Market Structure Analysis and Appliance for the Stables in the Urban Area of Des Moines, Iowa, USA - Case Study Example

of the Extended Essay Effect of Economic Development on the Activities of Stables Downtown Des Moines Words : 3137 Date Submitted: Table of Contents 1. Research Question 3 2. Approach to Research Question 3 3. Introduction 3 4. Market Profile 4 5. Economic Situation in Des Moines 6 6. Growth of Business for Stables with Economic Development 9 7. Oligopoly Nature of the Business of Irish Run Firms 12 8. Conclusion 13 9. Abstract 13 10. Holistic Judgment 14 11. Works Cited 15 Market structure analysis and appliance for the stables in the urban area of Des Moines, Iowa, USA 1, Research Question: How do economic theories regarding market structure and behavior are applicable to Stables located in Urban Areas, particularly in Des Moines in USA. 2. Approach to Research Question: The approach to the above research question is through economic theories applicable in innovative real situations like Stables located in downtown Des Moines. The approach takes into consideration the atmosphere in the area considered and the potential of that area in nurturing the firms considered. The market existed for the stables and that can be developed by various methods is taken into consideration. Capturing the market share and developing that for the product or the service considered is important according to economic theories. This capture of market share is according to market behavior and structure and this is the central theme of the essay. 3. Introduction The services offered by a stable are to provide boarding for horses and other related services. The market profile of the stables is to operate as sideline enterprises for farm business. These offer boarding and different operating and management activities like training and lessons. When considering the customer base for the stables, the horse owners seeking boarding for their horses are considered as important and basic customers. The ideal location for the stables is outskirts of the city. In that aspect the stables located down town of Des Moines of Iowa are in an ideal location. The demand for horse boarding services depends on the number of horses in the city. The desire of the owners to participate in horse related competitions plays an important role in creating the market for stables. The first aspect that increases business is the high income level of the customers. The next one is attracting high income groups towards horse competition related activities. One more aspect that needs consideration is buying and maintaining a horse. This is a luxury. So the economic decline if any is capable of reducing demand for horse boarding services and other operations. The stables can flourish by gaining the share in the market by providing services at reasonable prices. They have to provide a good location regarding the facilities provided for horses. The horse stable business requires a considerable investment of time for planning to develop and market the operations of the firm. The ability to sell the services should be concentrated on high income individuals. Thus the horse boarding and offering of other services needs a patient approach. The individuals or a group that wants to develop a stable must follow the zoning and building ordinances governed by local municipality. The three stables down town Des Moines have satisfied the regulatory conditions of Des Moines Municipal Corporation. (Dean Dyck, p. 1) 4. Market Profile The assessment of market potential is crucial for marketing activities of a boarding stable enterprise like Irish Run Firm. The number of potential customers in Des Moines can be termed substantial as there are very few vacancies in the stalls of the stables. The services like training the horses and owners by giving them lessons should be provided in the right location. The firms considered here are satisfying that criteria. All the three firms; Irish Run Firms, Hunters Glen and Valley Park Stables are maintaining their clientele. It should be observed that the competition is less and so as the demand. So that they are aware of the prices and services they offer to their clientele. Apart from the above activities the firms must be creative in offering services and facilities. The market research can be done using the economic statistics of the Des Moines. The development of trade and the economy in the local municipality can indicate the extent of market for stables downtown Des Moines. The company can consult horse owners about the additional boarding facilities and services they want to offer. The potential customers for the boarding stable operations are high income class and big business men in the city. The stable management can advertise about their activities and can get outside customers by providing them resident facilities. By providing the riding activities to the customers who have no horses, the management can attract upper middle class customers. Using the suggestions from the article Commercial Horse Boarding Stable Industry by Dean Dyck, the stable managements can provide barn care, box stalls, out door paddocks, pasture board, outdoor riding arenas, indoor riding arenas, trail riding, riding lessons, grooming the horses, veterinary services for horses and intensive management for horses with injuries or serious health problems. The pricing strategy must be based on the clients attracted by the firm. Maintaining high income clients who have own horses will give high profitability for the firms. There would be less profit if the firm maintains horses for providing the services for the customers who have no horses. The prices should be decided in such a manner that the margins between boarding revenues and costs must be substantial to meet the expenses and risks along with the profit. As all the firms cannot attract the high income customers or horse owners, the maintenance of horses for the customers who don't have horses is also important. Though the percentage of profit is less in that area of service, the firm can earn more profit by increasing the turnover. This is possible by increasing the customer base substantially. 5. Economic Situation in Des Moines 3.1 Economic growth and its indicators: While considering the economic development of Des Moines, the announcement of Aviva is important. It is acquiring land for its new US headquarters facility. The establishment of headquarters of one of the largest insurers of the world indicates the economic potential of the Des Moines. The company is investing $150 million and this indicates the rapid economic and industrial growth in the region. This ensures the stable high income customers for the stables in downtown Des Moines. (News Release in August 2007) From the following table the average household income in Des Moines and its economic growth can be understood. The above table is adopted from www.converstations.com/business/ The economic growth of a region can be considered as a potential reason for the increase of customers for the firms like horse boarding stables in that region. The Des Moines economic growth is stable and can be found increasing from the following figure. The above figure is adopted from www.dsmairport.com/AboutUs/Economic_Impact.htm a. Market Structure and Analysis: Apart from the other details, the infrastructure investment in Iowa can be termed as an indicator for the economic growth of the Des Moines and its surroundings. The transportation investments are closely related to the economic development or these investments can drive the economic development further. The property values in Iowa State increased due to the demand for the land. The demand for the land in Des Moines increased due to the acquisition of land for housing and commercial purposes. The increased commercial activity in an area is an indication for economic growth. This is capable of creating potential customers for the firms like horse stables as the activities involving horses are expensive. The report of DAVID SWENSON, LIESL EATHINGTON, and DANIEL OTTO after 1993 demonstrates the measure of economic change within the metropolitan regions of Iowa. This change can increase the market potential for the firms like stables located downtown Des Moines. The increase in growth of capital values, which increase with the income of the individuals and firms, is observed. This increase of capital values and incomes provide enough money and space for luxurious activities involving horses and stables like Irish Run Firms, Hunters Glen and Valley Park Stables can flourish. There are 8,200 unique taxing districts in Iowa and these include cities, counties, townships and school districts. Community colleges and special purpose districts also come under the taxing district category. These taxing districts are increasing their income growth indicating economic growth in urban areas of Iowa. This is capable of enhancing the business of the stables that offer luxurious activities as services. The following tables indicate the urbanization due to economic growth in Iowa and particularly in Des Moines. The above figure is adopted from http://www.ctre.iastate.edu/pubs/crossroads/227economic.pdf The economic growth and increase of value of property are mentioned in this chapter. This is to indicate the increase of potential people who can spend on luxurious activities. As the activities and services offered by stables are not a necessary but a luxury, the economic growth denotes the increase of market for luxurious activities. The luxurious activities considered here are about the horse boarding and training activities of stables located downtown Des Moines. (News Release in 2007) 6. Growth of Business for Stables With Economic Development While Des Moines is witnessing economic development in the above mentioned manner it can be termed that there will be an increased market for Valley Park Stables, Hunters Glen and Irish Run Firms. The reason is that the Valley Park Stables concentrate on the horse owners who want to show their horses and participate in riding and taking lessons. This is possible when young riders take part in the activities of the firm. The Irish Run Firms another stable in the same area can offer a tough competition for Valley Park Stables as it is offering both the services of Valley Park Stables and Hunters Glen. The Irish Run Firms is able to attract both neo rich people and sophisticated industrialist class of the Des Moines and its neighborhood. This means that the Irish Run Firms is concentrating both on boarding the horses of the owners and letting them participate in the shows and lessons. This gives a vast market and a chance of development of the market by attracting Aristocrats, industry heads and high income executive class. The participation in the activities involves entry fees, class fees and show fees. Paying three types of fees and taking part in the activities is a luxurious activity for the youngsters and it is possible for high income businessmen and entrepreneurs. In this manner the Valley Park Stables is concentrating on the potential of the economic development of Des Moines and is attracting the rich people of the city. They take part in the horse showing and riding activities. Contrary to this Irish Run Firms is offering services for both the customers who seek boarding for their horses but ride now and then along with the regular participants. This increases the chances for the expansion of the business of Irish Run Firms and this may result in increasing of stalls in future. The company can increase the stalls by classifying or segregating them into two types. The first type of stalls and the ground is for the people who want not only boarding for their horses with regular participation in riding, showing and lessons. The fees for these activities may be higher. The second one is about the high income executives' families who participate in the riding activities now and then and want regular boarding for their horses. This type of business involves larger customer base with less participation of the customers. As Irish Run Firms (IRF) is offering these services also, it can develop a separate barn for the customers who prefer boarding for their horses along with fewer ridings in a particular period. The Valley Park Stable's activities can be termed costly because the stable is not allowing its stall just for boarding the horses. This makes the participation in the activities of valley park stables expensive and need of rapid growth in the income to meet the expenses of the luxurious activities. As the luxurious people increase their participation in the activities of Valley Park Stable and Irish Run Firms, there exists development of another class. These people are busy and have higher income levels than upper middle class. This Irish Run Firms can concentrate on this class of people along with the people attracted by Valley Park Stables. This is because the increase of number of luxurious customers or industrialists will result in increase of highly paid executives who concentrate on semi luxurious activities like owning horses. They need boarding for them and riding them less frequently. (Not for regular showing and taking lessons). This indicates that concentration of the customers similar to those attracted by Valley Park Stables results in development of the number of customers who want boarding for their horses with less participation in the activities of stable. The expensive nature of the Valley Park Stable's activities is mentioned to assess the economic development of Des Moines. This can be exploited by Irish Run Firms to attract the regular customers as well as the customers who pay fewer visits to the stable. To make clear about the business of stables downtown Des Moines, the economic status of the Des Moines is evaluated. The presence of Ying SA, CPA - Intl Tax Consultants Inc in Ankeny nearer to Des Moines can be a measure that indicates the capability of the companies around Des Moines dealing with international trade. This company deals with the international taxation particularly about Canada, China and other rapidly developing countries. The presence of these types of companies is an indicator of rapid economic development and high income concentration. This helps in making the luxurious activities of the businesses a success and it can be observed that the growing commercial activities in Des Moines are making the stalls in Stables; Valley Park Stables, Hunters Glen and Irish Run Firms full. The no vacancy of the stalls in the stables are an indication of the luxurious activities of the individuals in the near by area. (Aurora Bosch Sanchez, 1998) 7. Oligopoly Nature of the Business of Irish Run Firms The Irish Run firms can run business equal to that of Valley Park Stables and Hunters Glen though it have less space as it is having direct access to the park. The access to the park can be used to cater the needs of the customers who want boarding for their horses and fewer ridings without regular participation. This reduces the pressure on the available space of the firm and the limited space can be used for the customers who pay entry fee, show fee and class fee along with boarding fee. This type of activities of the business of Irish Run Firms can be termed Oligopoly as it is concentrating on more than one type of customers. One more aspect that makes the business activities of Irish Run Firms Oligopoly is that it combines the activities of Valley Park Stables and Hunters Glen. By doing this it is offering its services and is adding another activity of giving lessons to the customers who don't own horses. The Valley Park Stable concentrates only on the highly paying customers but not on the customers who want boarding for their horses. In contrary Hunters Glen concentrates on only boarding the horses but not on regular showing and lessons for the customers who are horse owners. The Irish Run Firms combines the two activities of the Valley Park Stables and Hunters Glen with offering lessons using the firm's own horses. This is a third type of activity, which is offered by Irish Run Firms apart form the services offered by other two stables. The third type of activity is to offer the lessons to the customers who do not own horses. This activity combined with the other two activities of two other stables will constitute the oligopolistic nature of the activities of Irish Run Firms. In case of monopolistic nature, the firms concentrate on only one activity and managed by individuals. In case of Valley Park Stables the firm is concentrating only on horse owners who participate regularly in spite of having larger area. The hunters Glen is offering services about the boarding of horses only and they do not have regular trainers or shows for the horse owners who want regular participation. This is not the case with the Irish Run Firms. Though the firm is having less available space than the other two firms, the direct access to the park is enabling it to offer three types of services thus making its business oligopolistic in nature. 8. Conclusion The increase of commercial activities, along with regular and rapid growth in the income levels of the Des Moines is capable of supporting the business for luxurious activities. This atmosphere can well cater the needs of the Irish Run Firms, Hunters Glen and Valley Park Stable; the stables located downtown Des Moines, Iowa. If the economic activity in Des Moines is not sufficient to support the business activities of the above mentioned firms, the entire business and commercial activity in Iowa State is sufficient for creating the business for the services offered by the stables like that of the ones mentioned above. 9. Abstract The three stables located in the downtown Des Moines are having enough customers and rarely a stall can be found vacant. This indicates the potential of the market in the services offered by stables in an urban area like Des Moines. The three stables are offering three types of activities. The Valley park Stables and Hunters Glen are concentrating on regular customers and the customers who want boarding for their horses respectively and are operating as monopolistic ones. The third stable; Irish Run Firms (IRF) is operating in the two areas of the VPS and HN along with the third area of offering the lessons for the customers who do not own horses. This makes the IRF's business an oligopolystic one. 10. Holistic Judgment The discussion in the paper suggests that the economic development and market structure in Des Moines is sufficient for creating enough business for three stables located downtown Des Moines, Iowa. As the three stables are offering different types of services for the customers, there is enough room for the increase of business of these stables. The three stables cater to the different needs of various types of customers. The luxurious customers can make use the services of Valley Park Stables and other customers can make use of Hunters Glen. The third stable IRF can cater the needs of all the customers from luxurious horse owners to the customers who do not own a horse but are interested in activities of horse riding and racing. Thus, the activities of the three firms can well cater to the needs of the different types of neo rich customers, who emerge from the atmosphere of ever increasing income levels of the area. Works Cited Dean Dyck., Commercial Horse Boarding Stable Industry, Ropin the web, June 1, 2004, Retrieved on 3rd October from News Release, USA: Aviva USA selects West Des Moines site for new US headquarters, Aviva, 29th August 2007, Retrieved on 3rd October from Aurora Bosch Sanchez, Economic Growth, Property Valuation Change and Transportation Investments, ctre.iastate.edu, 1998, Retrieved on 3rd October from Read More