Financial Analysis and Recommendations for Event Management Project

This report provides a comprehensive financial analysis of an event management project, specifically a company manager’s quarterly meeting. It begins with market research to establish the commercial viability of such events, highlighting the willingness of companies to invest in quality amenities. The report then explores the sources of finance, including bank loans and retained earnings, and details the relevant income streams such as room bookings and on-demand services. A thorough financial analysis is presented, including cost breakdowns, revenue projections, break-even analysis, and Return on Capital Employed (ROCE) calculations. The report also covers various pricing strategies like competitor-based pricing and cost-plus pricing. Finally, it concludes with recommendations to focus on service quality to maintain a competitive edge in the event management industry.

FINANCIAL DECISION MAKING FOR
CREATIVE PROJECTS AND EVENTS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Market research...........................................................................................................................1
Source of finance of event...........................................................................................................1
Relevant income streams.............................................................................................................2
Financial analsis of event.............................................................................................................2
Pricing strategies..........................................................................................................................3
Recommendation.........................................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5
.........................................................................................................................................................5

INTRODUCTION
Event related to the company manager’s quarterly meeting will be organized at Queen
club at Palliser road, South West London. Meeting will be organized on 15th July 2017 at
mentioned venue. There are varied facilities that will be provided to the people at the mentioned
venue so that their needs can be fulfilled on time. There are number of facilities that will be
offered to the people in the Queen club. Like there will be free Wi-Fi facility and on demand
services will be made available to those who are participating in annual general meeting. Thus, it
can be said that in the mentioned club no one will feel scarcity of any facility.
Market research
On research it is identified that there is commercial viability of such kind of events
because firms that organize annual general meeting in any club or hotel pay heavy amount in
order to ensure that all amenities will be available to the relevant people in the relevant area
(Gration and Andersson, 2016). Companies are prepared to pay amount that club or hotel wants
to charge. Hence, firms can earn sufficient amount of revenue in their business and on this basis
it can be assume that project is viable for the firm. However, it is very important to make
available all necessary services to the customers on time. This is because if same will not be
done then negative image of the firm is created among customers and this does not prove
beneficial for the firm. Thus, it is the industry in which it is necessary to perform each activity in
better way so that positive work of mouth marketing of the firm can be promoted among
customers. Once negative image of the firm is created among people then in that case there is
possibility that firm will receive less number of clients in its business. Thus, working in event
management is very risky.
Source of finance of event
 Bank loan: Firm will raise funds through banks and under this it will enter in to
agreement with it. Before taking a loan detail market research will be done and under this
information about different interest rates at which loan can be raised from the market is
identified. At most cheaper rate and liberal terms and conditions loan will be taken from
the commercial bank (Sources of finance, 2017). By doing so it will be ensured that cost
of capital will remain in control in business. It is the best approach to control cost of
capital.

Retained earnings: Retained earnings is the one of the important source of finance that is
available to the business firm (Van and Getz, 2016). Retained earnings are basically part of
revenue that is earned by company in the business. It can be said that retained earnings is another
best option that is available to the firm.
Relevant income streams
Income streams are services that firm intends to provide to the guests. Rooms that will be
provided to those who will attend annual general meeting will be one of the main source of
revenue. Apart from this, many other facilities will be made available to the people like food and
drinks and services on demand. All these things will be main income stream for the firm
(Webster, 2017). Room booking and service will be one of the most important source of income
for the business firm. Thus, it can be said that firm have multiple channels through which it can
generate sales in its business.
Financial analysis of event
Cost: Cost of current event management cover operating cost which will be incurred in order to
meet additional expenses (Hallak and Assaker, 2016). Operating cost of project will be £8000
followed by finance cost of £3000. Salary and wages will be charged at £8000. Apart from this,
cost of goods sold will be £10000. All these expenses lead to earning of profit of £11000 in
business.
Table 1Cash flow of project
2017
Revenue 40000
Less: Cost of goods sold 10000
Gross profit 30000
Expenses
Finance cost 3000
Operating expenses 8000
Salary and wages 8000
Sum of expenses 19000
PBIT 11000
Tax 0
Net profit 11000
2017

Finance cost 1.16%
Salary and wages 46.29%
Operating expenses 20%
Revenue: Revenue of £40000 is expected to be earn on this project as it cover cost of room
service that is provided to guests (Testa and Metter, 2017). It can be said that sufficient revenue
will be earned on this project.
Break even analysis: Break even analysis value is 0.42 which means that after coverage of
variable expenses in order to cover fixed cost firm need only single guest in event management
(Stone and Olson, 2017). It can be said that entire cost will be covered in project.
Table 2Break even analysis
Revenue 40000
Variable expenses 19000
Fixed cost 50000
BEP 0.42
ROCE: This ratio reflect return percentage that is earned on invested amount. ROCE is 38%
which reflect that return of 38% will be earned if investment is made on event management
project.
Table 3Calculation of ROCE
Net profit 11000
Capital employed 29000
ROCE 38%
Pricing strategies
There are number of pricing strategies that are available to business firms and some of
them are given below.
 Competitor based pricing: It is the pricing strategy under which price that is determined
by competitors are taken in to account and same are compared with each other to identify
the price that firm must set in order to compete with rival (Maguire, 2017). Firm can
follow mentioned pricing strategy in its business.

Cost plus pricing: Cost plus pricing strategy is one under which margin is added to cost in order
to identify sales price of the product. This strategy is followed by most business firms in their
business (Holmes and Ralston, 2017).
Market penetration pricing strategy: Market penetration strategy is one under which in order to
enter in to market firm reduce its product and services prices (Ryan, 2016). This help firm in
attracting customers in its business. It is one of strategy that prove very effective for firms.
Recommendation
On the basis of above discussion it is recommended that business firms must focus on its
service because by doing so it can create its positive image among the customers. This is because
there are large number of competitors in the mentioned industry and price as well as product
quality heavily affect the firm image among the clients. It can be said that there is strong need to
further improve products and services in the business.
CONCLUSION
On the basis of above discussion it is concluded that event management is one of the
lucrative business and availability of product and services heavily affect the business. Firms must
take due care while offering products and services to the clients. This is because if service of best
quality will be made available to guests then in that case they will be satisfied and will lead to
increase in profit of the business firm.

REFERENCES
Books and Journals
Gration, D. and Andersson, T. D., 2016. Resident Valuation of Planned Events: An Event
Portfolio Pilot Study. Event Management. 20(4). pp.607-622.
Hallak, R and Assaker, G., 2016. Segmenting Meeting and Event Management Organizations
Based on Business Performance. Event Management. 20(3). pp.383-393.
Holmes, K and Ralston, R., 2017. “It's a once-in-a-lifetime experience and opportunity-deal with
it!”–Volunteer perceptions of the management of the volunteer experience at the London
2012 Olympic Games. Event Management.
Ryan, W. G., 2016. How Do You “do” Event Management Education (EME)? a Case Study of
Event Management Higher Education Awards. Event Management. 20(1). pp.69-80.
Stone, M. J. and Olson, E.D., 2017. Career desires and expectations of event management
students. Journal of Hospitality and Tourism Management. 32. pp.45-53.
Testa, M. R. and Metter, M., 2017. Assessing Economic Impact as a Means for Event Efficacy:
A Proposed Model and Case Study. Event Management. 21(1). pp.61-70.
Van Niekerk, M. and Getz, D., 2016. The Identification and Differentiation of Festival
Stakeholders. Event Management. 20(3). pp.419-431.
Webster, C., 2017. Events as a Strategic Marketing Tool (D. Gerritsen and R. van Olderen).
Event Management. 21(1). pp.131-133.
Online
Maguire, M., 2017. [Online]. 6 Different Pricing Strategies: Which Is Right for Your
Business?. Available through:<https://quickbooks.intuit.com/r/pricing-
strategy/6-different-pricing-strategies-which-is-right-for-your-business/>
[Accessed on 19th June 2017].
Regression analysis, 2017. [Online]. Available through :<
http://www.statgraphics.com/regression-analysis>. [Accessed on 12th July 2017].

Sources of finance, 2017. [Online]. Available through:<
https://efinancemanagement.com/sources-of-finance/sources-of-finance>. [Accessed on 12th
July 2017].