Cranberry Industry: Analysis

While peat bogs come up for sale rarely, as your uncle, an experienced cranberry grower, has predicted the interest in this land is likely to be very high. The research also indicates that the cranberry industry has seen consistent growth in the recent past and that these bogs come up rarely for sale. Therefore the likelihood of your getting this bog at a discounted price is very low given both the interest from other potential buyers and the seller’s ability to make high profits from this sale.

From our earlier association I am well aware of your considerable business acumen having built a bagel enterprise often retail stores from scratch. However, as you have rightly professed, cranberry production may be a different prospect. Your earlier experience might not equip you for this and skills you have acquired in your earlier venture might not be transferable to this venture. – Another crucial factor that I notice is that while prices have risen in the recent past, their rise in the near future is not certain.

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The overall growth rate in the industry is also relatively slow compared to your earlier ventures and therefore it may take time for you to get an appreciable return on your investment. – I would also like to point to the fact that should you enter this industry you would have no choice but to retain the existing manager and depend on him entirely to run the business while you are in the learning phase. This might not be the best strategic move given that the manager is ultimately an employee and might eave a different perspective on how the farm should be run.

Given all these reasons, the likelihood of making a considerable economic profit in a relatively short period of time is low since the learning curve is steep and industry growth slow. Therefore, unless there is no alternative opportunity that yields a better rate of return, my recommendation would be not to pursue this venture. Outside the scope of economic reasoning however, this appears to be a great chance to hone management skills and acquire a different industry experience.

Jesse
from Nandarnold

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