SUN Solution
Strategy Analysis
Utilization &Implementation
uNcertainty

5. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
STORM Framework
B1 Social Conditions
Industry Retrospect:
Growing Consumption of Organic Products
Huge Gap between Supply and Demand:
Introductory
Growth
Maturity
Organic Farming
Total Market Sales
Decline
Organic Product has a blooming future

6. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
STORM Framework
B2 Technical Conditions – Planting Procedure
Stored in containers
Covered with black plastic
$ 133 per acre 2
Seedlings 4
Containers 1
Seeds
In the greenhouse
$ 1 per seed
$ 700 per acre
Irrigation
$ 50 per acre 3
Produce
Yield is seriously infected by weather conditions

7. B2 Technical Conditions – Transportation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
STORM Framework
B2 Technical Conditions – Transportation
Transportation of Product
Truck $ 7000
Variable Cost:
$ $ 0.21= $ 0.34 per Mile
Depreciation of Truck
$7,000
for100,000 Miles
180 miles
70 miles
220 miles
6 hours
2 hours
8 hours
Distance
Time
Restaurant is the most time and distance consuming

8. B3 Organizational Conditions
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
STORM Framework
B3 Organizational Conditions
Planting
Work
Brett
3 days per week
Transporta- tion Work
Brett
4 days per week
50 +
Every week
Packing Work
Brett
Part-time Laborers
$ 10 per person
$ 44 per week
Brett works almost everyday without rest.

9. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
STORM Framework
B4 Market Conditions
Low
High
Selling Price
Restaurant
CSA
Farmer’s Market
Restaurants
Community-Supported
Agriculture
Upscale restaurants
Fixed product catalogue every week
Advantages for farmers:
1.Get to spend time marketing the food early in the year
2.Receive payment early in the season, which helps with the farm's cash flow
3.Have an opportunity to get to know the people who eat the food they grow
Farmer’s Market
High risk/high return
10% spoilage rate
CSA is getting popular in the US

10. B5 Revenue Conditions – Channels
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
STORM Framework
B5 Revenue Conditions – Channels
Restaurants have the highest margin and revenue per week.
Restaurants make up 56% of the revenue
Restaurant
CSA
Farmer’s
Market
Restaurants have the highest margin per week

11. B5 Revenue Conditions – Channels
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
STORM Framework
B5 Revenue Conditions – Channels
Rate of Return (Revenue/ Variable cost)
Time is most effectively used in Restaurants
CSA shares the highest rate of return.
More time of CRM can be spent in the restaurant channel and the CSA has the highest potential of Profitability.

12. B5 Revenue Conditions – Produce
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
STORM Framework
B5 Revenue Conditions – Produce
Yield
Farmer’s Market
Profit structure of each Breed
CSA
Restaurants
Tomatoes’ output has far exceeded the others and its elasticity of demand is relatively little.

13. Utilization & Implementation
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Social Conditions
Technical Conditions
Organizational Conditions
Revenue Conditions
Market Conditions
STORM Conditions
Apportion Analysis

14. Classify Relevant Cost and Non-relevant Costs
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Classify Relevant Cost and Non-relevant Costs
Relevant Cost
Non-relevant Cost
The Restaurant Channel
The CSA Channel
The Farmers’ Market Channel
We should focus on the relevant cost
Cost of seed &seedling
Fertilizer cost
Plant, care &harvest
Packaging
Fuel
Maintenance &repair
Depreciation of tangible assets
Communication cost
Cost of seed &seedling
Fertilizer cost
Plant, care &harvest
Packaging
Cost of seed &seedling
Fertilizer cost
Plant, care &harvest
Fuel
Maintenance & repair
Depreciation of tangible assets
Communication cost
Fuel
Maintenance & repair
Depreciation of tangible assets
Preparation for the truck

15. Utilization & Implementation
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Caselot for CSA
Foundation of Adjustment:
Different profit margin of different crops
Variability and Abundance
Long term CRM (Focus on CSA)
Items
Percentage of
Last Season
This Season
Tomatoes (large)
12.50%
Tomatoes (small)
8.25%
14.12%
Watermelon
10.00%
5.00%
Okra
9.00%
Basil
7.00%
Cucumbers
16.67%
Sweet potatoes
11.00%
Winter squash
18.75%
21.68%

16. C1. Quantitative Analysis – Linear Programming
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
C1. Quantitative Analysis – Linear Programming
Step One List all the constrained conditions & objective function
Tomatoes (large)
Watermelon
Basil
The Restaurant Channel
Tomatoes (small)
Cucumber
Sweet potatoes
Winter squash
Okra
The CAS Channel
The Farmers’ Market Channel
2.175X
0.125Y
31-(2.175X+0.125Y)
3.5X
0.141Y
45-(3.5X+0.141Y)
0.4X
0.05Y
13.33-(0.4X+0.05Y)
0.15X
0.094Y
5.6-(0.15X+0.094Y)
0.2X
0.07Y
4.8-(0.2X+0.07Y)
0.9X
0.15Y
22.33-(0.9X+0.15Y)
0.33X
0.11Y
7.11-(0.33X+0.11Y)
0.225X
0.22Y
8.88-(0.225X+0.22Y)

17. Quantitative Analysis – Linear Programming
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Quantitative Analysis – Linear Programming
Step One List all the constrained conditions & objective function
Constrained Condition
0 ≤ 31-(2.175X+0.125Y) ≤31
1. Constrained by products
0 ≤ 45-(3.5X+0.141Y) ≤ 45
0 ≤ (0.4X+0.05Y) ≤ 13.33
0 ≤ 5.6-(0.15X+0.094Y) ≤ 5.6
0 ≤ 4.8-(0.2X+0.07Y) ≤ 4.8
0 ≤ (0.9X+0.15Y) ≤ 22.33
0 ≤ 7.11-(0.33X+0.11Y) ≤ 7.11
0 ≤ 8.88-(0.225X+0.22Y) ≤ 8.88
2. Constrained by working hours
0≤ X Y≤24
3. Constrained by truck capacity
0 ≤ (7.883X Y) ≤ 40
Objective Function
Z= X Y

18. Utilization & Implementation
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Quantitative Analysis – Linear Programming
Step Two Feasible Region within the restrained conditions
（8.98，31.63）

19. Quantitative Analysis – Linear Programming
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Quantitative Analysis – Linear Programming
Step Three Optimal solution of linear programming
Because of integer programming
Optimal solution:
Quantity of Restaurants served: X=9
Quantity of CSA subscribers: Y=32
Maximized relevant profits per week:
Z= × ×32 ≈$

20. Utilization & Implementation
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Quantitative Analysis – Planned Sales Structure
The Restaurant Channel
The CSA Channel
The Farmers' Market Channel 9 3 2
Average Weekly Restaurant Delivery Composition
(Total for 9 Customers)
Average Make-up of a Single CSA “Box”
(Total for 32 Subscribers)
Average Weekly Sales
Cases
Tomatoes (large)
19.58
Tomatoes (small)
31.50
Watermelon
3.60
Okra
1.35
Basil
1.80
Cucumbers
8.10
Sweet potatoes
3.00
Winter squash
2.03
Approximate % of a Standard Harvest Case
Tomatoes (large)
12.50%
Tomatoes (small)
14.12%
Watermelon 5%
Okra 9%
Basil 7%
Cucumbers
5.00%
Sweet potatoes
11%
Winter squash
21.68%
Cases
Tomatoes (large)
7.43
Tomatoes (small)
8.98
Watermelon
8.13
Okra
1.24
Basil
0.76
Cucumbers
12.63
Sweet potatoes
0.44
Winter squash

21. Utilization & Implementation
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Qualitative Analysis
Solvency
Significant debt
Time of Cash-in Flow
Restaurant Channel:
CSA Channel: Receive $400 from each subscriber at the beginning of the 15-week season.
Farmers’ Market Channel: Cash sale
To buy and build the farm, Brett spent a lot from saving and assumed significant debt.
To improve the cash flow performance
Increase the sales of CSA channel and Farmers’ market while decrease the sales of restaurant channel.

22. Utilization & Implementation
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Qualitative Analysis
Opportunity Cost
Channel
Time consumed
(hours per week)
The restaurants
14.83
CSA
8.9
Farmer markets 27
In total
50.73
Brett hope the farm would become profitable enough to support them both comfortably in the near future.
Proper working hours and schedule should be made.
e.g. working hours≤ 48h per week
Personal Satisfaction

23. Utilization & Implementation
Case Overview
Current
Situation
Apportion Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Qualitative Analysis
Trend of Different Channels
The restaurant channel:
additional 10 potential restaurants
in the coming season
Good
Increase
The CSA channel:
33 to 90 potential subscribers
growth rate of 220% of CSA channel in general
Very Good
Increase
The farmers’ market channel:
high risk and high profit with large demand

24. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Strategy
VISION: to provide high-quality & hi-end organic product S O
Food with high quality
1.A huge gap in the market
2.A sharp increase in
potential customers
A sharp decrease in yield
next year
uncertainties in weather
and other related factors
Internal
Differentiation
Strategy
External W T

25. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Short-term decision – Planned Sales Structure 3 8
The Restaurant Channel
The CSA Channel
The Farmers'’ Market Channel 9 3 2
Average Weekly Restaurant Delivery Composition
(Total for 9 Customers)
Average Make-up of a Single CSA “Box”
(Total for 38 Subscribers)
Average Weekly Sales
Cases
Tomatoes (large)
19.58
Tomatoes (small)
31.50
Watermelon
3.60
Okra
1.35
Basil
1.80
Cucumbers
8.10
Sweet potatoes
3.00
Winter squash
2.03
Approximate % of a Standard Harvest Case
Tomatoes (large)
12.50%
Tomatoes (small)
14.12%
Watermelon 5%
Okra 9%
Basil 7%
Cucumbers
5.00%
Sweet potatoes
11%
Winter squash
21.68%
Cases
Tomatoes (large)
7.43
Tomatoes (small)
8.98
Watermelon
8.13
Okra
1.24
Basil
0.76
Cucumbers
12.63
Sweet potatoes
Winter squash
Slight adjustment due to strategic concerns.

26. Short-term decision – Forecast Income Statement
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Short-term decision – Forecast Income Statement
The Resturant Channel
The CSA Channel
Farmers' Market Channel
Total
Revenue
921.00
Cost of sales(including packaging)
( )
(385.59)
(481.84)
( )
Gross profit
880.73
535.41
816.98
Less Operating expenses:
Depreciation of tangible assets
(15.05)
(4.90)
(20.30)
(40.25)
Fuel
(45.15)
(14.70)
(60.90)
(120.75)
Maintance and repair
(27.95)
(9.10)
(37.70)
(74.75)
General and adminstrative expense(communicaiton)
(3.69)
(0.70)
0.00
(4.39)
Total operating expenses
(91.84)
(29.40)
(118.90)
(240.14)
Operating profit for week
788.89
506.01
698.08

27. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Brett’s Timetable
6:00 -
7:00
8:00
9:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
Leisure Day
Communication (CSA)
Farm
Management
TEL
(Restaurant)
Packing
Farm
Management
Transportation (CSA)
Farm
Management
Farmers’ Market
Farmers’ Market
Save unnecessary time so as to take care of the farm and rest

28. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Mid-Term Planning
Sensitivity Analysis
Variable
Value
Price Added per Unit
Limitation
Increment
Allowed
Decrement
Truck’s Capacity 40 5
62.77
12.97
Advice:
Purchase a New Truck in 2 years
Estimated Cost: $10,000
Capacity: 30 Cases per Trip
Value Added: $5×30 × 2= $300 per Week
Purchase a new truck to enhance capacity.

29. Utilization & Implementation Transportation Outsource
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
Mid-Term Planning
Transportation Outsource
Outsource transportation to restaurants to save time and cost.
Analysis:
Transportation to Restaurants per Week:
Gasoline Cost: $0.21 × 220 = $46.2
Depreciation & Maintenance Costs: ($0.07+&0.13)×220= $ 44
Time Consuming: × 10 = 8 (hrs)
Opportunity Cost: $10 × 8 = $80
(Based on 10 restaurants and gasoline price stays)
Advice: Outsource the Transportation to Restaurants
Cost Added: $ 150 per week
Profit Added: $46.2+$44+$80-$150 = $20.2 per week
The numbers of restaurants are increasing .
Oil prices are soaring! !

30. uNcertainty - Weather Conditions
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
uNcertainty - Weather Conditions
Weather of Summer
(Jun to Aug) in South Maryland:
Average rainfall/precipitation: mm
Average rainy days: 22.3 days
1. Weather
Best Condition
Average Condition
Worst Condition
Weather: sunny
Result: sell out all the product.
Weather: normal
Result: overall spoilage rate is about 10%.
Weather: rainy
Result: half products unsold ; 50% of unsold spoiled.

31. uNcertainty - Weather Conditions
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
uNcertainty - Weather Conditions
condition
Revenue & Profit per week
Action
Best
Revenue: $
Profit: $
Rainy days
X<20
Average
Rainy days
20<X<30
Revenue: $
Profit: $
Make preparation for different weather conditions.
Worst
Shift the scale from farmers’ market to restaurants and CSA channel.
Rainy days
X>20
Revenue:$
Profit: $

32. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
uNcertainty
2. Gasoline Price
The pump price is raised If
2011 Nov
$ ?
Then
The cost of delivery increases
What to do
Still increasing
2010 Nov
$ 2.82 per gallon
Enlarge the sale scale of CSA.
Decrease the delivery of long distance restaurants.
10% increased
2009 Nov
$ 2.65 per gallon
Outsource the delivery service.

33. Utilization & Implementation
Case Overview
Current
Situation
Apportion
Analysis
Strategy Analysis
Utilization & Implementation
uNcertainty
uNcertainty
Increasing Price of fertilizer
Mitigation:
Grow those crops that use less fertilizer.
Raise the price slightly.
Rapid Inflation
Mitigation:
Increase the price
Pay attention to the other uncertainties

34. A STORM framework Analysis
Summary
A STORM framework Analysis
A. Case Overview
Social Conditions
Technical Conditions
Organizational Conditions
Revenue Conditions
Market Conditions
B. Current Situation Analysis
C. Apportion Analysis
D. Strategy Positioning
E. Utilization & Implementation
A SUN Solution
F. uNcertainty
Management Accounting Approaches such as Linear Programming and Sensitivity Analysis are applied to help Even’ Star Organic Farm go from storm to sun.

35. From Sun Yat-sen University
Thank You for Your Time!
Dream Chasers
From Sun Yat-sen University
ZHANG Wei
HUANG Peilong
PENG Weijian
LIU Mengning