Chester W.SSenerez AGRIB 48BSA (Anscie) IVAgribusinessEnterprise Formationhe same time. Exciting, due to the fact theenterprise or business entity creates employment in the society, thus it makesfeel the entrepreneur/s need by. Moreover, it contributes to research anddevelopment; but most importantly, there is an easy accessibility of money inthe business world, that is why people normally engaged themselves with.
As itwas mentioned earlier as well, starting an enterprise is also dreadful becauseit pertains to myriads of mysteries why businesses normally fail. Someentrepreneurs start one successful business after one another while some oftenfail to succeed. The worst scenario about a failing business entity is that theentrepreneurs are not aware of it happening until it is often too late to savethe business.
It really makes sense due to the fact if the entrepreneurs reallyknew they were doing wrong, they might have been saved the enterprise to beginwith. However, some entrepreneurs live in a labyrinth of denial, while othersare just unaware of their mistakes. Generally, forming an enterpriseassociates in the concept of warfare, where soldiers should not be cursory tojeopardize themselves in invading into the battlefield without thinking of carryingany weapons with them; it is just absurd to think of, but just like thesoldiers, entrepreneurs also need to think circumspectly before establishingtheir proposed projects to have higher chance of success. Thus, forming anenterprise involves a thorough and systematic analysis of all the factors thataffect the possibility of success of a proposed undertaking. Since thePhilippines is one of the agricultural countries across the globe,agribusinesses are commonly established in the said country.
Theseagribusinesses generate the Philippines’ income in the agricultural sector. Examplesof these agribusinesses are the following: poultry farms, livestock farms,swine farms, feed companies, veterinary products manufacturers, hatcheries,etc. Therefore, agribusiness defined as an enterprise or sometimes known as anagricultural business embodies all the market and private business-orientedentity involved on the agricultural transactions such as farming, management,production, storage, processing, and distribution of agricultural commoditiesor agro-based products to the communityto suffice human needs, more specifically to alleviate hunger. In order for the agribusiness men, not only inthe Philippines but across the globe, to become big key players in the industrythey need to follow the 4 general fundamentals processes of enterpriseformation. These processes are the following: territorial selection, marketopportunities identification, enterprise design, and implementation and strengtheningof business support services. Territorial selection is sometimes known as agribusinessprofiling where its primary objective is to determine areas for investment byagribusiness men (investment entry points) and areas for agribusinessdevelopment (developed entry points). In selecting territorial site foragricultural business there are various interrelated factors must beconsidered. These factors are the following: economics, agricultural, andinfrastructures.
Economics is also related to economies of scale whichassociates a person’s class in society based on how much money he or she makes.This is also related to the buying capacity of the people in the territorial site(salaries and wages). This is one of the factors every entrepreneur needs toconsider, because the people themselves might be his/her customers or buyers inthe future, or maybe they might be part of the agricultural business’organizational chart (employees).Thus, the success of the proposed enterpriseis dependent on them as well. Second is the agricultural components; this isthe crucial part where the entrepreneurs should know what crops/animals (ifthey wanted to pursue animal/crop production) they are engaging with, prior tosite selection.
Moreover, the entrepreneurs should know thebiological/production cycle of the crop/animal they want to cultivate or rearfor their agricultural businesses. With that, the chosen organisms, eitheranimals or crops, can live appropriately in the chosen farm site. Thus, theagricultural components the entrepreneurs need to consider are the following:soil structure, type, ph, altitude, rainfall in relation to climate,temperature, relative humidity, and etc. Last factor must be considered is theinfrastructures. This factor is related to the accessibility.
An agriculturalbusiness must have an easy access to supplies, equipment, and the market. Itmust be provided with infrastructures such as roads. All of the 3 factors inselection of farm site must be used as the entrepreneurs’ guidelines for the selectionof the best territorial site; otherwise the proposed agricultural businessesare futile to begin with. The second fundamental process of the enterpriseformation is the market opportunities identification. This process simply identifieswhich agricultural subsystem the entrepreneurs wanted to pursue in theformation of their enterprises. The major 4 subsystems are the following: inputsubsystem, processing subsystem, production subsystem, and market anddistribution subsystem.
Prior of the selection which subsystem, theentrepreneurs must consider the levels of opportunities and demand given byeach subsystem. For example, in broiler industry, the Philippines has shortageof chicken throughout the nation. Thus, production subsystem has given greateropportunity in the said country. Another example, China has sufficient supplyof chicken. However, this country is dependent to United States when it comes tothe supply of grandparent stocks (GPS) — that are mainly used for breedingpurposes to produce day old chicks. Thus, the input subsystem is more promisingand gives more opportunities than the other three subsystems.
In summary,entrepreneurs should know first the current situation of the industry prior to theestablishment of their agricultural enterprises; either on the input side, orprocessing side; it depends really on the current status. The third process isthe enterprise design and implementation. This process mainly involves theenterprise project’s market chain, design of the enterprise and size (eithersmall scale or large scale), and most importantly this is where the proposedproject will be determined if it will be established or not (go or no go).Generally, there are four barriers or reasons why some proposed projects gotrejected or needed major revisions; these are the following barriers: highinvestment requirement, access to market channel, high cost of technologies,and economies of scale. For example, the entrepreneurs decided to go into theinput subsystem which they wanted to establish hatcheries for grandparentstocks to produce day old chicks, since they found out that this subsystem giveshigh opportunities than the other three subsystems. However, during theimplementation process, they found out that hatcheries are very expensive thatwill cost them millions of pesos just to construct a hatchery. If theentrepreneurs could not afford the budget, therefore it becomes their barrierand the proposed project will be revised tremendously or be rejected.
The lastprocess of the enterprise formation is the strengthening of business supportservices. This involves the evaluation of the local support services (nationalgovernment, local government, attached bureaus and agencies, and other privateorganizations or sectors). In summary, if the agribusiness menare interested in establishing agricultural businesses they must follow the 4 fundamentalsprocesses of enterprise formation. They need to study all the factors thataffect the success of their proposed projects, with scrutiny (market study,technical study, financial, socio-economics, management, and environmentalimpact assessment).
If the results of the study have shown that the proposedproject is feasible, then, agribusiness men should never be feared and be lostin the labyrinth of ignorance.