Alltel Essay

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1. How would you describe the competitive strategy of the ALLTEL Pavilion? Given the firm's strategy, what are the most important Key Performance Indicators (e.g., quantitative measures) for the Pavilion to track and manage if it is to achieve its goal of continuous annual growth in operating income? ALLTEL Pavilion is operated by SFX Entertainment in an outdoor atmosphere for its customers. ALLTEL attempts to create a competitive advantage as the major outdoor concert venue in the "Triangle" area of North Carolina consisting of Raleigh, Durham, and Chapel Hill. The amphitheater has art-like acoustics and video differentiating the venue with trying to keep costs budgeted for each concert. The Key Performance Indicators are based on…show more content…
B. How many tickets must ALLTEL Pavilion sell to earn $30,000 operating income after taxes, assuming a 40 percent tax rate? Is it reasonable to assume this level of operating income will be achieved? Briefly explain. $30,000 / (1-0.40) = 4x($40.08-$3.05) + 1x($13.09-$3.05) - $263,245 $30,000 / (1-0.40) = x($158.16) - $265,245 $30,000 = x($94.896) - $157,947 $187,947 = x($94.896) x = 1980.5577 tickets 1(1980.5577) = 1981 comp tickets 4(1980.5577) = 7923 paying tickets in order to earn $30,000 Operating Income after taxes The total number of 7923 paying tickets is reasonable to be achieved, although it is above the number of 7000 tickets that the reserved seating can actually hold at ALLTEL Pavilion. 3. What should be the average ticket price (for all ticket types combined--A through D) for the KFBS concert if the fixed-pay fee is $200,000 (rather than $160,635) and the Pavilion expects to sell 7,000 tickets and wants to earn $30,000 operating income after 40 percent in taxes? After you estimate the average ticket price for all ticket types combined (which is $22.12 for the situation depicted in Exhibit 2), estimate the price for each type of seat (i.e., in Exhibit 2: A-$36.29, B--$22.22, C--$11.31, D--$4.92). [Hint: assume the sales mix for A, B, C, and D seats remains the same as the mix in the Flash Report (Exhibit 2).] $30,000 / (1-0.40) = 7000 ($13.09 - $3.05)

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