Economics Essay

1230 words - 5 pages

1. What was ITC’s motivation for creating the eChoupal?
a. What problems (discuss from a data and process focus) does it address?
With the development of technological revolution, ITC created the eChoupal. ITC supplied Internet access for remote villages. EChoupal was used to assemble and knowledge and share information through websites. There are many motivations for ITC to create the eChoupal.
1. The revenue of IBD was far behind
The First, IBD (the agricultural commodities export division of ITC) was “lagging behind the other divisions of the company” (Upton and Fuller, 2004, p.2). According to the data, IBD grossed $100 million in agricultural commodities sales while ITC’s other ...view middle of the document...

To solve these problems, Pearlson and Saunders (2013) pointed out that “the value chain model addressed the activities that create, deliver, and support a company’s product or service”. For this reason, it is important to use accurate information resources to alter the value chain and optimize its supply chain. On the input side, ITC should use accurate information to forecast weather. ITC used herbicides and pesticides more effectively. Therefore, farmers as suppliers could receive a higher crop yield. ITC had more control over high-quality and high-yield soybean from farmers. On the output side, farmers obtained more information like price to make wise decisions. They had a choice of selling to the middlemen or directly to ITC. Optimizing the supply chain could save transaction costs and benefit all the participants.
3. Farmers had limited capacity for risk
The third, farmers reduced the investment in crops because they were worried about risks such as inclement weather or pests. Farmers did not want to risk new farming methods. For this reason, the crop value was low and farmers’ revenues were low. It is harmful for the development of agriculture in India. The capacity of crops also influenced the ITC’s profits in sales.
Overall, ITC created the eChoupal to increase soybean’s yield and farmers’ profits. The eChoupal would support the free flow of information in order to help ITC optimize its supply chain.
2. What were the old and new physical flows and information flows in the channel, i.e., how does it work? a. Draw a diagram to represent the old and the new physical flows.
Old Physical Flows
ITC contracted with a CA in each Mandi. Farmers did not know the price. The only distribution channel for farmers was to sell their soybeans to a CA in Mandi. Farms brought soybeans to Mandi and they needed to wait few days to get into markets. Then CA weighed the soybeans. Because of the inaccuracy of the scales, farmers got 0.5% loss and received the lowest and delayed pay. After a CA procuring the soybeans, it brought them to an ITC processing facility and ITC would pay for the soybeans.
Old Information Flows
Farmers used traditional Choupal to share knowledge and capture information. The Choupal just had been limited to verbal communication. Due to isolation of farmers, news was hard to spread and it took a long time to reach other village. Cash flow prevented the farmers from creating a sound financial base. Farmers could not obtain the weather report and price information.
New Physical Flows
Due to eliminating the Middlemen, farmers could sell soybeans directly to ITC. ITC weighed beans on a computerized weighbridge. After weighing the beans, farmers immediately and fairly received cash. Moreover, ITC based on the time and fixed freight-cost parameters repaid farmers. ITC also made some experience such as restroom facilities, purchasing soybean oil,...

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