Stonestreet Farms: Making a Business in the "Sport of Kings" SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Stonestreet Farms: Making a Business in the "Sport of Kings"
By the early 21st century, the economics of thoroughbred horse racing in the United States was backwards - owners invested about four times as much money into the sport than the total amount of purse money available. Owners raced their horses as early as possible, and for as short a time as possible to prove that they were valuable for breeding-then sold them to breeding operations. The industry relied heavily on new entrants who had money from outside horse racing to buy and race their foals. Stonestreet Farms was founded by Jess Jackson, a billionaire wine entrepreneur, who invested more than $200 million in the sport. Unlike most in the horse racing business, Stonestreet was involved in both training and racing horses and in breeding. Two of its horses, Curlin and Rachael Alexandra, won the coveted North American Horse of the year for three consecutive years, from 2007-2009. Both later became part of Stonestreet's breeding operation. This case discusses the challenges facing owners and breeders in the North American thoroughbred racing industry. It can be used as a companion case to SPM-49: Del Mar Racetrack: Reinventing the Horse Racing Fan Experience, which focuses on the industry from the perspective of race tracks.
Swot Analysis of "Stonestreet Farms: Making a Business in the "Sport of Kings"" written by George Foster, David W. Hoyt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Racing Horse facing as an external strategic factors. Some of the topics covered in Stonestreet Farms: Making a Business in the "Sport of Kings" case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Stonestreet Farms: Making a Business in the "Sport of Kings" casestudy better are - – there is backlash against globalization, wage bills are increasing, talent flight as more people leaving formal jobs, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, increasing energy prices,
central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Stonestreet Farms: Making a Business in the "Sport of Kings"
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Stonestreet Farms: Making a Business in the "Sport of Kings" case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Racing Horse, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Racing Horse operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Stonestreet Farms: Making a Business in the "Sport of Kings" can be done for the following purposes –
1. Strategic planning using facts provided in Stonestreet Farms: Making a Business in the "Sport of Kings" case study
2. Improving business portfolio management of Racing Horse
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Racing Horse
Strengths Stonestreet Farms: Making a Business in the "Sport of Kings" | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Racing Horse in Stonestreet Farms: Making a Business in the "Sport of Kings" Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Racing Horse are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Racing Horse is one of the most innovative firm in sector. Manager in Stonestreet Farms: Making a Business in the "Sport of Kings" Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Racing Horse has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Racing Horse has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Effective Research and Development (R&D)
– Racing Horse has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Stonestreet Farms: Making a Business in the "Sport of Kings" - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Racing Horse has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Racing Horse to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Racing Horse is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Racing Horse has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the Stonestreet Farms: Making a Business in the "Sport of Kings" Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Superior customer experience
– The customer experience strategy of Racing Horse in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Racing Horse is one of the leading recruiters in the industry. Managers in the Stonestreet Farms: Making a Business in the "Sport of Kings" are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Racing Horse in the sector have low bargaining power. Stonestreet Farms: Making a Business in the "Sport of Kings" has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Racing Horse to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Racing Horse is present in almost all the verticals within the industry. This has provided firm in Stonestreet Farms: Making a Business in the "Sport of Kings" case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Stonestreet Farms: Making a Business in the "Sport of Kings" | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Stonestreet Farms: Making a Business in the "Sport of Kings" are -
Low market penetration in new markets
– Outside its home market of Racing Horse, firm in the HBR case study Stonestreet Farms: Making a Business in the "Sport of Kings" needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Racing Horse is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Racing Horse needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Racing Horse to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Racing Horse has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Racing Horse even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
No frontier risks strategy
– After analyzing the HBR case study Stonestreet Farms: Making a Business in the "Sport of Kings", it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, George Foster, David W. Hoyt suggests that, Racing Horse is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Racing Horse supply chain. Even after few cautionary changes mentioned in the HBR case study - Stonestreet Farms: Making a Business in the "Sport of Kings", it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Racing Horse vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Stonestreet Farms: Making a Business in the "Sport of Kings" that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Stonestreet Farms: Making a Business in the "Sport of Kings" can leverage the sales team experience to cultivate customer relationships as Racing Horse is planning to shift buying processes online.
Lack of clear differentiation of Racing Horse products
– To increase the profitability and margins on the products, Racing Horse needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Racing Horse has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– Racing Horse has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Stonestreet Farms: Making a Business in the "Sport of Kings", in the dynamic environment Racing Horse has struggled to respond to the nimble upstart competition. Racing Horse has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Stonestreet Farms: Making a Business in the "Sport of Kings" | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Stonestreet Farms: Making a Business in the "Sport of Kings" are -
Using analytics as competitive advantage
– Racing Horse has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Stonestreet Farms: Making a Business in the "Sport of Kings" - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Racing Horse to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Racing Horse is facing challenges because of the dominance of functional experts in the organization. Stonestreet Farms: Making a Business in the "Sport of Kings" case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Racing Horse can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Racing Horse can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Better consumer reach
– The expansion of the 5G network will help Racing Horse to increase its market reach. Racing Horse will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Developing new processes and practices
– Racing Horse can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Racing Horse can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Racing Horse to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Loyalty marketing
– Racing Horse has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Racing Horse can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Racing Horse can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Racing Horse can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Racing Horse can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Racing Horse can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Stonestreet Farms: Making a Business in the "Sport of Kings" External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Stonestreet Farms: Making a Business in the "Sport of Kings" are -
Increasing wage structure of Racing Horse
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Racing Horse.
Regulatory challenges
– Racing Horse needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Racing Horse will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Racing Horse with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Racing Horse can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Stonestreet Farms: Making a Business in the "Sport of Kings" .
Shortening product life cycle
– it is one of the major threat that Racing Horse is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Racing Horse demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Stonestreet Farms: Making a Business in the "Sport of Kings", Racing Horse may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Stagnating economy with rate increase
– Racing Horse can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Racing Horse can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Racing Horse.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Racing Horse in the Leadership & Managing People sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Stonestreet Farms: Making a Business in the "Sport of Kings" Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Stonestreet Farms: Making a Business in the "Sport of Kings" needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Stonestreet Farms: Making a Business in the "Sport of Kings" is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Stonestreet Farms: Making a Business in the "Sport of Kings" is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Stonestreet Farms: Making a Business in the "Sport of Kings" is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Racing Horse needs to make to build a sustainable competitive advantage.
