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mock1 answer 2010

mock1 answer 2010

Ratings: (0)|Views: 52 |Likes:
Published by Dilupa Tharaka
To:

Steve Voddil and John Young

From: Senior Management Accountant Date: 2010

1 2 3 4 5 6 7

Introduction Terms of reference Identification and prioritisation of issues Approaches to resolving the main issues Ethical considerations Recommendations Conclusion

Appendices 1 2 3 4 5 6 SWOT analysis Mendelow's matrix Staff bonus scheme Sports production opportunity Potential acquisition of Company B Slides re new bonus scheme

VYP is a successful independent television production company operatin
To:

Steve Voddil and John Young

From: Senior Management Accountant Date: 2010

1 2 3 4 5 6 7

Introduction Terms of reference Identification and prioritisation of issues Approaches to resolving the main issues Ethical considerations Recommendations Conclusion

Appendices 1 2 3 4 5 6 SWOT analysis Mendelow's matrix Staff bonus scheme Sports production opportunity Potential acquisition of Company B Slides re new bonus scheme

VYP is a successful independent television production company operatin

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Categories:Business/Law, Finance
Published by: Dilupa Tharaka on Sep 05, 2010
Copyright:Attribution Non-commercial

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11/06/2012

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original

To: Steve Voddil and John Young
From: Senior Management Accountant
Date: 2010
1
Introduction
2
Terms of reference
3
Identification and prioritisation of issues
4
Approaches to resolving the main issues
5
Ethical considerations
6
Recommendations
7
Conclusion
Appendices
1
SWOT analysis
2
Mendelow's matrix
3
Staff bonus scheme
4
Sports production opportunity
5
Potential acquisition of Company B
6
Slides re new bonus scheme
VYP is a successful independent television production company operating in thetJK. This is a
large market that is highly fragmented with many hundreds of small companies bidding to win
contracts to provide commissioned content to the broadcast companies such as the BBC and ITV.
Some of competitors have international reputations that allow them to make mainstream films
such as Aardman Animations. The major challenges facing the industry is the ever-increasing

competition as new companies enter the market, combined with lower commissioning rates from the broadcasters as they face up to reduced licence fee and advertising incomes during the post- recession period.

2 Termsofreference
As the Senior Management Accountant the author of this report identifies and evaluates the issues
facing VYP and offers appropriate recommendations.
3 Identification and prioritisation of issues
The issues below have been prioritised based on the potential impact each could have on VYP
combined with their urgency. A full SWOT analysis is presented in Appendix 1.
3.1 Acquisition of Company A or Company B - first priority

An acquisition of either Company A or Company B will provide VYP with a bigger presence in the potentially lucrative drama genre and the expertise that would be acquired offers the potential of improved future profit margins. The impact on VYP will be large both financially and also culturally, as the integration of the two entities will impact significantly on VYP's existing staff.

Company B has requested an initial response within two weeks which gives this issue a high level of urgency. This would be a shift in strategic direction for VYP and the combination of high impact and urgency makes this the number one issue.

3.2 Staff bonus scheme - second priority

The reputation and future success of VYP is intrinsically linked to its staff and the introduction of the proposed scheme will impact staff financially and emotionally, as it will affect perceptions of their relationship with management. If adopted, the scheme may help to address the issue of falling profit margins.

The scheme is to be announced in 3 weeks and this urgency, alongside the potential impact on a
key stakeholder group (see Appendix 2), means that this is the second issue covered in this report.
3.3 Potential outsourcing of VT editing -third priority
VT editing is a strength of VYP and it will be important that VT editing skills are retained, whether
this is done 'in house' or via an outsourcing contract to protect current margins.

The future of VT editing is currently being discussed which means that a quick resolution of this issue is required. Raj and Paul also hold 10% of the share capital each, which is significant in the context of control of VYP.

The high level of urgency but lesser impact than issues 1 and 2 makes this the third priority in this
report.
3.4 Sports production opportunity - fourth priority
The proposed joint development of the sports quiz would give VYP access to an additional
revenue stream which builds on VYP's previous experience in the comedy genre. It also offers
potential for high margin international sales if successful.

ABC'sMD is keen to receive a prompt response and a number of other production companies are believed to be interested in this project, giving this issue a degree of urgency. However, this does not represent a change in strategic direction or involve significant up front costs and for these

reasons this opportunity is the fourth priority in this report
3.5 Other issues facing VYP
There are issues of lesser importance which have not been prioritised in this report as they are
seen as less urgent and as having minor impact on the organisation as a whole. For example:
Staff resignations are always a matter for regret, but the number and seniority of those who
have left means that this is not a high priority issue
Ethical issues facing the Board will be discussed in a separate section.
4 Approachestoresolvingthemainissues
4.1 Acquisition of Company A or Company B
This opportunity can be assessed using Johnson and Scholes Suitability, Acceptability, Feasibility
model
Suitability
VYP has moved into the drama genre in the last year, an example of product development

(Ansoff's matrix). Large initial costs and a lack of management experience has meant low margins of 7.6%. This market segment commands a high average commissioning revenue per hour and the acquisition of either Company A or Company B and the synergies resulting from shared best

practice present an opportunity for margin growth. This is also a market segment which is high
profile as programmes will often air at peak times and a larger presence in this genre will improve
VYP's brand recognition. Acquisitions are common in this industry; for example Shine Group
completed the acquisition of independent production firm Brown Eyed Boy in June 2010.

Company A has achieved a good record of having shows re-commissioned and the successful cost control that has been implemented is something that VYP could learn from as it looks to implement cost saving measures.

Company B has a high focus on quality (differentiation focus in terms of Porter's Generic
Strategies) which fits with VYP's need to maintain its reputation for high quality programming. This
quality has resulted in several prestigious awards and provides greater opportunity of securing
high margin international sales. The regional (i.e. outside the M25) location of Company B may

also be helpful in building VYP's relationship with the BBC which is committed to spending 30% of its programming budget on regional productions. Building a regional capacity is an important issue; in 2008 Talkback Thames invested heavily in opening a new office in Scotland.

Acceptability
Company A
The acquisition of Company A would generate an expected positive NPV of £320k. It appears
acceptable therefore in financial terms though this analysis is unlikely to reflect potential synergies
and integration costs post-acquisition. A concern is the negative publicity surrounding recent
redundancies and the quality of programming which raises doubts about the cultural fit of the two
organisations.

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