- What is the strategy of the GSO? Please be as specific as you can in identifying both the GSO’s environmental constraints, and how it differs both from the symphony orchestras, and from a professional sports team, which has many similar constraints and objectives? Why do these differences exist?
For a period of four years, Granville Symphony Orchestra experienced deficit, which forced the management to come up with effective, efficient, and attainable strategies. The main strategy of Granville Symphony Orchestra was to increase revenues whilst checking on the expenses. The management proposed many actions or measures to increase revenue as well as check on the expenses. One of the measures was to concentrate on the fixed costs. The Investment Committee and the Resource Committee were given the mandate to check the ratio between fixed costs to endowment income. The ratio between fixed costs to endowment income was to increase the income whilst reducing the associated costs or expenses.
In addition, the Resource Committee was charged with the responsibility of increasing ticket prices. On average, the Resource Committee was charged with the mandate of raising approximately $6,000,000 annually. On the other hand, GSO had a strategy of limiting capital expenditures for depreciation especially for new facilities as well as required improvements. Buildings and Grounds Committee was given the sole responsibility of ensuring that such capital expenditures are reduced to approximately $500,000 annually. Reducing the amount of expenditure is a move aimed at ensuring that the annual total cost incurred by the orchestra is lower than the revenue hence eliminating the deficit, which has been witnessed over the past years. However, there is need for a clear guideline on how the reduction of the expenditure will be attainable or achieved.
These were the measures that GSO planned to employ in a bid to increasing revenue and reducing or checking associated expenditures. However, there are environmental constraints associated with the same. Increasing the ticket prices is likely to discourage the clients (Schermerhorn Jr & Schermerhorn, 2011). Besides, there are many forms of entertainments as well as entertainment venues where people may get refreshed. Increasing the ticket prices was therefore not a good and sustainable idea since instead of paying higher fees for entertainment; many people would prefer the other alternative forms and places of entertainment.
It is important to note that other orchestras and professional sports team also experience similar constraints besides the fact that they have same objectives. However, there are differences that exist between the GSO and the other orchestras and professional sport teams. The main difference between the strategy and those of symphony orchestras and other professional sports team is that whereas GSO aims at increasing the ticket prices and reduce capital expenditures, symphony orchestras and professional sports teams are involved in sales promotion in order to attract many clients. Sales promotion range from internal (the orchestra or team promotes its products) to external (another firm uses the orchestra or the team for product promotion). For instance, the sports teams have been used in promoting the products of other firms such as Addidas and Puma, and this creates an opportunity to have additional revenues.
Many of the professional sports team and other orchestras have strategies for other forms of revenue. For instance, most of the professional sports teams and orchestras obtain revenue from different corporate sponsors such as Samsung, Emirates, AON, and Barclays amongst others. Such corporate sponsors provide the teams and orchestras revenue and obtain a forum for conducting sales promotion in return. It is important to note that there are times when the concert halls are free and this would be used for other activities that would attract revenue. GSO relies heavily on the revenue collected during the performances and this is the major difference between it and other orchestras and other professional sports teams. It is important for GSO to establish other attainable strategies that would attract revenue from other sources.
- Do the plans for 2005-12 seem attainable? If so, why? If not, what changes would you propose?
The plans for 2005-2012 as portrayed in the projections seem unattainable. According to the plans, the organization will be having an annual fund-raising to collect enough funds to meet the set target for a particular year. In addition, GSO only concentrates on obtaining revenue from sale of tickets. Despite the fact that this is a viable strategy, it is unattainable given the fact that GSO is involved in business activities, which are aimed at attracting revenues. Therefore, concentrating on annual fundraising and sale of tickets is likely to fail. The main reasons for possible failure of the annual fundraising and sale of tickets is that whereas many people will feel bored for attending fundraising every year, sale of tickets has proved to be unattainable over the past given the fact that the concert halls are not always occupied.
Notably, there is a need for the organization to make changes in the strategies through adequate business activities that will attract revenue. One of the changes that GSO can employ is to engage in promotional services as well as use the various concerts to promote other organizations’ goods and services. Engaging in promotion will not only attract more audiences but also provide the orchestra with an avenue to achieve additional funds from the other organizations. GSO needs to try the strategy of corporate sponsorship in order to increase avenue and magnitude of revenues collected.
References
Fridson, M. S., & Alvarez, F. (2011). Financial statement analysis: a practitioner's guide (Vol. 597). New York, NY: John Wiley & Sons.
Marson, D. C., Triebel, K., & Knight, A. (2011). Financial capacity. Civil Capacities in Clinical Neuropsychology: Research Findings and Practical Applications: Research Findings and Practical Applications, 39.
Schermerhorn Jr, J. R., & Schermerhorn, J. R. (2011). Introduction to management. New York, NY: John Wiley & Sons.
