Before One PLC (BON)

Music festivals are growing in number globally. Festivals vary in location, size, and music
genre. They include commercial multiple-day events on farmland and community-led events
in public-owned parks.

Before One PLC (BON), a European company, has organized music festivals since 2001.
5 In 2016, BON converted from a privately held company to a publicly held company to raise
finance for expansion. BON has 60 permanent employees but also relies on temporary
workers and freelancers.

BON organizes five music festivals each year and has contracts with five farmers to use
their farmland for an average fee of $100 000. BON must clean up after a festival at an
10 average cost of $250 000 per festival. BON’s directors regard environmental sustainability
as a significant challenge.

BON’s festival season runs from May to August. Each music festival runs from Friday to
Sunday. Each festival site:
• takes two weeks to set up and one week to dismantle
15 • requires security fencing, 60 stages, enough space for camping, 3000 toilets, and
25 000 waste bins.

BON has a traditional hierarchical organizational structure with a clear chain of command.
Its mission statement is “to create an unparalleled music festival experience that brings
together artists, fans, and communities from around the world to celebrate music, culture,
20 and creativity. Through our commitment to sustainability and social responsibility, we aim to
leave a positive impact on the environment and the communities we serve.”

The music festival industry has significantly changed in the last ten years. In 2016, when
BON had its initial public offering (IPO), it planned to use the share capital to expand the
company and improve its environmental sustainability. However, in 2020 when the
25 COVID-19 pandemic struck the world, BON’s strategic growth plans changed.

BON’s music festivals were cancelled in 2020 and 2021. BON worked hard to support its
permanent employees throughout the pandemic but had to lay off 50% of the staff in early
2021 when it was clear that there would be no music festivals that year. Many of BON’s key
suppliers and contractors also went out of business or shifted to other industries in 2021.
30 BON used a significant amount of its share capital and retained earnings to maintain the
company during the pandemic, and no dividends were paid to shareholders in 2020 and
2021 due to a lack of revenue from the cancelled musical festivals.

In early 2022, BON received approval to plan and host music festivals during the 2022
season. BON quickly began re-hiring employees and contacting their suppliers, but the
35 company found that many employees and suppliers were no longer available. BON’s former
employees were now working in the gig economy. As a result, BON faced a shortage of
skilled workers and suppliers that were needed to run the music festivals. Due to this
shortage, BON had to pay higher prices for suppliers and pay for many services up front
instead of using trade credit.
40 Organizing the music festivals in 2022 was more expensive than in 2019. BON’s direct
costs were higher, and their working capital cycle was longer. BON’s managers feared
reporting another unprofitable year after the losses in 2020 and 2021 due to the pandemic.

BON managed to host all five music festivals in 2022 but with the increased costs and
decreased revenue from low attendance and discounted ticket prices, BON just broke even
45 for the season. While BON’s music festivals were back and its managers were confident
that the 2023 festival season would be better, BON’s board of directors (BOD) were facing
pressure from the shareholders who wanted the company to be more profitable.

In addition to issues with profitability, BON faced a challenge with their environmental
sustainability. During one of BON’s music festivals in 2022, a local environmental group
50 took photos of the trash on the festival grounds and posted it on social media. BON’s crews
cleaned up all of the trash after the festival goers left, but many people were outraged at the
amount of non-recyclable waste created at the festival. BON’s corporate social responsibility
(CSR) policies were challenged, and BON was accused of greenwashing. Online, people
demanded that BON use more environmentally friendly practices at their festivals and
55 threatened to boycott the festivals if nothing changed.

BON’s managers had previously proposed investing in solar power and requiring all food
vendors to use more environmentally friendly tableware like bamboo plates and reusable
cups. However, the cost increase was significant. BON’s BOD was angry about the negative
media attention but were concerned about investing significant capital into sustainable
60 practices.

At a recent board meeting, BON’s BOD proposed a merger with another small music festival
company, World of Music (WOM), that provides a unique, story-oriented festival experience.
At WOM festivals, attendees interact with actors at special events to uncover a story while
enjoying the musical performances. These unique festival experiences have become more
65 popular with customers and would enable a differentiation strategy for BON. Due to offering
unique experiences, WOM has been able to charge premium prices for its tickets in
comparison to BON.

WOM leadership has an innovative corporate environment with a flat organizational

structure that is focused on creativity. If BON merged with WOM, WOM’s team could help to
70 transform BON’s existing music festivals into ones with a unique story focus. WOM also has
a stronger social media marketing strategy and better online brand awareness, which
contrasts BON’s more traditional promotional strategy of posters and billboards. WOM
music festivals cost relatively the same as BON’s festivals to operate. WOM does not hire
expensive headline performers and instead focuses on selling the unique, story-oriented
75 experience. The merger between BON and WOM would lead to some redundancies, cost
savings, and enable economies of scale, which would help BON contend in the very
competitive music festival industry.

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