Case study teaching notesHolly Farm
Over a period of six years, the owners of Holly Farm have developed two additionalcomplementary businesses. The first is a service
operation, opening up the farm to payingvisitors who can observe farming activities and enjoy tours, walks and exhibits; the second is anice cream manufacturing
facility, which sells to farm visitors and also through the retail trade.The case allows students to explore some capacity constraints in a service business, and tocompare the capacity with demand forecasts. The teacher will be able to highlight the dangers of ignoring changes in 'mix' of demand, and the inappropriate use of averaged data. Students canexplore options for flexing capacity, managing demand and target marketing to achieve a better balance between capacity and demand in a very seasonal business.They can also examine the role of inventory in the manufacture and supply of ice cream, withvarious seasonalities associated with different markets. Again, there are capacity constraints in production and storage.The case illustrates the dangers that can arise when apparently sensible marketing policiesignore operational capabilities and constraints. Key issues
Capacity management in services and manufacturing
Strategy in small businesses.
1. Evaluate Gillian's proposal to increase the number of farm visitors in 2008 by 50 per cent.You may wish to consider the following:What are the main capacity constraints within these businesses?
Should she promote coach company visits, even if this involves offering a discount onthe admission charges?
Should she pursue increasing visitors by car, or school parties?
In what other ways is Gillian able to manage capacity?
What other information would help Gillian to take these decisions? Nigel Slack, Stuart Chambers & Robert Johnston,
, fifth edition,Instructor’s Manual92© Nigel Slack, Stuart Chambers & Robert Johnston 2007 2. What factors should Gillian consider when deciding to increase the number of flavours fromfour to 10? Note
: For any calculations, assume that each month consists of four weeks including holidays(statutory holidays should be ignored for the purpose of this initial analysis). Discussion
1. IntroductionMost students should be well prepared to provide data and calculations on all the details provided in the case. However, before this, it is important to overview the business, itsobjectives, constraints and forecasts. Objectives
Both Gillian and Charles need to improve the profitability of their business.
Charles does not want to disturb the farming business.
Gillian believes that growth will provide extra profit.
The Gileses do not want to invest more capital on the business.
The farm workers and their spouses are provided extra income from the new activities; theymay have become dependent on this money and used to the pattern of employment.
Growth may be restrained by competitor action (other farms and other ice creammanufacturers) and affected by external factors (the economy, climatic conditions, etc.) Forecasts
The case does not say exactly how the forecasts were derived. However, it is clearly based on asubjective view of the following:(a) Historical growth, projected forward(b) Policy to expand farm visitors by 50 per cent(c) Realistic view of effect of competitor attack on ice cream retailers.A table in the case illustrates the historical and forecast sales of ice cream in each segment,showing the result of these influences. Students will quickly forget that, despite its credibility, aforecast is uncertain. Yet we often have to plan on the basis of such figures.Some students will also note, either at this stage or later, that the ice cream forecast is expressedin sales (money), whereas production is in litres. Where the...