Business management in equine businesses

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1 Business management in equine businesses Pack 4 The marketplace Pack Code: EBM4 This pack you will help you to: Describe the equine marketplace Describe the equine supply chain Explain the role of quality management in equine businesses

2 About this pack Objectives When you have completed this pack you will have explored some key around markets for equine products and services. This pack will help you to: Describe the equine marketplace Describe the equine supply chain Explain the role of quality management in equine businesses This pack is relevant to the level 3 unit Business management in the landbased sector, and in particular the following outcome: Outcome 3: Understand the business market place Links to other packs This is one in a series of learning packs, each tackling an important aspect of managing equine businesses. They are: EBM1: The equine sector EBM2: Types of business EBM3: Job roles EBM4: The marketplace EBM5: Record keeping EBM6: Recording income and expenditure EBM7: Profit and loss and balance sheets EBM8: Depreciation EBM9: Business improvement EBM10: Marketing and promotion Management in equine businesses 2

3 Getting to know the market All businesses need to find a market for their products and/or services in order to make a profit and survive. If a product or service is not what people want if it does not meet their needs, is too expensive, or is not delivered on time then it will not attract enough customers to make the business profitable. A market is made up of all the customers who are willing to pay money for a product and/or service. The fundamental marketing activity is finding out what customers want, and matching the product or service to this demand. So businesses need to be clear about their customer base in other words: The number of customers The type of customers Their characteristics factors such as age, sex, social background, etc The market segment they are aiming at those groups of potential customers who are most likely to want to purchase the company s products and pay a suitable price for them. The market for equine products and services is influenced by a wide range of factors: Trends in the behaviour of UK consumers in particular, the number of people riding regularly, but also other factors such as the number of people taking their holidays in the UK. Activities of competitors for example, if the owner of a local riding school retires then this will have an impact on other riding schools in the area. Changes in wider world markets for example, world cereal prices have a direct impact on the price of feedstuffs for horses, while changes in textile prices will have an impact on horse rugs and rider clothing. Management in equine businesses 3

4 Influences on the market Many factors influence the marketplace for equine products and services including both local issues and national factors such as changes in lifestyle and leisure activities. Some of these factors include: For a fuller list of environmental laws that may affect a business, see Pack ENV2: Environment law. Political factors will include national and EU legislation as well as the activities of industry regulators: for example, new health and safety or environmental legislation, new animal welfare laws or changes to planning permission rules. Economic factors could include increased competition which may make it harder to gain and retain customers; changes in prices of supplies that may affect what you need to charge for your products; an economic downturn which may mean customers spend less. Social factors could include trends towards taking more exercise; busier lifestyles might reduce the time people have for riding; ethical concerns such as animal welfare issues. Technological factors could include new, improved equipment that you may need to buy to stay ahead of competitors; improved feedstuffs might appear; improved computer software and hardware. Activity This activity asks you to identify PEST factors for an equine business that you know. Note two examples of each of the following factors here: Political factors: Economic factors: Social factors: Technological factors: Check your answers with those at the end of the pack. Management in equine businesses 4

5 The supply chain Each equine business is part of a larger supply chain. This may include raw material producers; transporters; manufacturers or processors; wholesalers and distributors; retailers; and consumers. Raw material Transport Manufacture/ processing Wholesalers/ distributors Retailers Consumers Many equine business riding schools, livery yards, etc. are retailers with direct contact with consumers. The equine business will use a range of suppliers, who may be retailers, wholesalers or manufacturers (of equipment, foodstuffs, veterinary supplies, etc.). They need suppliers who provide good quality products and services and deliver these on a reliable basis. These suppliers depend on businesses further back in the chain such as raw material producers and transporters. Supply chains can be complex. The following diagram (from East Anglia Food Link) shows a typical supply chain for wheat: Quality assurance is vital at all stages in the supply chain to ensure food hygiene, animal welfare and environmental management. Management in equine businesses 5

6 Activity Try drawing a similar flow chart to show the supply chain for a horse care product such as a saddle, or horse feed. Links in the chain Your examples Raw material Transport Manufacture/ processing Wholesalers/ distributors Retailers/ Consumers Check your answers with those at the end of the pack. Management in equine businesses 6

7 Quality management Quality management is about meeting customer requirements. Equine businesses that manage quality use systems and procedures to make sure that they: Provide the right product or service (what the customer expects) At the right time (when the customer expects it) The International Organisation for Standardisation (ISO) manages the ISO9000 series of standards which are designed to represent an international consensus on good quality management. These standards are based on eight principles of quality management: A customer focus understanding the needs both of consumers and other customers in the supply chain Involvement of people staff at all levels are clear about their role and able to take responsibility A system approach to management helps to ensure that work is done in a coherent way A factual approach to decision making all decisions are based on reliable information Leadership providing a clear sense of purpose and direction A process approach the organisation works out how best to carry out each activity. Continual improvement the organisation looks for ways to make things better Mutually beneficial supplier relationships the organisation aims builds good relationships with its suppliers BHS Approval Since 1961 riding schools have been able to seek approval from the British Horse Society (BHS). BHS approval shows that a school meets higher welfare, instruction and safety standards than those required for basic local authority approval. Some 700 schools have been approved. A similar scheme for and livery yards (which do not need local authority approval) has been in existence since 2002 and 1000 yards have been approved. The BHS also runs the Horses Welcome scheme for B&Bs and self-catering cottages which monitors the stabling, grazing and other facilities for horses associated with holiday accommodation. The Universal Feed Assurance Scheme The Universal Feed Assurance Scheme aims to protect human and animal health by ensuring safe practices in manufacture and distribution of animal feeds based on HACCP principles. It verifies that the industry is meeting its obligations under the appropriate feed safety related legislation and codes of practice in maintaining safety in the feed and food chain. Management in equine businesses 7

8 Other schemes include the Laminitis Trust Approval Mark and the Naturally Occurring Prohibited Substances Scheme. Quality assured food Within the land-based sector, Red Tractor Assurance sets quality assurance standards for the whole food supply chain. There are Red Tractor Farm Assurance schemes for livestock production (Beef and lamb, Dairy, Pigs and Poultry), crop production (Combinable crops, Sugar beet, Fresh produce, Oil seeds and Potatoes), and for transport, markets, meat processing and slaughter. Resources and further reading You may find the following helpful: Equine Business Management (Essential Equine Studies), 2010, Julia Brega, Allen Business Management for the Equine Industry, 2005, Sharon Eastwood, Anne- Lise Riis Jensen and Anna Jordan, Blackwell For more on ISO9000 see For more on the British Horse Society see Answers to activities Activity on page 5 For a riding school: Political factors could include animal welfare laws, health and safety regulations, etc. Economic factors could include increased prices for horse feeds, competition from another school, increased charges for fuel or business rates, etc. Social factors could include changes in holiday patterns which may affect when customers need riding facilities, changing attitudes towards animal welfare, customers wanting to book online, etc. Technological factors could include changes in tack and equipment, new computer software for taking and managing bookings, etc. Activity on page 7 For example, the supply chain for a saddle may begin with raw material in the form of leather; this will be transported to a manufacturer which will make the saddle; this in turn may be distributed via wholesalers to a retailer; who will in turn sell the saddle to a customer. Management in equine businesses 8

9 Knowledge quiz 1 What does PEST stand for? a) P b) E c) S d) T 4 Give four examples of factors that affect markets for equine products and services: a) b) c) d) 3 Fill in the gaps in the following supply chain: Raw material Manufacture/ processing Wholesalers/ distributors Consumers 4 Complete the blanks: Quality management involves: a) Providing the right b) At the right 5 Give three examples of Quality Assurance schemes: a) b) c) Management in equine businesses 9

10 Acknowledgements This learning pack has been produced by the Land Based Colleges National Consortium Ltd. The LBCNC is a consortium of colleges working in the land-based sector which cooperate in the development and production of quality flexible learning materials which encourage independent learning. We would like to acknowledge the contributions made by the following individuals and colleges in the development of this learning pack. Developed and produced for LBCNC by Learners First Cover photograph: Steve Watson, Riseholme College, University of Lincoln Produced in November The Land Based Colleges National Consortium Ltd. All rights reserved. Permission to photocopy or adapt the material in this learning pack is granted to members of the Land Based Colleges National Consortium Ltd. only. For further information please contact the LBCNC project management team at 7 Tyne Road, Bishopston, Bristol BS7 8EE. Tel Management in equine businesses 10