Business Case Studies - Dairyland

Dairyland is a medium sized dairy producer in the north of England. It is a sole trader still run by the founder and his family. It produces eggs, milk and chickens and has recently invested in equipment to start small-scale cheese production.

Here is a more detailed company profile:

General information
Product:	A range of dairy products: eggs, milk, chickens and now cheese.
Market:	Most products are sold to wholesalers and the milk sold to Milk Marque, but it has recently opened a small farm shop selling fresh products and their cheeses. Cheese is also sold to local retailers.
Ownership:	Dairyland is a sole trader completely owned by the farmer.
Financial Information
Turnover:	£245,000
Profit:	£21,000
Ratios:
Profit margin :	8.6%
Gearing (level of debt) :	20%
Acid Test Ratio:	0.6
Return on capital employed (ROCE) :	14%
Cost structure:	A high level of direct costs associated with the farm production, but recent investments have led to higher interest and capital costs.
Marketing
Marketing strategy:	Most products sold through wholesalers, but now also using local retailers and a farm shop as a local niche market.
Average market growth over last 5 years:	The market has grown very slowly at approximately 1% per year over the last five years.
Market prospects:	It is a mature market, but the new cheese production may yield faster growth, although it is risky.
Types of marketing used mainly:	No advertising or any other promotion.
Product
Characteristics:	Basic essential necessities.
Price elasticity of demand :	Very low - consumers need these basic products and so they are price-inelastic.
Income elasticity of demand :	Also very low, though the local cheeses are perhaps more income-elastic and they are more expensive than mass-produced products.

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