In the United Kingdom Julia Charles is well known event Management Company in all over the world. The company specializes in managing different kinds of events including entertainment events. Creativity and innovation are the two main aspects of the company’s services and the management uses these two elements effectively to manage entertainment, business and luxury events.
Though the company is based in UK the services of the company in relation to the event management are stretched to different parts of the world. The company is credited for some of the most creative event management services in UK with number of events for shopping centre displays and entertainment events. The company takes pride in providing highest quality services to manage different events as required by the clients of the company. The company has won number of awards for providing creative event management solutions for the clients to satisfy their requirements (Titman et al. 2017).
The company offers creative event management services and provides top quality entertainment management services for the clients. The company has its own in-house costume designers, planners for wedding, luxury event planners and designers to design prop to manage events of different kinds. Thus, the company is well equipped to manage wedding parties, baby shower parties, designer events, company product launch parties, entertainment parties and events of any kind.
In this part of the document a detailed discussion shall be made on the findings from the market research which have been conducted on the commercial viability of similar events and the existing competitors of the company in the market.
Here the market research has been limited to the market in the United Kingdom since the company’s majority of operations are limited within the boundaries of the country. According to the findings of a recent study conducted on the UK event industry the industry is almost worth of ?45.00 billion and currently supports almost 600,000 jobs directly (Barr and McClellan 2018). The market research further provides that on an average event attendees spent ?68,000 in annual registration fees. In-fact just a year back, i.e. in the year 2016 the market research on the event management industry showed the following results
Thus, within a year the industry has further expanded as the above findings were from a research conducted in the year 2016. Thus, just above a year the industry has boosted by increase in the number of jobs as well as total turnover of the industry that is a positive sign for the industry and its growth.
The top ten UK event management companies have a combined turnover in excess of ?3.5 billion and in the future it is expected to increase further. According to the 2015 study the budget per event is ?65,943. Thus, the findings from the above makes it amply clear that the event management industry in the country and its products have significant interests and popularity (Finkler et al. 2016). Julia Charles is a well-known event management company in the country however, there are number of competitors in the industry who are involved in providing event management services in the country. Let us take a closer look on the competitors of Julia Charles in the market.
The above list contains only few of the event management companies of UK thus, there are number of other companies which are in the business of event management however, not all of these companies are in competition with Julia Charles event Management Company.
In this document the particular event that shall be discussed is the business conference and meeting event to be held in London which will host top business executives from different parts of the country (Matthew 2017). The main purpose of the event is to encourage the investors to make investment in capital intensive projects within the country to create significant amount of jobs in the country. The event will be held on the 6th day of August in 2018 at the O2 arena. Since the event will be held to promote growth of industry and investment in the market along with the top business executives of the country the representatives of the government of the country are also expected to attend the event. The management expects that the required amount of funds to finance the project would be around ?750,000. Thus, the Julia Charles require an amount of ?750,000 to finance the business conference and meeting in the O2 Arena on 6th of August, 2018 (Gomber et al. 2015).
There are number of options which are available to an organization to arrange the required amount of funds for financing different projects. In case of the event management company Julia Charles there are number of options available which the company can use to arrange the required amount of funds of ?750,000 to finance the business conference. The business can meeting in O2 Arena for encouraging the investors in the country to invest in capital intensive projects to fuel the industry growth in the country (de Jong and Naumovska, 2015). Let us see the alternative sources of finance which the event management company can use to raise the required amount of capital needed to finance the event management at the O2 Arena in London.
The sources of finance can mainly be segregated into internal and external sources. Let us now elaborate a bit on the internal and external sources of finance.
Internal sources: Integral sources which the company can use include the following:
Excess amount of funds available within the company: Often companies have excess amount of capital which have left unused after investments in different projects such excess amount of funds can be used to finance the event in O2 Arena provided the company has such additional funds available with it (Kothari et al. 2015).
Retained earnings: Retained earnings accumulated by the company over the years can be used to finance the capital required for the business conference and meeting to be organized by the company on 6th of August 2018 at an approximate cost of ?750,000. It is important for any company to make profit over the years constantly in order to have the option of using its accumulated profits, i.e. retained earnings for investment purpose in the future.
External sources: Large organizations are mainly reliant on the external sources to arrange its required amounts of funds for investing in different projects (Pinkerton et al. 2017). Since the required amount of funds is significant the company can use the following external sources to arrange the required finance for organizing the business conference and meetings successfully on the 6th of August, 2018.
Loan from banks: The Company can take loan from banks for financing the event at O2 Arena in London. The required amount of capital ?750,000 can be taken on short term loan since the company expects to receive the whole payment for the event management after the successful hosting of the event.
Issuing ordinary shares in the market: The Company can issue its shares in the market to arrange the required amount of capital for investing in a project, in this case the business conference and meeting to be held in O2 Arena (Achleitner et al. 2017).
The main purposes of financial management within the event industry include but not limited to the following:
Better use of financial resources: The financial management is the process of managing the financial resources of an organization effectively. The financial management in event management companies will lead to better use of financial resources provided proper steps of financial management are followed taking into consideration the characteristics of business and requirements of business (Mallen and Adams 2017).
Optimum use of resources: Financial management is essential for any industry. Thus, it is equally important for event management industry also as it is directly related to the optimum utilization of resources (Egginton et al. 2016). The financial management in the event management industry will help the event management companies to make optimum use of its resources.
Minimizing the cost of operations: Financial management helps the companies in event management industry to reduce the overall cost of operations. Thus, the companies and organizations in the event management industry will be able to reduce the cost of operations by using the steps and procedures mentioned in the financial management theory (Langdon and Marsden-Heathcote 2018).
Julia Charles Event Management Company is a well-known company in the industry and is known for its creative event management for business product launches, shop displays and entertainment projects. Thus, it is not like that the company is looking to make a mark in the industry as it already has a strong market presence in the overall event management industry in the country. However, the management of the company is looking to improve its financial performance in the future by increasing its turnover and subsequently the profit earned from business (Rane and AnjanaRaju 2016). The company wants to maintain a sustainable rate of growth both in overall revenue as well as its profit. In order to increase the amount of revenue the company will have to increase the number of events it manages year after year. The pricing strategy of the company to price its products in the market will play a crucial role in determining the quantum of events that the company will end up managing in the future years. Thus, it is important that the management uses an appropriate pricing strategy to price its products and services to ensure maximum amount of revenue and profit for the company in the future.The relevant pricing strategies in front of the event management company are explained below;
Penetration pricing strategy: In penetration pricing the company will price its product at relatively low to attract more customers. Thus, the company shall charge relatively low price for managing different event to increase its overall revenue in the future (Bessis 2015).
High pricing strategy: Exactly opposite to the penetration pricing strategy under the high pricing strategy an organization generally charges very high prices for its products and services. Either a new firm in an industry or an entity in manipulation market can use high pricing strategy. Thus, in this case high pricing strategy is not an option for the Julia Charles Event Management Company (Stone et al. 2017).
Strategic pricing: Under the strategic pricing an organization prepares costing statement to determine the amount of cost of its products and services and then a particular rate of profit is imposed on the amount of cost to determine the price of the final product and services of an organization.
In this case since the event Management Company is a well-established organization and a successful company in the industry the management should use the strategic pricing strategy to achieve the dual objectives of sustainable growth in revenue and maximization of profit.
In this case the business conference and meeting event of 6th Augusts, 2018 is expected to cost ?750,000. Out of the above cost the fixed cost is expected to be ?150,000 and the balance is variable cost. The company expects to attract a total 5000 attendees for the event including business executives, government representative, investors and common people. Based on the above let us analyse the cost profit volume and break-even point for the event.
|
Cost Profit volume analysis (All amounts in the table are in ?) |
|
|
Number of expected attendees |
5000 |
|
Expected fees per attendee |
200 |
|
Revenue from entrance fees from attendees |
1000000 |
|
(5000 X 200) |
|
|
1000000 |
|
|
Less: Variable costs |
600000 |
|
(5000 X 120) |
|
|
Contribution |
400000 |
|
Less: Fixed costs |
150000 |
|
Expected profit from the event |
250000 |
Thus, from the above cost profit volume analysis it is clear that the company is expecting a huge profit from the business conference and meeting in the O2 Arena to be held on August 6, 2018. The company expects 5,000 attendees to attend the business conference and meeting in the O2 Arena on August 6, 2018. The expected attendance fees for the conference per attendee is expected to be ?200 and with a variable cost of ?120 per attendee the company is expected to earn a contribution ?80 per attendee from the business conference and meeting (Bocquier et al. 2017). The following cost profit volume analysis will further help us to dissect the importance of attendance in the conference and meeting to increase the overall profit.
|
Calculation of Contribution per unit (All amounts are in ? in the table) |
|
|
Particulars |
Amount |
|
Expected revenue per attendee |
200 |
|
Less: Expected variable cost |
120 |
|
Contribution per attendee |
80 |
Since the company is expecting to get a total attendance of 5,000 for the business conference and meeting the company will be able to earn a contribution of (5000 X 80) ?400,000 from the business conference and meeting on 6th of August, 2018. The company expects that the amount of fixed cost that will be allocated to the event is ?150,000 accordingly, taking into consideration the amount of fixed cost the profit from the business event will be ?250,000, i.e. contribution less fixed cost for the event (Atkins et al. 2016).
Break-even analysis helps an organization to ascertain the quantity of sales, i.e. the unit of sales it must affect in order to reach the no profit and no loss scenario, i.e. in the break-even point the company’s revenue equals to that of the total cost incurred to earn that revenue. The break-even point helps an organization to identify the minimum amount of sales that it must reach in order to ensure that there is no loss to the organization from the business operations (Kuster et al. 2017). In case of the business conference and meeting to be held in the O2 arena on August 6, 2018 the break-even point for the event management company is calculated below taking into consideration the information provided in this document.
|
Statement showing calculation of Breakeven |
|
|
Particulars |
Amount |
|
Fixed costs |
150000 |
|
Contribution per attendee |
80 |
|
Break-even point in terms of attendees (150000/80) |
1875 |
|
Break-even point in terms of revenue |
|
|
Break-even point in terms of attendees |
1875 |
|
Attendee fees |
200 |
|
Break-even point in terms of revenue |
375000 |
|
(1875 X 200) |
Break-even point is calculated by dividing the fixed costs of an organization with the amount of contribution per unit. As can be seen from the above table that in case of the business conference and meeting in the O2 Arena the contribution per attendee is ?80, i.e. ?200 less by the ?120 variable cost of per attendee (Atluri and Tirumala, 2015). Since, the fixed cost of the event is expected to be ?150,000 the number of attendee that must attend the business conference and the meeting on the O2 Arena in order to ensure that the Julia Charles does not end up incurring loss for managing the event is (150000 / 80) = 1875. Thus, the break-even point for the above event is 1875 attendees.
Since, the company, i.e. Julia Charles Event Management Company is profit making body and the company has significant amount of accumulated profits which it has earned over the years thus, the company should use its internal funds, i.e. retained earnings to finance the event in the O2 Arena (Garofalakis et al. 2016). The company can certainly use external sources also to arrange the necessary funds to finance the event in O2 Arena however, there is no point to use external sources and pay interests to banks or other financial institutions when the company has substantial amount of funds to finance the project internally (Atluri and Tirumala 2015). Hence, the better course of action for the company to use its retained earnings to finance the event on August 6, 2018 in O2 Arena in London.
In respect of pricing strategy it has already been said that the company is already a well-known organization and establishment in the event management industry thus, there is no point for the company to use penetration pricing strategy (Hossain 2017). Hence, the company should price its products and services strategically in order to earn maximum amount of profit from business and increase its turnover, i.e. revenue in the future. The use of high pricing strategy could hurt the business of the company in the future as the company has loyal customer base hence, the decision to use strategic pricing strategy (Bouchon et al. 2017).
Conclusion:
Taking into consideration the discussion above it can be said that Julia Charles Event Management Company has numerous options to finance its fund requirements with both the option of internal and external financial sources are available to the company. However, it would be better to utilize the funds which the company has accumulated in its retained earnings over the years. The company expects to earn a significant amount of profit from the business conference and meeting to be held at the O2 Arena in London on the 6th of August, 2018 provided the expected variables materialize in the future. The company expects to earn a profit of ?250,000 if the event attract 5,000 attendees as has been estimated by the management.
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