Babbitt Ranches Harvard Case Solution & Analysis

Babbitt Ranches Case Study Solution

Value Chain Channel structure:

Refer appendix 1: As the Babbitt Ranches sales the perishable product such as live cattle and beef products, therefore, it need be sold on the immediate or within a small time period. When sales of it not achieved within the time period and beef reached to end of its life then it needs to be sold on discounted price if not sold then it will lose their value, thus this will result in loss. The Babbitt Ranches sales their product through the whole seller, distribution or directly to retailers.

Distribution of Return

Refer appendix#2, the table provided in the appendix shows that the company’s value chain is distributed in 3 stages and the company revenue and net profit could be shown in three stages. These includes:

  • From by-Product
  • From Packing/ Processing Stage and
  • From whole product

The company's profit is varying from $0.05 to $0.10 per pound in case of by-product and the company generates minimum revenue of $60 and net profit of $25 per head from the packing/processing stage and the company earn maximum revenue from packing/processing that is $75 and net profit of $30 per head.

The Babbitt Ranches earns total revenue of $460 per cow and the net profit of per cow is $181. The average cost of per pound of a cow is 0.99 and the new margin per pound per cow is $0.39.

Business Model Canvas

The Babbitt Ranches is currently working on the business model that involves the Willard Wolf, an experienced Her ford broker who sales the grass-fed cattle as he is one of a recognized broker and works from many years with the Babbitt Ranches. Currently, the Babbitt Ranches sales their conventional beef through the broker at the $1.81 per pound and its cost is $0.86 per pound. However, the Babbitt Ranches can earn more than this if it sales their conventional beef directly to consumers despite sale beef through the broker. As by directly selling this, the company can save the commission that the company is currently paying to the broker for selling their conventional beef. Furthermore, the company not only save the commission that it is currently paying but also get a better understanding of their customer and their demand for the conventional beef, their reviews regarding the future demand of beef.However, this option for approaching to the consumer directly had implemented in the year of 2000-2001 by wholesaling conventional beef products such as hamburger and jerky but due to poor research and one of the main reason behind of these efforts was distribution issues and the other reason was the high price of the hamburger.

As the company already has experience and had been failed in making in approaching to the consumer directly, therefore the company should learn from their failure and enter into the market for approaching the consumer directly but before that, the company should now be prepared enough for implementing this. The company must think that either it should enter into market partially by overtaking the smaller market first such as Arizona or enter into market wholly, furthermore, the company also should make strategies what budget should be needed for entering into the market.How to attract the customers in the market. Either to approach the customers only through social media network or to open the retail outlet of the Babbitt Ranches Everywhere and dealing with the customer by face to face.

Recommendation

The company has many opportunities to earn increase their revenue on a sufficient level. One the opportunity to the Babbitt Ranches is to approach the customers by targeting them directly but it is recommended to company that the company should not transfer itself by wholesaling to retailer on the immediate basis as on the current situation the company have not any direct line so it will be very difficult for the company to get success in it in the short period of time, rather than in the current situation the company should target the smaller market for approaching the customer directly and also at the other the world with their wholesalers, if after a certain period the company get a positive response from there retail business then company should shift itself to the retail market by considering the demand and response of the company.

 

Appendix 1: Value Chain Channel Structure

Appendix 2: Distribution of Return

By Product
 Revenue
By Product
Minimum Revenue per pound$0.05
Maximum Revenue per pound$0.10

 

Packing/Processing
MinimumMaximum
Price per head$60$75
cost per head$35$45
Net profit per head$25 $30

 

Revenue and Cost Per Cow
selling price per cow $  460.00
Cost per cow$279
Net Margin Per Cow$181

 

Revenue and Cost Per Pound
Total cost per cow$279
the average cost per pound$0.60
total no of pounds465
Price per pound $          0.99
Net margin per pound$0.39

 

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