Tony Noonan Racing - Case Study Example

Tony Noonan Name Course Institution City/State Date Description of an organization The chosen organization in this case is the Tony Noonan Racing and the organization operates under the Australian Horse Racing Industry. Racing in Australia is mainly administered by the Australian Racing board and each of the states has a Principal Racing Authority which abides by and also enforces the Australian Rules of racing (Racing Australia 2016). Based on estimates the industry worth is about $1.5 billion and this entails the Australian Horse and Dog racing activities. A great amount of revenue that is generated in the industry is as a result of agreements made with the bookmakers as they facilitate gambling on horse and dog racing. The origin of horse racing dates back to the European settlement. Besides being a spectator sport, horse racing in Australia also plays an essential role in the Australian economy in that it offers both full tie and part time employment opportunities for about 250,000 people and this is equivalent to about 77,000 jobs. Additionally there are about 300,000 individuals who seem to have direct interest and this includes individuals such as the individual owners or the members of the syndicate. It can also been noted that there have been a growing public interest in some racing activities such as the thoroughbred racing and more specifically during the autumn and main spring racing carnivals and about 100,000 people have been attracted to participate and compete for various awards. Owners and trainers generally operate to break even, rather than aiming for substantial profits. The profitability of individual businesses is volatile each year due to the reliance on racing prize money as a revenue stream (Little, 2015). Tony Noonan Racing is based on Mornington Victoria. The company aims at training fast horses and the fact that it is in a position to share it with the others enhances their victory. Tony Noonan racing was started by Tony and he has been involved in the thoroughbred training in his adult life and currently holds the highest form of training license in the state of Victoria. Through his expertise he has trained about 800 winners. The company also has a department that deals with the sale or purchase of horses. Additionally, Tony Racing also allows stable visits. Based on the fact that Tony Noonan is a registered member of the Australian Trainers association owners of horses trained by Tony are therefore bound by the terms and conditions of the association. Porter’s five forces model Porter formulated the five forces model with the aim of explaining the influences that usually shapes the industry competiveness. The five forces includes the threat of new entrants, bargaining power of the suppliers, bargaining power of the buyers, threat of substitutes products and the rivalry among the existing competitors (Ireland, Hoskisson & Hitt 2008). The diagram below shows the porters five forces model Below is a discussion of the porters five model of horse racing industry and this will be done with the aim of assessing the competiveness of the industry Threat of new entrants When a market seems to be profitable and yield high returns they are more likely to attract new firms and this mainly results in new entrants and this would decrease the profitability of all the firms in the industry. Unless the already existing firms lock the new ones with incumbents, firms will stop attaining the abnormal profits and there will be perfect competition. The threat of new entrants is high in the racing industry. Tony Noonan faces major threats in that though there are high capital requirements there is no product differentiation, customer switching costs and brand identification and there is also easy access to technology (Rainer and Turban 2009). Bargaining power of the suppliers The bargaining power is termed as the ability to have an influence on the setting up of prices. It tends to assess how easy it can be for the suppliers to make the prices go up. The suppliers can in a way influence the profitability that a fir can attain in a certain market and they do so by exerting pressure for higher prices or at the same time they can reduce the quality. Power of suppliers can be said to be high since there are few suppliers in the market. In regard to the Tony Noonan Racing the key inputs are the horses and this are mainly supplied by the breeders also termed as the horsemen. There seems to be a limited supply of the top racing horses and also few substitutes are available for the horses and at the same tie it is crucial to note that good horses normally contributes greatly to the quality of the races that are offered. In addition, the horse breeders and the horse owners also choose to race on the tracks with better purse distribution. Bargaining power of the buyers In the horse racing industry buyers in the sector have a very high bargaining power since they exists a number of substitutes which have no switching costs. Additionally, there exist few buyers when viewed as a percentage of the total population. Threat of substitute’s products The mere existence of products that can be categorized as being outside the realm of the common product boundaries mainly leads to an increase in the propensity of the customers to switching to the next available alternatives (Porter 2008). In respect to these some of the substitute products which people can take note and participate in so as to supplement the horse race gambling includes activities such as engaging in casinos and lotteries and this can be done physically and through online means additionally people can engage in other entertainment options such as they can participate in art events, sport events and movies. Furthermore, the consumers do not incur any switching costs and the value as well as price of the substitutes is viewed in a positive manner when compared to horse racing. The substitutes also seems to be better placed in that they have already incorporated customer experience and more so in their entertainment offerings. Rivalry among the existing competitors Based on the fact that each business has competitors the rivalry in the horse racing industry low and this is based on the fact that there are few competitors in the sector and the competitors have a low diversity when it comes to their product offerings. Additionally, the horse racing tracks are offered as standardized products and they have some fixed costs. References Ireland, R. D., Hoskisson, R., & Hitt, M 2008, Understanding business strategy: Concepts and cases. Cengage Learning, Boston. Little, S 2015, Horse and Dog Racing in Australia, industry report, IBISWorld, viewed 2 September 2016, retrieved from IBISWorld Database. Porter, M 2008, The Five Competitive Forces That Shape Strategy, Harvard Business Review, Harvard. Rainer R.K. and Turban E. (2009), Introduction to Information Systems (2nd edition), Wiley, pp 36–41. Racing Australia 2016, Racing Australia Board, viewed 2 September 2016, retrieved from http://www.racingaustralia.horse/Aboutus/RacingAustraliaBoard.aspx Read More