IFP Team 56 Final Report Bryan Walkey V33 Master
-
Upload
rayner-mendes -
Category
Documents
-
view
43 -
download
0
Transcript of IFP Team 56 Final Report Bryan Walkey V33 Master
A&L Canada Laboratories Inc.Opportunity in the Precision Agriculture IndustryTeam 56
Sid Aiyar, Simon Clark, Harpreet Marwah, Rayner Mendes, Kelsey Paskell, Claire Sandilands
EIR: Bryan Walkey
Executive Summary• Project objectives:
• Go to market strategy that includes Marketing, Internal Decisions, and Operations Strategy
• Break even within 18 months of operations• Realize 18% ROI within second year of operations
• Recommendations:• Target consultants and farms over 2,000 acres• Use product advocates, a whitepaper, trade shows and print/electronic advertising• Price $24,670 - $28,670• Hire a division manager
2
Impact• Breakeven in 2016• 19.2% ROI• 88 total units sold in 2019• Implicit value of $1.63 million
Within this section:Precision Agriculture Overview
Competitive Analysis and Positioning
A&L’s Product and Unique Selling Proposition
Target Market and Marketing Efforts
Pricing and Projections
Marketing
4
Precision Agriculture and its BenefitsFor the farmer, precision systems provide meaningful benefits that justify the investment.
Reduce Time Surveying Crops
Minimize Impact of DiseasesReduce Costs of Inputs
Improve Yields
Research suggests that a farmer could save up to 33% on fertilizer alone.
5
Competitive AnalysisMany competitors fail to focus on benefits to the end consumer, and market their specifications in isolation of each other.
Competitor Image Precision Ease of Use Processing
SpeedRetail Price
(basic package)
Variety of Options Offered
eBee Ag by SenseFly
2 cm per pixel
Fixed wingProprietary autopilot
Flight planning
1 hour617 - 823 acres $25,000
Multiple modelsMultiple sensors
Additional accessories
Lancaster Hawkeye by
Precision Hawk
1 cm per pixel
Fixed wingAutopilot
Results analysisND $25,000
Multiple sensorsMultiple cameras
Analysis provided free
AgDrone by Honeycomb
3.2 - 4.6 cm per pixel
Fixed wingAutopilot
Flight planningResults analysis
1 hour750 - 1,000
acres$15,000 Multiple sensors
Tablet with built-in software
A&L 1.5 cm per pixel
Fixed wingOpen-sourced
autopilotFlight planning
1 hour900 – 1,200
acres$24,670 Single sensor
Single model
6
Competitive PositioningSenseFly and PrecisionHawk present the greatest threat from a financial and human capital perspective.
Financial Capabilities
Innovation & Expertise Service End-to-End Solution Sensor
• Parrot: $96.9 million (cash)• 2013
revenues $6.3 million
• 427 internal full-time employees and 75 external contractors
• Not disclosed
• Import data into eMotion, and provides images, immediate feedback
• Poor quality
• $10 million in Series B financing
• Investors: Intel Capital and CEO of Hulu.com
• Significant lead time
• Data upload via Cloud; $0.10 per acre for data processing & $0.20 per acre for data storage
• Poor quality
Competitors’ access to resources presents a threat to A&L. However, their lack of high-quality product and service is an opportunity that A&L can and should capitalize on.
7
A&L’s Product Offering & USPThe UAV provides a unique end-to-end solution that addresses pain points experienced by farmers.
A&L’s Product Offering
Autopilot
Stitching Software
Cloud Mapping
Image Sensor
A&L will only be able to sustain its
competitive advantage once they can develop
and monetize prescription algorithms
NDVI
Light Sensor
8
Potential Target Markets – ConsultantsConsultants have been early adopters of technological innovation and can be used to increase brand recognition.
Total Market Size (1,800)
Size of the Actionable Market in FY2015
Actionable (200)
Accessible (300)
Expected (9)
9
Potential Target Markets – Large FarmsLarge farms are the consumer group that receives the greatest direct benefit from the product.
10
Potential Target Markets – Crop InsurersCrop insurers could see $1.2 million in cost savings on seasonal workers if they were to utilize UAV technology.
$1.2 millionSavings assuming workers are paid $15/hr,
8 hours/day for 40 days
90,000Yearly claims
2,250Temp workers
needed
750Workers with
UAVs
1,500Fewer seasonal workers needed after
investment
11
Market Strategy and Marketing EffortsDirect sales to consultants and large farms presents itself as the optimal short-term strategy.
Medium-Term (2018-2019)Short Term (2015-2017) Long-Term (2020 onwards)
Consultants Farmers Crop Insurers Distribution through Retailers
Whitepapers & Publications
Leasing to Consultants
Trade Shows Paradigm Precision
Farmers’ Willingness to Pay
12
Pricing ConsiderationsWhen pricing the UAV, A&L needs to primarily consider the value to the end user.
Competitors’ Pricing
Market Signalling
Production Costs
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$12,875$17,167$21,459$25,751$30,042$34,334$38,626$42,918
Yearly Input Savings Yearly Potential Yield IncreaseBasic Price ($24,670) Premium Price ($28,670)
Acreage
Product Packages
Basic Safety Premium$24,470 $26,920 $28,670
A&L can give customers flexibility and the option to customize their UAV solution by offering different product packages.
13
Pricing Considerations & Projections
2015 2016 2017 2018 20190
20
40
60
80
100
9
44
66
79 88
22 23 28 31
22 23 28
31
20
23
26
Consultants Large Farms Crop Insurers
5-Year Unit Sales Projections
Establishing the UAV DivisionWithin this section:Internal Capabilities & Requirements
The Division Manager
Positioning within A&L
Projected Financial Performance
15
Current Capabilities
Internal Capabilities & Requirements
• Research and Analytics• Only 3 full-time employees • Strong relationships with farmers and
consultants• Continuous improvement, which has resulted
in late to market• Only one R&D employee
Requirements• Build manufacturing capabilities:• Leverage existing personnel for sales and
marketing• Hire a division manager• Hire one additional full-time employee for
production and testing• Seek out additional human capital for
research and development from top universities
Human Capital Capacity Constraints
Core Competencies
A&L’s core competencies lie in agricultural research and analytics where they have developed strong relationships.
16
Phantom StockSalary
ResponsibilitiesEducation and Expertise
The Division ManagerA&L should hire a division manager with strong business acumen, leadership skills, and experience within agriculture.
• Minimum 2-year business diploma Basic accounting Financial projections and modelling Marketing Operations and Logistics • Minimum five years Agriculture
experience• Product Development experience
• 5% phantom stock, redeemable after 5 years, or increasing by 1% thereafter until 2025
• Suggested salary of $70,000
Growth
DirectionLeadership
Communication
17
Positioning within A&LA&Ls UAV division will interact closely with other divisions and will benefit directly from the proprietary algorithms developed by other A&L divisions, once they are fully functional.
Farmer
A&L Biologicals
UAV division
Paradigm Precision A&L
$24,670 for a UAV and $500 for prescriptions
Pays of portion of salaries Pays $150 in royalties
Illustrative ScenarioPositioning
30% Royalty to A&L for Algorithms
Separate Entity
Portion of Paradigm Precision’s Salaries
18
Projected Financial PerformanceThe division has an implied value of approximately $1.63 million.
Key MetricsFY'15 FY'16 FY'17
Unit Sales 9 44 66Revenue $ 247,500 $ 1,210,000 $ 1,815,000Variable Cost Per Unit 5,970 5,649 5,366
Fixed Costs 317,615 637,837 658,196EBITDA (150,844) 191,598 604,674Free Cash Flows (216,963) (30,600) 298,122
Operating Leverage 0.8x 1.9x 2.8x Annual ROI -15.1% 19.2% 60.5%Cumulative ROI -15.1% 4.1% 64.5%
Cash Flow Projections
2015 2016 2017 2018 2019-400,000
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
(216,963)
(246,562)50,560
440,069
998,746(30,600)298,122
389,509558,677
Cumulative Free Cash Flows Free Cash Flow
19% 21% 23% 25% 27% 29% 31%
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
Discount Rate
Exit Multiple
Valuation Sensitivity
$1.63 million
Operations StrategyWithin this section:Refining A&L’s Business Model
Make versus Buy
A&L Training Program
20
Refining A&L’s Business ModelA&L must choose a value discipline that takes into account its capabilities and culture as well as competitors’ strengths.
Operational Excellence
Product Leadership
A&L’s OpportunityValue Disciplines Explained
Customer Intimacy
•Understanding of the Problem•Customer Relationships•Complete End-To-End Solution
Make vs. Buy A&L should manufacture until critical mass is reached and then consider outsourcing.
21
Assemble UAVs
Manufacturing UAVs
Explore Alternatives Once Critical Mass is Reached
Source Parts in Bulk Reduce Dependence
Re-Focus on Core Competencies
Explore Partnerships and Joint Ventures
22
A&L Training ProgramA&L should offer training sessions that focus on software use as well as flight operations of the UAV.
Overview of Training Program
Groups of Customers Classroom Component UAV Operations
• At Customer Field• Pre-FlightPost-Flight• SFOC Not Required
• Autopilot Set-up• Stitching Integration• Troubleshooting
• At Customer Location• In London, ON• Group Rates at Hotel
Implementation
Implementation Plan
24
Marketing ActivitiesFY 2015 FY 2016 FY 2017 FY 2018 FY 2019
Activities Dec'14 Mar'15 Jun'15 Sep'15 Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Mar'18 Jun'18 Sep'18 Dec'18 Mar'19 Jun'19General Marketing:Website Development $20,000Publication Advertisements $7,200/YearWhitepaper from MNP $60,000Promotional Leasing AgreementsTrade Shows: $75,000/Year
Western Canadian Crop Production ShowCanadian Farm Progress ShowCanadian Western Agribition
Target Market:ConsultantsLarge FarmersCrop Insurers
Marketing Activities Sales Efforts Sales & Marketing
Division and Operational ActivitiesFY 2015 FY 2016 FY 2017 FY 2018 FY 2019
Activities Dec'14 Mar'15 Jun'15 Sep'15 Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Mar'18 Jun'18 Sep'18 Dec'18 Mar'19 Jun'19Manufacturing Efficiencies Production 80 hrs Target Production Time 60 hrs Target Production Time 50 hrs Target Production Time 40 hrs
Develop Sales Channels
Hire Division Manager
Hire Production and Testing Staff
Search for Additional Engineering Staff
Production 10 units 45 units 70 units 80 units 90 units
Sourcing of Bulk Parts
Develop Flight Training Program
Run Training Programs
Ongoing effort Hard Target
Thank you