Proposal for Event Management Company

This report presents a proposal for an event management company, covering aspects such as market research, funding sources, pricing strategy, and CVP analysis. The report focuses on the commercial viability of organizing a corporate retreat for the Raymond Group of Industries. It also includes a critical analysis of the sources of funds and the purpose of financial management in the event industry. The pricing strategy and CVP analysis are discussed to determine the profitability of the event. The report is based on the case study of Fantastic Music Decorators, a well-known event management company based in London.

A report on the Proposal for Event Management
Company
Submitted by
Student’s Name:
Professor:
University:
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Executive Summary
Fantastic Music Decorators is a well known in the event management industry which is
specialised in retreating its corporate customer has asked its Assistant Finance manager to
identify and propose an event that seems to be financially viable. Hence the finance manager
is writing this proposal covering the broader aspects like the introduction of the company,
results of his market research, a critical analysis of the alternative sources of funds to fund the
event, a critical analysis of the pricing strategy to be adopted for pricing the products and
services for the vent etc, which have been presented in the following section.
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Table of Contents
Executive Summary...............................................................................................................................2
Introduction...........................................................................................................................................4
Company Profile................................................................................................................................4
Description of the Venue and its facilities.........................................................................................4
Market research................................................................................................................................4
Market research and commercial viability of the events proposed......................................................4
Market Research...............................................................................................................................5
Market Segmentation........................................................................................................................5
Projected Statement of Profit and Loss.............................................................................................5
Critical analysis of the sources of funds.................................................................................................6
Critical analysis of the purpose of financial management.....................................................................6
Critical analysis of the pricing strategy..................................................................................................7
CVP analysis...........................................................................................................................................7
Recommendation..................................................................................................................................8
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10
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Introduction
Company Profile
Fantastic Music Decorators is one of the renowned event company based out of London. The
company has been in profit for quite some time and employs 2 full time salaried people and 5
part time staff. The company mainly deals in decoration for events and parties, weddings and
other social functions. It is well known for its unique work in political manifestations, rallies
and music festivals and concerts as well. The company was formed in 1988 by 2 students
who were studying event management in the Greenwich University (Belton, 2017).
Description of the Venue and its facilities
The venue which will be chosen is Tottenham Hotspur stadium considering the huge capacity
of 50000 people which it can accommodate. The same has also been approved by the mayor
of London Boris Johnson in the month of February, 2016. The venue has been selected as it is
centrally located and easily accessible to local public. There are a number of transport means
which are available and people who use public transport like buses and trains can also reach
there quite easily. Furthermore, the stadium has got good security measures which will be an
added advantage considering the crowd.
Market research
As per the BBC news, a Bomb attack in Manchester Arena on 16th May, 2018 is suspected to
have killed over 22 lives and over 800 people were also injured who were present there to
celebrate one of the music events. The main reason for the selection of Tottenham Hotspur
stadium was the large capacity holding of 60000 people and ample security and safety for
people. It was also established that none of such event was organised in the stadium in the
past and that makes the venue more attractive for the fans of Tottenham club as well as the
local public.
Market research and commercial viability of the events
proposed
The Assistant Finance manager has proposed to organise a corporate retreat planning for the
Raymond Group of Industries considering it as one of the most profitable option to earn a
steady market gain (Alexander, 2016). The major reason for opting for this proposal is that
the Assistant Financial Manager strongly feels that though during the period of the economic
downturn companies prefer the trend to follow the cost cutting strategy, but this is not the
case for the large corporate groups like Raymond. These corporate groups may lay off its
employees, but shall always consider the expenses incurred on training their employees as a
worth making investment. Further recently one of the representative from the personnel
training and Administrative cell has visited the Fantastic Music Decorators with a view to
organising the Training session on the recently implemented tax mechanism of the
government naming goods and service taxes. Further the Assistant financial manager strongly
believes that the market for the corporate training and leadership retreats rarely shows a
diminishing trend rather demonstrates a steady rise always.
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Market Research
Fantastic Music Decorators is serving the corporate customers in terms of their contribution
in event planning by way of contributing towards its teaming and skill development events in
which it has gained the specialisation. It is because the economy is showing the state of
gradual recovery from the economic downturn, but still the big corporates are continuously
making huge investment in their Huan capital to whom they consider their biggest asset and
expect that it shall always benefit them in the long run (Choy, 2018).
The company is presently enjoying the competitive advantage in the market too. First it is
focussing on the limited amount of services so that it can best serve the customer. Secondly
its quotation rates in comparison to its customers are much lower than its customers due to its
specialisation in the relevant area.
Further in order to ensure an effective marketing strategy it has launched its own website. At
the same time the participation in various trade shows too has been increased. Our customer
can do their booking s through online website platform. Further this website is highly
effective in spreading the major information about the services being provided along with the
prices to be charged. That has proved our transparency to a great extent (Werner, 2017).
Further due to the networking done trough the local chamber of commerce it is well
perceived that significant growth has been noticed during last few years that is again going to
contribute in terms of the growth of business.
Market Segmentation
Our company s primarily focussing on the corporate customers like Raymond without much
penetrating into the social market that is also a significant source of approaching to generate
revenue for the company (Fay & Negangard, 2017).
Actually there is specific reason for the same that is the corporate groups directly approach
the company for organising its various training or team building or product launching events.
Again it is because our company can manage it in a more cost effective way as our effort is
primarily focussed on event planning and the company too shall not have to engage its
employees to look after the arrangements in relation to the same as they might be highly busy
in their day to day work (Meroño-Cerdán, et al., 2017).
The projected amount of revenue to be generated through this event for the Raymond
Industry has been summarised hereunder:
Projected Statement of Profit and Loss
Particulars Amount
(Rs)
Sales 253000/-
Direct Cost of Sales 150000
Gross Profit 103000
Gross Margin 40.71%
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Payroll 40000
Other 10000
Net Profit 53000
Net Profit Margin 20.75%
Critical analysis of the sources of funds
For the event management organisations there are several means of raising finance which are
available. Few of the major ones are government grant, sponsorship fees, participation fees,
sale of merchandise products, raffle and the spectator fees (Visinescu, et al., 2017).
The above means are discussed in brief hereunder:
Government grant: In case the government considers the organisation of some specific events
as in the public interest in such a case it provided grants as a measurement of encouragement
to promote such events.
Sponsorship this is one of the oldest way for raising finance by the event management group.
Like various charitable events are organised using this mode.
Participation fees: Under this method or source the events are identified as beneficial for
certain section of people. Hence by participating in such events such group of people are
interested in availing the benefits associated with the event. In such case they are also ready
to contribute something in terms of their participation fee (Sonu, et al., 2017).
Spectator fees: These events may be basically entertainment based. Hence the spectators are
asked to pay the spectator fees for them like visiting the exhibition ceremony.
The major sources of revenue for this event may be numerous. The first and the most easily
available means of finance is asking for the advance or just to recover the cost of organising
the event form the Raymond Industry itself so that the Company does not have to think over
its blocked fund.
The second option for this can be simply putting its own money to organise the event and
then finally get the amount back with the invoice raised in favour of the Raymond group. But
in such case it might so happen that its other professional commitments may be hampered.
The third source may be use of its surplus resources that might have been left with it or the
profit earned already from its previous activities. Similarly one more option may be getting
all the items required for the event on credit provided all the suppliers are ready for it and
then release their payment dues once the bill amount is realised from the Raymond group.
Critical analysis of the purpose of financial
management
Financial management in the event industry plays a very crucial role in its success it is
because it can not say that throughout the total financial year there shall be steady demand for
its service. Then in such case sometimes the demand may be at its peak, but other times there
may be the sign of downturn too (Dichev, 2017). In such case the proper forecast of the need
of fund becomes too crucial. Again it is not the case that all of its blocked funds with the
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customers shall be immediately released by them or all of its customers can pay them the
requisite advance to organise the event management programme. Hence due to this volatile
nature of the business it becomes important for it to draft a sound financial management plan
in advance so as to meet any urgent contingency. Otherwise its long term survival can be
troublesome due to lack of fund which may cause a big hit to serve its targeted customers at
the time of their need.
Further for the event management groups it seems quite difficult to procure the fund then any
other industry. It is because not many events gain the attention of either the government or
the sponsors to encourage them to contribute for organising the same. Moreover public often
fail to see the real benefit of organising such events. This is the reason why they are found
reluctant to contribute. Hence planning for the finance plays vital role in such a case
(Marques, 2018).
Critical analysis of the pricing strategy
The pricing for the event is again a very tricky decision to be taken by the Company. It is
because it is the pricing strategy that is going to decide whether the company shall succeed to
sell out its event or it shall fail. In such a case there are only two options left, i.e., the first
being to charge the optimum price for the event being organised or the second being ensuring
the cost cutting in terms of the services being provided (Heminway, 2017).
Further in this regard there are few major factors which serves as a guide on how to charge
the price. These are the own reputation in the market, Target customer group and finally the
market which is to be served. For example if the reputation is very high then it can be
expected that reasonable price may surely be charged. Similarly the category of customers
like in this case Corporate group in which case a relationship building too shall matter, hence
keeping this actor in mind the price to be charged. Finally the market too decides the price to
be charged as same price can not be charged from several markets.
Further the major pricing strategies followed by this industry are Flat pay charges, Hourly ay
charges, commission basis, a combination of hourly plus expenses and percentage based
commission (Jefferson, 2017).
As per the flat rate percentage method the pricing strategy seems to be highly transparent as
the customer is having the advance knowledge of the amount that is to be paid by him.
In case of the hourly rate charges it is the duration of the event that is gong to decide how
much to pay. That is higher the duration, higher shall be the charge and vice-versa.
A very few of the event organisers prefer to charge commission from the travel agents and
the hotels etc booked for the specific event.
Another strategy may be to charge hourly and additionally charge for the expenses
specifically incurred for the event (Goldmann, 2016).
Finally for those fund raising events it is the percentage of the amount raised through the fund
that is charged by the event managers.
In our case it is being suggested to charge on hourly basis, as it seems much justified in the
given case.
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CVP analysis
The relevant data to calculate the Break-even is summarised hereunder:
Selling price per unit Rs. 500
Less Variable cost per unit Rs 360
Contribution Per unit Rs. 140
The relevant fixed cost for the event is Rs 50000
The number of the trainees required to attend the training session to break-even=Fixed
cost/Contribution per Unit
50000/140
=357 trainees (approx.)
The break-even chart has been prepared with the help of below table (Linden & Freeman,
2017).
Units/Output 0 100 200 300 400 500
Revenue 0 50000 100000 150000 200000 250000
Variable costs 0 36000 72000 108000 144000 180000
Fixed costs 50000 50000 50000 50000 50000 50000
Total costs 50000 86000 122000 158000 194000 230000
0 100 200 300 400 500
0
50000
100000
150000
200000
250000
300000
Break Even Chart
Revenue Variable costs Fixed costs Total costs
We can clearly see in the above chart that the company breaks even at 357 level of output
where the total revenues equals the total costs.
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Recommendation
After going through the above details it can be said that the best way to fund the event can be
to ask for the advance from the Raymond group. The major reason to be provided for this is
that as all of the various means of finance available for the event is not to made applicable
the in the given case other than the sponsorship fees. In other words, this event is going to be
sponsored by the Raymond group for the benefit of its own as it shall increase the working
efficiency of its valuable employees (Kim, et al., 2017). Such type of sponsorship from
Raymond group shall improve the business image of the group too. Actually sponsorship is
one of the most easily found and adopted practice by the large Corporate groups, as it is
somewhere being associated with their social image. One more mode that is to be suggested
is the participation fee. It’s not required that the participants have to bear the total cost of the
training session, but the same can be shared by the Raymond group and the participants
partially. Even the Raymond group can offer its employees that such participation fee is not
to be paid by them to the event management company, but the same shall get deducted from
their remuneration (Meroño-Cerdán, et al., 2017).
If this second strategy is followed then it shall ensure better scenario. The reason for the same
is given as the Raymond group shall be able to shift the expenses on training partially on its
employees. Employees too shall be able to give proper value to the training programme.
Moreover if some sort of certificates are provided for this type of training then also it shall
attract more number of participants for the training session (Trieu, 2017).
So far as the pricing strategy is concerned as the Raymond group is a major group in the
Textile industry which can significantly contribute towards the future growth of this business
of the vent management hence it is being advised that hourly rate pricing strategy may be
adopted in the given case (Vieira, et al., 2017). In the given case the flat rate does not seem to
be justified as because of the time factor. If we consider the flat rate then it shall cause
injustice to the company. Whereas hourly charge can encourage the event management
company to provide much better service too. Because there is no certainty as to the factor that
how long the Raymond group is going to utilise the services to be provided by the event
management company. The exploitation of the resources provided by the event management
group is to be justified with the return they are earning on the same (Dai & Vasarhelyi, 2017).
Conclusion
From the above analysis and discussion it is quite clear that the event organisation plan as
submitted by the Assistant finance Manager of Fantastic Music Decorators seems to be
highly justified having seen the proposal drafted by him especially keeping in mind the offer
made by Raymond group for providing the Goods and service tax training to its finance team.
Further not only in terms of organising this specific event but it is being expected that in near
future it shall ensure a long term business relationship with such a textile giant. That is
ultimately going to contribute towards the future growth of the business of the company.
Our analysis also reflects the critical evaluation of the factors that are to be kept in mind
while considering about the various options available to fund the event organising. Not only
this but what are the various influencers in determining the best pricing strategy for this
business have also been discussed above. One most important thing that can be perceived in
the given case is the company s primarily planning for focussing on very few of the services
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it can provide to its customers. Generally one of the major reason for the failure of this type
of business is nothing but they can not make themselves specialised. But this company has
adopted the correct strategy in this regard. Further in terms of funding this type of event if the
partial contribution from those participants can be obtained then it shall make the
arrangement of such events in future too and that seems to be much justified. Hence it is
suggested to the company to give approval to this project as written by the Assistant finance
manager of the company as he has already undergone a broad market analysis along with the
market segment analysis done by him. Further he has made sufficient effort to justify his
proposal with the help of the various accounting tools like the projected profit and loss
account along with the cost volume profit technique. Hence we can not say that the proposal
is in vague status. That is the reason behind supporting the proposal and recommending its
acceptance.
References
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Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. 3 ed. London:
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Jefferson, M., 2017. Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland.
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Kim, M., Schmidgall, R. & Damitio, J., 2017. Key Managerial Accounting Skills for Lodging Industry
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