case study Flashcards
(147 cards)
1
Q
average cost (lines 9-10)
A
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.
2
Q
challenge (line 11)
A
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.
3
Q
company (line 4)
A
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.
4
Q
contracts (line 8)
A
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.
5
Q
cost (line 10)
A
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.
6
Q
directors (line 10)
A
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.
7
Q
employees (line 6)
A
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).
8
Q
environmental sustainability (line 11)
A
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
9
Q
expansion (line 6)
A
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.
10
Q
fee (line 9)
A
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.
11
Q
finance (line 6)
A
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).
12
Q
location (line 1)
A
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.
13
Q
permanent employees (line 6)
A
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
14
Q
private limited company (line 5)
A
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.
15
Q
public limited company (line 5)
A
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.
16
Q
temporary workers (line 6)
A
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.
17
Q
bamboo plates and cutlery
A
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.
18
Q
covid 19 pandemic
A
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.
19
Q
credit card
A
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.
20
Q
freelancer
A
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.
21
Q
greenwashing
A
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.
22
Q
interest rate
A
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.
23
Q
landfill site
A
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.
24
Q
line manager
A
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.
25
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.
26
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.
27
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.
28
music performer
A music performer is an individual musician or a band that performs music, in recorded form and/or live performances.
29
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.
30
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.
31
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.
32
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.
33
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.
34
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.
35
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.
36
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).
37
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.
38
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.
39
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.
40
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.
41
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).
42
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.
43
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.
44
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.
45
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.
46
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.
47
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).
48
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).
49
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.
50
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.
51
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.
52
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.
53
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.
54
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.
55
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.
56
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.
57
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.
58
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)
59
creditors
Creditors are individuals or other businesses to whom money is owed. This is because BON may have used trade credit from its suppliers (for credit purchases and outstanding bills) and/or loan capital (such as bank overdrafts or bank loans).
60
crowdfunding
This is a way of raising finance by asking a large number of individuals each for a small amount of money to finance a new business or project. This is the opposite of the traditional method of borrowing a large sum of money from a small number of lenders or financiers. Crowdfunding may serve as a viable source of finance for BON to support relatively new and lesser-known music performers.
61
customer base
This means the total number of individuals who purchase goods and services from a business. The size of the customer base is important because it is the customers who ultimately help the business to earn money, grow, and do thrive. BON’s customer base consists of those who attend its music festivals, irrespective of demographics such as age or income level.
62
customer loyalty
This measures the degree to which customers consistently repurchase products from the same business. Loyal customers also choose the goods and services of the business over its competitors. Marketing strategies designed to cultivate loyal customers can give organizations a competitive advantage. BON’s loyal customers are those who repeatedly attend its music festivals.
63
customer satisfaction
Customer satisfaction is a measure of the degree of customer contentment with regards to indicators such as the quality of the firm’s products and its services. Data used to measure customer satisfaction includes customer satisfaction surveys and ratings or reviews on social media. Such feedback can help BON to determine how best to improve or change its product offerings, including music artists, performers, and bands at its music events. It could also include feedback about the food and beverage offerings at its music festivals.
64
economic sustainability
Economic sustainability in the context of the case study refers to the ability of BON to generate sufficient revenue and manage costs effectively in the long term, while also contributing positively to the economic well-being of its stakeholders, e.g., BON’s shareholders and the local communities in which it operates. It is about effective financial planning and management.
65
economies of scale
Economies of scale refers to the cost-saving benefits enjoyed by an organization due to its larger scale of operation. It is shown by a fall in average cost of production following an increase in output. For instance, hosting larger music festivals enables BON to spread fixed costs (such as the fee paid to the five farmers) over a larger number of attendees and activities, leading to a decrease in average cost per attendee.
66
energy-efficient production methods
This refers to methods of lowering energy consumption by using less energy to achieve the same amount of output. Examples include the use of solar power (line 50) and energy-efficient LED light bulbs for BON’s music festivals.
67
entrepreneurship
An entrepreneur bears the financial risks of starting and managing a new business or a commercial venture, such as running music festivals in Europe. Entrepreneurs can develop new products or service ideas or find a new way of offering an existing product. S/he organizes factors of production to produce goods and/or services and assumes the risks and rewards of running the business.
68
environmental issues
Environmental issues (in a STEEPLE analysis) refer to the ecological aspects of business activity that can have positive as well as negative impacts on organizations. Environmental sustainability is one of the three pillars in Elkington’s triple bottom line (along with social and economic sustainability) referring to the ability of BON to maintain the use of its renewable and non-renewable resources for future generations.
69
ethical objectives
Ethical objectives are the moral principles that guide business decision-making. Ethics are the beliefs of what society considers to be morally right or wrong. These goals can come from internal pressures (such as the desire of management to implement ethical business behaviour, such as labour practices at BON) or from external pressures (such as environmental sustainability practices). Ethical objectives are shaped by societal norms and expectations of business practices that are deemed to be fair to society as a whole.
70
external investors
External investors are stakeholders who provide external sources of finance to an organization. Examples include financial lenders (such as banks) and business angels. External investors of BON are interested in the company’s financial performance, especially its profitability and level of gearing.
71
external stakeholders
These are individuals or other organizations that are not part of the business but have a direct interest in its operations. Examples for BON include customers (music festival attendees), suppliers (such as the farmers who rent their land to BON), freelancers, competitors, financiers, local communities, pressure groups, and the government.
72
extrinsic motivation
This category of motivation occurs when people participate in a task or activity because of the tangible benefits and rewards associated with doing so, such as pay, financial benefits, recognition, and praise for music performers at BON’s festivals.
73
financial performance
This refers to how well a business is performing financially as reflected in its final accounts (balance sheet and profit and loss account). A ratio analysis is often conducted to assess the financial performance of a business.
74
financial motivation
This refers to the use of monetary payments to reward and/or motivate people in organizations. Examples for BON include salaries and fringe benefits (for permanent employees), wages (for temporary employees), commission (for agents), and possibly bonuses (for freelancers).
75
fixed costs
Fixed costs are costs which do not change with the level of output or sales. Examples for BON include advertising, insurance, management salaries, loan repayments, and rent (paid to the five farm land owners).
76
green credentials
Green credentials refer to the credibility of a business in terms of its ecological sustainability (attempts to protect the planet), which will also have a direct impact on its economic sustainability. For example, a business which actively engages with the three Rs (reduce, reuse, and recycle) is likely to have better green credentials than firms that do not. The three Rs is a simple framework that can be applied across the board to businesses of all sizes in all industries. Consumers and businesses increasingly consider green credentials when deciding who they will do business with. Therefore, it is increasingly challenging for organizations to ignore business ethics, sustainability issues and considering the environmental impacts of their operations. Sustainability is of growing importance to customers and governments around the world.
77
health and safety training
This refers to specific training that ensures BON’s workers are able to carry out their jobs carefully without risks to their physical wellbeing or harm to others. Managers have a responsibility to make sure the business has a safe and healthy working environment, especially in job roles with high-risk activities such as running outdoor music festivals. It also helps to improve labour productivity as staff know what to do, in a safe and sensible manner. A lack of health and safety training will cost BON money due to staff absences (lost productivity, sick pay, and even compensation claims).
78
human resource management
HRM is about the development of people and overall workforce planning. It includes the recruitment, selection, dismissal, training, and development of employees. The HR Manager is in charge of developing the skills, experiences, and talents of the workforce. A human resources strategic plan is a long-term plan to ensure that the labour force within the business has the correct skills and expertise to carry out its role within the business so that it achieves the business objectives. This is particularly important given the seasonal nature of BON in running its musical festival from May to August (line 12) but also with permanent employees throughout the year (lines 6 – 7).
79
informal communication
Informal communication is communication that takes place through social conversations and gossip, rather than through official lines of communication. In the context of BON, this could take place between the temporary employees, permanent staff, and freelancers.
80
informal communication
Informal communication is communication that takes place through social conversations and gossip, rather than through official lines of communication. In the context of BON, this could take place between the temporary employees, permanent staff, and freelancers.
81
infrastructure
Infrastructure refers to the physical structures and facilities needed for the operations of a business. Examples of infrastructure for BON include telecommunications, electricity (power networks), and transportation access to its music festivals.
82
internal stakeholders
These are individuals or other organizations that are part of the business, so have a direct interest in its operations and affairs. Examples for BON include employees, managers, directors, and shareholders.
83
internal sources of finance
This refers to the various methods by which an organization funds its operations without the use of third-party (external) finance. Examples for BON could include the sale of tickets for its music festivals, merchandise sales, and retained profits.
84
intrinsic motivation
This category of motivation exists when people engage in a task or activity out of their own desire (such as the enjoyment of being a music artist or performer), rather than due to extrinsic reasons (such as pay, financial benefits, and praise).
85
job production
Also known as customized production, this production method is used to make unique or one-off products for the specific requirements of customers. Each music festival is an example of job production, with its different set up artists, bands, and performers catering to audiences and fans of different music genres.
86
leadership
Leadership is the art of influencing, inspiring, and motivating others to accomplish a common goal. Leadership plays a key role in an organization and involves setting a clear vision and direction for others to follow. It is integral to the success of running music concerts and festivals, given the huge scale of operations, staffing, and attendees at these events.
87
liquidity
This refers to the ability of a business to meet its short-term debts and liabilities without causing disruptions or incurring excessive costs. It involves BON monitoring the cash flow of the business to ensure it can meet its current obligations, including bills, overdrafts, and other short-term liabilities. Seasonality, in particular, can cause liquidity challenges for BON, given the absence of sales revenues between the months of September and April.
88
management
Management encompasses several roles which include planning, commanding, controlling, coordinating, and organizing human and capital resources to achieve organizational objectives. Managers at BON focus on problem solving and decision-making so that the company’s goals can be achieved within a set time frame.
89
market development
Market development is the growth strategy in Ansoff’s matrix where a business sells its existing products in new markets, i.e., the products are the same, but sold to a new group of customers. For BON, this could include expanding its music festivals into new geographic markets or expanding its portfolio of festivals by catering to different music genres or niche audiences.
90
market gap (or market opportunity)
A gap in the market refers to a business opportunity whereby something that customers need is identified but it is not currently available. This is likely to be a product that is completely unique or addresses the existing needs of customers in a different market. For example, BON could host festivals dedicated to niche music genres such as indie rock, electronic experimental, or folk, as well as targeting festivals specific to families with young children. Identifying and catering for these gaps in the market can lead to higher attendance and engagement at BON’s events.
91
market growth
This refers to the increase in the size of a market or industry over time. It can be measured in several ways including an increase in sales revenue or the number of customers in a particular market. It is typically associated with an increase in the level of consumer spending in a given market, such as the increase in attendees at music festivals in the post-COVID era.
92
market research
Market research is the process of gathering and interpreting information regarding the thinking patterns and buying habits of customers. For example, market research help can BON to gain insights into the preferences, tastes, and behaviours of its target audience. By conducting surveys, interviews, and focus groups, BON can gather feedback on the types of music, performers, and experiences that attendees desire.
93
marketing
Marketing is the management process of identifying, anticipating, and satisfying consumers’ requirements in a profitable way. It involves BON meeting the needs and desires of its customers by focusing on ensuring that the product (music festivals), price, place (distribution channels), and promotional methods are effective in encouraging sales of tickets to its music events.
94
marketing mix
The marketing mix describes the key components of marketing a physical good: product, price, promotion, place, physical evidence, and process. All aspects of the marketing mix apply to BON for the successful running of its music festivals.
95
marketing strategy
This refers to the management process of formulating a firm’s marketing goals and activities to increase sales and to achieve a sustainable competitive advantage. BON’s marketing strategy should be drawn from market research and focus on all aspects of the marketing mix in order to achieve its strategic goals.
96
mass market
A mass market refers to an unsegmented market for a good or service, i.e., the product is aimed at or appeals to all customers in the market, irrespective of population demographics. BON caters to a broad audience of festival goers by organizing music festivals that appeal to a wide range of music enthusiasts. Successful music festivals will attract large numbers of attendees, representing different demographics, interests, and preferences.
97
mission statement
This official declaration of a business refers to its overall goal and its purpose. Although BON’s mission statement is not provided in the pre-release statement, it forms the foundation for setting the aims and objectives of the business.
98
motivation
Motivation is the desire, effort, and willingness to complete a task or to achieve something. It can be extrinsic (such as pay and financial rewards for BON’s 60 permanent employees) or intrinsic (such as pride, self-esteem, or altruism - the desire to help others). Many music festivals rely on volunteers, including those with medical training who serve as first responders and coordinate emergency services. These volunteers participate not only to assist others but also to enjoy the atmosphere associated with outdoor music events.
99
non - financial motivational methods
Non-financial rewards (intangible rewards) are non-monetary methods used to reward and/or motivate people. Examples of non-financial rewards for BON could include job satisfaction, job enlargement, job enrichment, teamworking, and career advancement.
100
objectives
Objectives are the short to medium term goals of an organization, such as survival, expansion, revenue maximization, increased profits, and increased market share.
101
operational objective (tactical objective)
This is a short-term organizational goal that is in line with the organization’s long-term goals. They are specific targets for the day-to-day activities and tasks necessary to execute BON’s music festivals efficiently, such as resource utilization. Departments or divisions of an organization tend to set their own tactical objectives.
102
operations management
Operations management (or operations) is concerned with using an organization’s resources (labour, capital, and finance) to provide goods and/or services. This business includes BON overseeing the planning, coordination, and execution of various activities and resources necessary to organize and run successful music festivals.
103
opportunities
In a SWOT analysis, opportunities refer to changes in the external business environment that create optimistic prospects for a business. Opportunities for BON could include market growth in the post- COVID era, adoption of digital technologies, and strategic partnerships (such as collaborating with music artists, influencers, sponsors, local communities, and other key stakeholder groups).
104
overheads (expenses)
Overheads are the ongoing expenses of running a business. They are not directly linked to the level of production, or the service being provided, but are still vital to the firm’s operations. Examples include the cost of office rents (for BON’s headquarters), salaries of administrative staff, office equipment and supplies, legal fees, accounting fees, advertising, and utility bills
105
pressure groups
Pressure groups are external stakeholder groups that exist to influence and persuade organizations and governments to act in socially responsible ways. Such advocacy groups could include those focused on environmental conservation and sustainability by exerting pressure on BON to adopt eco-friendly practices and reduce its environmental impact.
106
price
Price refers to the value of a good or service that is paid for by the customer. Price will usually cover the costs of production, allowing the business to earn a profit margin. Ticket prices for BON’s music festivals are likely to be high due to the peak summer season when demand is high.
107
pricing methods
This refers to the pricing strategies that a business uses to sell its goods and/or services. Examples of pricing methods for BON could include cost-plus, premium pricing, competitive pricing, and dynamic pricing. Note: Although the latter two methods are both HL only, application of any relevant tool, theory, or term from the syllabus will be awarded according in the exams.
108
profit
Profit is the financial surplus from sales revenue after all production costs have been deducted. It is a fundamental objective of most private sector organizations. BON’s shareholders will expect a return on their investment so the company will need to be profitable. In its most simplistic form, profit is calculated by using the formula: Profit = Sales revenue – Total costs.
109
promotion
In the context of marketing, promotion is part of the marketing mix related to the methods of communicating marketing messages to potential and existing customers, usually with the intention of selling a firm’s products. Methods of promotion include the use of advertising, branding, sales promotion, and public relations. Promotions and advertising play a crucial role in attracting attendees, enhancing brand visibility, and influencing ticket sales for BON’s music festivals.
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qualitative research
Qualitative research involves the collection of primary and/or secondary market research data and information based on attitudes, beliefs, and opinions. It is about finding out what people think and why they think it. Qualitative research may be important for BON in understanding the preferences, motivations, and experiences of attendees at its music festivals industry in order to enhance customer engagement in the future. However, the research can be subjective, so is open to a high degree of interpretation.
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recruitment
Recruitment is the process of hiring suitable workers for job roles within an organization. It starts with identifying the need for a new employee, followed by defining the job and the appropriate person for it, attracting a number of suitable candidates, interviewing them, and finally selecting the best person for the job. This applies to both BON’s temporary and permanent employees (line 6).
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recycling
Recycling means a physical good sold by a business, such as the bamboo plates and cutlery (line 40) which can be collected, broken down, processed, and reused to make new something new or be used again. It helps to save resources in the long-term and is designed to work well with sustainability, waste management systems, and circular business models.
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renewable energy sources
Renewable energy sources, such as solar power and wind energy, are natural resources that replenish themselves through natural reproduction processes. They replace the resources that have been depleted by usage in production and consumption. Using these resources can help BON to improve its green credentials and reduce costs in the long term.
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revenue expenditure
Revenue expenditure refers to the money needed for the day-to-day running of a business, including expenses such as wages, rent, marketing, insurance, and utility bills. Revenue expenditure is a key reason why BON needs sufficient sources of finance.
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revenue streams
This refers to the money or income coming into the business from a particular activity over a period of time. Examples for BON could include ticket sales, merchandise, sponsorships, and revenues from the sale of food and beverages sold at its music festivals.
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risks
A risk refers to a situation with unknown outcomes which could damage the financial health and viability of a business. Some risks, with a high degree of uncertainty, can cause a financial loss and possibly threaten the survival of an organization. Risks for BON included the COVID-19 pandemic which caused liquidity problems for the company. Competition in the industry, green credentials, and evolving societal expectations about sustainability are existing risks or challenges for BON.
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salaries
A salary is a fixed amount of money paid on a periodic basis, usually per month, to full-time or permanent staff. Hence, salaries represent a fixed cost to an organization. Salaries create a sense of security as employees know how much they will be paid each month (unlike wages or commission), although do not necessarily create any incentive to work harder
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sales
Sales (or sales revenue) refers to the income of a business received from customer purchases of its goods and/or services. It is calculated by multiplying the selling price of the product by the quantity sold. BON’s sales mainly come from selling tickets to its music festivals. Additional sources come from the sale of merchandise.
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secondary market research
Also known as desk research, this refers to information collected from second-hand sources (which already exist), e.g., government statistics, the news media, and independent market research reports, all of which are easily accessible to the public. Secondary market research can offer insights into consumer preferences and demographics related to music festivals. This information can help BON to tailor its music festival offerings to enhance attendee satisfaction and build customer loyalty.
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set-up costs
These are the initial investment costs incurred by a business when establishing a new operation or when launching a new product or service, such as a specific music concert or festival. Examples for BON include costs associated with acquiring or leasing physical farm land (to host the music events) and purchasing machinery, equipment, and other tangible assets needed for the music festivals.
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services
Services are intangible (non-tangible) products provided by organizations, such as BON’s music concerts and festivals. Freelancers (like music performers, music composers, choreographers, videographers, marketers, and publicists) and suppliers also provide their services to BON.
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share capital
Share capital is a source of finance, raised by selling shares in a company to shareholders (who become part-owners of the company). Share capital is the most important source of finance for public limited companies like BON.
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social media
Social media refers to any form of online platform (such as websites and applications) that enable users to create and share interactive content or to participate in online social networking. Social media platforms provide BON with direct channels to engage with its target audience, including festival goers, music fans, and potential attendees, as well as possible sponsors and vendors.
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sources of finance
Sources of finance refers to the various methods by which an organization obtains its money. These sources can be split into internal sources (such as retained profit) and external sources (such as bank loans, leasing, and share capital raised on the stock exchange from the general public).
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sponsors
A sponsor is a person or organization that pays for or contributes to the costs of an event in return for exclusive advertising exposure at events such as BON’s music festivals.
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staff retention rate
The staff retention rate is the percentage of staff who remain employed by a business over a given time period, usually one year. It is calculated by deducting the number of leavers from the total number of employees in a year, expressed as a percentage of the workforce that has remained within the business. A low retention rate implies low employee motivation and a lack of staff loyalty. BON is likely to have a relatively high turnover rate (i.e., a low staff retention rate) due to the seasonal nature of the business and the number of temporary employees hired its music festivals.
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stakeholders
Stakeholders are the individuals and/or other organizations that have a direct interest in the operations and activities of the business in question. They include internal stakeholders (such as employees, managers, directors, and shareholders) and external stakeholders (such as customers or festival goers, suppliers, the local community, pressure groups, and the government).
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strategic objective
Strategic objectives are the long-term goals that guide the overall direction and growth of BON in the music festivals industry. They involve broader decisions and initiatives made by the directors and are aimed at positioning the organization for future success. BON’s strategic objectives could include growth (expansion), market leadership, sustainability objectives, profit maximization, and improving the corporate image of the organization.
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strategic plan
This is an organization’s proposal of its business strategy, outlining its strategic direction and including the necessary resources to pursue the strategy. As a management tool, strategic planning starts with strategic analysis (an examination of its current position in the market), followed by strategic choice (the possible options through which the firm can pursue its strategy) and ending in strategic implementation (deciding how to get to where the firm wants to be).
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strategic priority
Strategic priority refers to the ranking of strategic objectives by their level of importance to the organization at any given time. Subsequently, operational (or tactical) planning and resource allocation (including budgets) are based on a firm’s strategic priorities. A strategic priority for BON could be expansion (line 6) in the European music festivals industry.
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subcontractors
A subcontractor is a third-party individual or firm hired by the main contractor of a project to help complete a project. The subcontractor specializes in performing and completing part of (or in some cases all of) the responsibilities assigned to them, in a timely and cost-effective way. Subcontractors can be hired by BON to handle various aspects of event logistics and setup of the 60 stages (line 15) at its music festivals.
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survival
Survival is a business objective for many organizations, especially during turbulent times, such as the COVID-19 pandemic. It refers to the continuity of a business and its operations. Common methods to survive include cost cutting (such as staff redundancies) and reducing prices to increase sales revenue.
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sustainability
Sustainability is about using the planet’s resources in such a way that future generations are not deprived of access to what the current and previous generations have enjoyed. In Elkington’s triple bottom line model, sustainability is comprised of three pillars: economic, environmental (ecological) and social sustainability, i.e., profits, planet, and people. Sustainability initiatives and practices are a top strategic priority for BON.
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tertiary sector
The tertiary sector refers to business organizations that operate in industries involved in the provision of services (intangible products). BON operates in the tertiary sector by providing services such as music concerts and festivals to its target audience.
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threats
A threat refers to any external factor that hinders or risks the operations and profitability of an organization. Examples include the challenges of competition in the music festivals industry, technological breakdowns during BON’s music festivals, changes in government regulations, adverse weather conditions, and the outbreak of infectious diseases such as the COVID-19 pandemic.
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tourism
Tourism refers to people travelling to places outside of their normal environment for the purpose of leisure and pleasure. It is a dynamic and competitive industry that caters for the changing needs and desires of customers, with a specific focus on customer satisfaction, safety, and enjoyment. Tourism in Europe will have a direct impact on BON’s financial success as this influences the number of attendees at its music festivals.
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training
Training is the process of developing the knowledge and skills of workers in order to enhance their confidence and competence in the workplace. The main forms of training are induction (for new staff to acquaint themselves with the policies, processes and physical environment of the organization), on-the-job (training in the normal workplace) and off-the-job (training that takes place away from the normal place of work, such as at a training college).
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uncertainties
In business management, uncertainties refer to any situation with a lack of certainty or confidence because the business cannot control or accurately predict the outcome of its actions. A high degree of uncertainty can create many problems for BON as it is more difficult to make well-informed decisions. For example, there are uncertainties about the direction of interest rates in Europe as well as government regulations for sustainable initiatives at music festivals.
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unique selling point
Unique selling point (USP), also known as a unique selling proposition, refers to any aspect of a product or organization that makes it stand out positively from others on the market. BON’s USP is not clear but could revolve around offering a distinctive festival experience that sets it apart from other music festivals in Europe. This could include unique themes based on different music genres, creative stage designs with a unique appeal, interactive activities for overnight campers (line 15), and immersive performances that create memorable moments for attendees.
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variable costs
Variable costs are costs which change with the level of output or sales. Examples of variable costs include wages paid to the temporary employees, electricity, and other utility bills.
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wages
Wages are a time-based payment system used to pay workers a fixed amount per time period. Workers are typically compensated on an hourly, daily, or weekly basis. Workers receive this payment for the work or services provided. For BON, wages are likely to be used to pay its temporary workers during peak seasons.
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weakness
In a SWOT analysis, a weakness refers to any internal factor that negatively impacts the market position of an organization. For BON, this could include its reliance on seasonal demand for its music festivals (thereby causing potential liquidity issues during the rest of the year) as well as the environmental issues and sustainability concerns associated with running its music festivals. Having 25,000 waste bins (lines 15 – 16) also suggests there are huge challenges for BON in terms clean- up costs at an average cost of $250,000 per festival (lines 9 – 10).
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word of mouth
Word of mouth (WOM) is a form of unpaid promotion in which customers tell others about a business or its products and services. WOM is increasingly important for all businesses, as happy and satisfied customers can influence many others, especially in the age of social media and social networking. WOM is a crucial aspect of the marketing for BON, playing a significant role in shaping its reputation, attracting attendees, and fostering customer loyalty.
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workforce planning
Workforce planning is the continual process of assessing the current and future needs and priorities of an organization’s personnel requirements. It involves recruitment, training, and appraisals. Workforce planning is particularly important for seasonal businesses like BON in order to deliver successful outdoor music events.
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working capital
Also referred to as net current assets, this represents the amount of finance available to a business for its day-to-day operations. It is calculated using the formula: Working capital = Current assets – Current liabilities. Not having enough working capital indicates strained liquidity while too much would indicate wasted investment opportunities. The seasonal nature of BON’s business can create working capital concerns, especially during September to April.
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working conditions
This refers to the physical and non-physical environments in the workplace. It includes working time (hours of work, rest breaks, and work schedules), pay and rewards, and the physical conditions in the workplace (such as lighting, air conditioning, and rest areas for employees and music performers). Working conditions have a direct impact on the productivity and wellbeing of employees.
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working relationships
This refers to the degree of affiliation and connections with other people in the workplace. Having a good working relationship with others means the ability to get along with (or work with) other people in the organization. Strong, professional, and meaningful working relationships are more likely to improve labour productivity, motivation, and success for individuals and the organization. This is more likely to apply to the 60 permanent employees but more challenge to foster for the temporary workers and freelancers (lines 6 – 7).
