Put a leader on that horse (association).

Green, LaVon ; Conners, Susan E. ; Green, Sherry 等

CASE DESCRIPTION

The primary subject matter of this case involves the strategic direction of a not-for-profit equine breed association. Additional issues are organization structure, leadership, and financial stability. The case has a difficulty level of one, appropriate for freshman level courses. The case is designed for one class session and will require about two hours outside preparation.

CASE SYNOPSIS

The Arabian Horse Association is responsible for the breed registry, membership, marketing and promotion, and member programs for Arabian and Half-Arabian horses in the United States. The growth of the organization resulted in poor financial planning and no long term strategic plan to guide the organization.

INTRODUCTION

There is a world-wide equine industry involving many breeds of horses. Horses serve primarily as show horses, hobby interest, breeding stock, and in some instances, working horses. In this global market, purebred horses generate a great deal of income and are responsible for a large part of the market's economy in some geographic areas. The various breed associations in each country control the pedigree and show records of these horses. The Arabian Horse Association in the United States has suffered setbacks in its attempts to create a competitive market place for these horses.

US EQUINE INDUSTRY

Horses have been a part of civilization for centuries as one of the primary sources of transportation and work animals. In the 1800s and 1900s during the industrial revolution, much of their purpose was transferred to machines. In the 21st century there are still horses working on ranches, serving as police mounts, and performing similar functions. The majority of horses today are used for sporting events, breed association shows, and as pets.

There is currently an emphasis on sport horses used in international horse show events such as racing, jumping, dressage, endurance, and reining. The business of breeding such horses can be lucrative and has many tax incentives. There is a global market for these types of horses having pedigrees and show records which often command high prices. There are Horse Councils at both national and state levels that lobby the government on behalf of the equine industry. These councils track economic data related to the equine industry. In some states, such as Kentucky, the equine industry has a major impact on the state's economy. The KEEP white paper reports, "The horse industry has an estimated $4 billion impact on the state's economy each year" and that "The 2010 World Games will be the largest sporting event in Kentucky history and the largest equine event ever held in the United States with an estimated economic impact of more than a $150 million and attendance estimated at over 400,000."

The United States Equestrian Federation has responsibility for overseeing horse shows and maintaining international standards at large competitions. They have been successful in the past five years in bringing major international competitions to the United States that generate millions of dollars in revenue for the locations that host these events. In 2010 for the first time, the United States will host the World Equestrian Championships in Kentucky.

The people in the equine industry look to their breed associations to assist them in this highly competitive industry. The Arabian horse is considered the oldest purebred horse of record in the world and many breeds trace part of their ancestry to these horses. The Arabian horse industry is a major player in this global market.

ARABIAN HORSE INDUSTRY

After the importation of Arabian horses to the United States in the late 1800s and early 1900s, the Arabian Horse Registry was formed to authenticate pedigrees and register purebred Arabian horses. A second organization, the International Arabian Horse Association, was formed later to register Half-Arabian horses and provide a marketing and member services organization. The organization chart in Figure 1 represents these organizations. These organizations duplicated efforts and did not run efficiently as separate entities. In the late 1990s there was discussion regarding merger of the two organizations to form a more efficient method for coordinating all matters concerning Arabian and Half-Arabian horses. The resulting organization was the new Arabian Horse Association. The organization chart in Figure 2 represents the new organization. The merger did not go smoothly and the result was a loss in market share for the Arabian horses. The growing pains of merging two different organizations seemed to create a lack in both leadership and strategic planning.

ARABIAN HORSE ASSOCIATION

The Arabian Horse Association (AHA) is headquartered in Colorado. Its primary mission remains as guardian of pedigree records and the authority to register purebred and Half-Arabian horses. The secondary mission is to provide membership records, promote the Arabian horse through advertising, horse shows, and other programs. Additionally the AHA puts on the three national shows held every year. They maintain a web site at www.arabianhorses.org.

After the merger, the AHA faced declining registration numbers as fewer horses were being bred each year and declining membership. This resulted in a loss of revenue and resulting financial problems. The existing leadership did not engage in adequate long term strategic planning. The Breeders Sweepstakes incentive program, for example, was paying out more than it was receiving in revenues. There were pending lawsuits regarding the policies on registration of horses. The association was facing serious problems and an increasingly unhappy membership.

In 2004, the membership sent a clear message that change was necessary by voting to change the leadership. The new officers are all club members that are professionals in the equine industry--breeders, trainers, and horse show judges. They immediately accepted the challenge of creating a long term strategic plan and implementing standard business practices, which included a serious look at the staff of the association. This resulted in a restructuring and the creation of new positions to address critical issues. A new Breeders Sweepstakes Commission was seated and dramatic changes to the program occurred to stop the financial losses.

Marketing research was done and brought new information to the association, which had incorrectly identified its client base. The new information on the actual client base resulted in a shift of programs to serve these clients. Professionals in the areas of information systems, marketing and finance now direct these departments.

After two years of major changes in the organization, the numbers of horses registered and members is starting to increase. The lawsuits have been settled and new contracts for the national shows have been implemented. The association is actively promoting Arabian horses in many venues and recognizes the role Arabian horses can play in the marketplace. The AHA is solvent again and forecasting profitability.

DISCUSSION QUESTIONS

1. What one aspect of strategic planning was the most beneficial to this organization and its restructuring? Explain how it helped them.

2. Evaluate the potential benefits and pitfalls of this rapid restructure.

3. What suggestions would you make to the Arabian Horse Association for future strategic planning?

4. What would you have done with this organization to correct the situation after the merger?

RESOURCES

American Horse Council. Retrieved January 16, 2007, from http://horsecouncil.org

Arabian Horse Association. Retrieved January 14, 2007, from http://www.arabianhorses.org

Kentucky Equine Education Project. Retrieved January 15, 2007, from http://www.horseswork.com/pdf/KEEP_whitepaper.pdf

National Economic Impact on the U.S. Horse Industry. Retrieved January 16, 2007, from http://www.horsecouncil.org/statistics.htm

The State Horse Councils Advisory Committee of the American Horse Council. Retrieved January 15, 2007, from http://statehorsecouncils.org

United States Equestrian Federation. Retrieved January 15, 2007, from www.usef.org

LaVon Green, Purdue University Calumet

Susan E. Conners, Purdue University Calumet

Sherry Green, Purdue University Calumet

Michael Mick, Purdue University Calumet