The profit percentage of pork is 14.814, which is the least of all. Hence its operation can be ceased.
Calculation of Labor Cost: (Refer Exhibit # 7)
S.No.
1. Labor cost 1,130 $
2. Total Expenses 79,422 $
3. Labor Cost as a percentage of expense 1130/79422*100% = 1.42%
Thus, Labor cost forms 1.42% of expenses which is significantly lower than a typical community based farming which is highly …show more content…
Joel Salatin, the owner of Polyface was facing a dilemma where he must decide the road ahead for his business. As the demand of Polyface products is on a rise, he must decide how or what is the best possible way to grow his business. There are following options with him:
a) follow a disruptive strategy of growth in his business model
b) stay committed to his small scale, local market scheme
He is wary of his father’s advice of staying away from running after reckless growth and quick ideas to generate sales based on the principles of his forefathers. The vision of constantly looking at ideas and effective use of resources available is the basic idea behind Polyfarm. However, with the increasing demand of customers, Salatin was unable to carry on with the available resources. Salatin being the owner of Polyface has always looked to work with the similar mission of utilizing the available resources to the maximum. Now that, such a situation has occurred, it’s high time for Salatin to bring in new innovations or new products into his line of business to keep up with industry requirements and pushing up the positive food growth. Joel must decide the growth trajectory of his business which can be aligned with the vision of his father. He must decide whether he should acquire more land and if he does go for this option then, who will look after the new …show more content…
However, workers are even hired during the load season as per the demand. With the same strategy, where Salatin and his employees have always tried to think of utilizing the available resources to increase the overall quality and output of Polyface. In this way, he can focus on quality aspects and can increase his prices in competition with Whole Foods. At present, he has also a cushion to increase the prices and thus can expect better profits without any significant increase in land. Also, he need not increase his present labor which maintains the cost at optimum level.
2) Acquire more Land:
With this option, Joel will be able to satisfy the demand of growing consumers and it will increase the clientele as well as the profit structure of polyface. But the problem lies with labor, specialization and the principle of staying small. The expertise level shall go down. Now that Salatin if takes up new lands then he has the challenge to optimize the resources, optimize the supply chain as well as develop similar structure farm.
3) Acquire Local Farm to Meet Customer