CIMA Global Challenge Fantastic Four
Our mission: To provide people with high quality, informative and entertaining programmes Our vision: To be the best programme creator in England Our values: • High quality • Our audiences • Trust of our clients
Zubinos Coffee Shops
Top priority: Proposal to expand into corporate advertising videos Problems Opportunities Negative profit margins in the shortterm Penetration into a new market of corporate advertising Tough competition Attracting more clients No self resources Third priority Second priority Harm to VYP’s reputation in case of failure Drop of profits due to costly entering the market Positive profit margins in the long-term Top priority Risks Fourth priority Ethical issues
Market potential to grow VYP’s revenue increased by 38 % from 2010 to 2011. So the company has great potential to grow
So, new market or what?
Top priority: Proposal to expand into corporate advertising videos Solution: Higher costs and tougher competition: “profit” margins down to -8, 8% VYP’s accustoming to the market: margins’ growth to Second priority higher profit up to with BBC to show adverts in between of the drama series Long-term 2, 9 % Short-term Top priority Lowering operating costs: Worthwhile in the long-term also given: • Renegotiating the fee 17, 5% Third priority • Contract Fourth priority Ethical issues
Sammy the Squirrel
Second priority: Fee negotiation for children’s programme Variant 1: • Commissioned revenue £ 6, 3 million • No merchandising • No risks Neither losses nor increases of operating margin rights Variant 2: • Commissioned revenue £ 4, 095 million (-35%) • 40% share of merchandising margin Top priority Second priority • Underperforming • Irregular media exposure • Piracy • Economic slowdown Third priority Fourth priority New venture: To take or not to take? Ethical issues
To sell or not to sell?
Breakeven analysis We have: £ 4, 095 mln To break even: £ 2, 205 mln needed VYP merchandising margin: 10 % Sales breakeven point: £ 22, 05 mln Teletubbies (1997) sales level = £ 23 mln Projected sales level with a correction rate = 1, 383× 23 mln= £ 31, 8 mln This is £ 875, 000 extra profit!
Second priority: Fee negotiation for children’s programme Why? How? What? Solution: Outsourcing design, manufacture and distribution of merchandise Previous experience of Teletubbies’ level of publicity Broadcaster’s concern about future sales Top priority VYP should venture into selling merchandise (shortterm) VYP should consider selling merchandise on its own (long-term) Second priority Third priority Search for potential licensees Obtain the right merchandising manager Plan a long-term strategy Fourth priority Ethical issues
Rowing championship
Third priority: Re-commissioned drama series Lower fee New contract on drama series Implementation time: April 1, 2013 Shooting time: 4 months • J. Strong (main No actor Top priority Second priority • Offered revenue: £ 5 million (-10%) • Maximum profit (by J. Black): 5 % Third priority character) unavailable: Contracted for 10 months from April 1, 2012 Fourth priority Ethical issues
How often do we show?
Third priority: Re-commissioned drama series Usually drama series is shown once a week Drama programmes: • Length=54/56 mins. • 300, 000<Cost<500, 000 (393, 000 last year) • 8 programmes • Cost=max= 500, 000 • Total costs=8× 500, 000= 4 million • Operating profit=Revenue – Total costs = 5 m – 4 m = £ 500, 000=10 % margin Thus, there are spare £ 500, 000 as a maximum to be paid for J. Strong £ 1 million Top priority Second priority Third priority Fourth priority Ethical issues
Solution: Relax!
Third priority: Re-commissioned drama series Why more money? IF our drama series is shown twice a week Profit≤ 4% (less than last year) Filming outside + computer graphics More money needed for John Strong Filming costs increase with time Now prominient actors and screenwriters Top priority Second priority Third priority Fourth priority Ethical issues
Third priority: Re-commissioned drama series Solution: • Find out how often the series should be shown • Negotiations with BBC about: - promoting Zubinos Coffee Shops in the advertising time in between of the drama series - getting more money if filming more than 8 hours is the case • Negotiations with GGG about obtaining J. Strong Top priority Second priority Third priority Fourth priority Ethical issues
“Banks – friend or foe? ”
Fourth priority: “Banks – friend or foe? ” – A new documentary from the VYP Reduce costs by means of reducing quality? Long investigation phase LOSS of £ 32, 000 Repeated interviews Large number of inconsistencies Top priority Remain the quality untouched regardless of the losses? For decrease of revenue (costs unchanged) Second priority Third priority Fourth priority Ethical issues
Cost effectiveness or quality?
Fourth priority: “Banks – friend or foe? ” – A new documentary from the VYP • Documentaries = reputation and profitability • CGI = increased public interest = addition to documentary’s success Reasons • Estimated loss = mere 0, 1 % of total operating profit Solution • Accept the proposal of keeping the quality on a high level • Planning expenses in detail and following them closely • Increasing revenues by means of expanding audiences Actions through: • Educational direction; International sales; Advertiser funded programmes; Internet marketing Top priority Second priority Third priority Fourth priority Ethical issues
Ethical issues. Why should VYP choose to be ethical? New employees Reputation Long-term sustainability Success Top priority Second priority Third priority Fourth priority Ethical issues
Ethical issues. Accident at studio. Working anti-social hours Bad working conditions Worker with an arm broken Top priority Second priority Third priority Press-release ensuring the opposite issued Investigation on the case conducted Recovery fully paid for Fourth priority Ethical issues
Ethical issues. “Banks – fried or foe? ” – the world has the right to know the truth. Revealing the truth: CGI, schemes and more interviews Margins DOWN Budget cutting: No CGI and repeated interviews Top priority Second priority Third priority Margins UP Fourth priority Ethical issues
Should profit reasons be put aside this time in order to keep company’s image on a high level?
Ethical issues. “Banks – fried or foe? ” – the world has the right to know the truth. Yes, they should! Losses = 0, 1 % Main priority – high quality Main value: our audiences All the necessary figures and schemes should be shown Top priority Second priority Third priority Fourth priority Ethical issues
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