Business Principles of Wyatt Earp, Buffalo Hunter Case Study
After carefully reviewing the information presented in the case study "Wyatt Earp -- The Buffalo Hunter," which is included within Chapter 1 of Operations and Supply Management: The Core by F. Robert Jacobs, the connection between this historical account and fundamental economics becomes quite evident. The buffalo hunting circumstances described by Jacobs -- as relayed by Wyatt Earp himself in Stuart Lake's biographical account Wyatt Earp: Frontier Marshal -- represent a closed commercial market in which both supply and demand remain relatively constant. In this particular commercial environment, a business (the buffalo hunter and his assembled team of skinners, spotters and other hired hands) cannot effectively manipulate pricing, so the most effective method of ensuring profit margin is to streamline operations. Despite this economic truism, the average buffalo hunter during Earp's era "set out for the range with five four-horse wagons, with one driver, the stocktender, camp watchman, and cook; and four others to skin the kill & #8230; (and) provided horses, wagons, and supplies for several months" (Jacobs, 2009), basing their sizeable operational expenses on an expected haul of 100 felled buffalo per day. This volume-based approach required the average buffalo hunter to meet highly unsustainable quotas in order to meet the threshold of profitability, and the majority of hunting excursions resulted in take of only 50 or so hides, meaning the hunter's obligation to pay for outfitting, supplies and labor resulted in a net loss for days of...
Although Earp lacked a formal education in economic theory, he observed the generally accepted practices employed by his fellow buffalo hunters and instinctively employed a concept known as cost -- volume -- profit analysis, and through this process the legendary gunslinger discovered that by killing fewer buffalo, he could actually derive greater profit despite diminished revenues. According to Colin Drury's appraisal of Earp's methods, presented within his authoritative textbook Management and Cost Accounting, the iconic Western figure "saw that the typical hunting party had considerable idle capacity. So Wyatt scaled things down. He decided to use one wagon plus four horses and another horse for riding in place of the four wagons and 20 horses other hunters used & #8230; (and) he hired one good skinner in a profit-sharing arrangement" (2007). Financial management scholars have developed a consensus which holds that "the conventional analytical tool cost-volume-profit, commonly called breakeven analysis (BE), is used widely in managerial decision making to examine sales prices, sales volume, variable costs and fixed costs in relation to target profit levels" (Yuan, 2009), and although Earp had no awareness of these concepts as such, he naturally implemented a process of calculations to reduce expenditures while increasing efficiency.
Earp's novel solution to the problem…
