Exploring the Potential of Vertical Farming: A Case Study on Industry Practices and Future Prospects.
(2024) BUSN09 20241Department of Business Administration
- Abstract
- The agriculture industry faces numerous challenges, including growing population, climate change, farmland shortage, soil degradation, and water scarcity. These issues drive the search for alternative methods of food production. Vertical farming (VF), which involves cultivating crops in vertically stacked layers under controlled conditions, presents significant advantages such as reduced water usage, elimination of soil degradation, and closer proximity to consumers, thus reducing transportation emissions. Despite these benefits, VF encounters substantial hurdles, including high initial capital investments, technological dependence, and market acceptance challenges due to higher product costs. This thesis explores how the vertical farming... (More)
- The agriculture industry faces numerous challenges, including growing population, climate change, farmland shortage, soil degradation, and water scarcity. These issues drive the search for alternative methods of food production. Vertical farming (VF), which involves cultivating crops in vertically stacked layers under controlled conditions, presents significant advantages such as reduced water usage, elimination of soil degradation, and closer proximity to consumers, thus reducing transportation emissions. Despite these benefits, VF encounters substantial hurdles, including high initial capital investments, technological dependence, and market acceptance challenges due to higher product costs. This thesis explores how the vertical farming industry can achieve scalability and profitability while maintaining its sustainable benefits. To address that, an exploratory single-case study method is employed, incorporating semi-structured interviews with stakeholders from across the VF industry. The research framework is built on theories of business models, industry analysis, strategic partnerships, and sustainability, refined through empirical data gathered from these interviews. The findings identify two main business models, referred to as Model 1 and Model 2. These models differ in factors such as profit formula design and channels for communicating and delivering customer value propositions. Model 1 focuses on producing high-quality, premium products for affluent consumers, requiring strong brand awareness and superior product quality. Model 2 targets the average consumer market, competing directly with traditional agriculture on price point and shelf-life. Key recommendations include adopting a customer-centric approach, fostering collective innovation through coopetition, and meeting energy needs through renewable sources to enhance sustainability. The choice of location is critical, with hyper-localization benefiting premium models and proximity to distribution centres benefiting cost-competitive models. VF's unique selling point of providing locally produced, fresh food regardless of the season should be leveraged to distinguish it from traditional agricultural methods. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9156287
- author
- Mrozowski, Konstanty LU and Gkanaviaris, Michail LU
- supervisor
- organization
- course
- BUSN09 20241
- year
- 2024
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Vertical Farming, Horticulture, Business Models, Industry Analysis, Strategic Partnerships, Sustainable Agriculture
- language
- English
- id
- 9156287
- date added to LUP
- 2024-06-26 12:43:16
- date last changed
- 2024-06-26 12:43:16
@misc{9156287,
abstract = {{The agriculture industry faces numerous challenges, including growing population, climate change, farmland shortage, soil degradation, and water scarcity. These issues drive the search for alternative methods of food production. Vertical farming (VF), which involves cultivating crops in vertically stacked layers under controlled conditions, presents significant advantages such as reduced water usage, elimination of soil degradation, and closer proximity to consumers, thus reducing transportation emissions. Despite these benefits, VF encounters substantial hurdles, including high initial capital investments, technological dependence, and market acceptance challenges due to higher product costs. This thesis explores how the vertical farming industry can achieve scalability and profitability while maintaining its sustainable benefits. To address that, an exploratory single-case study method is employed, incorporating semi-structured interviews with stakeholders from across the VF industry. The research framework is built on theories of business models, industry analysis, strategic partnerships, and sustainability, refined through empirical data gathered from these interviews. The findings identify two main business models, referred to as Model 1 and Model 2. These models differ in factors such as profit formula design and channels for communicating and delivering customer value propositions. Model 1 focuses on producing high-quality, premium products for affluent consumers, requiring strong brand awareness and superior product quality. Model 2 targets the average consumer market, competing directly with traditional agriculture on price point and shelf-life. Key recommendations include adopting a customer-centric approach, fostering collective innovation through coopetition, and meeting energy needs through renewable sources to enhance sustainability. The choice of location is critical, with hyper-localization benefiting premium models and proximity to distribution centres benefiting cost-competitive models. VF's unique selling point of providing locally produced, fresh food regardless of the season should be leveraged to distinguish it from traditional agricultural methods.}},
author = {{Mrozowski, Konstanty and Gkanaviaris, Michail}},
language = {{eng}},
note = {{Student Paper}},
title = {{Exploring the Potential of Vertical Farming: A Case Study on Industry Practices and Future Prospects.}},
year = {{2024}},
}