HAWASSA UNIVERSITY

COLLEGE OF AGRICULTURE
Faculty of Environment, Gender & Development Studies
Department of Agribusiness & Value Chain Management

Course: Agribusiness Organization & Management

Course Code: ABVM 562

Case Tittle: A Case Study on friendship Agro industry PLC

By

Boja Senbeta: (ID GPABVMR/0002/14)

Submitted to: Delelegne Abera (Ph.D.)

Apr, 28, 2022

Hawassa University
CASE STUDY ON FRIENDSHIP AGRO INDUSTRY PLC

Poultry farm at friendship Agro industry

Head
office of

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Table of Content

s
1. Introduction..........................................................................................................................................0
1.1 Background.....................................................................................................................................0
1.2. Statement of problem..................................................................................................................2
1.3. Objectives of the Case Study.........................................................................................................2
2. Type of Data and Methods............................................................................................................3
3. Results & Analysis..............................................................................................................................4
3.1. Business Model, ownership of Business, Company management structure and legal forms.......4
3.1.1. Business model...........................................................................................................................4
3.1.4. Business Operations of Friendship Agro Industry PLC............................................................5
3.2. Company evolution..................................................................................................................8
3.3. Business Challenges for Friendship Agro Industry...................................................................8
3.4. Favorable conditions from government side and opportunities of the company......................9
3.5. Features, Advantages and disadvantages of the organization.................................................10
3.5.1. Features of organization............................................................................................................10
3.5.2. Advantages of the organization................................................................................................10
3.5.3. Dis advantages of organizations...............................................................................................10
3.6. Critical success factors of company..........................................................................................11
4. Summary and Conclusion..........................................................................................................13
5. Personal recommendation of the case study...................................................................................13
6. References.......................................................................................................................................14

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 Case Study on Friendship Agro Industry Plc

1. Introduction
1.1 Background

Abel Mekonnen frequently recalls that afternoon twelve (12) years ago, when he met four of his
friends for coffee. That afternoon changed his life. At that time, he and his friends were university
graduates working for different companies. What they also shared in common was a dislike to
being bossed around by somebody else. In addition, their salaries were far from being at the level
where they could lead comfortable lifestyles. It was during that life-changing afternoon when

Abel asked the significant question: “Why don’t we start our own business?” His friends initially
laughed at the idea, not taking the suggestion seriously. However, days passed and they could
not put Abel’s idea out of their minds. Ashenafi, an electrical engineer, took the first step and
called Abel to discuss options for the business. They met to explore different enterprises and to
consider their options for investment. They called their other friend Yosef, a civil engineer, and
shared their plans with him. He agreed to be part of the group. Their other two friends were not
included in the venture, having shown little interest in Abel’s idea. And so the three friends
organized their group based on trust, dedication, interest and hard work. Said Abel, “I was
working as a teacher at the International Community School of Addis Ababa (earning EBT
13,000/month) for six months. The average salary for a teacher at that time was EBT 4,000. I was
the first Ethiopian to quit my job there, despite the relatively high salary, good health care, and paid
education for my five children. I even had a company car, which would have been mine after five
years. I knew I had to make a sacrifice, so I quit. I asked myself the question: Do I use my time
efficiently?” Identifying the right business that would help them reach their vision proved a huge
challenge for the new entrepreneurs, especially since they did not have much money to do a lot of
things. So they analyzed six different businesses and scored them according to various criteria
e.g. ability to generate quick returns, low level of capital investment, easy management. They
concluded that poultry farming would meet their objectives and at that point started looking for
start-up capital. “Our pockets were empty, but our hearts were full”, Abel remarked. Between
them they had only 18,000 ETB and needed additional finances which they ended up getting in
the form of credit from a micro finance institution. Altogether they had 45,000 ETB which they
used to finance the business, including making their first purchase of day-old chickens. In order
to overcome the problem obtaining enough day old chicken (DOCs), they reached an agreement
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with a company supplying chickens to buy from them, or to use their incubator in case there were
future shortages of day-old chicks.

Upon starting the business in 2010, the entrepreneurs had only one employee to help them with the
production and distribution of eggs. They had 80 chickens laying eggs and a single shop selling
the eggs. Currently, they have 87 employees, seven shops, 60,000 chickens, a training center, a
metal workshop to produce improved cages, a vegetable garden, a poultry farm, a feed-processing
plant, a business plan preparation service and lorry rental facility. Moreover, providing poultry-
based advisory services and continuous supervision of client producers is also part of their
operations. Friendship Agro Industry PLC, as the business was named, is currently the first
company providing poultry feed and trainings in Addis Ababa. Feed sales have reached 2 million
ETB per month and not less than 25 million ETB per annum.

Interestingly, the three people who established the business had no background in agriculture.
Abel, the production manager of the poultry business, is a chemist by profession. His
colleagues, Ashenafi and Yosef, are electrical and civil engineers respectively. However, they
had the enthusiasm to learn everything about poultry production and to combine that with the
knowledge from their professional fields. Their engineering background helped them in
equipping the poultry house with electricity (heater) supply and in designing their own bird
cage. They even secured a government patent for their cage design. Compared to imported ones,
the new cage has proved to be better for both the chickens and the producer; the feeder and
drinking station are more convenient for the chickens. The new cage can have several floors,
custom made according to the wishes of the customer, thus allowing more chickens to occupy
each square meter area in the shed. Abel received training from the National Veterinary
Institute (NVI) on how to vaccinate chickens and so used to vaccinate them himself. However,
he strongly believed that this had to be done by professionals, and so he hired three
veterinarians to take care of the health of the chickens. Currently, Abel’s main responsibilities
are to manage the farm, organize and provide trainings, and explore opportunities and new

markets for further development. The current organizational structure (see organization
structure) consists of the management board, which is the decision-making arm of the business,
followed by the general manager, the secretary, and the marketing, production, finance and
human resources departments. The board meets every month to look at business performance,
discuss challenges, explore solutions, take strategic decisions and follow up on implementation.

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1.2. Statement of problem

The Ethiopian poultry sector is almost exclusively dominated by backyard and small-scale production
using limited to no inputs in production and which is targeted for either self-consumption or the
market. Unlike other parts of the world, there are relatively few intermediaries operating between
producers and consumers in the Ethiopian poultry sector. However, because of increased urban
development, there are newly emerging private farms responding to growing consumer demand

Indeed, rising demand for meat products has led to inflationary pressures on prices, with poultry
prices increasing fivefold in nominal terms over the past decade. Nonetheless, while growing, broiler
meat production remains fairly low, with most consumers favoring traditional forms of poultry over
processed products.
There is a chronic shortage supply of day old chicks, pullets and cockerels in Ethiopia. This leads to
many farmers abandoning poultry keeping because their poultry houses will often be empty for
months on end whilst they are waiting for new supplies from the hatcheries. Although the available
hatching capacity is adequate; its performance is rather poor and needs improvement (Mebratu L,
2015), (Demeke S, 2004). The first step to improving the poultry production, identifying particular
problems that challenges smallholder farmers to improve production and productivity and strengthen
intervention of government and all needed stakeholders.

1.3. Objectives of the Case Study

 To assess the ownership & management structure, business model, business operation and
opportunities and constraints of Friendship agro industry PLC
 Identify features ,advantages and dis advantages and opportunities of organization
 To analyze the company’s business challenges and give personal recommendation of case
 To identify lessons to be learned from the case

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 2. Type of Data and Methods

Depending on the purposes of case study introductory information was collected from my earlier
information and my friend who works around this company. Both Primary and secondary data were
used to collect information to achieve the objective of case study on Friendship Agro industry PLC.
By set Semi structured questions information were collected from the company’s manager (Abel).
Then for the second time we had took more time based on information about him and his friends’
history how they were meet each other and come together formed their business company and etc. The
secondary data used were obtained from my friends who work around the company and additionally
different literature review, published and unpublished documents, and other internet sources were
some secondary data I were used in the case study.

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 3. Results & Analysis
3.1. Business Model, ownership of Business, Company management structure and legal forms
3.1.1. Business model

Friendship agro industry is committed to further investment in advanced technology and equipment,
quality control and competent management and staff to enhance the operational capabilities and
increase labour productivity of its poultry and vegetable farms. Friendship also processes and sells
chicken feed and manure to farmers. They also run a program where it partners with suppliers who
help market their products. The company is working to expand its reach and supply. In order to
achieve Friendship Agro industries’ long-term business objectives, more upgrading and expansion
activities will be undertaken in the future. Furthermore the company will engage in the commercial
production and marketing of poultry products, including broiler chicken, portioned chicken meat, day-
old chicks and table eggs; engage in the production and marketing of cash and industrial crops for the
local and export markets as well as for use by own processing/canning plants; develop, process and
market canned meat and vegetable products for the domestic and foreign markets; and build-up a
competent management and staff workmanship by constantly upgrading their skills and encouraging
teamwork and a sense of belongingness.

3.1.2. Ownership of Business and Legal forms

Abel Mokonen (chemist by his background) and his friends’ were Yosef (Civil engineering) and
Ashenafi (electrical engineering) were together established partnership form of business called
Friendship Agro industry PLC. Abel and his two friends identified the right business that would help
them reach their vision proved a huge challenge for the new entrepreneurs, especially since they
did not have much money to do a lot of things. So they analyzed six different businesses and
scored them according to various criteria such as, ability to generate quick returns, low level of
capital investment and easy management. These three people who established the business had no
background in agriculture. Abel, the production manager of the poultry business, is a chemist by
profession. However, they had the enthusiasm to learn everything about poultry production and to
combine that with the knowledge from their professional fields. Their engineering background
helped them in equipping the poultry house with electricity (heater) supply and in designing their
own bird cage.

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 3.1.3. Organizational Structure

General manger

Secretary

Administration and
Marketing Department Production department
finance department

Daily laborers

Metal Feed Finance Human

Training Purcha Farm
Shops Post sing work processing section resource
and section
sale sector section
marketin
g

Source: company document

3.1.4. Business Operations of Friendship Agro Industry PLC

Friendship agro industry PLC was established in 2010 G.C with the memberships of three friends in
Addis Ababa with initial capital of 45,000 ETB (forty five thousand birr) and 80 (eighty) chickens in
Addis Ababa, Upon starting the business, the entrepreneurs had only one employee to help them with
the production and distribution of eggs. They had 80 chickens laying eggs and a single shop selling
the eggs. Currently, they have 87 employees in their different branches. The private farm industry has
brunches in (Debre Zeyet, Ayer Tena, Ferensay Legasion, and British Embassy area), above 60,000
chickens, one training center, a metal workshop to produce improved cages, a vegetable garden, a
poultry farm, a feed-processing plant, a business plan preparation service, and lorry rental facility;
Moreover, providing poultry-based advisory services and continuous supervision of client producers
is also part of their operations. Company products and services are listed by below in figures as
follows:

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 1.1 1.2

1
1

1,5 1.6

1.7 1.8

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 Source: photo taken from company Apr, 2022

Figure 1.1: Animal feeds

Figure 1.2: Production Cages
Figure 1.3: Improved cage by Friendship Agro Industry (Place: farm site at Bishoftu, Feb. 2022
Figure 1.4: Eggs prepared for distribution and selling for customer
Figure 1.5: Training hall
Figure 1.6: material and equipment used for training
Figure 1.7: sample of certificate prepared for trainee by company
Figure 1.8: shows types of services they provide

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 3.2. Company evolution

Interim market assessments made during the earlier poultry farming years led the company into
other areas of the poultry sector i.e. egg production. The company’s focus shifted to layer hens to
produce more eggs and to increase market share. With increasing market demand for eggs, the
company decided to increase the number of layer hens.
This required expanding space to accommodate more hens. Given the initial established location
of the business, getting more land was not the best option for increasing production. Alternative
options were sought to accommodate more layer hens. The owners found that using cages to
increase hens per plot of land was the most feasible option, and so the company started to
produce its own cages, which were subsequently certified and patented. The company now
produces cages for its own use and for sale to other poultry businesses. Abel is also eager to
venture into other areas of the sector, such as by-products/waste from poultry farming. The
company started producing feed and vegetables for its own use and for sale to the market.
Different vegetables are produced at the company’s production center located at Debre Zeit.
There are a number of similar enterprises or companies supplying poultry products in and around
the capital city. Among them are Genesis Farms, ELFORA, Elere Farms, Alema Farms, etc.

3.3. Business Challenges for Friendship Agro Industry

After the business took off, the next challenge came from the people (family, neighbors, friends, etc.)
around the entrepreneurs. Some considered poultry production to be an ‘inferior job’ for engineering
graduates, whilst others would ask “How come you clean chicken litter?” Ironically, those who were
making fun of them, where themselves now active in the poultry business. “It is very difficult to work
with people; they get different messages than you are trying to convey when you are communicating.
There were a lot of misunderstanding. So now we take the time to discuss issues (Abel said). Their
farm manager was trying to steal the pullets from their farm in Debre Zeit. They got a phone call one
day from the neighbors of their farm that they should hurry back before he empties the farm.” During
the early stages of the business, the entrepreneurs would go to various mills to have their corn and
soya ground to prepare feed for their chickens. In a culture where women would normally be expected
to do this type of task, the entrepreneurs encountered some ridicule from family and friends, with
some wondering why educated men would want to do this type of work instead of the usual practice
of working in an office. Despite this, the entrepreneurs stuck to their idea believing in the potential of
their business, and focused on overcoming their initial challenges, one of which was the difficulty in
securing the starter poultry stock they required.

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According to Abel, “I myself at that time was forced to go to Genesis Farms, which is situated in
Bishoftu town, once in two weeks, to negotiate access to the starter stock.” It was after six months that
the business secured 80 starter chickens. The business was also confronted with challenges in the feed
processing section of the agro-industry. Abel was astonished that “the purchasing section bought corn
with a high level of moisture at a lower price. When that got into the processing stage, it developed a
fungus which unexpectedly infected the chickens. As a result some of their customers lost their stocks.
The business still does not own an incubator of its own. Friendship Agro Industry was buying feed
from another place, but they quickly realized that this was not cost effective. To minimize their costs,
they decided to buy different machinery to help produce quality feed for use on their own poultry
farms and to also supply the market. While they were supplying feed to the market, they faced big
challenges in terms of the quality they supplied, to the extent that they lost their market initially. In
order to overcome this problem they invested in quality assurance. The company introduced an
improved quality control system and started selling chickens accompanied by full end-to-end
packages. In order to show that they had quality products, they took samples of their feed to the
Agriculture Office and to other customers for testing.

3.4. Favorable conditions from government side and opportunities of the company

Since 1991, the Government has been implementing its strategy of Agricultural Development-Led
Industrialization (ADLI) which sees agriculture as the engine of growth. Its main thrust has been to:
Improve agricultural extension services; Promote better use of land and water resources; Enhance
access to financial services; Improve access to domestic and export markets; and Provide rural
infrastructure. There is an increased demand for foods of animal origin in developing countries
because of high human population growth, urbanization and higher incomes (Abdullah et al., 2011), as
well as a shortage of animal protein. The genetic diversity of indigenous chickens is much higher than
other livestock species which have good adaptability to climate and disease. In this regard, the
demand for poultry meat and eggs and the relative ease of establishing a poultry business are the
driving forces behind the growth in this sector (FAO, 2015; Daghir, 2012).

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 3.5. Features, Advantages and disadvantages of the organization
Friendship agro industry was a partnership form of business run by three persons where their
relationship is based on agreement participating in the profits and losses arising out of it.

3.5.1. Features of organization

Existence of an agreement: the company were formed on the basis of an agreement between three
persons to carry on business. The terms and conditions of partnership were laid down in a document
known as Partnership Deed.
Sharing of profits and losses: In the organization, partners are entitled to share in the profits and are
also to bear the losses, if any.
Common Management: Every partner (one of the three persons) has a right to take part in the
running of the business. It is not necessary for all partners to participate in the day-to-day activities of
the business but they were entitled to participate
Unlimited Liability: The liability of partners is unlimited. As result some obligation arises then not
only the partnership assets but also the private property of the partners can be taken for the payment of
liabilities of the organization.
3.5.2. Advantages of the organization

The partners of company had obtained several advantages: - Because they were brings together a
diverse group of talented individuals who share responsibility for running the business. It was made
them financing easier: the business can draw on the financial resources of a number of individuals.
The partners not only contribute funds to the business but can also use personal resources to secure
bank loans. The partners were combined their limited financial resources and used their diverse skills
and talents and their company’s growth level were increased from year to year because better
supervision and control, division of work and spreading of risks.

3.5.3. Dis advantages of organizations

A major problem with company was unlimited liability: in this case, each partner is personally liable
not only for his or her own actions but also for the actions of all the partners. The Company’s partners
have subjected to unlimited liability. Second, being a partner means that you have to share decision
making, and many people aren’t comfortable with that situation. Not surprisingly, partners often have
differences of opinion on how to run a business, and disagreements can escalate to the point of
jeopardizing the continuance of the business. Third, in addition to sharing ideas, partners also share
profits. This arrangement can work as long as all partners feel that they’re being rewarded according
to their efforts and accomplishments, but that isn’t always the case.
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 3.6. Critical success factors of company

Before they tend to establish company their critical success were they had test efficiently and
effectively their business environment/business location Addis Ababa wich is capital city of Ethiopia.
The position is center for market access, access of electricity and road infrastructure, access of more
customer from special zones of Addis Ababa who buy poultry feed, cattle feed, poultry products,
eggs, and hens. Identified objectives and their goal and properly planned to reach their goal. Even if
they had challenged by many factors in the working process of activities, however they had solved
problems by discussed on the issues because they had Harmonious relations with the workers and
efficient management of the whole organization. The company were successful as a business owner
because they were more than coming up with a brilliant idea and working hard. Some of the
company’s critical success factors were summarized as follows:-

They identified their business: know what they’re doing. They’re knowledgeable about the industry
in which they operate (both as it stands today and where it’s headed), and they know who their
competitors are. They know how to attract customers and who the best suppliers and distributors are,
and they recognized the impact of technology on their business.

They uderstanded the basics of business management: basis of a great idea, but to manage it you
need to understand the functional areas of business accounting, finance, management, marketing, and
production.

All partners have the proper attitude: all these 3 people had a passion for their work and cooperated
depending their interest and trust. They believe in what they’re doing and have personal commitment
to their business.

They satisfied their customers. Even if they had lost their customers at the starting point of business
because of problems created by their purchasing sector of feed however through time they adjusted
everything related to that problems in relation with quality insurance and then grow and grow
customer satisfaction overtime. Friendship agro industry gives great attention for customer service as
one of its success factors to earn customers’ loyalty and to make the business sustainable and
profitable. The company keeps increasing its market share. Client loyalty has grown: “Once a client
comes here he never goes away”. This is because of the different services they are providing to their
customers

The company know his competitors: they discovered their niche in the marketplace, keep an eye on
their competitors, and they prepared to react to changes in the marketplace.

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 3.6.1. Marketing strategy of company

Marketing strategy of company was one of success factors to retaining their cutomers and promote the
company at regional and national level for exporting their products. Friendship Agro Industry PLC
has three major customers. Supermarkets and pastry houses in Addis Ababa are the major buyers of
eggs. In the case of feed, cages and vegetables, the company serves all types of buyers by allowing
custom supply in terms of volume/size (from small amounts to bulk orders) to meet the needs of
customers at different levels of business scope.

There are three main marketing strategies used by the company.

1. The first strategy is providing integrated services such as training to customers (poultry care,
feed use), information supply and follow up. Services are made available to customers of
Friendship Agro Industry PLC as a pre- condition for success and access to company products.
2. The second strategy is in- creasing market share. The company prefers using local materials in
feed production. The use of home-sourced inputs were relatively cheaper and also engaged more
people in the local labor force.
3. Increasing sales of cages. The company knows their cages are the best quality available in the
market.

3.7. Support from Government and other non-government organizations

Government have critical role in creating enabling business environment. For technical support, the
company has close links with the National Veterinary Institute and Poultry Center. Close ties are also
maintained with the financial institutions which supplied the initial investment capital. The Ethiopian
Health and Nutrition Research Institute provides information on feed formulation. Friendship Agro
Industry also has relations with NGOs such as RISE and World Vision that work on women’s
empowerment in the country. Moreover, the company trains women’s groups in poultry production,
management and marketing in close cooperation with the sub-city women’s association

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4. Summary and Conclusion
Friendship agro industry PLC is a form of business partnership established in 2010 G.C with
the memberships of three friends in Addis Ababa with initial capital of 45,000 ETB (forty five
thousand birr) and 80 (eighty) chickens in Addis Ababa, Upon starting the business, the
entrepreneurs had only one employee to help them with the production and distribution of eggs.
They had 80 chickens laying eggs and a single shop selling the eggs. Currently, they have 87
employees in their different branches. The private farm industry has brunches in (Debre Zeyet,
Ayer Tena, Ferensay Legasion, and British Embassy area), above 60,000 chickens, one training
center, a metal workshop to produce improved cages, a vegetable garden, a poultry farm, a feed-
processing plant, a business plan preparation service, and lorry rental facility; Moreover,
providing poultry-based advisory services and continuous supervision of client producers is also
part of their operations. The current organizational structure consists of the management board,
which is the decision-making arm of the business, followed by the general manager, the
secretary, and the marketing, production, finance and human resources departments. The board
meets every month to look at business performance, discuss challenges, explore solutions, take
strategic decisions and follow up on implementation. The business was also confronted with
some challenges such as there were a lot of misunderstanding, Difficulty in securing the starter
poultry stock they required, difficulty in the feed processing section of the agro-industry and also
faced big challenges in terms of the quality of feed they supplied to the market. There was
Favorable conditions from government side and the company have many opportunities in the
future because of the government looks agriculture as an engine of agricultural transformation
and increased demand of populations for poultry products. The company have working with
linked to gov’t and NGO.

5. Personal recommendation of the case study

Friendship agro industry has poor communication with different stakeholders like Ministry
of agricultures (MOA), Agricultural Transformation agency (ATA), Ministry of
Communication and Information Technology (MCIT), Agricultural Marketing Corporation
(AMC), Ethiopian Commodity Exchange (ECX), different universities, research institutions,
…etc, but regular communication among these institutions will play important role.

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6. References

Costa, N.D., (2009) Climate change: Implications for water utilization in animal agriculture
and poultry, in particular. Proceedings of the 20th Annual Australian Poultry Science
Symposium, February 9–11, 2009, University of Sydney, Australia. CSA (2012/13)
‘Agricultural sample survey report on livestock and livestock characteristics’.
Statistical bulletin number 570, 2:20–28. Daghir, N.J. (2009) ‘Poultry production in
hot climates: Book reviews’. Journal of Applied Poultry Research, 18:131-134.
Farrell, D. (2010) ‘The role of poultry in human nutrition’. Poultry development review. Food
and Agriculture Organization of the United Nations, Rome, Italy, p. 2.
http://www.fao.org/docrep/013/a1709e00.pdf
Vernooij A., et al. (2012) ‘Poultry Production in Ethiopia’, in Poultry in Ethiopia: A
survey of Production, Value Chain and Marketing of Commercial Poultry in
Ethiopia, The Hague, Netherlands-African Business Council.

Vernooij, A. (2012) Poultry in Ethiopia: A survey of Production, Value Chain and

Marketing of Commercial Poultry in Ethiopia, The Hague, Netherlands-African
Business Council

Friendship Agro-Industry PLC

Manager of company: Abel Mokonen

Address: Addis Ababa, Kaliti, in front of Jate Kidane Mihret Church, 200 mtrs into Gelan
Condominium, near the mobile network tower

Phone: 0913 56 57 74/ 0930 51 92 20

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