Cost Structure

The Bussiness Model of the Moringa at KITA is very much a mixture of a value driven model and a cost driven model characterized by the focus on creation and delivery of a high value, value proposition driven by the mission of the institute. But as KITA as not an operation with a lot of capital they are somewhat forced to stay focused on the reduction of the costs which obviously impacts other business model canvas building blocks. 

The fixed costs mainly consist of the initial investments such as building materials of the construction of the milling and packaging center and the salaries of employees. The buying and installing of machinery and equipment. These costs are investments in the long-term and will be depreciated over the years on the balance sheet of the company. Variable costs heavily depend on the volume of production. These include transportation, utility bills and raw materials bought from the farmers. 

Economies of scale is a benefit that is not applicable to 
KITA due to their small size, but they may want to strive for economies of scope. Economy of scope refers to the reduction of costs when a business invests in multiple markets or a larger scope of operations. Product diversification can be rather enjoyable with such a versatile raw produce as Moringa, hence KITA has shown interest in producing soap made out of the powder as well. Research has shown many more possibilities, which may be very easy to produce once the initial investments have been made.

There are many advantages to product diversification such as:

• Increased response rate and decreased response time to market driven changes, you never know what may change over time. Especially when projects should be able to fund themselves, this may be clever. 
• Processes are repeatable with a higher degree of control over their execution, not a lot of extra human capital or intellectual capital is necessary to target a whole new market. 
• There is less risk associated with a company, which sells multiple products, or targets multiple markets or does both. Even if one product or market falters, the company will have alternatives to help tide it over while it readjusts strategy. Which could mean that a more commercial product such as soap could fund a more health-beneficial and social product as the Mor Nutro Powder. 

Shown in the previous chart and table are the project costs for the estimated Mor Nutro Powder. Here is visualized how the costs are balanced. Most of these are payed for by the students. Except the project material costs which are further explained in the table underneath. Of the total 1860 euro material costs 550 will be provided by KITA and the rest will be raised by the students through various fund raising activities. 

Not only are their physical monetary costs but social and ecological costs aswell. The farmers who will supply the Moringa leaves to KITA will have a stable income. This can cause jealousy of the other farmers. Also the people at schools and hospitals that will be supplied with the Mor Nutro powder, will have a more balanced feeding pattern than the people who visit other schools and hospitals. This will cause inequality. 
With the transportation of the Moringa leaves and Mor Nutro powder will cause exhaust gasses to be released. Furthermore, by replacing specific plats by Moringa, this can mean that several other crops will not be available which are ecological costs we need to keep in mind.

Remaining Costs

• Support and participation costs, the success of the project depends on extra staff to support the workers such as super visors and facilitators. 
• Provision costs to provide for people in non-attendance and possible sick leave (in case of future paid employees). 
• Opportunity costs for the recruitment and training of new staff to prepare for after our departure at KITA and the costs of possibly reduced productivity in this period. 
• Work readiness costs such as licenses, permits, uniforms etc. for disadvantaged workers.
• Fundraising costs 
• Ethic costs like premiums for fair trade goods in case of exporting the product.