...EDUCATION Vol. 19, No. 4 November 2004 pp. 555–565 The ALLTEL Pavilion Case: Strategy and CVP Analysis Edward Blocher and Kung H. Chen ABSTRACT: The ALLTEL Pavilion case is intended for the undergraduate management accounting or cost accounting course and the M.B.A. management accounting course. It provides an excellent context in which to examine strategic issues in using cost volume profit (CVP) in a service business. Based on an actual entertainment pavilion, the case develops many factors unique to a service business and illustrates how pavilion management can use CVP analysis to determine which artists to attract and what kinds of contracts to have with these performers. The Pavilion has two types of customers (paying ticket holders and free ticket holders) and earns profits from three types of revenues (ticket revenues, concession revenues, and parking fees). The case requires you to identify the best strategy for different types of artists, conduct cost-volume-profit analyses, consider the strategic issues related to operating leverage and how this affects the choice of performer and contract, and assess pricing strategies. O ne day in early November, Pam Berg, Manager of the ALLTEL Pavilion, was reviewing the operating results for the year just completed in preparation for the executive board meeting the following Friday. While the year ended in the black, she was disappointed that the ALLTEL Pavilion failed to earn the budgeted profit goal. This was the...
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...accurate budget and negotiating fair and reasonable contracts, the requested CVP analysis was performed. Although ALLTEL is aware the current system for negotiating contracts leads to budgeting troubles, this report details the exact shortcomings and provides recommendations to improve it, including a new system for paying the performing talent. The Pavilion has goals other than making the highest revenue possible, although they are still looking for 5% annual growth. ALLTEL wishes to achieve its desired earnings while maintaining a competitive edge against its competitors in the area. Being the only pavilion with outdoor seating gives it a unique advantage, but it needs to be careful not to underpay its performers or it will drive them away. Looking for a way to budget accurately, a target increase point was set to give a base to work off of in order to develop a formula. This increase point helped to find what price Alltel will break even from, and can further the process to find a price that will bring a profit. Included in the appendix is the formula used to find the break-even point. Modifying this formula can help to calculate the number of tickets that need to be sold, the price of the tickets, or the highest fixed fee that can paid for a show. These numbers vary widely based on the entertainer and the contract type used. Through using this formula, ALLTEL can determine specific numbers needed to earn its desired 5%. This percentage, like all the variables in the equation...
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...The next question is, what is the maximum fixed fee that you can pay the KSFB Allstars if the you to earn $45,000 of operating income after taxes with a tax rate of 40% and the show has an average ticket price of $22.12 and the show is expected to draw 6,000 paying ticketholders. First, we find the operating income before taxes. You find this by taking the desired ending operating income by one minus the tax rate. In this case, the total operating income you want is $75,000. By plugging the numbers into the formula provided, you find that the highest fixed fee you can allow is $59,630. This is due to the low ticket sales. 45,000/(1-.4) = 75,000 | EQUATION: | 37.03 * Q + (10.04 * .25Q) = Fixed costs + Fixed fee + Desired ending Operating income | 37.03 * 6,000 + (10.04 * .25) * 6,000 = 102,610 + X +75,000 | X = $59,630 | Next, we need to find the maximum fixed fee that you can pay the KFBS Allstars assuming you want to earn $45,000 after 40% tax and you expect the show to have an average ticket price of $22.12 and the show is expected to sell out. Like the last example, we find the desired operating income. $45,000 divided by 60% is equal to $75,000. Now we can use our equation again. Plugging in the numbers, we find the answer is $428,040. 45,000/(1-.4) = 75,000 | Equation: | 37.03 * Q + (10.04 * .25Q) = Fixed costs + Fixed fee + Desired ending Operating income | 37.03 * 15,000 + 10.04 * 5,000 = 102,610 + X +75,000 | X = 428,040 | Now we want find the...
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...333- ACC Section C The ALLTEL Pavilion Case Strategy and CVP Analysis 1. How would you describe the competitive strategy of the ALLTEL Pavilion? Given the firm's strategy, what are the most important Key Performance Indicators (e.g., quantitative measures) for the Pavilion to track and manage if it is to achieve its goal of continuous annual growth in operating income? ALLTEL Pavilion is operated by SFX Entertainment in an outdoor atmosphere for its customers. ALLTEL attempts to create a competitive advantage as the major outdoor concert venue in the "Triangle" area of North Carolina consisting of Raleigh, Durham, and Chapel Hill. The amphitheater has art-like acoustics and video differentiating the venue with trying to keep costs budgeted for each concert. The Key Performance Indicators are based on advertising media. They have researched on the most effective advertising in each region of the state in order to maximize ticket sales with the least advertising costs, which eventually create profitability. Other items include customer satisfaction, parking, and concessions. 2.) Complete two selected cost-volume-profit analyses for the show illustrated in Exhibit 2, the KFBS Allstars: A. How many tickets must the ALLTEL Pavilion sell to break even? (Hint: don't ignore the possibility that the attendance of Comp ticket holders affects the concert's profitability.). (4:1 sales mix tickets of paying : comp) Break-Even = $0 = 4x($40.08-$3.05) + 1x($13...
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...secondary objective is also to promote awareness and future business opportunities outside their own state and sometimes even outside the country. For instance, potential dealers, agents or large buyer from abroad and other parts of the country visit their stalls and connections build up from there. 5. Mass awareness of these products 6. Single major platform for tribal communities from states who otherwise don’t find many avenues to promote their handicrafts and other products. 7. It is often found that in one such trade fair the tribal group manages to sell products which they might have made over last 3-4 months. But more importantly it creates a major awareness of these tribal products in more urban areas. Special features: 1. The pavilion of the state where the main theme of the state’s heritage is conceptualized and therefore attractive to visitors. 2. The visitors are automatically attracted to the goods display shops. 3. All items inherently specific to the state are available in one roof. 4. The latest products and designs are displayed in the stores as many store owners use this opportunity to make it a first time promotion. It becomes a win-win situation for buyer and seller...
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...purpose of the merger was to build a dynamic company that is capable of competing in the industry’s top-tier level. It took two years for the merger to close. In the meantime, Bell Atlantic and Vodafone Air Touch, now Vodafone Group, announced their agreement to create a new wireless business. The new “Verizon” brand was launched on April 3, 2000, after a six month wait for regulatory approval, and began operating as Verizon Wireless on April 4th. GTE’s wireless operations joined Verizon Wireless thereby creating the nation’s largest wireless company. “Verizon then became the majority owner (55 percent) of Verizon Wireless, with management control of the joint venture” (Varettoni, 2013, p. 3). Upon entering into an agreement to acquire Alltel, Verizon had to meet some conditions of the acquisition. Verizon had to divest overlapping wireless properties in...
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...Assignment 1: Competitive Strategies Maurice Haywood Professor Nikhil Nayak BUS508029VA016-1134-001: Contemporary Business 5/3/2013 In the ever changing world we live in, there will always be competition. Regardless of the category, someone or something needs to feel it is the dominant one. We see the competitiveness of humans all around us each and every day. Some competitors have a long standing duel with each other such as Pepsi and Coca-Cola, and some are just beginning their famous quest for the top such as Samsung and Apple. It should go without saying that the world actually thrives on this type of competition because it’s good for the economy and overall growth of all of our systems and branches of government. Sanders said it best in an excerpt from his book Equipped to Lead. Everything that happens inside an organization is tied to a process. If we were to take our time and closely examine the architecture of every discipline within an organization, we discover a series of complex systems, some formal and some ad hoc, that upon deconstruction reflect and orderly subsystem of processes-a subsystem compromising of inputs and outputs (Sanders, 2008). With that being said, every company is tied to its competitor in some way or another, one has to have a larger market share. The industry which will be used as a discussion for this paper will be the telecommunications industry, and the two companies I will discuss for competitive strategies are Sprint...
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...respected brand in communications. 4. Internal Resource (1)Organizational Culture: • Employees Own Their Career • Employee Training - Tools & framework available to resolve any customer problems - Support - Passion & Training • Place to Grow • Get Degree Verizon Pay • Medical / Health Benefits compensation for tuition • Day care program/Mother’s Room (2) Technological Resource: * Reliable / Robust Wireless Network * advance Fiber Network (3) Financial Performance / Position (4) Physical Resource: Acquisition & Merger • January 2006 4- Verizon Communications closed its $8.44 billion acquisition of long-distance carrier MCI • January 2009 5- Verizon Wireless $28.1 billion acquisition of regional carrier Alltel Wireless is finally complete, making the combined company the largest wireless carrier in the United States. • April 20116 - Verizon Communications (VZ) has closed its $1.4 billion acquisition of Terremark Worldwide, clearing the way for Verizon to lead the rapidly evolving global managed IT infrastructure and cloud services market. • August 20118- Verizon Communications Inc. announced today that it has acquired CloudSwitch, an innovative provider of cloud software technology, in a deal that will simplify the move to the enterprise cloud and help to boost industry adoption • June 20127 - Verizon Acquires Hughes Telematics for $612M in Cash (5) Corporate Strategy – Joint...
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...Telecommunication industries is rising and becoming more of a demand on a daily basis. One of the top telecommunication companies is Sprint, which has extensive operations in the United States and three United States territories (Virgin Island, Guam, and Puerto Rico). Sprint offers communication services (wireless, wireline) to businesses, government users and consumers. The company engineers, builds, and implement technologies, which includes the first 4G (fourth generation) wireless service in the United States from a national carrier. The company’s services also entail contract services and pre-paid services. In 1990 Sprint offered basic phone lines and branched out in 2000 to walkie talkie services using an analog network. On July 10, 2013, Sprint merged with Nextel, became Sprint Nextel, and being its directly owned subsidiary. Sprint Nextel was changed to Sprint Communications, Inc. Sprint is now a 4G LTE network and also one of the most fast network services. Sprint caters to consumers’ needs by providing and producing enhanced products to communicate, such as, surfing the internet, talking, listening to music, watching television and having a face to face conversation from your phone and that is just to name a few. Sprint not only offers services in the United States but also in some of the international countries. Sprint not only provide services for cell phones but have advanced to home phone services, tablets, I pads, MIFI hotspots, and laptops. As of...
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...Sprint Nextel Corporation SWOT Analysis Background Sprint Nextel Corporation (Sprint) is a communications company. The company provides a range of wireless and wireline communications products and services to individual consumers, businesses, government subscribers and resellers. It provides wireless services on a postpaid and prepaid basis to retail subscribers and also on a wholesale and affiliate basis. The company markets its postpaid services under the Sprint and Nextel brands, and prepaid services under the Boost Mobile, Virgin Mobile, and Assurance Wireless brands. The company offers its services through wireless networks, an all-digital global long distance network and a Tier 1 Internet backbone. (www.alacrastore.com, 2013) Mission Sprint’s mission is to be number one in providing a simple, instant, enriching and productive customer experience. (Sprint Nextel Corporation, 2013). Vision Sprint’s vision is to be a world class company, with standards by which others are measured, including a commitment to developing a world class supplier base that is reflective of the communities we serve. (Sprint Nextel Corporation, 2013). History Sprint's red diamond logo represented the combined achievements of many legendary predecessors, including United Telecommunications, US Sprint and Centel. Each embraced the same bold approach that Sprint's founder Cleyson Brown showed in 1899, when the Brown Telephone Company successfully went toe-to-toe with the Bell monopoly...
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...Strategic Management and Strategic Competitiveness Sherry Carmichael BUS499 Professor Shereen Turner July 13, 2013 The telecommunication industry is moving fast. Sprint Nextel is one of the top three telecommunication company in the US. Sprint Nextel has extensive operations throughout the United States and in three of the U.S. territories — U.S. Virgin Islands, Puerto Rico and Guam. Sprint Nextel provide products and services to individual consumers, business, government subscribers and resellers. Sprint Nextel service both post paid and pre paid services. Sprint Nextel has moved at a fast pace with technology. Sprint Nextel has moved from basic phone services in the 1990’s to direct connect walkie talkie services in the early 2000’s all on an analog network now in 2013 have moved passed even CDMA digital network . Sprint Nextel is advancing with technology sprint now offer service on one of the fasted network 4G LTE. If I was to describe how fast sprint is moving I would have to use perpetual innovation. Sprint Nextel now offer phones that you can talk on, listen to music, and watch TV, surf the internet and now have face to face time right from your phone and more. Sprint services are not just limited to the US Sprint offer service in some international countries. As the demand for new ways to communicate are needed Sprint Nextel are producing products to keep up with it consumers needs. Sprint Nextel have advanced passed cell phone they now offer other products...
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...Although these acquisitions have somewhat changed the dynamics of the market, there are still many players. An oligopoly market is considered to have three to four players, and such markets are typically stable in terms of growth, technical innovation, and pricing policies. It seems that the wireless carrier market will require a few more years before it becomes an oligopoly. Also, the rate of innovation in wirelcss technologies is frantic. A pathbreaking technical innovation by one of the big players has the potential to change the industry dynamic. The major players and thc number of subscribcrs that they have are as follows: 3. Sprint Nextel (53.8 million subscribers). 4. T-Mobile (28 million subscribers). 5. AllTel Inc. (12 million subscribers). In 2007,Alltel completed its merger with an affiliate of TPG Capital and GS Capital Partners and ceased trading on the New York Stock Exchange. 6. US Cellular(6,1 million subscriben). 1. AT&T (70.1 million subscribers). In 2004, Cingular Wireless acquired AT&T Wireless. That acquisition gave Cingular nationwide coverage. Then the BellSouth acquisipercent ownershipof cingular. tion in 2006 gave AT&T 2 Verizon Wireless (65.7 million subscribers),formed by the . union of Bell Atlantic Mobile, AirTouch Cellular, PrimeCo, and GTE Wireless. European wireless giant Vodafone has a 45 percent stake in Verizon Wireless. The growth in the number of subscribers and in revenucs (which does not include...
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...After doing some research, I have come to the conclusion that Sprint is the best place to work. In this paper I will compare Sprint’s benefits, turnover rate, and financials to that of AT&T and Verizon Wireless. Once I have completed this paper, I am sure you will agree with me. I will begin with AT&T. AT&T has some wonderful benefits. It provides its employees with medical, dental, and vision plans. It gives employees a 401k savings plan/pension plan. Employees get paid time off. Students can get tuition reimbursement. And they also provide life/accident insurance. Employees are offered discounts on AT&T products and services. They are given adoption assistance, leave of absence, and ongoing employee training. They also have the option to purchase veterinary insurance for their pets, as well as auto and home insurance. Because of the Union, they provide excellent benefits. They give you a set schedule. They give you good pay with a chance to earn more through commission. According to AT&T Inc Company’s Financial information, their earnings are currently $1.25 million. The only downside that I have found is according to glassdoor.com, they have a 90% turnover rate. After the employee has made a sale, they are encouraged to give poor customer service. In March of 2011, Verizon was using some sought-after benefits to recruit new employees. They had 900 positions to fill. They were offering health, dental and vision insurance...
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...Could Softbank play Sprint’s savior Recently, one big new shocks the U.S cellular telecommunications industry and some people even thinks that will cause a new worldwide tycoon in this industry. The new is that “Softbank Corp. has reached a deal to buy 70 percent of U.S. mobile carrier Sprint Nextel Corp. for $20.1 billion in the largest ever foreign acquisition by a Japanese company (Walker).” This is a mergence between the Japanese third biggest mobile carriers and U.S third biggest mobile carriers. Some investors believe this action will disrupt U.S Market and make Sprint competitive with two traditional communications giants AT&T Inc and Verizon Wireless. As we all know, Sprint is suffering a hard time now with huge debts. One article points out that Sprint has struggled in recent years to compete with Verizon and AT&T. The company has $21 billion in long-term debt, and has launched a costly network restructuring and signed a long-term contract to buy $15.5 billion worth of iPhones from Apple Inc. over four years (Walker). On the other side, Softbank are also not financially healthy. Softbank spends $20 billion buying Vodafon Japan subsidiary on 2006 and takes 5 years to pay off the debt. Besides, Softbank just announces a 2.2 billion emerge plan with eAccess this month. So Softbank’s statement of assets and liabilities may disappoint investor for a long time. So most people may question that whether Softbank can save Sprint and stop Sprint’s declining tendency...
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...Cellular Warfare: Competing for the Highest Bid & Technology (Investigating Stock Quotes & Financial Positing) By: Odettia A. Newsome FIN 534 Financial Management Quarter: Summer 2007 Instructor: Dr. Brian Cornforth Cellular Warfare: Competing for the Highest Bid and Technology Cellular companies are constantly competing for the high number in sales and the latest advances in technology. In order to do this they must find their target market and offer them new and inventive ways to accommodate their lives in order to make it easier for the average consumer. Once this is defined, they must then again fine inventive ways to persuade their audience that what they have to offer is better then their competitors. How this is accomplished is by offering features such as text message and rate plans, data plans and equipment insurance for their devices or phones. Upon mastering this marketing advertisement, the sales for these companies reflect how well they are doing with in that particular market. Thus giving the investor an over all view of how their company is performing on a finical standpoint nationwide for companies such as AT&T, Verizon, Sprint, & SunCom. In order to have a clear understanding, we will look at four companies and where they stand on the finical standpoint. AT&T is one of the largest cellular companies advertising the “The Largest digital and data network” reassuring their market that they are getting the...
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