Evaluation Report

on

Corporate Diagnosis of Oro-Fresh S.C: Challenges and Directions

development of agribusiness.

Fig. 1. The relationship of cause and effect in diagnostic analysis of corporate management system
organization management [1].
Let's consider the range of key features that determine the company's management system in the agricultural
sphere:
Organisational Pathologies Under Conditions of Economic Downswing

The word pathology is derived from the Greek language and means a state of being ill or the study of
illnesses. In common usage, pathology is understood as the extended presence of a significant irregularity.
In as much as pathology is the study of illness, organisational pathology can be treated as the study of
‘organisational disease’. Looking at the second meaning of the phrase, organisational pathology is a long-term,
significant irregularity in the functioning of an organisation. According to Kieżun (1971), the study of
organisational pathology can be considered as a clearly isolated part of the theory of organisation and
management, which is concerned with the analysis of deviations and their subsequent generalisation as well as the
defining of remedial measures. As to organisational pathology itself, that same author defines it as a ‘relatively
permanent irregularity responsible for waste in an economic sense and (or) moral one exceeding the limits
of social tolerance’ (Kieżun, 2012). By analogy, management pathology may be defined as significant,
long-term irregularity in the process of managing an organisation or as an isolated part of the study of
management concerned with the analysis of the functioning of irregularities in management.
A concept that is similar to pathology is dysfunction. Dysfunction should be treated as a phenomenon that
has a negative impact on a defined social system. Systems are subject to tension and changes in ill-advised
directions as a result of dysfunction. The long-term effect of dysfunction can cause a system to enter a
pathological state. This means that dysfunction in an organisation leads to interference in the efficient
functioning of that organisation, where management dysfunction makes impossible or impedes proper
management of the selected organisational system. However, the borderline between dysfunction and
pathology is not always clear, which is reflected in the area of definitions. For example, Albrecht (2003)
perceives dysfunctions as organisational disorders. According to Cameron, Whetten and Kim (1987),
dysfunctions can include both processes, such as increasing centralisation, and states, such as low morale.
According to Stocki (2005), ‘pathology encompasses all dysfunction in the organization that does not allow the
achievement of realistic goals set for the given organization and aligned with social good, using defined means
over a defined time period’. A similar view of pathology (‘through dysfunction’) was held by many of the
interviewed managers and entrepreneurs.
The term organisational inefficiency is also used relatively often. Entire organisational systems or their
individual processes are seen as being inefficient. Inefficiency is the opposite of efficiency – the praxeological
assessment of ‘good work’. The basic positive aspects of efficiency are effectiveness, gainfulness and economy.
In a sense, these advantages are gradable. Therefore, organisation or process inefficiency is treated as the
holding of an insufficient quantity of the positive aspects of efficiency by the organisation or process. Thus, a
significant problem is the establishing of a threshold for the efficiency barrier defining the limits of phenomena
deemed as being pathological (Kieżun, 2012).

The faihcre process of an unsuccessful start-up company (type 1: cases C, E, G, I and K)

An overview of their failure process is displayed in Figure 2. We draw attention to the specific
characteristics of management in our description below.

Many companies fail within five years after their founding. Most of these companies have limited growth, are
unprofitable and have no survival chances.

A trypical initial shortcoming concerns the lack of managerial or industry-related experice.

The necessities within a company's business plan are unknown and many companies have no strategic advantage.
Inappropriate management may also lead t o insufficient control mechanisms and all cases are characterized
by severe operational inefficiencies.

As a consequence, the company's long tenn survival seems very unlikely as from its start-up.

Errors in rhe company's policy are the visible result of errors made by management.

Depending on the experience, three negative signais can be observed:

- heavy capital expenditure
 - low sales levels and
- underestimated expenses.

The negative signals are rapidly followed by financial indicators of distress.

- Low cash flow and profitability inevitably leads to liquidity problems, often increased by unadjjusted
investments.The fall of the company appears likely shortly after its foundation.

Stakeholders are well aware of the company's problems and stable relationship cannot be established.
The lack of external legitimacy (Kale and Arditi, 1998) and stakebold mistrust accelerate the failure process.
Management gradually realize the necessity of a restructuring, but banks refuse cooperation.

Therefore, start-ups without significant starting capital have scant possibilities to survive and even with
sufficient starting capital, they are still very likely to fail as management does not assess the underlying issues.

As a consequence, these companies cannot escape the downward spiral.

 Characteristics of management
- Less industry experience
- Risk aversion Weak Business Plan

Cooporation of Lack of strategic

Government advantage

Overestimation of Inability to react to

Turnover changes in the
environment

Ambitious capital
expenditure plan Underestimated
Low Sales expenses

Insufficient cash flow = lack of internal financce

Liquidity Problem

Increased Liability
= Weaker Solvency

Mistrust of all stakeholders

+ Acute cash shortage
= Company bankruptcy
 Lack of managerial Weak business plan
and ind try

Lack ofstrategic advantage

Heavy capital
expenditures

Insufficient cash
= Lack ofin

Liquidity prob!

+ Acute cash shortage

Company bankruptc
The expert team visited key organisations in the vegetable industry of Dezhou according to the scheme taken up in Table 2

CHALLENGES FACING AGRIBUSINESS

SUPPLY CHAINS IN SOUTH AFRICA
BEYOND 2000
M. A.G. Darroch
Pages 505-521 | Published online: 09 Jun 2010

The managers of agribusiness supply chains in South Africa face three key challenges
beyond 2000—namely the need to manage the drivers of change, to build core
competencies to form and manage supply chains, and to overcome barriers to
successful supply chains management. Appropriate actions to meet these challenges
include having shared visions and compatible goals, flexible market response, cost
controls, effective logistics and risk management, information sharing and, critically,
building trust and incentives so that playas will invest resources in supply chains,
Creative solutions are also needed to handle the potential impacts of HIV/AIDS on
market growth and business costs, and to viably integrate communities that were
previously denied access to economic opportunities into existing and new supply
chains, These issues are likely to create business opportunities for firms that are
competent coordinators and customizers. Learning from the “best practices” used by
non-agribusiness firms ill South Africa and other countries to successfully perform
supply chain activities will also improve cost competitiveness.
 Inputs Production Distribution Sales

Imports Export
Processing/
Packing

Wet market

Input Farmer OroFresh Supermarket/

retailer

Wholesale
Wholesale
market
Imports Institutional

Fruit and Vegetable crops are important both for health and economy; but the amount and mode of production
and marketing is still weak in Ethiopia.

Demand for fruit and vegetables consumption tends to grow very rapidly with urbanization, increased awareness
and income of the peoples.

Ethiopia generates USD 214

million from horticulture
exports
In the last five months, Ethiopia has generated over USD 214 million from the export
of horticultural products, according to the Ministry of Agriculture (MoA).

The export, totaling 122,611 tons, includes cut flowers, vegetables, fruits, roots, and
aromatic products. Cut flowers contributed the most to revenue, with over USD
184.77 million, followed by vegetables, fruits, and aromatic products at USD 15.54
million, USD 7.225 million, and USD 7.18 million, respectively. Despite a 33%
decrease in revenue, the export volume has increased by 7.8%. The main destinations
for Ethiopian horticultural products include the United Arab Emirates, Saudi Arabia,
The Netherlands, and the United Kingdom.
Production
Total fruits production of Ethiopia which was around 410,000 metric tones in
2005 has almost doubled in 2018 reaching 800,000 metric tons in 2018,
according to data of the Central Statistics Agency (CSA)

In terms of the area covered with fruits, it has increased to about 120,000
hectares in 2018, from some 45,000 hectares in 2005.

Export

In the last five months, Ethiopia has generated over USD 214 million from the export
of horticultural products

The export, totaling 122,611 tons, includes cut flowers, vegetables, fruits, roots, and
aromatic products

The export volume has increased by 7.8%

From year 2019/20 earnings of Ethiopia from fresh and dried fruits export has
increased by around $2 million.

The main destinations for Ethiopian horticultural products include the United Arab
Emirates, Saudi Arabia, The Netherlands, and the United Kingdom.

Export
During the first six months of the current budget years of Ethiopia started July 8,
2021, Ethiopia has earned about $9 million from export of fresh and dried fruits.

The previous year (2020/21) in 12 months the country has earned close to
$11.12 million from fruits export of net 29,009,156 kilograms).

This shows that one kilogram of Ethiopia’s dried or fresh fruit is sold for around
0.36 USD. In Djibouti, which imports about 90 percent of Ethiopia’s fruits, the
retail price of one kilogram of avocado today is between $6 to $7.

The fact that the average FOB value of Ethiopia’s fruit is less than half a U.S.
dollar, suggests that like most of Ethiopia’s export items fruit export is also a
victim of under invoicing practices.

During the same year Ethiopia has also earned an additional $530,000 from
value added processed fruits export which includes passion fruits juice, organic
avocado oil crude, according to export data from Ethiopian Customs
Commission.

From year 2019/20 earnings of Ethiopia from fresh and dried fruits export has
increased by around $2 million.

Exports of fruit and vegetable products from Ethiopia have also increased from 25,300 tons in 2002/03 to 63,140
tons in 2009/10 (EHDA, 2011).
Horticultural produce is a high value item. Diversity of fruits and vegetables are demanded by
consumers, such growth provides major opportunities for farmers and retailers to diversify increase their
incomes. Such opportunities may be especially valuable for women, who are the primary producers and
marketers/retailers of horticultural produce throughout Ethiopia. Finally, from the farming through retailing,
fruits and vegetables employs about twice as much labor as cereals per hectare of production; small farmers,
rural laborers, and the urban poor stand to gain extremely from these employment opportunities (Munguzwe and
Tschirley, 2006).
Diversification into horticultural crops is becoming attractive for many poor farmers around the world.
Worldwide production of fruit and vegetable crops has grown faster than that of cereal crops, albeit from a much
lower base. Between 1960 and 2000, the area under horticultural crops worldwide has more than doubled. There
are several reasons for the global increase in production and trade of fruit and vegetable crops. Horticultural
production is profitable. Farmers involved in horticultural production usually earn much higher farm incomes as
compared to cereal producers and per capita farm income has been reported up to five times higher ( Lumpkin et al.
2005).
Ethiopia has different varieties of fruit and vegetable crops that can grow in different agro ecological
zones produced through commercial as well as small farmers both as a source of income as well as food.
However, the type is limited to few crops and the production is concentrated to some pocket areas. In spite of
this, the production of fruits and vegetables varies from cultivating a few plants in the backyards for home

Orofresh Fruits and Vegetables Business Share Company

Part One – Introduction
1.1 Understanding of the Assignment
1.2 Project Delivery Method
1.3 Project Execution Milestone
1.4 Study Report Structure

Part Two – Macro Economic Review

2.1 Global Economic Outlook
2.2 Macroeconomic Environment in Ethiopia and Oromia Region

Part Three – Diagnosis of Existing SoEs

3.1. Mandate Analysis of Oromia SOEs
3.2. Financial Analysis
3.3. Job Opportunity Creation
3.4: Legal Analysis
3.5. Value Chain Analysis of Oromia SOEs

1 Introduction

1.1 General remarks

 1.2 Basic description of the sector in Dezhou
1.3 Challenges

2 Ambition and goals of Dezhou City

2.1 Ambition
2.1.1 Fundamental principles
2.2 Main development goals
2.3 Specific development goals
2.3.1 Improve market supply.
2.3.2 Reasonable adjustment of structure.
2.3.3 State-of-the-art technology.
2.3.4 Improve quality and brand.
2.3.5 Improve logistics.
2.3.6 Increase farmers' income.

A balancing act of resilience and

agility in fruit and vegetable
industry

Sustainability and adaptation

Fresh Fruit and Vegetables Ethiopia

Duration: 2021 to 2025Fresh Fruit and VegetablesEthiopia

Healthy living trends are boosting the consumption of fruit and vegetables. Ethiopia has
a wide range of fruit and vegetables, such as avocados, green beans and mangoes.
These have great potential in the European market. Still, some steps are necessary for
Ethiopia to develop an export market. These include lowering costs, increasing market
opportunities, and improving land and sea logistics. Sea freight export offers the
capacity to export larger volumes. This export method also has a lower environmental
impact.
In 2021, the Centre for the Promotion of Imports from developing countries (CBI) started
the Fresh Fruit and Vegetables Ethiopia project. This project focuses on transitioning
Ethiopian horticulture to a sustainable export alternative. In this project, CBI helps
Ethiopian Small and Medium-sized Enterprises (SMEs) gain experience in exporting to the
European Union (EU), Gulf Cooperation Council countries and other countries in the
Middle East via sea freight.

Project goals

This project aims to:

• Increase the sustainability and competitiveness of the Ethiopian fresh fruit and
vegetables (FFV) sector. To do this, the project focuses on shifting export from air
freight to sea freight;
• Support the establishment of effective service delivery for SMEs in the sector;
• Help build a sector collaboration platform. This will help create a more export-
enabling environment for sea freight;
• Establish Corporate Social Responsibility (CSR) practices and gender awareness
in the Ethiopian FFV sector.

Project participants and products

12 companies are taking part in this export coaching project.

We also support the business support organisation Ethiopian Horticulture Producers and
Exporters Association.

Contact CBI to find out more or contact these exporters.

Partners

• Flying Swans;
• The Ethiopian Agricultural Authority (EAA).

Activities

This project includes:

• Support with the creation of an international market strategy;

• Coaching on how to organise exports via sea freight;
• Help implementing CSR practices;
• Individual technical support from CBI sector experts;
 • Workshops on requirements and certifications, such as EU FFV quality and food
safety requirements; and
• Market-entry activities, such as trade fairs and B2B matchmaking.

Get involved as an importer

Are you a European importer interested in fresh fruits and vegetables from companies in
Ethiopia? Contact CBI to get more information or to meet with suppliers in this project
being trained to export to Europe.
2.1.7 Generic Strategic Recommendations to overcome challenges from the global
Economy
Overall, the global economy landscape can present both opportunities and
challenges for
OPEB enterprises. However, post COVID the challenges are outweighing and enterprises
need to focus on strategic coping mechanisms to mitigate risks and capitalize on
opportunities. Accordingly, the following recommendations are made:
A. Building resilience:
Diversification: Enterprises can diversify their product and service offerings, as well
as their customer base and geographic markets. This reduces dependence on any
single factor that could be affected by global economic fluctuations.
Supply chain optimization: Enterprises can optimize their supply chains by
diversifying suppliers, building inventory buffers, and investing in automation and
technology to improve efficiency and reduce vulnerability to disruptions.
Financial prudence: Maintaining healthy financial reserves allows enterprises to
weather economic downturns and invest in opportunities when they arise.
B. Enhancing competitiveness:
Innovation and efficiency: Enterprises can invest in research and development to
continuously improve their products, services, and processes. This can help them
maintain a competitive edge in the global market.
Building strong relationships: Building strong relationships with international
partners, such as suppliers, distributors, and investors, can provide access to
resources, expertise, and new markets during challenging times.
Focus on quality and value: By focusing on delivering high-quality products and
services at competitive prices, Ethiopian enterprises can establish a strong reputation
and attract customers even in a challenging global environment.
C. Adaptability and continuous learning:
Monitoring global trends: Closely monitoring global economic trends, trade policies,
and geopolitical developments allows enterprises to anticipate potential challenges
and opportunities and adapt their strategies accordingly.
Developing a culture of continuous learning: Encouraging a culture of continuous
learning within the organization can equip employees with the skills and knowledge
needed to navigate the changing global economic landscape.
By implementing these strategies, OPEB enterprises can increase their resilience,
enhance their competitiveness, and navigate the complexities of the global economy
to
achieve sustainable growth and success.