case study Flashcards
average cost (lines 9-10)
This refers to the cost per unit of production. The average cost is derived from dividing the total cost of output by the number of units of produced. As a business grows, the average cost will tend to fall due to economies of scale.
challenge (line 11)
A challenge refers to any internal or external factor that hinders the operations and profitability of an organization. For example, internal challenges facing BON include environmental sustainability practices (line 10). Examples of external challenges include competition from other organizers of music festivals, technological breakdowns during music concerts and festivals, changes in government regulations (such as eco-friendly guidelines), and adverse weather conditions.
company (line 4)
A company is a business owned by shareholders who have limited liability. Companies, like BON, are incorporated organizations, i.e., they are legally separate entities from their owners. This means there is a divorce of ownership (the shareholders) and control (the directors) in the company.
contracts (line 8)
Contracts are legally binding agreements between two parties, such as an employer and employee. The legal agreement sets out specific terms and conditions established for work-related matters. Contract exist between BON and its employees (temporary and permanent), the five farmers (to use their farmland for the music festivals), and freelancers.
cost (line 10)
Costs are items of expenditure by a business when producing goods and/or services. Examples for BON include the costs of salaries for the events managers and administrative staff, rent paid to the farmers, advertising expenses, and corporate taxes.
directors (line 10)
Directors are senior executives in an organization who hold autonomous decision-making responsibility and power. They are appointed to manage and oversee the operations of a company.
employees (line 6)
A type of internal stakeholder, employees are the people who work for a business. They are employed to carry out specific tasks or roles. They can have significant influence on the organization, such as their level of loyalty, motivation, and productivity. BON hires both permanent and temporary employees (line 6).
environmental sustainability (line 11)
This is one of the three pillars in John Elkington’s triple bottom line (TBL), along with social and economic sustainability. Environmental sustainability (or ecological sustainability) is the ability of a business to maintain the use of its renewable and non-renewable resources for future generations. This means production does not jeopardize the resources for successive generations. Depletion of the earth’s scarce resources is not sustainable as they cannot be used indefinitely
expansion (line 6)
This refers to the growth of a business due to an increase in the size of the organization itself and/or growth in the market. Expansion is usually measured by an increase in metrics such as sales revenue, market share, or profits. The music festival industry has expanded substantially, especially after the COVID-19 pandemic.
fee (line 9)
These are payments made to a professional body in exchange for advice or services. Essentially, this refers to the price a customer pays for receiving advisory services.
finance (line 6)
Finance refers to the money required for business activities, such as funding music concerts and festivals during the summer months, the day-to-day running of the business throughout the year, and to fund its expansion. Finance for a business can come from internal sources (such as retained profit) or external sources (such as share capital and bank loans).
location (line 1)
This refers to the geographical position of a business, such as the farmland that BON hires to host its music festivals (lines 8-9). The location decision is a crucial one, and will depend on both quantitative and qualitative factors. The location of a business or its operations can have profound implications on the profitability and survival of the organization.
permanent employees (line 6)
These workers have an employment contract on a continual basis. There is no expiry date on the employment contract, unless the workers resign or the employer terminates the contract due to redundancies or dismissals
private limited company (line 5)
A private limited company (or privately held company) is an incorporated business owned by shareholders who have limited liability. The shares of a private limited company cannot be bought by or sold to the general public.
public limited company (line 5)
A public limited company (or publicly held company) is an incorporated business owned by shareholders who have limited liability but with the shares being openly traded on a public stock exchange, such as the London Stock Exchange or the Euronext Paris.
temporary workers (line 6)
In Charles Handy’s Shamrock Organization model, temporary workers are employees hired for a limited period of time or until the completion of a project.
Note: The Shamrock Organization is HL only content, so will not be explicitly assessed in the final external examination.
bamboo plates and cutlery
These are eco-friendly dishware, tableware, and utensils made from sustainable bamboo. This reduces the environmental impact of using plates and cutlery at BON’s music festivals compared to traditional materials like plastic or other non-biodegradable compounds.
covid 19 pandemic
The worst global health crisis in living memory caused by the novel coronavirus in late 2019, impacting economies, healthcare systems, and people’s daily lives across the world. The pandemic had devastating impacts on the whole music industry, and in particular music concerts and musical festivals, due to lockdown and social distancing measures.
credit card
This is a card payment system that allows qualifying customers to borrow funds from a financial services provider (such as banks or credit card companies) for making purchases. The credit card users repay the financiers at a later date, often with interest charges if there are late payments. Credit card payment allows attendees at BON’s events to pay without using cash.
freelancer
A freelance is a self-employed individual who provides services to their clients, rather than working for an employer. Freelancers work on specific projects instead of long-term employment commitments. Examples of freelancers in the music festivals industry include music performers, music composers, choreographers, videographers, marketers, and publicists.
greenwashing
This refers to misleading marketing tactics that falsely portray sustainable practices or describe products to be more environmentally friendly than they actually are. Negative environmental impacts from music festivals are mainly related to transportation, energy usage, littering, and waste.
interest rate
This refers to the cost of borrowing money or the return on savings, expressed as a percentage figure. The higher the interest rate, the higher the cost of borrowing, including those with credit card debts, and the greater the incentive for saving money.
landfill site
A landfill site is a designated area for the disposal of waste materials, which is compacted and buried to order to minimize the environmental impacts of waste and litter.
line manager
A line manager is the person directly above an employee on the next hierarchical level in an organizational structure. Line managers, as shown in an organizational chart, supervise and manage their subordinates on a day-to-day basis.
music concert
This is a live music performance event where artists and bands perform for a live audience. Music concerts are typically single events that feature one or a few supporting artists or bands who perform at a single venue.
music genre
This refers to the distinctive category or style of music, thereby defining its audience and appeal. Music festivals enlist a range of music performers of different music genres, including popular music, folk music, rock and roll, rap, metal, hip hop, rhythm and blues, reggae, and country.
music festivals
These are large-scale music events featuring multiple musical performances across various music genres, often spanning multiple days (line 12). Typically, music festivals attract diverse crowds of attendees. The main difference between music festivals and music concerts is their scale and duration. Music festivals are typically larger events spanning multiple days with multiple stages featuring a wider variety of artists.
music performer
A music performer is an individual musician or a band that performs music, in recorded form and/or live performances.
reservoir
This is a facility for storing large volumes of water, used for different reasons like drinking water, generating hydroelectric power, and irrigation (agricultural purposes). Reservoirs are important infrastructure for waste and water management at music festivals.
solar power
This is energy or power generated from sunlight. The purpose or benefit of solar power is the provision of clean and renewable energy, such as the supply of electricity for outdoor music events during the summer months.
above the line promotion
Above the line promotion refers to the use of mass media (such as television, magazines, national newspapers, and radio) for advertising of a product or a service. Established over 20 years ago and hosting 5 music festival events annually, BON is likely to utilize aspects of ATL promotion.
advertising
Advertising is the main form of promotion, used to shape and develop brand awareness and foster customer perceptions, knowledge, and attitudes towards a firm’s products or services, such as BON’s music concerts and music festivals. Advertising communicates marketing messages in a persuasive and/or informative way.
agents
An agent is an independent person or company appointed and authorized to act on behalf of another person in business and legal dealings. BON could work with agents to hire their temporary workers (line 6) and music performers.
bank loans
A bank loan is a fixed amount of money borrowed from a bank with regular fixed repayments, including interest payments, over a defined period. Bank loans are generally offered by banks against some security or collateral from the borrower. The COVID-19 pandemic is likely to have caused major cash flow issues for BON, possibly necessitating external finance such as bank loans.
below the line promotion
Below the line promotion refers to the use of non-mass media promotional activities. Examples of BTL promotion for BON include special discounts for large groups attending their concerts and music festivals, social media marketing (SMM), and targeted search engine marketing.
board of directors
The Board of Directors (BOD) of a company refers to an elected group of senior executives to represent the interest of shareholders. The BOD acts as the governing body that oversees the operations and strategic direction of the company. The BOD meets at regular intervals (at board meetings) to discuss the make decisions about company policies and practices, such as BON’s expansion strategies (line 6).
brand
This refers to a distinguishing name, symbol, image, or trademark of a product or organization, e.g., the BON brand name. As an intangible asset, the brand differentiates the product or organization from competing products and firms in the market.
brand awareness
This term refers to the extent to which a brand name is recognized or well-known to its potential market audience. Brand leaders will have high brand awareness amongst their existing and potential customers whereas less known brands will have low brand awareness. Given the company was founded in 2001, there will be awareness of the BON brand amongst music festival goers.
brand loyalty
This measures the degree to which customers consistently repurchase the same brand of a product over time rather than buying from rival firms. Strong brand loyalty exists when customers are committed to a certain brand and make repeat purchases time and time again, e.g., the same people return to BON’s music concerts and festivals year after year. Marketing strategies designed to cultivate loyal customers can give BON a competitive advantage in the industry.
break-even
Break-even exists when a firm’s total sales revenue equals its total costs (TR = TC). This means the business does not earn any profit nor does it make a loss. Break-even is a common objective for new businesses, as they can then strive for profits. Rising costs can be a challenge for BON as its break-even level of sales will increase.
business functions
Business functions refer to the various types of work carried out in a business. In larger organizations, people and work are often divided into departments which carry out certain tasks related to that area, e.g., tasks relating to human resource functions, finance, production, administration and so forth. These functions might be carried out most efficiently by organizing a business into these departments (or functional areas).
business owner
A business owner is the legal proprietor of a business organization. Business owners can be individuals or groups of owners, such as shareholders of BON, with legal rights to the assets of the organization, including any profits generated from its operations.
business plan
A business plan is a written document detailing how an organization sets out to achieve its objectives and the strategies to achieve these goals. It is prepared by the owner(s) and describes the market, sales strategy, operations, financial forecasts, and staffing needs of the business. BON’s business plan may include policies and procedures for dealing with its music events, such as human resource needs, marketing strategies, and operations management strategies.
capital expenditure
Capital expenditure is a use of finance, referring to the spending of a business on acquiring, maintaining, and/or upgrading its non-current assets. Capital expenditure represents a financial investment in the business, e.g., the purchase of capital equipment for BON’s head office.
carbon emissions
This refers to the greenhouse gases emitted to the Earth’s atmosphere due to human actions and business operations, such as power to run BON’s music festivals. The long-term impacts of this include climate change and global warming.
carbon footprint
Carbon footprint is a measure of the total greenhouse gas emissions caused by business activity. It can be attributed to an individual, product, organization, or event (such as music festivals). It is measured by the amount of carbon dioxide (CO2) produced through the burning of fossil fuels.
career prospects
Also known as career opportunities, this refers to the likelihood or probability of a person’s future success in a certain job or profession. Such opportunities within the workplace are an important factor in staff recruitment and retention. The seasonal nature of BON’s business means that there are few, if any career opportunities for temporary workers (line 6).
cash flow
This refers to the movement of cash into (mostly from income and capital injections) and out of (mostly purchases and expenses) a business. Effective cash flow management becomes vital for a business such as BON that only has cash inflows for 4 months in the year (May to August).
cash inflow
This refers to the movement of cash into an organization, such as from the sale of goods (such as merchandise, food, and drinks sold at the music concerts and festival) and services (mainly ticket sales). It can also come in the form of bank overdrafts, loans, and crowd-funding income.
cash outflow
This refers to the movement of cash out of an organization, such as payment of wages (to temporary workers and freelancers) and salaries (for full-time, permanent employees), rental payments to the five farm owners (line 8), and taxes to the government.
climate change
This refers to an increase in the average temperature of the earth driven by human-induced emissions of greenhouse gases, and the resulting and extensive shifts in weather patterns across the world. It is caused by events such as music festivals which generate huge volumes of waste. Climate change also causes extreme weather conditions so can have major consequences for outdoor events such as music festivals.
communication
Communication refers to the transfer or exchange of information, ideas, or messages from one party to another. Internal communication takes place with BON as an organization, e.g., employees communicating with their line managers. External communication takes place between BON and outside individuals and organizations, e.g., farm owners, suppliers, freelancers, and local communities.
competition
This refers to the rivalry within an industry, such as organiser of large music festivals like Sziget (Hungary), Tomorrowland (Belgium), and Glastonbury (UK). Competitors may offer products of better quality, more competitive prices, and/or have lower costs. BON may have little or no control over the activities of its competitors as these are external stakeholders.
competitive advantage
This refers to any edge (degree of superiority) that a firm has over its rivals, allowing it to generate greater sales and/or profit margins. For example, brand loyalty and superior marketing campaigns can give BON a competitive advantage over other organizers of music festivals.
competitive price
This pricing method entails BON setting the price of its tickets at the same or similar level as its main competitors. Typically, this pricing method is used by businesses selling similar products, although the services they provide can differ markedly.
coordination
Coordination is one of the main functions of management. For BON, this refers to the process of overseeing and managing all aspects of its music concerts and festivals. This can include the management of human, capital, and financial resources in order to meet organizational goals. Line managers are responsible for coordinating routine tasks and activities.
corporate social responsibility
CSR consists of responsible business behaviour towards the individuals and societies, e.g., consumers, suppliers, employees, and local communities. It also involves a business being responsible for the natural environment in which it operates. Hence, CSR involves organizations like BON monitoring and ensuring their compliance with the ethical standards of society, e.g., noise and pollution levels at its music festivals.
cost-plus pricing
Cost-plus is a pricing method that adds a mark-up to the cost of production of a product, ensuring the firm earns a profit margin. It is important for BON to determine its average cost of production (lines 9 – 10) in order to charge a suitable price (depending on its desired or target profit margin)
