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Symphony Orchestra Case Study
Symphony Orchestra Case Study
Symphony Orchestra Case Study
1. What is the total weekly profit for each proposal? Which proposal should John consider
implementing?
Proposal 1 – Student tickets is outlined in Exhibit 1. It demonstrates that the incremental
income from selling discounted student tickets is $600 and a total profit of $700. Proposal 2 –
Matinee Repeat is outlined in Exhibit 2. It demonstrates that the incremental income from a
matinee show is $150 and a total profit of $250. Proposal 3 – New Series is outlined in Exhibit 3.
It demonstrates that the incremental income from a new series in the first week is -$200 and a
total profit of -$100. However, each following week the incremental income would be $4,300
for a total profit of $4,400. This results in a profit, after the first week, of $4,400 for the second
series plus $1,200 for the sale of discounted student tickets of $600 for each show, for a total
profit of $6,600.
John should take on the new series, suffering a loss in the first week for the greater good
long term, and also sell student tickets for the shows that don’t sell out. If it’s an either-or
situation, then just take on the new series. If he doesn’t have deep enough pockets to suffer a
first week loss, then he should go with proposal 1 and sell discounted student tickets.
2. Discuss the strategic implications for the decision you have chosen. Apart from the
dollars are there other factors that John should consider about the option?
The implications of adding a new series would be increased scheduling complexities,
managing additional staff (concessionaries and musicians), increased marketing costs, and
overall managerial costs (bookkeeping, payroll). I would imagine there would be little difficulty
facilitating and accounting for the sale of discounted tickets to students. Having two series and
providing a good experience to customers would likely bring other benefits. Opens the
opportunity for the same customers wanting to see both shows and more total patrons to
provide good press.
The second series won’t increase the weekly rent (fixed costs), so its margins when
adding an additional show increase substantially. Both shows are also not projected to be at
capacity. Having two shows increasing the number of student discounts that can be sold. Even if
the projected number of students that may attend decreases by having two, the incremental
income is still positive due to existing fixed costs.
EXHIBITS
Exhibit 1 – Proposal 1 – Student Tickets
Proposal 1 - Student Tickets
Incremental Patrons 200
Price Per Ticket $4
Revenue $800
Cost program + ticket ($200)
Incremental Income $600
Total Profit* $700