FEASIBILITY STUDY OF URBAN FARMING COMPANY GROWTH STRATEGY: A CASE STUDY OF SAUNG HIDROPONIK RESPATI

• Main Author: Rizky Hamidan, Akhmad
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/58563
• Institution: Institut Teknologi Bandung

Urban farming has become increasingly important since the urban population in Indonesia increases every year. Many urban farming companies utilized location as a unique selling proposition and success factor of their business. Saung Hidroponik Respati (SHR), a Tasikmalaya-based urban farming company specializing in hydroponics, is become the focus of this study. The current location of SHR has a distance of 17 kilometers to Tasikmalaya City square, which is quite far. Since its opening in 2018, the annual profit of SHR is still below expectations. One of the strategies that SHR decided to increase its revenue and profit is by opening a hydroponic store branch in the middle of the city. This study objective is to determine whether SHR’s plan to open a hydroponic store branch in the middle of Tasikmalaya City is feasible or not in several scenarios of sales and growth. The capital budgeting analysis is conducted using SHR financial statements from 2018 to 2020, interview results with a hydroponic farmer and a hydroponic store owner, and additional secondary data. In the optimistic scenario, the investment for opening a hydroponic store branch generates an NPV of IDR 3,650,481,561 with an IRR of 113% and a payback period of 1.7 years. Then in the most likely scenario, the investment generates an NPV of IDR 2,034,949,053 with an IRR of 89% and a payback period of 2.2 years. The last, in the pessimistic scenario, the investment generates an NPV of IDR 531,317,516 with an IRR of 40% and a payback period of 3.6 years. Based on the analysis results, all scenarios are acceptable in NPV, IRR, and payback period. Therefore, the SHR strategy to increase revenue and profit by opening a hydroponic store branch is feasible.