from local tradition to global capitalism
TRANSCRIPT
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From Local Tradition to Global Capitalism
Rachel Turcott, Megan Liles, Grant Sportelli, Romel Soltero
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AgendaBackground AnalysisOption EvaluationProposalImplementationRisk MitigationQ & A
Background Options Propos
alImpleme
nt Risks Q & A
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ProductBackgro
und Options Proposal
Implement Risks Q & A
Oktoberfest is more than a sum of its products, but a celebration of culture itself…
Oktoberfest sells to its customers a way to come together and celebrate a culture.
Tangible
• Beer• Local Food• Music
Intangible
• Culture• History• Heritage
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Demographic of VisitorsBackgro
und Options Proposal
Implement Risks Q & A
Munich60%Rest of
Bavaria12%
Rest of Germany
9%
Foreigners19%
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Background Options Propos
alImpleme
nt Risks Q & A
Stakeholders
Consumers
Vendors
Government
Suppliers
Hospitality
Transportation
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Market AnalysisBackgro
und Options Proposal
Implement Risks Q & A
StrengthsGlobal Reputation
Strong Supplier/Consumer
BaseKnowledge of the
Market
WeaknessesUnprofitable Niche Market
Smaller demographic
OpportunitiesNew TechnologyExisting Demand
Global Interconnectivity
ThreatsEconomic ConditionsInternational Laws
Competition
SWOT
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Global FranchisingWhat • Franchising Munich Oktoberfest
How
• Regional Analysis• Liaising with Councils Abroad
Why
• Long-Term Profit Expansion• Potential Growth• Cultural Expansion
Background Options Propos
alImpleme
nt Risks Q & A
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AnalysisBackgro
und Options Proposal
Implement Risks Q & A
Criteria Potential Profitability
Feasibility
Growth Potential
Maintaining Heritage
Expanding Cultural AwarenessShor
t Term
Long Term
Global Franchising
2 5 3 5 3 4
1 = Not at all support2= Unlikely to support3 = May or may support4 = Likely to support5 = Extremely likely to support
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Improving Local Operations
Background Options Propos
alImpleme
nt Risks Q & A
What • Adjusting Revenue Structure
How
• Replacing Rent Formula• Aggressive International Marketing
Why
• Short-Term Profit Expansion• Feasibility• Maintaining Heritage
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Analysis Backgro
und Options Proposal
Implement Risks Q & A
Criteria Potential Profitability
Feasibility
Growth Potential
Maintaining Heritage
Expanding Cultural AwarenessShor
t Term
Long Term
Improving Local Operations
5 2 5 2 5 2
1 = Not at all support2= Unlikely to support3 = May or may support4 = Likely to support5 = Extremely likely to support
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ComparisonCriteria Potential
Profitability
Feasibility
Growth Potential
Maintaining Heritage
Expanding Cultural AwarenessShor
t Term
Long Term
Global Franchising
2 5 3 5 3 4Improving Local Operations
5 2 5 2 5 2
Background Options Propos
alImpleme
nt Risks Q & A
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Background Options Propos
alImpleme
nt Risks Q & A
EnhanceExpand
Evaluate
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Enhance Oktoberfest Model
Background Options Propos
alImpleme
nt Risks Q & A
Old Revenue via Rent
Based on Space
Minimal Marketing
NewRevenue via Sales TaxBased on Units SoldAggressive International Marketing
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Background Options Propos
alImpleme
nt Risks Q & A
Expanding to New Countries
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Evaluate Based On Criteria
Background Options Propos
alImpleme
nt Risks Q & A
Potential ProfitabilityFeasibilityGrowthMaintaining HeritageExpanding Cultural Awareness
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TimelineBackgro
und Options Proposal
Implement Risks Q & A
2016-2020
2015
2020 +
Refine existing Munich model
Conduct market research on UK
Trial Oktoberfest in UK
Evaluate successfulness of Munich model
Evaluate Oktoberfest in UK
Continue to research new countries
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Risk MitigationBackgro
und Options Proposal
Implement Risks Q & A
• Control of AuthenticityBrand Dilution
• Trial PeriodRejection of Franchising
• Aggressive International Marketing
Cannibalization of Munich
Oktoberfest
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Q & ABackgro
und Options Proposal
Implement Risks Q & A
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AppendicesAppendix 1 Our Evaluating Criteria
Appendix 2 Scale for Evaluating Criteria
Appendix 3 Global Franchising Criteria
Appendix 4 Improving our Current Operations Criteria
Appendix 5 Location Analysis
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Appendix 1: Evaluating Criteria
We have prioritized the criteria we feel are important to the future and reputation of Oktoberfest and have then evaluated all of our
options according to these criteria. The criteria is as follows:
Criteria Explanation
Potential Profitability This refers to how much potential there is to create value and turn a profit. Although this profit will be ploughed back into the event.
Feasibility This is how easy it will be to implement the option.
Growth Potential This considers how much potential future growth is likely to
Ability to Maintain Culture This is how easy it will be to continue expressing the history and core values of Oktoberfest.
Expanding Cultural Awareness This refers to the ability to educate new attendees on the Bavarian culture.
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Appendix 2: Scale for Evaluating Criteria
Ranking Definition
1 This option will not at all support this criteria
2 This option is unlikely to support this criteria
3 This option may or may support this criteria
4 This option is likely to support this criteria
5 This option is extremely likely to support this criteria
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Appendix 3: Global Franchising EvaluationCriteria Ranking Justification Evidence Potential Profitability
5/5 Long term
2/5 Short Term
In the long-term franchising the Oktoberfest brand in Europe would be more profitable because it would expose Oktoberfest Munich to a new consumer base.
19% of attendees come from
outside Germany 55% of international visitors return
to Oktoberfest Combined, the largest cultural
festivals in the world attract over 28 million attendees.
Feasibility 3/5
We already have a longstanding knowledge of Oktoberfest, however we don’t have a full understanding of how this will translate to other countries. Therefore, it is feasible but it would be easier to enhance the current Munich operation.
Oktoberfest has been running
successfully for over 200 years.
Long Term Growth Potential
5/5 Obviously, when moving to a new market segment there is high potential growth. By Franchising the Munich Oktoberfest name abroad it will give us a wider customer demographic. After our first successfully expansion abroad it could also potentially open up even more markets.
Maintaining Heritage
3/5 It may be harder to maintain the history and heritage of Oktoberfest when moving to another country.
Expanding Cultural Awareness
4/5 By taking Oktoberfest abroad we can educate other countries on the culture of Bavaria.
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Appendix 4: Improving Current Operation Evaluation
Criteria Ranking Justification Evidence
Potential Profitability
5/5 Short Term
2/5 Long Term
Opportunity to capture more growth by changing how vendors are “taxed”. Munich doesn’t advertise to tourists who spend more money than locals.
• 1.1 billion EUR revenue
• Tax of food/beer could bring in 8.4 million EUR
• Only 30,000 EUR spent on marketing, for art competition
Feasibility 5/5 Revenue policies are an easy adjustment. No drastic changes to venue, product, or vendors.
• Munich government already developed a formula to charge for beer/food for revenue
Long Term Growth Potential
2/5 Relative to globalization, room for long term growth is limited. The venue is fixed and limits the amount of vendors/ visitors.
• Theresenwiese is fixed, they have to use location. This means that there is a cap to how many vendors they can have.
Maintaining Heritage
5/5 Long standing tradition, Bavaria is the flagship Oktoberfest, celebration of Bavarian culture.
• Oktoberfest has been running since 1887.
Expanding Cultural Awareness
5/5 Worldwide advertisement would further associate Oktoberfest with Bavaria.
• Currently only 30,000 EUR is spent on advertising, which extends to only producing local brochures from the funded art competition.
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Appendix 5: Location Analysis
These are some potential locations we have analyzed for potential franchising: We have considered the “World Bank Organization: Ease of Business Rankings” for this recommendation.
Location Analysis
United Kingdom • United Kingdom visitors comprise almost 13% of international visitors, the second largest group behind Italy.
• UK already celebrates German culture; there are traditional German markets in Birmingham, Bournemouth, Leeds, London, Glasgow, and Oxford. the United Kingdom is close by and Germany has a good relationship with the United Kingdom.
• Furthermore German is 5th most popular foreign born nationality in the UK, providing a solid base and a large opportunity for growth
Denmark: Copenhagen • UNWTO World Tourism Rankings show that Denmark had 8.7 million visitors in 2010.
• Of all EU citizens 35% are interested in Denmark as a holiday destination.
• Denmark is trying to grow its tourism industry so they could be open to Oktoberfest.
Switzerland • In 2007 World Economic Forum found that Switzerland had the most competitive travel and tourism sector in the world.
• Switzerland’s Economy is based highly on having a qualified labor force which could make implementation more feasible.
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Oktoberfest profitability today
Background Options Propos
alImpleme
nt Risks Q & A
• Grosses approximately 1.1 Billion EUR• Who captures these profits?• Local vendors• Hired local staff• Ride operators• Tent hosts• Local hoteliers
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Oktoberfest: MunichBackgro
und Options Proposal
Implement Risks Q & A
• Munich is regulated to not profit from Oktoberfest
• Costs of Oktoberfest = ~2.5 million EUR
• Currently uses a rent formula to cover projected costs
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Capturing/Creating Value
Background Options Propos
alImpleme
nt Risks Q & A
• Replace rent formula with beer/food tax formula
• Lowers barrier to entry• Market beyond art/design• Attract more tourists• Day trip spends :46 EUR/day• Tourists 213 EUR/day