Business environment

The success of any company largely depends on its business environment. Let me give one simple example. A 17-year old, pretty looking schoolgirl, despite her lack of education, product knowledge and flower arranging skills, can be more successful in running a flower stall than a veteran florist with excellent education. Even if the schoolgirl only opens her shop for a few hours a day and few days per week, she can be more successful than the professional and experienced florist who offers an exceptional 24/7 service. In such a case, you’ll find the girl’s flower stall in a busy area with a high concentrations of shops or just opposite the entrance of a supermarket while the exemplary florist is unlucky enough to be located in a less visited place.

There’s a clear, linear relationship between the consumption of flowers and the economic situation of a country;  the Gross National Income (GNI). When economic growth and income in a poor country such as Mali increase, the consumption of ornamentals will grow a similar rate. Plants and flowers enjoy a strong position in the consumer market;  after eating, drinking and  housing the next thing people think of is buying flowers and plants.  Setting the right price, a proper location and a the correct range of products are crucial, decisive factors in the consumer’s buying process no matter how experienced or hard- working the florist is.

Here in Amsterdam where I live, there are two supermarkets selling flowers and plants, one traditional florist and a street vendor. In total four outlets on one small square. I cannot prove it, but I think the street vendor is selling the largest quantity of flowers at the lowest costs. He has a small, temperature-controlled van and an enormous presentation on the street. The important flow of shoppers heading for the supermarket constantly walk by.

In the past, the Dutch growers congregated in the same area. These agricultural clusters included R&D centres, horticultural schools and if possible an auction. On average, the business results of growers living in such agricultural centres were sometimes 50% higher, compared to isolated growers in remote areas.

According to Professor Michael E. Porter from Harvard University, working in clusters provides many economic benefits. Why?  In such a business environment, farmers are usually better informed and more open to the exchange of relevant information. Moreover, it encourages growers to perform outstandingly as they want to do better than their neighbour. Education is stimulated, market information is more widely and more quickly available. Furthermore, the most important suppliers can concentrate in that neighbourhood and offer cheaper, better and wider assortment products to the farmers.

Now consumer behaviour is changing faster than ever. The three traditional consumer categories of Phillippe Kotler (basic demand, mass demand and specialty demand into many niches) are nowadays joined by consumers who search a tailor-made product based on their own preferences, consumers that are highly interested in locally grown products and the story behind these products.  It’s the type of consumer who really wants to know the producer personally otherwise he doesn’t trust the product. Freshness, sustainably grown (no fertilisers, no pesticide, no child labour, no carbon/CO² footprint) drive buying behaviour. And it appears that the consumer is willing to pay a higher price for such products.  The business environment is changing rapidly.