Harvard Case - Litchi, the Unlucky Fruit: What does the Evidence Say?
"Litchi, the Unlucky Fruit: What does the Evidence Say?" Harvard business case study is written by G. Ramesh, Stuti Goswami. It deals with the challenges in the field of Business & Government Relations. The case study is 18 page(s) long and it was first published on : Jan 1, 2020
At Fern Fort University, we recommend a multi-pronged approach for the litchi industry in China, focusing on: 1) Enhancing market access through strategic partnerships and government engagement, 2) Implementing sustainable production practices to address environmental concerns, and 3) Fostering innovation and technology adoption to improve efficiency and competitiveness. This strategy aims to address the challenges facing the industry, including market volatility, environmental concerns, and competition from other fruit producers, while leveraging the potential of the Chinese market and the growing global demand for litchis.
2. Background
The case study focuses on the litchi industry in China, a key producer and exporter of the fruit. The industry faces various challenges, including:
- Market Volatility: Price fluctuations due to factors like oversupply, weather conditions, and global demand.
- Environmental Concerns: Intensive farming practices leading to soil degradation, water pollution, and pesticide overuse.
- Competition: Growing competition from other fruit producers both domestically and internationally.
- Lack of Innovation: Limited adoption of modern agricultural technologies and practices.
The case study highlights the plight of litchi farmers in Guangxi province, who are struggling to cope with these challenges.
3. Analysis of the Case Study
This case study can be analyzed using the Porter's Five Forces framework:
- Threat of New Entrants: High, due to the relatively low barriers to entry in the fruit production industry.
- Bargaining Power of Buyers: High, as buyers have numerous options for fruit consumption and can easily switch to other alternatives.
- Bargaining Power of Suppliers: Low, as farmers are often price-takers in the market.
- Threat of Substitutes: High, as consumers have a wide range of fruit options available.
- Competitive Rivalry: High, due to the presence of numerous domestic and international competitors.
This analysis reveals the highly competitive and challenging environment faced by the litchi industry.
4. Recommendations
To address these challenges, the following recommendations are proposed:
1. Enhance Market Access:
- Strategic Partnerships: Form strategic partnerships with major retailers, wholesalers, and exporters to secure stable market access and improve price negotiation power.
- Government Engagement: Lobby the government for policies that support the industry, including trade agreements, tax incentives, and subsidies.
- Brand Building: Develop a strong brand identity for Chinese litchis to differentiate them from competitors and attract premium pricing.
2. Implement Sustainable Production Practices:
- Organic Farming: Encourage and support the adoption of organic farming practices to reduce environmental impact and appeal to environmentally conscious consumers.
- Water Conservation: Implement water-efficient irrigation techniques to conserve water resources and reduce reliance on unsustainable practices.
- Pesticide Reduction: Promote the use of integrated pest management (IPM) strategies to minimize pesticide use and protect biodiversity.
3. Foster Innovation and Technology Adoption:
- Research and Development: Invest in research and development to improve litchi varieties, develop disease-resistant strains, and enhance production efficiency.
- Technology Adoption: Encourage the adoption of modern agricultural technologies, such as precision farming, data analytics, and automated harvesting systems.
- Knowledge Sharing: Establish platforms for knowledge sharing and best practice dissemination among farmers.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies: Leveraging the existing knowledge and expertise of Chinese farmers in litchi production.
- External Customers: Meeting the evolving needs of consumers, including a preference for sustainable and high-quality products.
- Competitors: Differentiating Chinese litchis from competitors through quality, sustainability, and brand building.
- Attractiveness: Improving the profitability of the industry through increased market access, reduced production costs, and enhanced product value.
6. Conclusion
By implementing these recommendations, the Chinese litchi industry can overcome its current challenges, enhance its competitiveness, and secure a sustainable future. This approach requires a collaborative effort between farmers, government agencies, and private sector stakeholders.
7. Discussion
Alternatives:
- Government-led intervention: Direct government intervention through price controls or subsidies, which could lead to market distortions and dependency on government support.
- Large-scale industrialization: Shifting towards large-scale industrial production, which could lead to environmental degradation and social inequality.
Risks and Assumptions:
- Market Volatility: The recommendations assume that the global demand for litchis will continue to grow, but fluctuations in demand could impact the success of the strategy.
- Government Support: The recommendations rely on government support for policies and incentives, which may not be readily available or sustainable in the long term.
- Technology Adoption: The success of technology adoption depends on factors such as access to finance, training, and infrastructure, which may pose challenges for some farmers.
8. Next Steps
- Establish a task force: Form a task force consisting of farmers, government officials, industry experts, and private sector representatives to develop and implement the recommendations.
- Pilot projects: Pilot the recommended strategies in specific regions to assess their effectiveness and refine them before wider implementation.
- Long-term monitoring and evaluation: Continuously monitor the impact of the implemented strategies and make adjustments as needed to ensure long-term sustainability and success.
The Chinese litchi industry has the potential to thrive in a global market. By embracing a strategic approach that prioritizes market access, sustainability, and innovation, the industry can overcome its challenges and unlock its full potential.
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Case Description
The case of mysterious deaths of children caused by eating litchi, a popular fruit in Bihar, India provides the classic context. There have been instances of deaths of children in Bihar after eating Litchi and this has been going on for years. Many children were brought to hospitals with acute neurological symptoms like swelling of the brain, seizures, and convulsions, although strangely they seemed to have been healthy just moments before. These symptoms of the sick children were treated for Acute Encephalitis Syndrome in the region. It left the families of the children and neighborhoods perplexed, and even the doctors were at a loss in understanding the cause of the deaths. It was finally diagnosed in 2014, based on a research finding published in Lancet that these deaths could be due to hypoglycemia triggered by children eating litchi and skipping dinner thereafter. Another study by John had concluded similarly. They recommended administration of dextrose as the treatment which helped bring down the incidences. The government did try to implement their recommendations. However, the disease struck again in 2019 with the death of about 125 children. The disease and the deaths again brought to the fore all the questions. This case is about the reality of conflicting evidence, how the issue was handled by the government and the stakeholders' response. At the next level, the challenge for the government is how to communicate the diagnosis, treatment protocol, and precautions to the parents regarding the risk their children are exposed to on eating litchi when they are hungry. There was consensus about the findings and treatment procedures. Given this, the challenge is in communicating this to the healthcare providers as well as to the parents and the general public. It has to be done without creating panic about litchi. The government, as well as the growers, had the overriding concern that the controversy should not damage the market for litchi.
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