Holly Farms

Holly arouses strategy submission In order to revive benefit and salve themselves from bearing heavy losses, Fred and Gillian Giles had opened a cardinal purposed lift for the general public in 1993. Their would-be(prenominal) goals had let them to put in all in all their savings to establish facilities on the set up which would entertain the tourists. This location of the affair was apart from the usual bring forthing organism carried out which included the distribution of ice woof which was manu incidentured behind the farm in a small federal agenty, a milking parlor to see the a la mode(p) technology universe used to milk the cattle and an enlargeitional guided tour of the farm.Even though the wrinkle is currently running reasonably well, the owners be cladding some serious issues related capacity constraints and competition. serve ups Answer 1 There is a no. of issues which Gillian Gales is confront in her side of the business. These issues include the item that in order to grow the Holly Farms business, it is non practical for the owners to add supererogatory capital. They have already invested a tummy of m wizy and any additional capital getable to them will be in foothold of a loan.However, the interest rate on the loan is evaluate to be above ten percent which would non make it executable since the owners are non expecting to sack up that high a return on their investment in order to pay the interest and the bargainer amount. Other issues which Gillian inescapably to take notice of include the fact that the ice-cream factory is not operating at full capacity, the freezer which has a capacity to kibosh 10,000 units is operated at 7000 units storage to allow for stick rotation.The inadequacy of preservatives used in the ice-cream would also be a factor in this regard where the list necessitate to move out of the factory within 6-12 weeks. This factor would be driving down retail sales to shops and hotels wh ich powerfulness be interested in h over-the-hill the ice-cream for their peak periods (since Gillian is not in a plaza to adjoin production for them at that beat). Gillian also need to decide whether to promote director firms or trade to families and takes for trips to their farm.Gillian mentions that on average one out of 2 equipage customers buys one liter box of ice-cream man a quatern occupant car buys the said(prenominal) amount. This info, though a good starting point, would not allow for right decision making since data on how galore(postnominal) a private instructor commonly h ancients. in any carapace the use of averaged data is not prudent when making decisions as to who the taper merchandise would be for the coming year.There is also a need for exceptional module by the farm, currently the ice-cream manufacturing employs farm workers wives ( terzetto) and a maximum of four flavor can be produced given the time constraints and the set up time (t o change flavors). Since capital investment is not possible at this time, Gillian would need to hire much(prenominal) staff for ice-cream manufacturing if she plans to profit the repress of flavors to ten, analysis and dead-on(prenominal) prognostic of what quantities of flavors to produce would also be required if the enactment of flavors is to be change magnitude.Market seekes as to which flavors are being demanded by the customers would also be required and could help withdraw the need to expand to ten flavors outright, but this is currently not being undertaken by Gillian. The lack of promotional activities by Gillian has seen the crook of arrivals to the farm cap at 15000 a year this situation is being handle as Gillian is concentrating more on expanding the manufacturing side, now she unavoidably to take a more active come on to attach the traffic at the farm.The issue of farm timings not being conducive to picnics and factory visits (20% of the customers colla pse before the milking process) and this very fact that many visitors are unavailing to see the milking process is also one which would be driving trim down ice-cream sales and involve to be looked into by Gillian. Answer 2 To amplification the number of farm visitors by 50% in a single year is a intimately unachievable goal that Gillian has set for herself. Although it is possible that the number be cast upd, but going from 15000 visitors to 22500 visitors is not a small task which can be achieved in the duration of a single year.This is ascribable to a number of factors which, for Gillian, would be constraints in achieving this growth target. These factors include 1. The fact that the farm is open to visitors for 7 months in a year, during the hold oning months the animals are kept privileged and the rides etc open to customers are not safe due to the weather situation. This is a limit which Gillian would be unable to surmount in a single years time without capital inve stment into building sheds and interior facilities etc at the Holly Farm. 2.An some otherwise time constraint is the fact that Gillian and Fred build that keeping the farm open for more than the four days it is already open (Friday to Monday) is not feasible due to the low traffic during the remaining days. Also the farm workers would not be free during the three days of the week (they would be involved in the real farm work), so the only style to keep the farm open the entire week is through hiring extra staff which could only be justified and feasible if Gillian were able to confirm attention/traffic at the farm during these days via school trips etc.The weekend is the peak period for Holly Farm and it is unconvincing that working individuals would be willing to take farm trips during work days. The sales forecast for 1999 shows that Gillian has prepared is extremely presumptuous given that she has yet to decide how she would be increasing the number of customers on the far m. Whether she wishes to bring in more customers through trail firms or target the family and diversional travelers (who come by car).With coach firms Gillian would almost likely have to offer discounts on the farm visits to the coaching firms to plan trips or revert to her old commercializeing maneuvers of giving lectures at schools and institutes and foodstuff her farm herself. The decision on whether or not to engage with coaching firms is not possible at this time because the number of passengers on each coach has not been identified, thus one cannot calculate the profits to be had from the sales of ice-cream and other produce along with the admission fees (with or without the discounts).Even if the averaged figure of one-liter ice-cream sale per ii coach passengers is taken to be reliably accurate without the number of potential customers coming through the coach trips, and via cars for that matter (one liter per four passengers), choice betwixt the options would be mor e moot point than proper decision making on the part of Gillian. If we were to light upon that half the customers come by car and half come via coach trips than promoting coach trips would yield more benefits in terms of ice-cream sales as * 7400 coach trips/2 = 3700 liters of sales & * 7400 car travelers/4 = 1850 liters of salesGiven that 13500 liters were interchange through the retail shop ($27000/$2(selling price)) this would regard as that come together to 41% of the sales comes through the customers on the farm. A 50% increase in the number of customers on the farm would lead to sales of $40,000 only if the number of customers at the farm window also increased by 50% which is a market not being targeted by Gillian, thus the following slowness leading to a figure of $40,000 would be paradoxical as the sales would be lower (higher(prenominal) from the customers on the farm but when including the trend based sales through the farm window the total sales would be lower). 14 8001. 5=22200 customers * 11100 coach trips/2$2=$11100 * 11100 car travelers/4$2= $5550 * $16650/0. 41 = $40,610 in sales. School parties and trips could be a good tactic on the part of Gillian as they would ensure higher number of visitors and a larger sale of ice-cream and other products which could be made on the farm. Charging a lower admission fees for parties and retaining the catering of the party would be a good source of income for the farm and has the potential of increasing the traffic at the farm by curtain raising a whole new target market for Holly Farms i. e. party venue.Gillian should invest some time and fret into confinement market research into how many schools would be willing to have parties or field trips on the farm (before offering party packages), also knowledge on the customer tolerance for queuing (to respect the milking process) would be beneficial to Gillian in analyzing how to increase the number of customers on the farm because if the customers ar e not able to watch the milking process and view this as a distribute breaker, they might seek out other sources of recreation and by increasing customers in the short run, Gillian might lose customers in the long run.Information on the positive number of car visitors vs. those coming through coach trips should be sought before Gillian decides on a course of action. Answer 3 Before undertaking a decision to increase the number of ice-cream flavors from 4 to 10 Gillian should weight the advantages and the disadvantages of this back. The first factor which Gillian needs to consider is whether a market exists for ten flavors of ice-cream or not, and whether it is feasible for the farm to be producing ten flavors.The fact that capital investment is not possible for Holly Farms promoter that the additional production would be through an increase in the labor force but the overall sum of the ice-cream produced would still be expressage to an inventory level of 7000 liters (which can be held by the freezer). This would mean that the new flavors would be introduced at the expense of the old flavors. This can be an advantage if the customers of Holly Farm are seeking one or two flavors other than those eing offered (market research would be required to confirm this) and that the quantity demanded would allow for greater turnover through any farm or retail sales. Alternatively this venture could lead to unsatisfied customers in cases where the farm could consume stock outs of certain flavors due to the fact that many flavors would be under production. A move to now offering ten flavors would also create logistic problems as the machines available for production and storing are limited.The fact that more staff would have to be hired would also increase the cost of production of all ice-creams and that would affect the profits of the ice-cream venture and Gillian would be obligate to make another key decision on whether to pass on the increased cost to the cust omers in the form of higher prices, and risk losing some business, or decrease the profit margins of the same.Since an increase in mountain is only possible if the inventory turnover is greatly enhanced by the introduction of new flavors (which is not certain) the profits for the farm would be on a downward trend if all other factors remain constant and flavors are added to the product offerings.Since there is no research to suggest that there would be a greater uptake of ice-cream (at retail or farm level) with more flavors, a jump to 10 flavors would be rash and create more problems for Gillian in terms of resource management, forecasting the demand for individual products and overlook the manufacturing of the same, rather than the advantages Gillian seeks.Undertaking some degree of market research and exploring one or two additional flavors (based on research findings) whilst maintaining the same level of staff could be more beneficial for Holly Farms and they could expand thei r flavor offerings over the long run when they have the capacity to increase production or maintain higher levels of inventory. ConclusionThe case under review explores the capacity and resource constraints being faced by a small business which was able to attract customers and diversify into other forms of antonymous businesses i. e. tours and ice-cream retailing. What we find in this case is that Gillian, the partner in charge of the complementary businesses is facing two censorious decisions (a) how to increase the number of customers visiting the farm and (b) how to increase the retail sales of the ice-cream.Since capital investment is not a feasible option for the business the mode of increasing customer traffic are limited to promotional activities and attracting the right customers for both tours and ice-cream sales. We find that such decisions are not possible with the data available to Gillian at the present time and that the option to increase the number of ice-cream flavors to ten (from four) is also not viable given the manufacturing and storage constraints.Gillian should therefore seek additional data on the target audience for promotional activities and if she plans to increase the number of ice-cream flavors she should start on a smaller scale after conducting proper market demand research. References Author of Book (1999), Case Study Holly Farms, Name of Book, Pp 244-248 Read morehttp//www. ukessays. com/essays/business-strategy/holly-farms-strategy. phpixzz2DakGnUSm