For the investigation of the company’s macroenvironmental factors, we will use the Environmental model, by looking into the demographical variables, media, technology, attitudes, people’s cultural changes, and financial situation of the country, because the Eventmakers industry and the company itself is influenced by these factors. All the factors in the macroenvironment affect the industry and organisation but they are out of their direct control. They are continuously changing and the company needs to be flexible to adapt.
We will start our analysis by looking into the demographic aspect of the company’s macroenvironment, because the people make up the market.
a) Demographic variables:
The demographic factors affect customer needs and the size of the markets. The analysis of the population in the country will reveal first of all whether it is increasing in terms of total number of people available to purchase products and services. The total population of Denmark is more than 5 million inhabitants, and is expected to increase.
The distribution of the population according to the age is presented by age group variables. More than a million of the total population in the country are below 17 years of age and it represents 18.7%. The age group from 15 to 60 years is about 3.5 million which is 66.4% of the total population. Similarly, more than a million of the population are over 60 and it is about 15%. Regarding the period of the last 20 years, the proportion of young people and children in Denmark is dropping, at the same time the share of people in active employment and the elderly is increasing.
This growth can be seen as advantage for Eventmakers’, because their potential customers mostly consist of an active employment age group. Also it will lead to increased demand for product and services the company provides. However other groups have to be taken in consideration because the service products of the company can be obtained by different age group. For example, the population of the youngest age group can be seen as the potential customers of the company. Even the money is earned and the decision about purchase is made by their parents but is influenced by the needs of the kids.
The next step will be to look at the population growth rate (PGR). It is the factor, which determines the increase in a country’s population during a period of time, usually one year. It is expressed as a percentage of the population at the start of that period and reflects the number of births and deaths (surplus or deficit) during the period and the number of people migrating to and from the country. In the year of 2002 the population growth rate in Denmark was positive and represented by 0.29%. This population growth can be explained by the level of development and high living standard in the country. The population growth rate tends to be higher in Eastern cultures, where the social and economical conditions are not so developed.
Workers’ gross average monthly income in 2000 was DKr 19,790. Household incomes tend to be high in Denmark, owing to the large proportion of working women. There is a big difference between the gross income and the disposal income. The personal disposal income, income after paying the taxes, in average comprises of 66.8 percent of the gross personal income. It is caused by the high levels of taxation in Denmark, and at the same time the disposal income remains still high. Usually in the family both of the partners tend to have full-time jobs and it also brings the rather high income of the whole family. However in Copenhagen and Århus areas the incomes tend to be higher than in the rest of the country. We can conclude on this that Danes can afford to spend more money on the services and products of high price and which are not of the first importance. It is cohered with the demand of service products of the Eventmakers where the customers can spend more money on the activities and parties.
The size of the active population (those in work plus the unemployed) is about 3 million people. The labour force is slowly increasing through the last years. At the same time the unemployment rate is fluctuating, it was about 5 percent in 2002. In Copenhagen and Århus most of the jobs exist, mainly in the service industries, public institutions and particular business services. In the case of the Eventmakers when a big segment of customers are companies, it will be necessary to promote the company in the big cities, however it is necessary to be aware of the competition in this areas and the attitude of the customers towards the events and leisure activities.
There is a traditional awareness in Denmark of the importance of education. The result is a well-educated population with a high proportion of university graduates. Today, 83% of young people complete a secondary education programme and 40% complete higher education. In addition, great emphasis is placed on providing further education to the large proportion of the current workforce educated only to elementary school level. Quantity of customers with high educational level means the high demand for the quality of the product and the way it is delivered. We can assume that education institutions are another potential segment and that educated customers will require parties on a different intellectual level.
Denmark consists of the peninsula of Jutland and around 406 islands, 78 of which were inhabited in 1997. Of these, the largest and most densely populated are Zealand (on which Copenhagen, the capital and the biggest city is situated), Funen and the north Jutland Island. Most of the Danish population, 85%, live in towns and urbanized districts. Just fewer than 1.8 million people currently live in the metropolitan district of Copenhagen. Århus is one of the others major urban centres in Denmark, with a current population in the region of 215 thousands. The major part of the country is covered by a network of small and medium-sized towns. Jutland represented Denmark's fastest-growing region over recent years, reflecting the large number of municipalities situated on the Danish peninsula. The growth of service sector jobs in particular, in towns and cities like Århus, Silkeborg, Vejle and Aalborg attracted new people to the region. If we will compare the income of the population and where the biggest part of active population is settled, we can assume that customers with high income are mostly living in the big cities such as Copenhagen, Århus. They will be more likely to purchase the company’s products.
b) Media:
Almost all of the Danish household have a television and 60% of these have cable TV or a satellite receiver. There are three nationwide channels, of which most frequently watched channels are TV2 and DRTV (Denmark’s Radio's TV station).
Although around a third of the population read two or more newspapers a day, just over one-in-four do not read a newspaper at all. Most of the newspapers, even they are popular, have difficulties that can be explained because of the competition from electronic media, such as TV and the Internet. Through the last years there is a trend in increasing of circulation of non-daily newspapers over daily ones, and in the year of 2000 it comprised both of about 50%, at the same time the growth of non-daily is about 20 % from the last ten years. There is a decrease in the penetration of weekly magazines, however family and women’s magazines are the biggest magazine publications in terms of circulation. The last years there was an increase in the circulation of specialist monthly magazines, particularly in sectors such as computing and sports, reflecting overall trends in leisure activities.
Regarding this section we can conclude that the customers are becoming more and more TV and Internet oriented therefore the company could use these media to promote and to inform the clients.
c) Technology:
In this part we will look at the technological development in the country and to the proportion of people having personal computer (PC) and using Internet, mobile phones and other accessories.
The number of PC’s owners is relatively high in Denmark and increases through the years. In the year of 2000, 66% of Danish households possessed a personal computer, say the national statistical offices. We also found out that Denmark had the highest rate of internet access, mobile phone take-up and e-business implementation in Europe in the year of 2002. In 2000, there were around 2.1 million Internet users in Denmark. Most of the Danes having access to the Internet from their homes; however other locations include schools, work places, public libraries and colleges. Today, the Internet is considered a common mean of communication, in line with the telephone and well ahead of the postal service. E-mail services via the Internet took over most of this traffic and the general use of Intranets, Extranets, inter-company mailing systems and e-mails between companies helped familiarize many Danes to the Internet. E-commerce or e-trade is increasing and you often hear of deals made via the Internet.
From these analysis we can conclude, the company should make use of this IT development in Denmark. Using IT for marketing purpose in order to get in touch with wider sort of customers and improve customer relations would be beneficial. According to our opinion the company should extend their use of information technology also for internal purposes of the company.
d) Attitudes:
In this part we will try to come across the attitudes of Danes towards the products and services of the same or similar type as Evenmakers is providing to their customers. The attention will be mostly concentrated on the patterns and priorities of the people to the leisure and entertainment and the way these activities are organized. We will also look at the consumer expenditure patterns if it is popular in Denmark to have entertainment activities.
In the companies it is popular to celebrate events, such as birthdays of the company or employees, the date of long working experience in the company, as 5, 10 years and other occasions. The significant event which most of the companies are celebrating is Christmas, which can take more than several days when personnel is meeting together. These meetings usually take place in restaurants or in the nature – outside of the big cities.
In 2000 one tenth part of total consumer expenditure was spent on leisure and entertainment. The most famous type of activities is sport where almost one of two Danes is engaged. The popularity of sport activities is increasing in Denmark both for participation and as spectators. However the most popular types of sports are concerned with water activity and those in the fresh air, for instance sailing, swimming, canoeing and kayaking, rowing and cycling. Many of Danes own a holiday cottage, most of which are located in rural areas, that indicates that people are interested to escape the hectic environment of cities. There is also a pattern in the leisure activities to visit pubs and bars, the favourite activity outside the home is cinema, theatre-goers, situated in Copenhagen, are also popular.
Concluding on attitudes towards events and parties we can say that it is quite popular in Denmark and the company can increase the product’s range to serve more segments, not only business people for example, but also family’s activities or provide more types of events, however for this purpose we are going to analyse later on the company’s products portfolio.
e) Cultural changes:
Cultural factors which affect the company, in some cases are very difficult to identify and analyse, they are usually based on the conditions and environment in which people are living. There are some rapid changes in the country happening in the population mix with regard to the cultural base, language, religion, age distribution, social class and ethnic origin. If we will look again into population variables we can see that most of people living in the country are Danes but 7% of total population are immigrants and refugees. However there is a trend of increasing the number of foreign nationals coming to the country and it can have strong impact on the society and culture. The company should be aware of these changes because it can happen to be positive, if more people will purchase their products, or negative, if these nations will influence original inhabitants to change their attitudes against the company’s offer.
f) Financial situation:
Economical analysis has the same importance as the other factors because markets are requiring purchasing power as well as people. The economic environment consists of factors that affect the consumer purchasing power and spending patterns.
Danish economy is characterised by dependence on the foreign trade and that’s why they have a strong interest in free exchange of goods and services across its borders. In the recent years the economy of the country has been characterised by growth, high employment, low interests rate, low inflation and a surplus in the trade balance and the current account. The inflation rate has not increased significantly through the last years and the price increases have remained relatively steady at about 2% increasing annually. These has contributed to pulling down interest rates and facilitated a real increase in wages.
Foreign trade accounts about 2/3 of GDP (gross domestic product) and most foreign trade is with EU countries. While agricultural products used to dominate, industrial products now account for the greater part of Danish exports: machines, instruments, biochemical products etc. Danish import consists mostly of consumer goods, which is about 30%, and raw materials, semi-manufactured products including energy, machinery and others. We can conclude on this, that Denmark has the industrial economy structure, which is characterised by the exchanging the manufacturing goods with other countries for the goods which are lacking and therefore needed in the economy. In this case there is a sizable middle class who makes Denmark a rich market for all sorts of goods and services. The consumer purchasing power is high, so the people can afford some luxuries and spend more money on health, education, leisure.
At the same time it is important to look at the consumer spending patterns, to see what the consumer’s priorities are and if they are changing. Companies who are warning about changes in consumer spending patterns can analyse the trends and take advantages from it. As the disposable income rose in the recent years, it is reflected in the increase of the consumer expenditure. Although the housing expenses continues to account for the biggest share of consumer spending and it decreases in one percent for the last ten years. The next places take the expenditure on transport and food. The fourth place takes the amount spent on leisure and entertainment and as we mentioned before it accounts of 10% of total consumer spending and there is a slowly increase in it.
From the financial analysis of the country we can conclude that nowadays situation is quite stable and the company can use this as an advantage and increase its market share by attracting more customers.
g) Conclusion on the macroenvironment:
Regarding the macroenvironment section of our analyses we found out many items which are influencing the company and from which it can benefit.
The population in the country is slowly increasing, at the same time the active employment group, which is considered to be as the potential customers of the company, is growing through the last years. As the highest urbanisation is in the Zealand, Funen and the North Jutland Island, the company has to concentrate on these areas, because of high possibility of getting potential customers. However it has to consider the level of the competition and probable changes in culture due to the increase in the number of foreign nationalities coming to the country.
The leisure and entertainment activities are becoming more popular which can positively affect the demand of the company’s products and services especially if we will take in consideration the high income of the population and economical stability of the country.
The people in Denmark are becoming more interested in education and the technological development, in this case the Eventmakers has to be more specific in their offer and use IT for marketing purpose and improvements in customer relations. It is also corresponds to the trends in media as the customers are becoming more oriented towards the TV and Internet.
3.1.3. Situation on the microenvironment of the company:
Before starting to discuss about the framework of this model, we want to explain the reader how is the market structured in the country and worldwide. Based on our research we could find four big international organizations regarding companies which organise events and other manifestations. These are: IAPCO, a very prestigious non-profit organisation. The second one is ICON Group with the headquarters in London. The third one is MPI and the fourth one is CONGREX Partners which has bureaus in four countries.
On the Danish market we identified seven important players: ICS, DIS, Dara Events, Adamas Events, WOCO, AT & CB and Eventmakers. The first two, ICS and DIS, are the only two Danish PCO’s that have met the rigorous membership requirements of IAPCO and the other associations mentioned above. Dara Events is an American company with international contracts. Adamas Events it is also a famous Danish company specialized in parties and other private events. Aalborg Tourist & Convention Bureau operates in the city of Aalborg, organizing study tours and teambuilding for tourists. WOCO is the official convention and visitors bureau of Grater Copenhagen and Southern Sweden which serves mainly the tourists which are visiting this area.
a) Threat of new entrants:
Regarding this part of the model, we identified a number of companies which are entering the Danish market at irregular intervals and organising different events. Because most of them are operating on international level they organise major events with a high variety of themes.
One of the companies which entered the Danish market in the last period of time and we were able to identify it is “Dara Events” which organised an event in Copenhagen. Even if other companies are entering the market at irregular intervals, they do not remain in the market. The reason for entering the market is that they sign different contracts with partner companies, which for example want to organise a party for their employees, like McDonalds, as we could find in theirs portfolios.
The entry barriers would not cause problems for the new companies, but the profitability without economies of scale is questionable. All three companies ICS, DIS and Adamas Events have organised more than two thousand events since they started the business. There are a number of barriers connected with the technological requirements, as we understood, that the Danish leader companies are using state of the art equipment and software applications.
On the market there is a strong brand identity built on years of experience and success. Companies like ICS, DIS and Adamas Events have already its clientele and therefore trying to compete with these companies is hard but not impossible.
The capital requirements are direct proportional with the company’s choice to enter the market at a certain level. For example if the company wants to organise extremely large events this could require certain software and technology but the sum could not compare with the one needed to enter the hotel industry for example.
b) Bargaining power of suppliers:
When looking at the suppliers of these companies, which were available on their web pages, we identified four most important suppliers:
- Catering companies,
- Companies which provide technical equipment,
- Security companies and
- Special effect companies.
Regarding the partners of these companies, we identified three most important ones:
- Hotels (for conference space, accommodation and large restaurants mostly),
- Transport companies,
- Construction companies.
When speaking about suppliers, the PCO’s are very vigilant. They are changing the suppliers every time for a better one, with more competitive prices and quality, which is appearing on the market. The PCO’s are very prudent with their customers and therefore they can’t afford to lose them because of inadequate products and services. Also they have full responsibility regarding the organisational part, so the slightest mistake when organising an event for 10.000 people, could lead to disaster and severe image damage.
Regarding the suppliers, they have a low-medium level of bargaining power because their products are not totally exclusive.
The supplier’s concentration is by far higher than the industry itself. There are a high number of suppliers and their product diversity is also high which means that the organiser can choose between products very easy.
Some of the suppliers in the industry could very easy become themselves, competitors for the organisers but in a smaller level. For example: the companies who provide technical equipment could start to organize smaller events using their equipment instead of renting one. In our case we have a concrete example, namely Eventmakers who in the beginning were just renting their equipment.
Also the bargaining power of suppliers is low-medium because the organiser’s industry is recognised as an important customer for some of the suppliers so they are representing a big part of the suppliers profit.
The importance of buying in large volumes is very important for some of the suppliers and partners of the organisers, such as accommodation and catering companies, because large orders mean big profits for them.
When speaking about the partners of these organisers, we assume that they charge a certain commission for a large number of bookings like travel agencies do. Also they have many arrangements regarding price and duration. Because some partners of these organisers are making important profits, they are adapting their facilities towards this kind of business which is very profitable for both parties.
c) Threat of substitute products:
The threat of substitute products is medium, because there are no many possibilities for a major event to be organised by other companies than the organisers industry. For example in the case of the tourism industry there are different types of accommodation and the consumer can chose between them. In our case there are no companies to organise a large event and not being part of the industry. If the consumers would try to organise the events themselves, it would be very difficult because they need special departments which are costly to sustain. Among other disadvantages, lack of experience and professionalism could be also a barrier.
As substitute companies we identified: Travel agencies, Hotels, Restaurants and Tour Operators. In their case they could evade the organisers offer because they can organise particular events having their own space and employees.
The industry appears to be profitable so that a number of competitors are entering the market via substitute products in order to obtain a share of the potential profits.
For an unprofessional company without experience in organising large events will be very expensive or less profitable to try organising, because they lack economies of scale, speed and experience.
d) Bargaining power of buyers:
To identify possible buyers we searched in the organiser’s portfolio and we reach the conclusion that they can be all kinds of companies and enterprises. The probability to become a customer is very high because sooner or later all the companies are thinking to organise or celebrate an important event in their existence.
The concentration of buyers on the market appears to be high. In this case their bargaining power is medium-high because most of them are buying in large volumes products or services through and from the organisers.
Also the organiser’s product is not influencing in a large extent the buyer’s product quality therefore the buyer has a higher bargaining power.
Because the services which are provided by the organisers are saving buyers money, their bargaining power is decreasing or it is maintained at the mentioned level.
The buyers brand identity has a certain importance for the organiser because an important brand in its portfolio will attract other brands and also new customers. The organisers are vigilant with the important brands because this means also important profits, but mainly they are impartial.
From the buyers point of view is very easy to maintain a high information level regarding the PCO’s because theirs concentration is much smaller, especially when speaking about the international ones.
The buyer’s ability to backward integrate or to enter as a competitor in the organisers industry is small therefore they don’t represent a threat for the organisers.
Mentioning all the four points which are influencing the competition level in the model, we will expose the degree of rivalry on the market and the conclusion on the model’s result.
e) Rivalry determinants:
As we could find out after analysing the market, it appears that the concentration of the organiser’s industry has a low-medium value. On the market there are few major players, respectively ICS and DIS, few medium players: Eventmakers, Adamas Events, WOCO and AT & CB. The exact number of small players was not available.
The rate of industry growth tends to be slow, therefore on the market there is a high intensity of rivalry, mainly between ICS, DIS and at some levels Eventmakers, Adamas Events, WOCO and AT & CB are representing important competitors as well.
The fixed costs in this industry tend to be low, because the companies have a small number of employees and they operate in small size offices. Their consumption is not high at all, so is not difficult to run the business. Also because they are offering a service product, is difficult to evaluate the truth costs, consequently we are estimating their fixed expenses.
Regarding the product difference, they offer close types of service products but they can adapt very easy to the customers request.
When speaking about brand identity, we can state that it is a high awareness between the customers. For some evident reasons ICS is the leader of the market at this moment. These reasons depend on a better organisation, modern culture, creativity, professionalism and efficient CRM. Also ICS is a younger company than DIS and Adamas Events which are on the market for more than 50 respective 25 years and in our opinion are having a drop in enthusiasm. DIS’s offer is constant with no major improvements comparison with ICS. Regarding DIS, they are known as the organiser of the biggest event held in Denmark and consisting of 16.000 people which was the EU Summit for Social Development.
Regarding the competition made by the two convention bureaus, we can conclude that they are having a different orientation on the market; therefore the offers are oriented to different segments respectively towards tourists.
The similarities between the major competitors are high. As a result of this, they are trying to compete in different ways, so they are running into each other all the time, increasing in this way the competition level and the rivalry between them.
a) Identifying competitors (The Dart Board Model):
To have a clear picture about the players on the market and what is their offer, we will use the dart Board Model. Main purpose of this model is to identify the direct and indirect competitors of the company. Based on the identification we will focus on the direct competition for Eventmakers in order to create a picture about the situation on the market. Such analysis will offer an identification of where the company should place more attention to equal their potential with the competitors.
Regarding this part of the model, we are identifying al the competitors in the event organisers market which are having the same product in their offer. Firstly, the Eventmakers offer will be exposed and also the common products which our main competitors are offering.
Eventmakers:___
Parties: Out door sport events:
Theme parties Team building
Confirmations Rafting
Graduation parties Canoeing
Meetings. Paragliding
Equipment rental.
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Competitors: - Common events:
ICS ---
DIS ---
Dara Events Confirmations, Graduations
Adamas Events Graduations
Aalborg Tourist and Convention Bureau Team building
WOCO, Visitors & Convention Bureau Team building
The events mentioned above (Common events) are the elements which correspond to Eventmakers offer and also to the competitors offer. The mentioned events are creating narrow or direct competition between Eventmakers and Dara Events, Adamas Events, AT & CB and WOCO.
We can conclude that these are the main competitors regarding the “Same product” competition level. Further, we are presenting the indirect competitors and their common product category.
In this part of the analysis we are identifying the competitors of the Eventmakers and their product categories which are interacting:
Product category:
- Parties - Meetings - Out-door sport events - Equipment rental.
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Competitors: - Product category:
ICS Parties, Meetings
DIS Parties, Meetings
Dara Events Parties, Meetings
Adamas Events Parties, Outdoor sport events
AT & CB Parties, Meetings
WOCO Parties
In this section the competition appears to be much broader. All the six competitors plus Eventmakers are offering the same product category. After these analyses we can conclude that the main competitors of Eventmakers at product category are ICS, DIS, Dara Events and Adamas Events. The Eventmakers are having only one competitor on “Out door sport events” category, six on “Parties”, four on “Meetings” and none competitor on “Equipment rental”. From the above mentioned we can conclude that the competition level on the same product category is high if considering the small number of players on the market but also it is focused on two important product categories namely “Parties” and “Meetings”.
Regarding this part of the model, we will identify other businesses or substitutes which could satisfy our customer needs. To clarify this issue, we identified the following possible types of customer needs and other types of companies which could satisfy them:
Customer needs:
- Physical activity, social, celebrate, motivation of employees, organising and arranging.
Other types of companies which could satisfy the above mentioned needs:
- Pubs, restaurants, hotels, TA’s, TOP´s, cafes, discos, theatres, cinemas, gyms, video-rentals, swimming pools and stadiums.
At this level of the Dart Board model our competitors would be any business distributing products and services on the market. The key factor here would be the consumers of products and their buying behaviour. The determinant of their decision whether to purchase a product would be the purpose of buying a product or in other words, what need they want to satisfy at the moment of purchase.
At this level our competitor could be anybody, who would satisfy the need of customers at that given moment of their need for a product. It would be vain to make any analysis of competitors as the need of customers is unpredictable and also influenced by other factors essential for the customers.
b) Identifying the level of competition:
At this stage of the analysis, we are choosing to focus more on the first two levels of competition namely “Same product” and “Same product category”. Choosing these two levels, our group wants to expose the relations between the competitors and if they are representing true threats for the Eventmakers. In the next section we will expose the main factors which distinguish the true direct and indirect competitors of Eventmakers.
c) Identifying main competition factors:
Eventmakers – residence in Kolding. Operating in Jutland and Funen.
ICS - residence in Hellerup, DK. Mainly operating in Copenhagen.
DIS - residence in Herlev, DK. Mainly operating in Copenhagen.
Dara Events - residence in USA. Operating mainly in USA.
Adamas Events - residence in Gentofte, DK, operates in Gentofte & Copenhagen.
Aalborg Tourist and Convention Bureau-residence in Aalborg, DK Operating in Aalborg.
WOCO - residence in Copenhagen, DK. Operating in Copenhagen and Southern Sweden.
As we can see from the above mentioned residences and business radiuses, we can eliminate from the same product competition and same product category the following competitors: Dara Events, WOCO, Adamas Events, DIS and ICS because their radius does not interact with our company’s radius which consists of Jutland and Funen. Even the companies are excluded from the direct competition in the region of Jutland, we will analyse the rest of their competition factors in order to be comparable with the Eventmakers. The four companies are operating mainly in the area of Copenhagen and their businesses are interacting with Eventmakers only at the national level. Concluding on this section we can state that in the region of Jutland, our company has one competitor namely AT & CB.
As regards the competitors on the Danish market, we will analyse the experience levels of: ICS, DIS, Adams Events, WOCO and AT & CB.
From the information accessible on their web-pages, all the companies are having experience in the field of event organising, for more than 10 years. Some of them are having even 30-50 years of experience.
Regarding the ICS and DIS their employees are very well selected. Most of them are having two or three diplomas in economics, CMM, Business, Languages, Marketing and Design. Also the employees have different backgrounds like: ex. Managers in Hotels, Project managers in other service companies or Finance Managers. The employees are trained in using the state of the art software and other equipments.
Adamas Events employees were also described as experienced ones, but no concrete data was available in order to draw a clear conclusion and picture about this company’s situation.
About the employees of WOCO there were no data available on their web pages. All what was mentioned is that their employees are specialized and experienced in all the departments of the company.
As regards the employees of AT & CB we could find that they are having very specialized personnel in organizing meetings, trips for tourists and team building activities. Also they possess a number of guides able to speak German, French, Italian and Danish and are operating on the organizers market for a large number of years.
In our opinion the first two companies mentioned, namely ICS and DIS are having the most qualified personnel because they are offered to organize large events like EU Summit’s and other similar ones.
Comparing the employees of Eventmakers with these companies, the first conclusions regarding efficiency could be drawn. In our company’s case, we have managers who came from different walks of life; therefore they don’t have appropriate experience to perform their tasks efficiently.
When speaking about the size of the companies, they appear to be reduced but very efficient and co-ordinated. The word co-ordination it is the key factor in this business, as the companies are stating on their web-pages.
Starting with ICS, they have 12 to 15 full-time employees highly specialized. When speaking about DIS, they have 10 full-time employees also very skilled. Regarding Adamas Events, WOCO and AT & CB, there was no available source to explore.
Comparing the size of these two companies with our, which has 13 full-time employees, and a high number of part time employees we can conclude that more efficiency could be achieved if they would be more specialized and organised. Regarding this issue we will go in details when speaking about the internal situation of the Eventmakers later on.
From the sizes point of view, the companies are nearly equal but more successful than Eventmakers. Even with less employees, ICS and DIS succeed to organise bigger events and also much faster.
All the four companies, except WOCO, are having highly accessible web-pages, with a tendency towards description of their business and services. Everything is discussed in big lines, without any detailed manner. About WOCO’s web-page we consider it very informative but also very agglomerate. It is hard to find in all the web-pages analysed here, the differentiation strategies.
In our opinion, especially ICS and DIS, are offering on there web-pages in the same way an aim of customer orientation and satisfaction and too few details about their activity. Also the ERP aspect of their e-business it is not present in enough quantities in our opinion. We agreed on that because their web-pages don’t seem to have enough connection with the company’s departments. Also there are few active functions which aloud the customer to express his wish or opinion. Regarding Eventmakers we can suggest them to create a webpage in order to create more awareness about the company.
Concluding on this, we can affirm that the severest problem on the other web-pages is the lack of details and precise information available.
All the five companies are using their web-page as a marketing tool and therefore it represents them. In their web-page the company is creating its electronic face, which is interacting with the customers. Because of this they should give more attention to the meeting between the customers and the company on the Internet. Their web-pages reflect the orientation of the company towards the client which in some cases is very formal and cold. Concluding on this section, we believe that the companies could improve their marketing efforts also by concerning more about the web-page.
Regarding the ICS’s service concept we could conclude after analysing its offer that they are orienting towards scientific conferences particularly in the medical field.
DIS is orienting towards symposia, conferences especially towards political and confidential ones. Adamas Events has a service concept based on parties and outdoor activities, WOCO and AT & CB are offering study tours and team building courses mainly for tourists.
d) Conclusion in terms of differences between competitors:
As we can see from the analysis above, all the competitors on the national level are having a service product or an orientation which is partly different from the others.
Regarding WOCO and Eventmakers, the main difference between these two competitors is that one is orienting its efforts towards tourists I the area of Zealand and the other towards the companies operating in the area of Jutland and Funen. We consider WOCO as a minor competitor on national level for Eventmakers because of the target group differences and different operating area.
When speaking about the differences between Eventmakers and Adamas Events, the companies are competing not only at the same products, namely parties, but also at same product category which is “Outdoor sport events”, on national level. Their national competition level towards Eventmakers is low as well.
The two companies: ICS and DIS are not competing with Eventmakers on the same products but this doesn’t make them less important as national threats. They can be encountered in competition at the “Same product category” competing on parties and meetings. Because they are oriented towards political events and also large ones, their offer is not similar with Eventmakers one. We consider ICS and DIS as main competitors for Eventmakers regarding international meetings and conferences.
When speaking about the competition between Eventmakers and AT & CB, we can state that they are having different target groups. AT & CB is oriented towards tourists in the north of Jutland and Eventmakers is oriented towards the companies and the customers from all the region of Jutland and Funen. Even the AT & CB is oriented towards tourists, they are representing a strong competitor for Eventmakers at the “Same product” and “Same product category”. Also they have a bigger experience than Event makers, regarding international meetings and conferences.
Regarding the Eventmakers “Equipment rental” category, we couldn’t identify a competitor who is offering the same type of products. We consider this a strong advantage for the company and also a differentiation strategy.
Concluding on the overall situation of Eventmakers as a company, we can state that the level of competition is high in the region of Zealand because it represents the most important economical point in Denmark, with a high density of companies and people.
As regards the competition level in the region of Jutland and Funen, from our findings we consider that it is being low because of very low concentration of players on the market in this area. The only competitor remaining in the area of Jutland is AT &CB.
3.2. Situation on the internal environment of the company:
3.2.1. Eventmakers´ financial development
a) Profitability
Return on total assets (Appendix 1, Table 3)
- Has decreased by 56.2% from 2000 to 2002, which shows us that the company earns less on total invested capital.
This is caused by two things:
- A change in profit before interest (Appendix 1, Table 3)
In this company it is because of a change in profit before interest ratio, as it has decreased from 2000 to 2002 it was from 12% to 8% by 33.3%, which shows that the company earns less on sales/turnover.
- A change in total assets turnover (Appendix 1, Table 3)
Over the three years from 2000 to 2002, Eventmakers recorded the change of 33% decrease. This indicates that the company does not get as much return on their investment, which is dependent on the level of sales.
Return on equity ratio/owner’s capital (Appendix 1, Table 3)
- Has decreased from 2000 to 2002, which shows us significant decrease from 95.2% in 2000 to 42.61% in 2002 by 55.2%.This is an indication that the owners earn less on invested capital.
Return on total assets ratio and return on equity ratio (Appendix 1, Table 3)
- Is decreasing but it does not mean that the situation should be considered very bad, because the market interest would not be higher than the interest the company gains by its activities.
- We can tell that the profitability in the company has a bad development from 2000 to 2002 and that it is caused by the ability to earn on sales and the ability to adjust the invested capital to the turnover, which must be investigated further.
b) Ability to earn on sales
As mentioned in the analysis of the profitability the income before interest ratio has decreased from 2000 to 2002 by 33.3%, which means that the company earns less on sales/turnover.
This decrease could be caused by two things:
- A decrease in contribution margin ratio (Appendix 1, Table 3)
There is a decrease in contribution margin ratio from 80% in 2000 to 76% in 2002 by 5% decrease, which shows us that the company has a smaller part of the turnover to cover capacity costs (marketing expenses, other operating expenses and the depreciation), interest, extraordinary costs and net profit.
This decrease in contribution margin ratio can be caused by three things:
-
A change in the range of products, so products with the lower contribution margin ratio are sold instead of products with higher contribution margin ratio. (Appendix 2, Table 6)
Equipment rental - according to the table has the highest contribution margin about 90% but its sales are decreasing by 38.6% from year 2000 to 2002. Event-party and Event-action have smaller contribution margin about 50% with increase of their sales by 56.75% for event-party from the year 2000 to 2002 and by 58.39% for event-action from the year 2000 to 2002.
In general products event-party and event-action are the lower contribution margin ratio products, which are sold instead of partly the higher contribution margin ratio product of equipment rental.
- Variable costs per unit are higher from 20% in 2000 to 24% in 2002, which is another reason of the decrease in contribution margin ratio.( Appendix 1, Table 1)
- A drop in sales prices as one of the reasons could be also relevant, but because of lack of given information we can not make any further analysis of this item.
- A bad development in the relationship between revenue and the capacity costs
From the calculated index figures we can see that turnover has decreased by 17.4% from the year 2000 to 2002, while capacity costs have decreased by also 17.2%. Hence the development in the relationship between revenue and the capacity costs was good.
But the capacity costs are consisting of marketing expenses, other operating expenses and depreciation expenses. (Appendix 2, Table 4) From these three components marketing expenses has the most significant decrease ratio of 72%, which is embodied only in total amount of 108 000 DKK. On the other hand, other operating expenses decreased by 16.5% but they are represented by the total amount of 794 000 DKK, which have dominant share in the total value of total capacity costs. Although depreciation expenses have increased by 12.3%, it would not make any visible change to the trend of total capacity costs decrease as they are represented by only 20 000 DKK.
The capacity ratio: (Appendix 1, Table 3)
This has decreased from 1.18 in 2000 to 1.11 in 2002, a decrease of 5.93%. This shows us that the ability to earn on the capacity costs of the company has gone down and therefore the ability to resist a fall in activity has also gone down.
It might be that the decrease in turnover is not caused only by level of sales but by marketing and other internal efforts of the company. According to our analysis, it seems that the decrease of expenses could increase the earnings. Unfortunately the decrease of expenses is in areas, for instance marketing expenses, where action in this way could actually decrease the earnings.
We can therefore say that the earning during the period has decreased. If we have enough information of sales prices, it would be necessary to investigate further. But one thing is clear, that there has been an undesirable change in product mix as well as the variable cost per unit.
c) Budget analysis
From the proposed PROFIT AND LOSS BUDGET, we can see the company plans to increase their net income from 415 000 DKK in 2002 to 742 000 DKK in 2003 by 78.7%.
The approaches are to increase revenue from 6 237 DKK in 2002 up to 6 526 000 DKK in 2003 by 4, 6%, meanwhile, decrease the operating expenses from 4 032 000 DKK in 2002 to 3 302 000 DKK in 2003 by 18.1%. These efforts mentioned above must increase the profitability of the company.
At the same time, the contribution margin would reasonably decrease, because the variable costs would be increasing accordingly with the increase of revenue. From the proposed Contribution Margin 2003 Budget the company is predicting further increase of revenues in the two already mentioned departments. This also explains an evident change in variable costs increase in proposed Profit and Loss Budget for 2003, where the increase of revenues and in accordance of variable costs of these two departments represents a significant part of company’s variable costs. The marketing expenses are increasing significantly by 448% from 42 000DKK in 2002 to 230 000 DKK in 2003, which could mean that the reason revenues are increasing is affected by the raise of company’s marketing activity.
According to proposed CONTRIBUTION MARGIN 2003 BUDGET, it is evident that the company is concentrating their efforts on Event-part and Event-action departments; even the contribution margin of these two products is smaller than for equipment rental. It is reasonable if we look at trend of the contribution margin report all through the past 3 years, which shows that the contribution margin of the two departments were increasing continuously, in contrast, it was decreasing in the equipment rental department.
d) Conclusion of financial analysis
From the last 3 years financial reports, we can see the company was operating still well, although the net income of the company was decreasing.
First of all the return on total assets is decreasing, which means that the company earns less on total invested capital caused by the decrease of income before interest and the level of revenue as well as the stockholders.
Secondly, the undesirable product mix and increasing of variable cost per unit make the contribution margin decrease.
Company’s proposed budget looks very optimistic as they are predicting an increase of sales nearly at the same level as in the year 2000. It seems their new strategy takes completely different direction, which is focused on marketing. As we can see marketing expenses would be increased by nearly 200 000DKK. Other operating expenses, which represent the dominant share of fixed expenses, were looked into by the company and are supposed to decrease by 730 000 DKK.
3.2.2. Eventmakers´ Service Management System
For analysing Eventmakers products we will apply the theory of Service Management System (SMS) because of the interaction of different elements of SMS and the way these influence one another.
a) Service concept
In comparison with the early beginnings, currently Eventmakers has three different services to offer; different character of each of the services/products satisfies different needs. If we consider Eventmakers` early beginnings, Anne and Kaj Skov started with the Equipment rental as a spare time business. Anne and Kaj had also full time employment elsewhere. Their business activity was directed from their house and the only investment was into the equipment. Therefore their initial expenses of starting the new business were very low. If any business activity losses were experienced, these would not be so serious for this particular “company”.
The situation has changed, when Eventmakers purchased more equipment, hired more staff and moved their office into different premises. Fortunately, this development followed after they receive more inquiries to arrange parties for larger business. At that moment more services were developed, securing that the company could focus on different segment. Therefore Eventmakers acquired more safe strategy of conducting their business. Eventmakers reduced the risk of failure by basically offering more products.
From the accounting analysis of Eventmakers we learned about the development of individual services in their portfolio. Important information to state here is that there has been a significant change in product mix of the company.
The Equipment rental service, which the company started with, was and still is the product that earns the company the biggest part of their profits. This product sale has decreased significantly, but is still sold the most from all of the products.
- Core and peripherals
In terms of core and peripheral services, Eventmakers service concept is based on offer of three different service and their peripherals. Services have intangible form, when the customers can not see any physical evidence, prove, it is difficult to judge whether the service is of satisfying quality. To obtain a better understanding of what Eventmakers is really offering we will break up their services into a detail and identify which parts of the individual services are core and peripheral. Employees of Equipment rental department offer equipment for rent, besides this core service, an additional service of delivery and assembly of equipment is offered, peripheral one. In Even-party department the core service is arrangement of parties. As peripheral service equipment provision and its delivery and assembly is offered and also people to attend at particular parties are delivered. For event-action department the distinction of core and peripheral services is more complex. The basic aim of this department is to arrange an action; this goes together with equipment provision and its assembly, and the staff, who would take care of the entertainment aspect at the event.
- Un-bundling and re-bundling of services
Evenmakers` service concept is based on a witty combination of several services. Further more, the company is able to un-bundle and re-bundle their services and serve thus to the individual needs of customers. The company can offer their services individually or combine them together. Event-action and event-parties can be bundled together with equipment rental, when the customer can receive the whole package – arranged party or action with the equipment needed for that purpose.
b) The culture and philosophy
The culture and philosophy, which is our company based on, is another key factor in the company’s Service management system. Overall principles by which is the company leaded to deliver services to the customers in a best efficient way for their satisfaction are derived from this.
We will start looking at the organizational structure of Eventmakers. Purpose of the structure is a co-ordination of activities directed towards goals and objectives accomplishment. The structure determines relationships, defines tasks and channels of communication. It is a framework through activities in an organization which can be planned, organized, directed and controlled. In order to provide picture, where things could be improved, we will directly concentrate on areas, where the problems, according to our opinion, erase.
Span of control relates to the number of subordinates which a manager can control, typically it is recommended to have no more than six. According to this, Kaj, as a directing manager, should be able to maintain control over his five managers. The number of employees under the direct supervision of these managers varies. Even the number of full employees in each of the department is very low; managers have to control many more casual employees, who arrive in as it is needed. As span of control of these mangers suddenly increases we can assume that their ability to maintain control will therefore decrease. Another important point is, that the span of control could be even wider, if the employees are well trained and experienced; therefore they need less direct supervision. As we previously mentioned the competence of employees of Eventmakers, namely its managers, we can assume that the company has a difficulty to maintain the control of activities. As the managers came from different walks of life they are more or less experienced and their quality of performance decreases.
- Authority and responsibility
From the given information about Eventmakers and their current organizational structure we stumbled over a problem with the responsibility and authority among the departments and the employees. The organizational chart indicates that there are three departments split according to a nature of product/service and two departments split according to their function in the company. These should be on an equal level with their authority as the chart indicates it. Anne, the director of the accountancy department seems to interfere with her authority, by controlling activities of other managers, which is the line authority and have to be done by her husband, the directing manager of the company. Such misunderstanding comes probably from the family relations between Anne and Kaj. Further more in the Equipment rental department; Jens and Marie seem to have problem with the division of task and their responsibility over their activities. Marie is blamed for mistakes, which she says are in Jens’ scope of responsibility. As Jens is the manager of the department but spends most of the time outside the company, it is difficult to keep track of the activities in the department. Therefore, such mistakes have a high possibility of occurrence.
The work in the company should be split according to some common characteristics, in order to prevent disorganization within the departments. In this case we shall closely investigate the organization between the departments divided according to product/service. As the resources are commonly shared between the departments and activities of individual departments interrelate, control over these activities should be given to a single person. One responsible person would be able to schedule allocation of these resources more efficiently. Namely the limited availability of technical equipment, the van for equipment delivery which is needed in all of the departments, is the source of disagreement and therefore better organization is needed. It is important for the employees of individual department to cooperate. From the available information we can see that the departments sort of compete between each other. This situation in a company does not help to sustain good moral between the employees and also decrease the potential of a company to operate efficiently.
Work specialisation relates to the level of an individual being involved in one particular job description within the working process. Work specialisation has its advantages and disadvantages. Employees specialised in one particular task can produce efficiently in to the certain level. After some time when this level by an employee is reached, individual perceives himself as very skilful and is less motivated to perform his task, in this case the quality of output decreases. Therefore keeping individuals to proceed with the variety of different tasks offers an opportunity to motivate the employees and improve their perception of the working environment. In the case of Eventmakers, the work specialisation is very low. On one hand this could be seen as great advantage for the current structure. But as we mentioned previously, this situation contradicts on managerial level of the organisation. The managers themselves did not reach the level of being highly specialised as they are lacking the competence which is necessary for managers to posses. Therefore managers have still a lot to do in order to control their subordinates and improve their productivity. In the technical level, when employees have an opportunity to help in other departments, therefore carry out different activities is rather beneficial for the company. At this stage we also want to mention, that the employees should perceive themselves as partners rather than competitors, because this sort of service requires good quality as well as innovative ideas, which are possessed by different individuals in the company.
As we mentioned before the managers are lacking the necessary skills and abilities in order to plan, lead, organize and control in appropriate way. There are just few individuals, at managerial positions, where we can see some traces of managerial practices. In relation to the managers’ skills, it seems that some of them possess interpersonal skills, when the managers try to motivate the others. In terms of the technical skills to use variety of techniques, for instance knowledge of finance and human resource management or computer systems, managers of Eventmakers are quite fare behind. Namely in these fields skills of the managers should be improved.
As is stated in our description of overall situation in the company, its organisational structure, span of controls, competence and skills of employees, relations between employees and work coordination, we are proposing entire change in the company. Change of the design of organisational structure, and consequently activities, relations and the overall environment, which are derived from the design of an organisation chart, is proposed.
Change in the organisation is not that easy, the purpose of change is to prepare the culture of the company for a certain innovations. It is important to reduce the resistance, as employees are uncertain and fear of unknown about the new conditions within their environment. The process of change goes through different stages. At the first stage of the change, unfreezing, employees have to be convinced that the change will bring benefits to the whole company. The intention of change needs to be communicated with the ones involved and therefore reduce the resistance by helping employees to see the sense and purpose of a change. Making the employees involved and let them express their opinion about the future decisions should ease the situation.
At the second stage, changing, the actual change takes place. And in the third stage it is necessary to stabilize the change, refreeze, and hold the current situation so it can be sustained over time. This an important stage in the process where new conditions and measures should be strictly followed or the change will have a short live and the employees might turn back to the stage before the change.
- The new organisational structure
The new span of control of Kaj is over three department managers, sales department, accountancy and production department. This should make it clear that these three departments are on the same level with their scope of authority and responsibility. Departments have to communicate on daily basis in order to improve efficiency within the company. It should be also easier for Kaj to devote his time to other activities. Less people to communicate with will offer him a possibility to keep easily track with all activities in the company.
Manager of the production department, with Kim in charge, will have a control over the two departments of Unit 1 and Unit 2. This should allow the company plan and organize the activities more efficiently. It will be just one person in charge who will be able to provide customers with prompt answers to their enquiries. He will be to allocate the resources in the company and thus prevent the disagreements between individual managers.
The names of the two last departments had one more purpose. As we mentioned previously it is important for this particular company that the employees cooperate. Employees of these two departments will be allocated based on the nature of the contract and blended into teams, in such a way that people are comfortable with each other and their proportion of skills allows them to perform appropriately.
On the function of managers we are proposing Tanja and Mari, who will overtake the activities mostly internally. Jens will remain as main coordinator of the activities on the outside.
Coming back to Simon’s entry, this is a very important change for the organisation as well as the whole strategy of the company. Simon should accompany Kaj until he could be fully replaced within sales. After this period we predict that Simon would be competent enough to carry out these activities and therefore satisfy Eventmakers´ customers. Simon is the manager of Sales department, and the only one as well. Therefore he will be able to overtake the activities of dealing with the customers in matters of sales, which should be the only activity to be done by Simon. Other activities of working out the details and also responsibility for these will be performed by Mari and Tanja.
Such change in organisation structure will, according to our opinion, allow the whole company to improve their coordination, communication, efficiency and relations between the employees.
c) Service delivery system
As service companies are being personality-intensive and go through Moments of True many times a day, it is necessary for the front line employees to possess such skills and abilities in order to deliver the service product. We should keep in mind that the employees and tangible products, if any, of a service company are the only physical evidence before products are purchased. As customers judge according to what they see, more focus should be placed on the representatives of a service company and other parts of physical evidence. The way employees interact with the clients and their appearance indicates much about a service company. In this section we will pay attention to the key figures of the company, to those who mostly represent the company on the outside. We will analyse their importance toward the customers and identify how those activities of individuals add on the appeal of the service concept and the image of the company.
Kaj Skov`s original profession was of a manual character, he was working as a butcher’s assistant and latter as cook. Currently Kaj is the managing director of Eventmakers, which is quite a big move from a cook to a managing director. Considering his previous specialisation, Kaj still managed with his wife Ann, who is skilled in accountancy, to expand. Kaj knows a lot about the company and therefore can provide necessary information when dealing with customers. He is approachable for the needs of his employees. Kaj`s is experienced to carry out these activities, which is essential if we consider customer relations and the Service Delivery System.
Currently Kaj has hired Simon who will take over Kaj´s, Tanja`s and Jen`s activity of sales actions. Simon has already worked in sales and therefore has a sufficient experience to deal with the customers. This would be a good move for the company, Kaj could devote more of his time to internal management of the company and Simon would deal with the customers. One disadvantage about sending Simon out to overtake sales activities is that he did not gain sufficient knowledge about the company.
Jens Dupont is in charge of even-action department; he is also partly employed in the army. Sometimes he is joined by his colleagues from the military, who are all together able to give a competent feedback to the participant of more demanding actions. He has experienced work in security and consultancy in areas of team building and management, thus Jens is able to arrange diverse activities for the company. Namely his work in army provides Jens with an ability to be combined and used for the company’s services, which is important for company’s Service concept. One disadvantage about Jens on the managerial position is that he spends most of his time outside the company.
Unfortunately the company has not yet make use of Jens Dupont experience in security, thanks to which company could offer additional service and extend their service offerings. Also Kaj`s previous specialisation of a cook could be skilfully exploited in company’s service concept and add on its appeal.
No matter the key figures in the company we just described, there are also others from different walks of life whose abilities add less or more on the competence of company’s personnel and its delivery system. We can say that company adopted so called “personnel idea” when they grouped personnel from different backgrounds and made use of their diverse skills and abilities for their service concept. Whether this idea is for the advantage of the company, we will describe in a Culture section.
Clients of Eventmakers are important from two different aspects. They are the consumers of its services but also are a part of the production of its services. Many of Eventmakers customers actively participate at the parties or actions organised by Eventmakers. Clients of Eventmakers are so called co-producers; they participate in the production and delivery of a service, without those the service concept would be incomplete and impossible to realise.
- Technology and physical support
Eventmakers are very personality-intensive company; still there is a need for physical support in order to deliver the service to the customers. In Eventmakers case it is also the equipment, which is necessary for the company’s Service concept. From tracks, telecommunication equipment, information technology and design of the furniture for parties and other physical support to arrange actions is needed to make the service concept alive.
From the information available we learned that it is mostly the equipment rental department with Kim Hansen in charge, where we can use of information technology into a relatively large extend. It was actually Kim’s son who helped to set up the program for the needs of the department. Programme to keep the track of hired equipment and its return is used efficiently; documentation of these activities takes more task load off Kim’s responsibilities as a manager and thus can dedicate more of his time to other management activities.
Also programme for scheduling activities within the department is used. This is evidence that Kim is acquiring as the only manager of the three departments, management practices, which enables the department to act much efficiently. Also the importance of task assignments for individual employees of the department is an excellent way of how to sustain healthy atmosphere in the department and between individual employees.
According to our opinion the company is not using the full potential of information technology. Communication and work efficiency between the departments could be therefore improved be integrated software connection. Use of IT for internal and external marketing and as a way communication with customers could be exerted. Clearly identifying objectives of strong customer orientation and aim of customer satisfaction will serve as tool to achieve and maintain culture with desired attitudes toward the clientele. Launching a website for the purpose of customer relation management and as a medium of conveying image of the company could be employed. The company can increase its market share by addressing wider sort of targets, where existence of new potential customers is very high. We also have to mention that such move will require training of some of the employees in the company.
d) The market segment
Currently, the company wants to concentrate their attention mainly on commercial customers. According to the director words it is the segment, where the greatest volume is concentrated. Before this proposed strategy, Eventmakers also served the needs of private consumers and associations or public institutions. According to our analysis this segment consists of people, who are economically active. According to our macro environment analysis, economic development of Denmark is promising and the number of actively working people represents 66.4% of the whole population of Denmark in age group from 15 to 60. This segment could be still perceived as potential segment to concentrate on. According to the analyses of German economical situation which has a good development, we decided to look at the possibility of Eventmakers to expand into this market. Approaching partners in Germany, the company could face some barriers. Namely language skills of the employees and also some differences between these two cultures would cause certain difficulties. Differences in power distance which relates to what extend members of a country expect and accept that power is distributed unequally. If we compare Denmark and Germany, Germany scores more in Power Distance Index (PDI) than Denmark. Therefore when dealing with the Germans, hierarchical and more formal culture, the company and its employees should pay more attention to the dress code and the way they address German counterparts. Showing respect to the businesses counterparts with higher rank and addressing them appropriately by their full name and title would be appreciated. Germans also score more in uncertainty avoidance index (UAI), in other words they are more anxious from unknown. Danes are relatively open to dealing with foreigners; on the German side this would be quite different. When attempting to open new business contact in Germany, it would be better, if a company is introduced by a third party. We should note that Germans as Danes consider written agreement as definitive with one difference, that Germans would favour if no changes to the contracts are done too soon after the signing. Germans have a higher need than Danes to have things documented. According to the Two Iron Rules of International Business, when the seller has to adapt the buyer, it is expected to observe buyers´ local customs. Same accounts for the language used, since the language of business is the language of the customer. Even most of the German managers and larger companies have competent English speakers; Eventmakers should adapt this rule as well.
e) The Image
Creation of an image is tool, when management can influence employees and its clients. Employees are an important part of Service Delivery System (SDS), which plays a significant role in the whole Service Management System of Eventmakers. The company should pay more attention to this matter. Employees are very much influenced by the management practices and activities; therefore the employees of the company overtake the vision and feelings of management about the company and project these in a same way, as management on employees, on the clients. As a service company and the intangible nature of a service, we already mentioned importance of personnel as physical evidence and thus the centre of customer’s judgement.
f) Conclusion on Service Management System
More effective use of core and peripheral service, their possibility to bundle and unbundled them, together with current skills of employees in order to innovate service concept could be applied by the company.
Regarding our hypothesis statement, we are concluding that the Eventmakers should not consider their business as a family one. Same would apply for the employees of the company. Eventmakers expanded into a level, when more structured organisation of tasks and responsibilities within the company are needed. If same conditions of management practises remain, the company can face serious crises relating to their financial situation, which is gradually slipping out of the management control.
Generally the whole organisational structure has to be changed and all other activities resulting from this change. Level of skills and competence of employees of Eventmakers should be improved. According to our opinion the company is not using the full potential of information technology. Use of IT will help the company to act more efficiently.
3.3. SWOT analysis
3.3.1. Conclusion on SWOT:
As the entry barriers into the industry are very low, any business can start their activity in this area. This serious threat could be overcome by appealing service concept, where services can be bundled and unbundled, peripheral services added on to the core ones and the different skills of Jens and Kaj exerted.
Sales of equipment rental service are decreasing, at the same time this service has the highest contribution margin and no competition from outside. At the same time the sales of Event-party and Event-action services are increasing. Therefore company should look for new ways of increasing sales of equipment rental department or sustain its sales for as long as possible. Concerning with Event-party and Event-action services, the company should focus more of their resources on these two services.
Stable economical situation and increase in leisure activities of Germans could be seen as a potential market for expansion, however the language barrier and culture differences could prevent the company to make a use of this opportunity.
The economical stability of Denmark, increase in the income of population growth in popularity in leisure and entertainment activities, especially sports, is a good opportunity for the Eventmakers. However the company has problems with structure of the organisation which decreases their efficiency and the low level of skills and competence in the managerial levels, which all have to be improved.
In Denmark the number of well educated population, number of people and successful companies using IT is increasing from a year to the other. At the same time the Eventmakers’ use of IT is not at the satisfactory level and therefore the company should extend the use of IT for improving their efficiency.
The situation regarding the urbanisation level in the North Jutland is increasing which represents new opportunities for the Eventmakers. Also the competition level in the Jutland and Funen area is remaining low which creates for the company the necessary environment to develop and become a strong competitor.
The biggest competition in the Danish organisers industry is taking place in the area of Zealand, where is the largest concentration of jobs, institutions, industries and business. The area of North Jutland, fastest growing region and an important economical centre could be encountered by the company for new business opportunities.
3.3.2. Objectives and strategies:
Regarding our conclusion on SWOT as the main objectives for the Eventmakers we are proposing to grow by:
- Increasing the sales by 4% in the year 2003 and by 15% – 20% by next five years. The reason for proposing low increase in the first year is that with the current competence Eventmakers it would quite challenge to achieve better results. As soon as their condition improves we suggest to attempt to increase their sales even further.
- Increasing their market share
These objectives can be achieved in the long term run by applying the competitive focus strategy when concentrating the effort in the following areas:
- in the geographical location of their current operation where there is a limited competition and an increase of private business concentration
- on particular segment of commercial customers existing in this area as well as the large segment of active population
- on developing different product packages which would fit to the needs of this segment
- increase marketing promotion
- promote different product packages which will be offered for reasonable price
- improve internally before the competition will become more fierce
As Eventmakers are situated in Kolding, region of Jutland, where is a limited competition represented by Aalborg Tourist and Convention Bureau, we recommend the company to remain in this market. Aalborg Tourist and Convention Bureau, compete with Eventmakers on the same product and product category. On the other hand Eventmakers have an advantage by offering service of equipment rental. Therefore Eventmakers could differentiate their offer from their main competitor. From our macro analysis we found out that there is significant increase of business concentration in this area. Therefore Eventmakers do not have to go too far to look for their customers. The company can make use of this development in the market and therefore offer their services to these selected customers. By developing different service packages for reasonable prices, which would fit the needs of this particular segments can help them to increase their sales and build good reputation on the market. Namely bundling equipment rental with event-actions or event-parties for a bundle price could be offered. At the same time increasing marketing of the equipment rental service in order to get more customers. In this way Eventmakers can extend the product life cycle of the equipment rental, which is their main profit generator and at the same time increase their revenues. As the Eventmakers are not facing too fierce competition in their area of Jutland, they have some time to improve their internal situation in order to perform efficiently. At this point we mean the total change in the organisation structure, improvement in the skills and competence and extend the use of information technology for external and internal purposes. After such changes are successfully accomplished, Eventmakers can plan and adapt to the new strategies for their expansion to the other markets eventually into the International market, mainly Germany.
4. Conclusion:
In the end of this report, after analysing the internal and external situations we will respond to the main question of the report and expose our opinion as regards the hypothesis stated in the introductory part.
Starting with the external situation of the company, our group reached the conclusion that the area of Jutland is representing for the Eventmakers not only a very attractive market with a high number of customers but also a safe and developed environment where to operate with no major competitors. Because the competition in this region is low, our company has the opportunity to focus more on improving its efficiency and co-ordination between departments which represent the key words in this business.
When speaking about the changes which the company should make, we reached the conclusion that firstly Eventmakers should solve their internal problems regarding the structure and managerial skills. In order to achieve more efficiency, the company has to become more specialized and well organized. In this sense the managerial skills must be improved and the personnel culture must reach a professional level. Until
For creating more awareness about their company, the Eventmakers have to start a promotion campaign sustained by an increase in diversity in their product offer. The company has to focus as well on the quality and professionalism level of their offer which will attract new customers and will keep the old ones, in this way their activity will be sustained as regards the long term run.
Our opinion is that the owners of the company considered their business as being a small family one, until the financial situation in the company could not be kept under their control. In that moment, the prosperity reached in the beginning started to drop and the company was on its way to collapse.
The strategies given in the report have the purpose to save and direct the company towards stability and profit with a new organisation a competent management. The conclusions behind the analysis in the report are having the purpose to make the management aware of the company’s situation and to start considering it as a veritable responsibility which requests a constant effort combined with team work.
5. List of literature:
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Gesteland, R. Richard, Cross-Cultural Business Behaviour, Copenhagen, DK by Reproset, 1999 ISBN: 87-16-13428-1
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Iversen, Peter Soren., Jørgensen, Thomass, Gammelgard Neel, Gammelgard, Iben, Writting Seminar Reports – Requirements and Guidelines, Gylling, DK by Narayana Press, 1997 ISBN: 87-593-0643-2
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Kotler, Philip, Marketing Management Ninth Edition, New Jersey by Prentice Hall, Inc.,1997 ISBN: 0-13-261363-8
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Kotler, Philip, Principles of Marketing - The European Edition, Great Britain – Glasgow by Prentice Hall Europe, 1996 ISBN: 0-13-165903-0
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Norman, Richard., Service Management, Strategy and Leadership in service business – Third Edition., England by John Wiley and Sous Ltd., 2000
ISBN: 0-471-49439-9
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Palmer, Adrian, Principles of Service Marketing- Third Edition, England by McGraw- Hill Publishing Company., 2001 ISBN: 0-07-709748-3
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Robbins, P.Stephen., Decenzo, A. David, Fundamentals of Management – Third Edition, New-Jersey by Prentice Hall ISBN: 0-13-065133-8
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James A. O’Brien, Management Information Systems – Managing Information Technology in the E-Business Enterprise, Fifth Edition, McGraw-Hill Irwin, 2002, ISBN: 0-07-112350-4
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Michael L. Kasavana, Richard M. Brooks, Managing Front Office Operations – Sixth Edition, Educational Institute – American Hotel and Lodging Association, 2001, ISBN: 0-86612-225-7
Sources used from the Internet:
OECD – Organization for Economic Co-operation and Development
Source: http://www.cia.gov/cia/publications/factbook/print/da.html
Source: http://www.politinfo.com/infodesk/countryfacts/da.html
Source: http://www.cordis.lu/euroabstracts/en/december02/feature02/feature02.htm
IAPCO - International Association of Professional Congress Organisers, founded in 1968.
ICON Group – International Conferences Network, headquarters in U.K., London.
MPI - Meeting Professionals International
CONGREX Partners – Congress and Exhibition, bureaus in: Sweden, Holland, Goteborg and Finland.
ICS - International Conference Services A/S Copenhagen, founded in 1987, IAPCO and ICON Group
member, residence in Hellerup, DK.
DIS - DIS Congress Service Copenhagen A/S, founded in 1952, IAPCO, MPI and CONGREX Partner,
residence in Herlev Ringvej, DK.
WOCO - Wonderful Copenhagen Visitors & Convention Bureau
AT & CB - Aalborg Tourist and Convention Bureau
PCO- Professional Congress Organiser
CRM – Customer Relationship Management.
WOCO – Wonderful Copenhagen, Visitors & Convention Bureau
AT & CB - Aalborg Tourist and Convention Bureau
CMM – Certificate in Meeting Management.
ERP – Enterprise Resource Planning represents the operating system or the background on which the other programs and systems are working in the company. The ERP is receiving data from the web-page and is sending it to the departments which need this data.
