EXECUTIVE SUMMARY

This report sheds light on Novus Agro’s impact in the agricultural space, the value chain gaps it tries to fill, and the issues/limitations to achieving its goal. It also analyses Novus Agro’s business model and advises on how to sustain growth using financial and non-financial solutions. The first part of this two-sided report highlights the company’s current standing and value creation for consumers, shareholders and all interest parties whereas the second part concentrates on preferring effective solutions required to achieve sustainable growth and provision of targeted monetary and non-financial gains.

A general survey of Novus Agro presents the company as a pace setter in its field and its footprint in the industry. It also reveals loopholes that if left unattended can have a lasting negative effect on the company while revealing opportunities that should be exploited.

The company’s financial report highlights the company’s gains and losses in the past four years and offers solutions to improve the company’s income. Novus Agro faces risks and threats such as bargaining power of suppliers, economic policies, and foreign exchange. This report also highlights the various marketing functions that can be exploited.



SECTION ONE

COMPANY REPORT FOR NOVUS AGRO

1.0 INTRODUCTION TO THE COMPANY

As an agro-allied company, Novus Agro provides both active and passive interest groups in the agriculture industry with agro-based facts and consulting help. It runs the largest private network for the collection of agricultural market data and the widest network of market facilitators who are all based in the community. Novus Agro was founded in 2009 and has since maintained a stand in the agriculture sector in Nigeria. Novus Agro is fully represented across the six geo-political zones by employing its market agent footprint technique of over 305 facilitators. They are currently in 33 states, covering over 97 key markets and tracking no less than 34 commodities daily.

Image 1: Novus Agro’s core functions



                                       Novus Agro annual report, 2017

2.0 STRATEGIC ANALYSIS TO DETERMINE THE CURRENT BUSINESS MODEL OF NOVUS AGRO

For a review of the situation analysis at Novus Agro, a SWOT analysis will be employed. To assess the company’s strengths and weaknesses, this study will employ an internal module, and use external analytical tools such as Porter’s 5 Forces and PESTEL to identify a list of threats and opportunities that are available to the company.

Image 2: Novus Agro Current Business Model



[center]Novus Agro annual report, 2017[/center]

2.1.1 EXTERNAL ANALYSIS

PESTLE Analysis

A PESTLE framework is applied in analyzing and monitoring the impact of macro-environmental factors on a firm. These points are viewed in different perspectives such as the political, economic, technological, legal, environmental and socio-cultural influences.

Image 3: PESTLE framework



Political Factors
Certain factors such as the lack of food safety regulations, efficient agricultural policies and quality testing bodies has negatively affected Novus Agro in providing grains free of debris, moisture and foreign matter to delivery location while favorable taxation policy has encouraged the ease of doing business in the industry. There are few commodities on the export ban list and this provides a wide range for Novus Agro to trade in.

Economic Factors
Economic factors such as interest rates, economic growth, inflation, exchange rates, depreciation of currency, and over-dependency on oil have affected the way Novus Agro does business. In 2015, the company found a lot of maize contracts being cancelled due to the inflation and exchange rates that affected its procurement as it became more expensive to purchase locally while seeing the neighboring countries buying up same commodity.

Social Factors
Increase in demand and population growth has created a large gap in the demand and supply structure of agricultural products. This has created an opportunity for Novus Agro to find creative and innovative means to procure and deliver agreed quantities to its clients.

Technological Factors
Technological landscape changes rapidly and affects the way business is done and how we market our products. Novus Agro frequently tries to upgrade its use of technology in the monitoring and gathering of data via its cutting-edge market application. It has also launched the farmer’s helpline to assist and provide technical and modern farming techniques and farming related issues that may arise.

Environmental Factors
These are recent additions to the factors that influence or affect how business is conducted.

With the recent change in climate conditions and ethical issues arising, the demand for ethically and sustainable source of products have been on the rise, causing Novus Agro to consistently perform quality testing on procured commodities in order to reduce the number of rejected produce by the clients.

Legal Factors
Each country has its own set of laws, rules and regulations that impede or facilitate the ease of doing business and also the lives of the citizens. There are few enforced laws guiding the industry and lack of it affects Novus Agro. There are currently no laws guiding the sale and quality of commodities by the merchants and farmers which impacts on the quality Novus Agro delivers to the client.

2.1.2 PORTER’S FIVE FORCES

This is a framework for rating a company’s completion of business. Porter’s five forces determine the intensity of the competition, gives a clearer understanding of the strategic points of a business and the profitability of the industry.

Image 4: Porter’s Five Forces



                                                          Porter, 1980

Rivalry among existing competitors: Findings show there is ample room for competition and growth in the agro-allied space. Novus Agro is still the only company with a network of field agents in 33 states, daily collecting, monitoring and updating of data in over 97 major markets. AFEX is a holding company and operates national commodities exchange in Africa and is seen as a partner by Novus Agro. A competitor such as Nosakis also able to procure commodities to supply to clients with the added advantage of owning its own farms.

Threat of Substitute products: At the moment, Novus Agro leverages on its private network which no other company has; however, Commodity Exchange Company such as AFEX has the capital needed to launch its application on a wide scale. This can prove to be detrimental to Novus Agro if there are no exceptional value-added services such as free analysis / trends on major commodities, and articles geared towards assisting small holder farmers and processors.

Bargaining power of suppliers: Novus Agro leverages on its network to locate suppliers and merchants in various states for the purchase of commodities as required by clients. This arrangement gives it a wide selection of suppliers and can procure at the best price possible

Bargaining power of buyers: Novus Agro is largely affected by any sharp rise and fall in prices partly due to lack of government monitoring and economic instability. Contracts are usually agreed on with minimal room for price change and hence any difference in price can negate a contract or make it difficult to execute. Clients have a wide room of options to purchase from; individuals and companies. As a result, they can call for a downward review of contract price irrespective of other factors that may have added to the cost.

Threat of new entrants: There are quite a number of opportunities in the industry with the potential for huge profits but knowledge and capital are a deterrent. Certain skills, knowledge and innovation are required in areas such as transportation (cold storage), packaging, farming (techniques) in order to succeed or make an impact. The threat of new entrants is reduced and there are quite a number of fields within the industry that new entrants can participate in. In the area of technology, the sale of market data is still untapped as very few clients and individuals are willing to pay for this service. Market data is still kept at a minimum and contributes less than 20% of the company’s revenue as at 2016, however, this is expected to change with the farmer’s helpline and warehousing services.

Read more: https://meziesblog.com/a-report-on-value-creation-in-business-for-novus-agro/