Table of Contents
Substitute Products and Services
VISION, MISSION AND OBJECTIVE
Sky Greens is world’s first low carbon, hydraulic driven vertical farm. Using green urban solutions to achieve production of safe, fresh and delicious vegetables, using minimal land, water and energy resources. Sky Greens is the innovation hub of its holding company, Sky Urban Solutions Holding Pte Ltd, where continuous innovation in next generation of urban agriculture solutions take place. Sky Greens is the innovator and builder of the world’s first low carbon hydraulic water-driven vertical farming system. This commitment towards innovative green urban solution marked the beginning of our journey in constantly re-inventing low carbon footprint agritech in fulfilling food supply security and food safety needs.
Ensuring food supply resilience is important to land-scarce city-states such as Singapore. Mr Jack Ng, Inventor and Founder of Sky Greens, has shown that the objective can be actualised by the creation of innovative green solutions such as a high-rise vertical farming system, to achieve significantly higher yields per unit area of land with minimal land, water and energy resources.Jack started experimenting with various prototypes as early as 2009 in the backyard of his aluminium factory. A Research Collaborative Agreement was signed with the Agri-Food and Veterinary Authority of Singapore (AVA) in April 2010 to formally structuralise cooperation (Sky Green, n.d.). This people-private-public (3P) collaboration resulted in the development of multi-layer troughs in a rotating A-frame vertical structure using hydraulic and gravitational principals and the birth of the world’s first low carbon footprint vertical farming system. The system was first test-bedded with the production of tropical leafy vegetables and proved to be a resounding success. The results were announced and publicised on 28 Jan 2011, and commercial operation began in 2012.
Sky Greens endeavours to becoming the world leading solution provider for integrated, sustainable and green urban agriculture technology. Sky Green’s mission statement is a combination of three missions that inform strategies and decisions. In summary form, the company’s mission statement is “to focus on strategic projects to achieve food self-sufficiency, while ensuring sustainability and conservation of resources.” Thus, the company’s mission statement is three-fold. The details of Sky Green’s mission statement’s three points are as follows:
- To constantly provide improved agricultural solutions with minimal impact on land, water and energy resources through invention and innovation.
- To help cities actualise food supply security and food safety targets.
- To promote and enable seamless integration of low carbon footprint agriculture into urban living.
Sky Green has received not one but four awards as well as accreditations. At the Ministry of National Development (MND) Urban Sustainability R&D Congress in June 2011, Sky Greens together with AVA won the Minister for National Development’s R&D Award 2011 (Merit Award) for Vertical Farming, an innovative and green solution addressing national urban food sustainability challenges for Singapore. In July 2012, Sky Greens and AVA jointly showcased the vertical farming system at the World Cities Summit 2012, under the theme “Liveable and Sustainable Cities – integrated Urban Solutions”. The innovation attracted interests from international representatives from the private sector as well as numerous government agencies from all over the world. In October 2014, we are proud to be honoured with the Singapore Sustainability Awards 2014 by the Singapore Business Federation. In August 2015, we were announced one of the 5 winners of the INDEX: Award 2015, the world’s biggest design award. The 5 winners were selected out of a total of 1123 nominations received from 72 countries. Sky Urban Solution’s Sky Greens Vertical Farming System emerged winner in the “Work” category.Sky Greens Vertical Farming System was also included in 2015 Sustainia 100 which features the most forefront in sustainability innovation. Sustainia 100 is published by Sustainia, a sustainability think tank working to scale the deployment of innovative solutions and provide industries and organizations with a shortcut to sustainable transformation.
As one of the leading companies in its industry, Sky Green has numerous strengths that enable it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. One of the strengths of Sky Green is a strong distribution network. Over the years Sky Green has built a reliable distribution network that can reach majority of its potential market. Good Returns on Capital Expenditure as well as Highly skilled workforce through successful training and learning programs are also some of it many strengths. SkyGreen is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more. Successful track record of integrating complimentary firms through mergers & acquisition. Sky Green has superb Performance in New Markets. It has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in. Lastly, the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
Weakness are the areas where Sky Green can improve upon. Strategy is about making choices and weakness are the areas where a firm can improve using SWOT analysis and build on its competitive advantage and strategic positioning. Limited success outside core business is a major issue. Even though Sky Green is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture. Furthermore, Investment in Research and Development is below the fastest growing players in the industry. Even though Sky Green is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments. There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
Opportunities are external variables that might provide a business with a competitive edge. It seeks to provide answers to questions like, “What technologies can we utilize to enhance operations?”, “Can we extend our main business?”, “What additional market segments can we investigate?” (THOMPSON, 2018). Government green drive also opens an opportunity for procurement of Sky products by the state as well as federal government contractors. The market development will lead to dilution of competitor’s advantage and enable Sky to increase its competitiveness compare to the other competitors. The new technology provides an opportunity to Sky to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value-oriented propositions.
changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model. New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future. lastly, Intense competition. Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
PESTLE studies consider the Political, Economic, Social, Technological, Legal, and Environmental aspects that influence the success of a business, organization, or nation. The United Arab Emirates, or UAE, is a wealthy Middle Eastern country on the Arabian Peninsula. In 2014, the UAE has one of the top 25 Gross Domestic Products per capita. The majority of this country’s wealth is derived from the export of oil and other fossil fuels, with secondary revenue sources emerging elsewhere in industry or tourism.
As a system of administration and governance, the UAE adheres to constitutional monarchy. Every state’s ruler is a ruler, and they all serve on the Federal Supreme Council. The President of the UAE is appointed by the council of the seven nations. The UAE wields considerable influence and power in Middle Eastern and global affairs. The nation has developed commercial and diplomatic ties with a number of countries.The UAE has positive economic connections with a number of nations across the world.
According to an estimate, the annual nominal GDP (gross domestic product) of UAE in 2020 was 353.899 billion dollars, and it’s 35th world’s highest. Out of which, per capita income of the gulf country was 41,476 dollars, and it’s 19th world’s highest (Shaw, 2021). UAE falls under the category of those countries that have the world’s highest GDP and per capita income. The economic growth and abundance of natural resources have attracted a lot of foreign direct investment.
UAE is the only modern and liberal country in the Gulf region, and the country has successfully integrated with many other developed countries for the past two decades (BUSH, 2016). It has helped the country to develop an image of an Asian business hub in the international market. UAE has a population of more than 9.89 million people. The Emirati national comprises 20% of the total population. However, the average life of men and women in the UAE is 76 and 78 years. The official and majority religion of the country is Islam. Arabic is the country’s official language.
According to an estimate, Emirati nationals are highly active over the internet and they spend approximately 3 hours of their time daily on social media. Roundabout 82% of her people have Facebook’s profile. However, Tumblr, Pinterest, LinkedIn, Instagram, YouTube, and Twitter are some of the popular social media platforms. UAE launched a space program in 2014 for sustainable space progress in the region. The country allocates an annual budget of 5.2 billion dollars for the space project. ICT, nuclear science, and life science are some of the other main growth areas.
UAE’s labor law deals with all the employees’ contracts, wages, salaries, and vacations. It applies to all the people living in the region regardless of their nationalities. A working day legally comprises 8 hours and 48 hours a week. However, UAE is the safest country in the region, and it has the lowest crime rate.
UAE is one of the world’s top tourist destinations and the tourism industry brings billions of investments annually into the country. Versatile cuisines, theme parks, historical ruins, crystal clear beaches, skyscraper buildings, shopping malls, luxury hotels, and a splendid balance between religious culture and modernity attract millions of tourists from across the globe. This country has quite a hot, dry climate, which can result in many different things. For example, productivity might be slightly lower, farming is not so easy, and air conditioners have the potential to sell well. The UAE also finds itself near a few coastal areas, allowing for easier trade by sea.
PORTER’S FIVE FORCES
COMPETITION IN THE INDUSTRY
Potential competitors may be across the road, across the nation or across the ocean. The threat of entry depends on the height of barriers like the extent to which established firms have scale economies, the extent to which established firms enjoy a market or cost advantage over potential entrants, high capital requirements for new entrants, the extent to which established firms have better access to distribution channels for inputs and outputs, the extent to which government regulations restrict entry, and the extent to which established firms have brand name loyalty with customers (Cunnah, 2020).
Bargaining Power of Suppliers
Suppliers are a threat to firm and industry profitability when they are able to increase the price of their product or affect the quantity and quality of the products supplied. Fewer suppliers mean they have greater power. Improved communication technology has taken away the power of many local suppliers. The recent mergers of suppliers and the consolidation of input technologies, such as seeds and pesticides, have increased the suppliers’ bargaining power with farmer-customers, as well as changed the competitive pressures within the input industries.
Bargaining Power of Buyers
The number of buyers has a very large impact on how the market works. Fewer buyers mean they have greater power. If sellers cannot easily ship their products to other markets, or they do not have price information from other markets, a few local buyers can have considerable power even though the total number of buyers is large in the broader market. In ways similar to suppliers, buyers have power if they are few in number or a few buy a large percentage of the product in the market, products are undifferentiated commodities, or buyers could integrate backwards in the value chain.
Substitute Products and Services
Substitute products limit the price that producers can seek or ask for without losing customers to those substitutes. Competitive pressure comes from the attempts of the producers of the substitutes to win buyers to their products. The advertising campaigns of the pork, beef, and poultry industries are an obvious example of the competitive pressures due to substitute animal protein products; each industry feels forced to advertise to keep customers and cannot charge as much as they would like without pushing their customers into buying other products.
Changes in technology can have a large impact on the production of and demand for a service or product of a firm. The risk from technological change depends on the size and the role of technology in the industry, as well as the speed of technical change. Advances in technology can be disruptive; they can cause leaps that leave users of old technology far behind. The expected lifespan or change in technology can put businesses on the treadmill of continually having to retool to keep up with their competitors.
VRIO is an abbreviation that stands for a four-question framework that includes value, rarity, imitability, and organization. It stands for Value, Rarity, imitability and organization (Smith, n.d.). Some aspects of sky garden include:
- Space saving -The footprint of the vertical system is small but yet can produce significantly more per unit area than traditional farms.
- Easy to install and easy to maintain – The modular A-frame rotary system allows quick installation and easy maintenance.
- Consistent and reliable harvest – Steady supply of fresh leafy vegetables is assured as growing is done in a controlled environment.
- Vegetables tastes good – Tropical leafy vegetables are grown in special soil-based media, which contribute to good tasting vegetables, suitable for stir-fry and soups.
- Increases productivity – The production yield of Sky Greens Farm is 5 to 10 times more per unit area compared to other traditional farms growing leafy vegetables using conventional methods in Singapore.
A foreign direct investment (FDI) is an investment made by a company or individual in one nation into commercial interests in another (Chen, 2021). The production yield of Sky Greens Farm is 5 to 10 times greater per unit of area than traditional Singaporean farms that growing leafy vegetables in a conventional fashion. Furthermore, the modular A-frame rotary system allows quick installation and easy maintenance. Automation increases the productivity of workers per ton of vegetables grown. The footprint of the vertical system is small but can produce significantly more per unit area than traditional farms. It can also be customized to suit different crop requirements and varying environments. This means that it will be cost effective and will also bring about maximum profit to the UAE if chosen to join their free zone.
BUSH, T., 2016. A PESTLE Analysis of The UAE. [Online]
Available at: https://pestleanalysis.com/pestle-analysis-of-uae/
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Chen, J., 2021. Foreign Direct Investment (FDI). [Online]
Available at: https://www.investopedia.com/terms/f/fdi.asp
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Cunnah, l., 2020. Advantages of Porter’s Five Forces Model and why you should be using it. [Online]
Available at: https://www.ayoa.com/ourblog/advantages-of-porters-five-forces-model-and-why-you-should-be-using-it/
[Accessed 22 July 2021].
Shaw, A. A., 2021. PESTLE Analysis of UAE. [Online]
Available at: https://swotandpestleanalysis.com/pestle-analysis-of-uae/
[Accessed 22 July 2021].
Sky Green, n.d. [Online]
Available at: https://www.skygreens.com/about-skygreens/
[Accessed 22 July 2021].
Smith, R., n.d. Explaining The VRIO Framework (With A Real-Life Example). [Online]
Available at: https://www.clearpointstrategy.com/vrio-framework/
[Accessed 22 July 2021].
THOMPSON, A., 2018. Caterpillar Inc. Vision, Mission, Intensive Strategy, Five Forces, SWOT. [Online]
Available at: http://panmore.com/caterpillar-inc-strategic-analysis-vision-mission-swot
[Accessed 22 July 2021].
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