Babbitt Ranches has been engaged in raising calves on their ranches and selling them at a later time at the market price. The ranch is headed by Billy Cordasco, its President, who is now looking into changing the company's business model to get in line with the interest of customers for grass-fed beef. The company is looking into how much the customers are willing to pay for sustainable grass-fed beef. If it sounds prospective, the company is willing to produce the same.
Chris Scherpereel, Kathryn S Savage, Lisa F Majure
Harvard Business Review (NA0421-PDF-ENG)
June 01, 2016
Case questions answered:
- What is the problem that you identified in the case?
- Is this a decision type of case, an evaluation type of case, or a problem type of case?
- What is your personal and alternative perspective when analyzing your options?
- What are the strengths, weaknesses, opportunities, and threats of Babbitt Ranches company?
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Case answers for What's Your Beef? Babbitt Ranches' Grass-fed Beef
1. Introduction – Babbitt Ranches
Babbitt Ranches company, formerly known as The Babbitt Brothers Trading Company, started as a ranch with 864 head of cattle in 1886. Of course, it became one of the largest and most successful companies in the livestock activity in the West very quickly. In 2010, The Land Report listed the said ranch as the twenty-ninth largest private landowner in the USA with 270,000 acres.
From the beginning, the company has been very responsive and has placed a strong emphasis on preserving land. Currently, the president of Babbitt Ranches company is Billy Cordasco. The board of directors of the company has been called the “Conversation Council.” All the members of the board are family members.
In 2011, Babbitt Ranches owned three properties: the C.O. Bar, the Espee, and the Cataract ranches. These ranches made up a cow-calf operation that produced roughly 2,000 Hereford cows for sale each year.
2. Problem Identification
The problem of the case has to do with the business model of Babbitt Ranches company. Billy Cordasco realized that the current business model that Babbitt Ranches utilizes does not yield very high profits.
So, given the increasing interest in grass-fed beef, Billy wondered if a better business model would allow Babbitt Ranches to capture more of the beef’s value. The company had long been interested in finding a more profitable option for the business.
3. Type of Case
This is a decision type of case as the president of the ranch company, Billy Cordasco, has to decide if opportunities to change the company’s current business model exist. If any opportunities to improve the current business model exist, more of the beef value will be captured.
So, maybe there are opportunities that should be taken advantage of to manage to increase its sales and profits and become more successful.
4. Decision Options: Personal and Alternative Perspectives
My personal perspective is that Babbitt Ranches company should control the whole value chain for the entire herd. Even though it requires a significant initial investment for slaughtering and processing facilities and an additional investment to establish and support channels of marketing and distribution, it will pay off as the company’s sales and profits will go up.
The alternative perspective is that Babbitt Ranches company should sell only part of its grass-fed cattle into the local market. So, the company should take advantage of the opportunity to enter their local Flagstaff area.
After the company develops a strong marketing and distribution infrastructure, it can then move into the Phoenix market. The company’s sales and profits will increase if the company takes advantage of this opportunity.
5. Decision Criteria
A logical decision cannot be made without decision criteria. That is, when deciding if any opportunities to change the current business model of the company exist, Babbitt Ranches has to take into consideration the following criteria:
- Babbitt Ranches became one of the largest and most successful companies in the livestock activity in the West very quickly.
- It is essential to change the company’s business model as with the current business model, and not enough beef value is captured.
6. Analysis of Decision Options
6.1. Personal Perspective
My personal perspective is that Babbitt Ranches company should