EuroDisney - Fixed costs on a business of dreams

30/12/2014 EuroDisneyFixedcostsonabusinessofdreamsManagementAccounting data:text/html;charset=utf8,%3Cdiv%20id%3D%22header%22%20style%3D%22display%3A%20block%3B%20height%3A%20100px%3B%20color%3A… 1/1 ManagementAccounting Somefreeinsightsonmanagementaccountingandbusiness. RSS Search... » Privacy ManagementAccounting WillSeal,RayH.Garrison,EricW.… £46.79 ManagementandCostAcco… ColinDrury(PaperbackMar15,… £50.58 Searchblog Translate Seleccionaridioma Tecnologiado Tradutor SomeadsfromGoogle Searchamazon.co.uk Search Amazon.… Next›‹Prev EuroDisney–Fixedcostsonabusinessofdreams ByJoãoonSeptember8,2014at9:00am PostedIn:Ch11CostVolumeProfitAnalysis,Ch12CostBehaviour&Estimation,Ch13 RelevantCosts&Revenues,Ch19CostManagement,ValueCreationAndSustainable Development,Uncategorized Buyourbookhere. Sometimeago,wepostedonthequitepoor financialperformanceofEuroDisney (http://burnsetal.com/2013/03/cvpanalysisa longertermperspective/).Thatpostfocusedon therevenueside,anditwassuggestedthatthere wasnotmuchthatDisneycoulddoabouttheir costs(mostlyfixed). Justbackagainfromafewdaysthere(a wonderfultime,asalways…),Iwilldiscussabit aboutthe“fixed”natureofEuroDisney’scosts.Of course,onaveryshortterm,mostofthemare indeedfixed:anadditionalcustomerimpliesvirtuallynoincrementalcosts,and purchasesattheshopssurelyprovidegenerousmarginsovervariablecosts.But let’sextendthetimehorizonalittlebit.Whenwalkingaroundthepark,youcan’t helpnoticingtheamazingnumberofstaff.Someofthisstaffaredirectlyengaged withgeneratingincome(forexample,intheshopsallovertheplace).Butthereis acountlessnumberofpeoplecoordinatingevents,operatingandmaking thoroughsafetychecksatallattractions,keepingtheplaceimpeccablyclean, simplywalkingaroundforanyissueorquerythatarises,alltheactors,musicians anddancers…Nottomentionallthestaffthatvisitorscan’tseebutwhichare “behindthescenes”makingallthiswork.Surely,altogethertheydorepresentA LOToffixedcosts. Ifyouturninto“businessanalystmode”,youmaywellbetemptedtodiagnose someoverstaffing,andmaybetemptedtowonderifsomeofthat“nonrevenue generatingstaff”couldbereducedinarelativelyshorttimehorizon.Idon’tknow thecontractualdetails,butI’dguessthatasignificantpercentageofthestaffhas quiteflexiblecontracts.Youmaywellbetemptedtothinkthatreductionsonthis typeofstaffmayyieldinterestingquickcostsavings(oncostswhicharefixedon apercustomerbasisbutnotcommittedonaslightlylongerterm),andmaynot haveasignificantimpactonvisitors’experience.Andprobablysomepeopleat Disneyconsiderthatpossibility,everynowandthen. Asitisusuallythecase,“temptations”(suchasthosedescribedintheprevious paragraph)maynotbegoodoptions.Thereisprobablyagoodreasonwhysuch highnumbersofstaffarethere.It’sbecauseiftheyweren’tthere,eachvisitto Eurodisneymightnotbesowonderful,soworriesfree,soeffectiveinmaking childrenandadultsdreamaboutaperfectworldofhappinessandjusthavefun. Soeffectiveinmakingusorourlittleoneswanttoreturnagain(it’smyfourthtime there…)–andgeneratemorerevenuesinamoreorlessdistantfuture. Thisisatrickybalance.ButDisneymanagersknowthatchasingshortterm benefitsthroughcostcutsmayriskcompromisinglongtermreputation, attractivenessandrevenues.Andthat’sariskthatDisneymostlikelycannot afford.That’swhybeingamanageratDisneymustcertainlyrequireanexcellent balancebetweenfinancialandbusinesssensitiveness,andmustbeanabsolutely thrillingexperience(plus:youprobablymanagetoseeyourfavouriteDisney characterquiteoften! ). Sharethis: LinkedIn 6Twitter 2Facebook More Home»Ch11CostVolumeProfitAnalysis»EuroDisney–Fixedcostsonabusinessofdreams HOME FREEONLINEBOOKRESOURCES OURDAILYPAPER BUYTHEBOOK CONTACT