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Alveole Growing The New Urban Beekeeping Market Case Solution
Alveole is a beehive management service company as the company is engaged in installing and maintaining hives for its base of clients. Firstly, the competition is intense which will shrink the profit margins of the business. Apart from this, staff retention is a problem as the nature of the business is seasonal and every season the employees would be hired, they will have to be trained, adding up to the cost of doing business. Furthermore, predicting the demand for beehives was crucial as over-production or under-production could lead to additional costs for the business. Also, there is a limit to the company’s carrying capacity of hives which would limit its cash flow generation potential.
Following questions are answered in this case study solution
Definition of Success and Critical Issues
Exhibits 1- SWOT Analysis
Exhibit 2- Porter’s Five Forces
Exhibit 3- Value Chain Analysis
Case Analysis for Alveole Growing The New Urban Beekeeping Market
2. Situation Analysis
The level of competition in the sector is intense as many players engage in providing beehive rental services and also offered workshops and educational sessions to people who would be interested in beekeeping. This helps in understanding how the competitors are making use of different strategies to generate a steady stream of revenue given the seasonal nature of the business. Apart from this, beekeeping is a business where success would highly depend on the customer service provided to the target customers. Hence, this is why staff retention is essential as once the employees are trained and the cost is incurred on them, they tend to leave after the season has completed and the same expense has to be incurred by the business in the next season. It is for this reason why Alveole had to invest in web and video educational platforms that did not bring much value to the business during the offseason as the hives would be dormant and the revenue generation would be low which would adversely affect the cash flow position of the company. This could place it in an unsustainable position if it would fail to fulfill its debt obligations during the off-season. Therefore, it is essential that the business diversifies its operations so that it can enter into different product segments and increase its revenue streams.
Apart from this, in the near future, the demand for beehives is expected to grow which means that it would be an appropriate strategy for Alveole to invest in having more hives as of currently to meet the projected increased demand. This would help in offsetting the higher expense incurred in the offseason months. However, if it does so during the off-season, its cash flow position would further deteriorate as the revenue flow would be limited during the winter season against the investment that would be incurred for creating new hives. Also, investing more in marketing and promotion and engaging with the audience by providing them with educational sessions that would allow them to get an idea about bee keeping and this would further help in generating the demand for the business during the peak season as there seems to be no other activity that the business can make use of to keep its employees engaged and motivated so that they stay within the business and perform productively.
The peak season for the business seems spring and summer whereas, in winter, the hives were protected from pests which show a huge business opportunity in which Alveole can tap as it would assist its clients to protect the installed hives by sending in its trained staff. Apart from this, honey-selling can be seen to be a lucrative business as the sales revenue generated from honey sales seems to be good enough for the business. Hence, there is a huge potential to invest in catering to the market segment that is engaged in buying sweet treats to fulfill their sweet tooth cravings.
3. Decision Criteria
The criteria that will be used to decide the successful outcome would revolve around focusing on high employee motivation and retention. Also, the focus is to improve business liquidity and improve profitability.
4. Options Analysis
Based on the SWOT analysis (Exhibit 1) of the business, it can be seen that it has a long history which makes it credible among its target audience. Hence, it can make use of its strong brand image to come up with distinct promotional plans for its target audience that are well-tailored with their needs in terms of pricing and the level of staff service that would be provided to them concerning hive maintenance.
Most of the clients host only 1 hive despite their potential to hold more. Alveole can therefore make use of its sales staff and provide them with the commission during the winter season to convince the respective clients to have more hives. This way the employees would be encouraged in generating long-term revenue for the business. They would be having diverse experience working for the organization which would improve their motivation level and their selling skills will also improve which will further help the business in enhancing the end customer experience that would in turn add value to the business (Exhibit 3).
It is recommended that Alveole should consider extensive marketing given the growth potential of the beehive market. The strong name will build strong customer loyalty which would further reduce the bargaining power of buyers as per the Porter’s five forces (Exhibit 2) and would ensure the selling of increased hives and higher revenue for the business. However, the cash flow position of the business would go bad in the off-season month when investment would be made. For this, the business can consider taking a bank loan to meet the short-term expenses and can then pay off the loan from the increased revenue. This will also keep the existing staff of the business engaged as they would be involved in making hives for the next season.
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