Running head: BELLE MEADE PLANTATION 1
BELLE MEADE PLANTATION 12
Belle Meade Plantation Case Study Analysis
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Executive Summary
The purpose of this paper is to analyze a case study of Belle Meade plantation that denotes the 18th-century American culture. The case entails applying social entrepreneurship to cope with the dwindling revenue stream from donors. As a premier horse breeding farm, the plantation provides an educational experience for American families about life in the 1800s. However, the primary challenge faced by the plantation is the lack of financial sustainability requiring restricting of the farm’s revenue sources. The ranch settled in building and operating a winery in the facility whose proceeds would maintain the museum and its operations. The paper finds a winery to be a socially responsible investment as it is in line with the farm’s historical values. Additionally, the winery guarantees the farm’s financial independence.
The paper further provides a SWOT analysis of the plantation. It finds the major strength of the farm to be its strong brand name in producing the best through bred horses in American and having a customer base of around 250,000 annual visitors. The main weakness plaguing the farm is its limited production and storage capacity. The main opportunity is the increased demand for winery products in the region due to the high number of restaurants. Finally, the plantation is threatened by increased completion and lack of raw materials. To maximize its strengths, minimize its weaknesses, grasp the opportunities and eliminate the threats, the threats paper recommends that the plantation adopts a comprehensive marketing strategy, establishes partnerships, expands its production and storage capacities and automates its operations.
Introduction
Nonprofit organizations exist to further a particular social agenda that benefits the public rather than making a profit. They reflect the foundational values of society through the belief that people should strive to make a difference in the lives of others without necessarily having any monetary rewards. However, most nonprofit organizations face a myriad of challenges in establishing and maintaining financial sustainability. Despite the public and private grants and being exempted from taxation, most charitable societies continue to face several financial limitations that hinder them from furthering their purpose. The over-dependence on external sources of funding has made it difficult for nonprofit organizations to achieve their objectives. As a way of responding to the changing resource environment, nonprofit organizations have shifted their focus from an exclusively donor-based funding approach to a diverse revenue generating system.
Belle Meade Plantation a nonprofit organization that had to invent new sources of income after a decline in the primary donor funding. As a premier horse breeding farm, Belle Meade Plantation has been a center of hospitality and American culture since the 1800s (Ferrell, Fraedrich & Ferrell, 2010). However, after the latest financials in 2004, Alton and Sheree Kelley searched for ways to better improve the funding as it was evident that the grants from different donors could no longer sustain the plantation (Ferrell, Fraedrich & Ferrell, 2010). This significant decline in donor funding forced the farm’s management to devise alternative revenue sources. Entrepreneurial ingenuity led to the institution of an ambitious plan to build and operate an on-the-site winery to provide the additional revenue needed. This paper is an analysis of Belle Meade’s plantation winery case and the resultant changes brought by the winery.
Summary of the Case Study
Belle Meade Plantation was established in 1807 by John Harding in Nashville, Tennessee (Ferrell, Fraedrich & Ferrell, 2010). The plantation is famous for producing the best-bred racehorses in the U.S. The selling of the grounds in the early twentieth century saw them converted to a historical museum to help people experience life in the nineteenth century (Ferrell, Fraedrich & Ferrell, 2010). However, the plantation suffered dwindling levels of donations for five consecutive years. In 2004, Alton Kelley, the president of the farm and his wife Sheree, faced a tremendous challenge of securing adequate long-term funding due to the declining funds. The couple believed the solution to be outside the proverbial box thus sought for ways to generate extra income. After evaluating several alternatives, the couple settled on building and operating a nonprofit winery in the facility to help sustain the existing and future financial needs (Ferrell, Fraedrich & Ferrell, 2010). This idea was in line with the plantation’s strong historical roots of wine production and ensured economic sustainability of the farm.
Problem Statement
The main problem experienced by the plantation was the lack of financial sustainability due to overdependence on corporate and private donations. Consequently, the farm faced a lot of difficulties in funding its operations. According to Ferrell, Fraedrich & Ferrell (2010), “in five consecutive years, donations had declined at unprecedented rates leading to the lowest total annual revenues in memory.” Indeed, the plantation needed to devise various revenue generating strategies to provide the finances required to sustain its operations. The shift from an exclusively donor-based system of funding to embracing new sources of income was inevitable for the plantation to continue preserving its historical value and educating the public about its significance in the American culture. Therefore, ensuring organizational sustainability by securing adequate current and long-term financing marked the priority intervention needed by Belle Meade plantation.
Ethical Issue Facing Belle Meade Plantation
Belle Meade Plantation faced an ethical dilemma with its investment policy. The company settled on establishing a long-term investment to finance the operations of the farm. In devising a worthwhile investment, the company was ethically accountable to adopt a socially responsible investment. According to Ferrell, Fraedrich & Ferrell (2010), “social responsibility entails a commitment to behave ethically and address the needs of the society and the environment.” Therefore, the investment should ensure that its financial portfolio is consistent with the plantation’s values. This ethical strategy calls for investing in ventures that furthered the plantation’s mission of preserving its historical value and the American culture while maximizing the financial return on the investments.
In choosing a winery, the company stuck to the plantation’s values and social responsibility to preserve the 18th-century history. Wine production was in line with Belle Meade’s strong historical roots. Numerous invoices proved that the Hardings produced wine in the facility (Ferrell, Fraedrich & Ferrell, 2010). Therefore, resurrecting the winery was in line with the plantation’s mission of keeping its history alive. Additionally, the winery was a nonprofit investment as the revenues were to maintain the museum operations (Ferrell, Fraedrich & Ferrell, 2010). Engaging in social entrepreneurship ensured that it created societal value rather than earn profits. Therefore, the plantation managed to adhere to its ethical responsibility of protecting the museum rather than profit generation. The winery also helped the estate to accomplish its civil responsibility of stewarding American’s oldest horse breeding farm so that families can experience its historical, educational experience.
SWOT Analysis of Belle Meade Plantation
Strengths
The Plantation enjoys some advantages which give a competitive edge to the winery business. The plantation enjoyed a reputable brand name. It is famous for producing the best through bred horses in America (Ferrell, Fraedrich & Ferrell, 2010). Such a prominent brand name gives the firm a leading edge in the market by giving the firm an attractive image to customers and thus strengthening its position against the competitors. Additionally, a strong brand name promotes market penetration which in turn helps in speeding up the acceptance of new products. This is evidenced by the quick adoption of Belle Meade’s wine products surpassing the first year’s set target of 10,000 bottle sales to reach 54,000 (Ferrell, Fraedrich & Ferrell, 2010). Part of the positive brand name is being a center for hospitality by hosting several key historical figures such as the president, thus, increasing the customer traffic in the facility leading to a ready market.
The abundance of outstanding historic facilities in the plantation is also a major strength enjoyed by the firm. Such amenities raise the interest of citizens to visit the ranch. According to Ferrell, Fraedrich & Ferrell (2010), “the farm receives 250,000 annual visitors who form be the initial primary market for the wines produced at the winery.” Inviting such guests in the tasting room and presenting them with the various labels of wine would create a ready market for the wine. Additionally, it is estimated that most visitors purchase a wine bottle before leaving the farm (Ferrell, Fraedrich & Ferrell, 2010). The plantation also has experienced staff in wine production. The winery is an all-staff effort by ensuring that everyone has adequate knowledge of the winery process (Ferrell, Fraedrich & Ferrell, 2010). As a result, teamwork efforts increase productivity leading to the firm’s success. Finally, the plantation owns the only winery located in Nashville thus experience less competition.
Weaknesses
The major weakness suffered by the farm was the lack of diversified revenue resources. Before the winery, the plantation did not have a reliable source of income and depended heavily on donor funding (Ferrell, Fraedrich & Ferrell, 2010). The plantation also lacks the ability to expand its services due to storage limitations for the bottled wine. The storage room for wine needed to be near the point of sale, climate friendly to protect the wine as well as have sufficient volume for expansion (Ferrell, Fraedrich & Ferrell, 2010). The historical diary is an ideal place for storage but has a limited capacity for expansion. As a result, the winery has been forced to turn down requests from local restaurants to have Belle Meade’s wine (Ferrell, Fraedrich & Ferrell, 2010). Additionally, the plantation does not apply modern technology in the wine production process. For instance, the company used hand bottling in the first year of operation as opposed to the quicker and more accurate mechanized system of bottling.
Opportunities
The plantation’s good gardens can host events with the potential for reaching a larger customer base and promote its services (Ferrell, Fraedrich & Ferrell, 2010). The firm can organize tours at the historic site where the guests can be treated with Belle Meade’s products. Such city-wide and community projects and events could provide additional income to maintain the property. The winery also can expand its business by producing more to meet the already existing demands. The plantation is surrounded by several restaurants that desire to make Belle Meade’s wines their official product. Expansion presents a market niche for the winery to expand its production. Additionally, being a nonprofit organization, the firm could still maximize the federal, state, public and private grant applications to raise more funds. The plantation’s visitors also present a worthwhile market that can be exploited by Belle Meade.
Threats
The major threat to Belle Meade Plantation is an increase in the number of competitors (Ferrell, Fraedrich & Ferrell, 2010). The plantation must be on the lookout for other rivals that may establish themselves in Nashville. The state of Tennessee where Belle Meade’s winery is located has 45 registered wineries with the likelihood of expansion shortly. These wineries may choose to establish their new expansion investments in Nashville. Obviously, such competition would act adversely against the plantation more so because it is a nonprofit organization. The profitable organizations have a better competitive advantage as they are already established. The plantation is also faced with the threat of reduced raw materials for wine production where the grape farming is in small scale. Nashville is also a historic city with several other tourist attractions. These other alternatives including Belmont Mansion and Hermitage may drift guests from the plantation (Ferrell, Fraedrich & Ferrell, 2010). Furthermore, this other historic sites may pursue a similar entrepreneurship investment threatening to run Belle Meade out of business.
Possible Solutions to Belle Meade’s Plantation Problems
Develop lasting partnerships
The company is faced with a potential threat from its competitors which could lead to its extinction. Therefore, to counter this growing threat, it needs to devise a comprehensive strategy and forge various partnerships to implement it. Their products should be used in different restaurants around Nashville. This has the advantage of reaching several customers who visit such restaurants thus promote Belle Meade’s products. Also, by pairing local foods with wines, the winery will experience increased sales and revenues (Ferrell, Fraedrich & Ferrell, 2010). Additionally, a partnership with the local restaurants also secures a significant market share and brand loyalty for Belle Meade thus protecting the company from other winery competitors that may be established in Nashville. However, forging such partnerships presents some disadvantages. First the cost of the wine products is raised making it more expensive. Partnerships are also harder to manage as opposed to selling the products individually. The decision-making capacity of the farm is also reduced since it has to consult its partners before making major decisions.
Develop a comprehensive marketing strategy
The company’s marketing strategies are limited in nature with most products being sold through its website, social media, and word of mouth (Ferrell, Fraedrich & Ferrell, 2010). Instituting a good marketing strategy can help the farm in reaching more customers and having more sales (Ferrell, Fraedrich & Ferrell, 2010). A good marketing strategy would be the use of retail stores where the company opens several retail stores across the country and stocks it with its wine and other products. The retail stores have the advantage of having a one on one interaction with the clients thus generating feedback to be used in the improvement of the outputs. However, such retail stores require extensive capital investments and personnel which may cost the company lots of money. Furthermore, retail stores need a complex managerial and supervisory structure which the company may not be able to set up.
Institute an expansion plan
Belle Meade winery cannot meet the demand for its products due to its limited production and storage capacities. Several restaurants in the region have requested the company to have its products as the official wine served but due to the limited production, the company cannot meet these demands (Ferrell, Fraedrich & Ferrell, 2010). Apparently, the company needs to expand its production capacities to exploit this market niche before the competitors do so. Therefore, the plantation should build a modern production and storage facility as this is the best solution to curb the expanding threat from the competitors. The expansion of output capacity is justified by the increased demand for Belle Meade’s products (Ferrell, Fraedrich & Ferrell, 2010). Before forming partnerships and developing marketing strategies, the company should be in a position to supply the products consistently. Expansion ensures that the business meets the consumer demands entirely and also creates a broader customer base. However, enlargement of the firm may pose problems. The company requires extra resources with a major drawback being the extensive capital requirements. Also, getting involved in too many markets can cause the plantation to spread its abilities and resources too much to the extent that it does not perform well in either sector.
Contingency Plan
The major hindrance to Belle Meade expansion is the lack of adequate production and storage facilities (Ferrell, Fraedrich & Ferrell, 2010). If not able to adopt the above solution of expanding its production capacities, the company can take the following contingency plan. It can choose to automate the wine manufacturing process instead. Automation of wine production includes the introduction of control systems, proper sequencing, sensors for temperature monitoring and fermentation stage identification, remote observation of processes, and mechanized bottling processes. Automation improves productivity leading to efficiency in production and increasing output to satisfy the market demands. It also saves on energy and manpower needed in the manual process. It also improves accuracy, eliminates time wastages and mistakes. The labor savings in labor costs reduces production costs. Finally, automation enhances the quality of wine leading to increased attractiveness with other wine producers thus eliminate the threat of competition.
Conclusion
In conclusion, Belle Meade Plantation is a plays a significant role of conserving the American culture. However, the farm solely relied on donor grants to keep its operations. The decline has forced it to adopt a winery so as to use the proceeds in maintaining the farm. The winery experienced unprecedented success since its inception. The plantation can use a variety of ways including forging partnerships with local restaurants, developing a comprehensive marketing strategy and expanding its production capabilities to enhance its continued success, t. However, the priority should be the expansion of its already existing facility to meet the increased demand for its winery products. Due to capital limitations, the company can first adopt automation of its process as this also increases the productivity. Implementation of these solutions would increase the company’s customer base; improve sales and revenues which would, in turn, be used to run the plantation. As a result, the farm continues its mission of preserving the historical site and keeping the 18th-century American culture alive.
Reference
Ferrell, O., Fraedrich, J., & Ferrell, L. (2010). Business ethics. Mason, OH: South-Western Cengage Learning.
