Euro 2008 winners and losers

Living as I do in the heart of Salzburg, just 400m from the Fanzone where 3 giant screens beamed the games to 25,000+ fans at a time, I wondered about the impact of the tournament on business. In particular two things struck me: the winners and losers, and the risk. Taking these in order, in my opinion they are as follows:

Winners

• Pubs and restaurants near the Fanzone and in the town centre (but those even 200m off the beaten track were very quiet)
  
• Security firms (fencing, security guards etc.)
• Hotels (but they rarely had full occupancy)
• Students (plenty of temporary jobs available, but many were apparently voluntary)
• Taxi drivers
• Jewellery stores (reports have it that many Russians came with serious money to spend)
• Stiegl - Salzburg's brewery (although as Carlsberg was an official sponsor they weren't allowed anywhere near the Fanzone)
• The mobile phone operators
  

Losers

• Local residents (although disruption - parking problems, late night revellers, rubbish - was not as bad as feared)
  
• Museums and tour guides (nobody apparently was interested in culture)
• Local shops etc. (many made an effort to support the event with themed window displays etc. but I'm sure sales were down)
  
• Entrepreneurs who paid thousands for selling space inside the fanzone (queues were rarely long, people complained bitterly that only Carlsberg was available, the enforced beer prices were high (€4.20 for 500ml) and the stormy evening weather won't have helped)
  

I'm sure that these lists can be added to. But what surprised me in compiling them is that the list of winners isn't bigger, and is quite narrowly defined.
Risk
Being an entrepreneur involves risk-taking of course. But there must be a huge amount of unsold stock left on shop shelves. How should a small shop owner predict how many flags and scarves of each nationality they will sell, or which teams will get past the first rounds? Was any guidance given about sales trends in previous European football tournaments? And can such guidance be applied to another city, another tournament, another year to another store? Should a small shop gamble and buy a lot of themed stock or play it safe and plan for business as usual? Will there be a sales bonanza? Will football themed toys sell better than normal; will people buy a football hat from a hat shop; football pyjamas and underwear? It can't be easy to decide.
The risk for larger businesses is smaller. Multinationals are diversified to spread risk. Unsold stock can be spread around their numerous stores.
It's my guess that there will be a spate of insolvencies amongst smaller businesses in the coming weeks. Even this may not be as easy to explain as you might think. Perhaps some businesses already in trouble decided to hang on until after the tournament before giving up, but perhaps others made big mistakes in stock purchasing.

Hot News - AQA Unit 2

Having finished beta testing, we've cut the price of unit 2 from £280 to £275. It's not because it's an inferior product (of course!), it's psychological pricing. Now you can buy units 1 and 2 for £495. We are sure that you will agree that with almost 1,000 slides tightly focused on the specification that's value for money!
We're really pleased once again with the level of interactivity. There are even more interactive diagrams than in any of our other products, making this a really involving way to teach the course. We've also tried not to miss an opportunity for a task, and are particularly pleased with our task for 'Place' in the marketing mix. In this task, groups manage the distribution network for a major firm and must decide how best to deliver a wide range of products. They must balance cost, time, environmental impact etc. and justify their solution to the class.
Anyway, enough said. To find out more and to download the 'virtual sample CD' which includes a free presentation, visit the website.

 

AQA A-Level (2130) Unit 2

I am delighted to say that we have now finished the development of the second of the PowerPoint Resource Packs for AQA's new AS Level Business Studies exams. We are very, very happy with it. It's now in beta testing, where we click every button, test every link, check every transition and generally look to find small improvements to give it that final polish. We hope to have it on sale by the end of next week. Currently it contains 572 slides and around 167 tasks (it is pretty difficult to define what is meant by a task, but in general it is an activity that involves class interaction and thus might range from a discussion question to a full business simulation exercise). We anticipate a retail price of £280.

AQA AS Business Studies Unit 1

The writing started in September, and finally, after a gruelling week of Beta-testing, our first A-Level product is ready for sale. We're very excited about this AS Business Studies resource pack as it is our first to be created specifically for one exam board, meaning that it is tightly focused to teachers' precise requirements.

This pack covers the AQA topic areas of 'starting a business' and 'financial planning' and includes material from Finance, Marketing, Formation and Growth of Business and Objectives and Strategy. As the pack is focused on the AQA specification, links, taken directly from the published specification, are provided on the second slide of every presentation, so you can be sure that you are covering the right material.

Find out more by visiting our website here.

Graham

P.S. Apologies to those who have bookmarked pages on our site, but the launch of this new A-Level Business Studies resource pack was used as an opportunity to tidy up the Business Studies area of the website. It was all back-office work, that makes no difference to the user experience, but paves the way for a more organised site in future.

Rugby World Cup Ticket Prices

The International Rugby Board (IRB) has been criticised for selling match tickets for the current Rugby World Cup at £160. There are calls for tickets to be sold at 'reasonable' prices.
But what is the difference between a reasonable price and the equilibrium price?
If tickets are sold for £20 (a 'reasonable' price) then many are bought by touts who sell them on for £160, making a £140 profit, none of which goes to into rugby or is taxed. The Rugby loses valuable revenue which could be going into supporting the game at the 'grassroots level'.
If the tickets are sold for £160 (the equilibrium price?), and the match is a sell-out then the IRB is much wealthier, far more tax is paid and everyone is a winner.
Predicting the equilibrium price is tricky. Two possibilities:
1. The IRB is cautious and under-prices - sells below the price needed to achieve a sell-out. Touts might buy these £160 tickets and sell them on for a little more - perhaps £180. With little profit margin, and high risk of not selling the tickets, few people might take the risk.
2. The danger is that the IRB, in being greedy, might over-estimate the equilibrium price. Then stadiums are half empty and everyone complains about the crazy prices.
Surely the IRB should be moving towards the equilibrium price, and away from the 'reasonable' price. We all know that selling a product that is in short supply at below the equilibrium price just can't work.

Is all publicity good publicity?

Given the discovery of a swastika on a Zara handbag (see BBC article), this is the obvious business question.
Perhaps an answer to the question might be to wonder how the news hit the media. Could it be that Zara sowed the seeds of the story themselves? If so, they will have weighed up the potential risks and rewards of the story, by conducting a cost-benefit analysis. Perhaps they considered some of these points:

Risks:

• The organisation is made to look stupid
• They are shown not to be in control of their own designs
• Consumers might boycott the stores
• Nazi sympathisers might start buying and wearing Zara clothing
• Staff might resign in disgust (???)
  

Rewards:

• Free publicity - The manager of Zara's multi-million euro advertising budget (Zara is a Spanish company) probably isn't complaining
• Staff and customers approve of the swift and decisive measures taken by management
  

Next Zara's managers will have weighed up the risks and rewards. One approach is to consider the likelihood of each possibility and multiply it by the predicted financial cost/benefit. A difficulty with this is the guesswork involved in gauging probabilities and monetary values - especially when the issue is something as intangible as staff and customer approval.
Regardless of the pros and cons of the news, it still beggars belief that the company managed to source this handbag without noticing the large green symbol on its sides.

A discussion task for your GCSE Business Studies students

On Tuesday, the contract for the right to sell Apple's innovative new iPhone (released in the USA in June) was awarded to O2. They are expected to sell the phone for £269 with users having to sign up for a £35, £45 or £55 monthly tariff. Read this BBC article and answer the questions that follow.

1. What is meant by a contract?
2. What do you imagine O2 had to do to win this contract from Apple?
3. Discuss the risks and potential rewards faced by O2 in signing this contract.