Lucky Prawn Farm

Essay by terroninaUniversity, Master'sA-, September 2006

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This case seems the classic example of businessmen's careless undertaking of a venture. While successful investors of the same industry report its profitability, the owners of Lucky Prawn Farm seem to have put too much faith in their declaration and neglected to do their own research and planning. It seems that they presumed having a pond and a manager with first hand experience in observing prawn culture practices were enough. Had they done more research on the subject they would have found that though shrimp aquaculture promises high profitability boosted by the demand of consumers for high-value seafood products and fluctuating supply from fisheries, in the long term returns from this venture rarely matched expectations due to the risks involved. These risks could be minimized through careful planning, feasibility analyses and prevention measures, however, reading through the case, they seem to have overlooked all these procedures leading to costly adjustments that were considerable and difficult to absorb relative to their initial investment.

With the situation already presented I would suggest that the owners concentrate on their first pond and set a start-up period for stabilizing the venture.

They should also define the acceptable rate of return for their investment and have an assessment of improvements that need to be financed, their ranking according to priority and the acceptable budget for such improvements instead of asking for a sum and providing a qualitative explanation for the request. Further, they should allot some earning to start-up the second pond, but this time, armed with the knowledge they have gathered from their first-hand experience. Meanwhile it would be useful to do further research from existing farms and assess how much preventive measure they must invest in especially with regard to risks in weather changes and disease. By defining these details, Ben Torres would...