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Value creation final project shai zamir, dan saguy
Value Creation Project Shai Zamir Dan Saguy
Executive SummaryBenefit Group was incorporated in 2000 by Shlomi Dauber who also serves as the company’s CEO. Its’headquarters employs 40 employees on a regular basis and hundreds more in changing positions accordingto the company’s projects.The company is located and operates in Israel as a production company for branding, event planning and“below the line” (BTL) product promotions. It offers it’s clients a spectrum of strategic services to supporttheir product and brand.The company’s main frame of work is producing commercial events for its’ clients. It produces around 30events per year of different scales (small, medium and large scale events) and is considered a smallboutique event company.The company’s benefits :• Creative concepts and ideas that will deliver the right message, according to the client and project at hand.• Professional event management to reduce mistakes in the execution processClients include Bank Hapoalim, Nirlat, Migdal insurance agency, IBM, Visa CAL.
The Corporate Event Planning ArenaThe event planning business is a highly competitive arena (a red ocean arena), with numerous players thatcompete against each other. There are approximately 200 players in the market with 20 major players.There are also two gorillas operating (Target market and Promarket) who hold around 60% of the market.They use their personal connections to push the small companies out of the competition and andadvantage of size to reduce prices.Entrance into the arena is characterized by low entrance barriers (no regulations, low initial costs).Therefore every year many newly incorporated companies enter the arena, while many others shut down.One of the significant factors in the arena is the business relations with suppliers. Since every event(product) produced requires different needs- the production companies rely on outsourcing for the differentelements required (venue, lighting, music, catering). Thus, Benefit, as well as most of the competitors in thearena are characterized by horizontal integration.Another important factor in the value creation of the arena is seasonality. The events tend to occur in twomajor periods- around the summer: June-August , when many employee events are held; and in the winter:November to December, when many companies are left with marketing budgets that they must spend bythe end of the fiscal year (there will be a low R2).Year 2011 was characterized by a social megatrend (middle class protest) which had a damaging effect onall the marketing industry, not withstanding the event planning arena.
The Arena Safety regulations and authorizations required by law for certain events (for example: police and mada)Competitors Benefit Eyal Faza Target market Promarket Group NaorSuppliers Venues Lighting and Catering Screens Sound Equipment Flowers rental Clients Bank Nirlat Migdal Visa CAl Hapoalim Consumers
Event-Factor-Review Event FactorsOutcome Description Strengths WeaknessesSuccess Winning a big client in • Strong Creativity *A small the arena (bank team player in a hapoalim) •Strong Budgeting and giants’ market supplier negotiation Exceeding revenue • Strong marketing * The targets • Decreasing costs company is not a major player in the arena Developing a successful • Strong technical skills * Going into facebook campaign • Ability to recognize unfamiliar new platform territory to opportunities create value
Event-Factor-Review Event FactorsOutcome Description Strengths WeaknessesFailure Losing a big client * Providing •Downgrade of quality of (Migdal) satisfaction to the events client in terms of •Poor communication with cost clients •High rate of employees turnover •The planning process is too long Inability to preserve *dynamic work * No organized data base for a constant arsenal of with wide range of suppliers/ clients suppliers suppliers The company’s *ability to reach •High rate of employees reputation is the cheapest turnover decreasing suppliers in the •Downgrade of quality of arena events • Planning process too long. Bad time management
Core-Competencies-Tree-CCT Owner value createdDeveloping a successful Exceeding Facebook campaign revenue targets Winning a big client in the arena Strong building and Decreasing supplier negotiations costsStrong Creativity Team Strong Marketing Ability to recognize new platform opportunities Core competencies
Current-Reality-Tree-CRT Firm’s market value is insufficient Company’s reputation is decreasing Downgrade of quality of events Losing a big client Poor communication with clients Planning process is too Inability to preserve a long constant arsenal of suppliersSmall player in a giants market High rate of employees turnover No organised data base Root Problems
Process of event producingPrimary concerns• Budgeting• Creative process and concept building for the event• Coordination and negotiation with suppliers• Communication with the client• Administrative management• Bureaucratic and logistic preparations
Benefit’s Event BriefProducing First communication with the clientprocess Negotiations Creative team with suppliers builds a concept 21 days 7 days Client approving the proposal Client disapproves 7 days Contracting suppliers P&L calculations Bureaucratic 7 days 7 days preparations 1 month Adjustments and synchronization Hiring staff process 7days 1 monthOverview with the client Building the site Day of event 7 days of the event 2 days
Maturity Level •Is the process defined? Yes •The employees and the staff are well aware of the process method and their role in the Level 1 process •As-Is status – Is there any process of measuring goals & performance? Not enough • the company sets goals in terms of revenue and number of clients, but not for efficiency, quality of events and client conservation Level 2 •Defined – Is there any follow-up regarding mishaps? No. • No organized methodology for recording mishaps, no follow up after flaws or delaying factors. Level 3 • Process Improvement? Yes • Debriefing exists after each event but is not efficient, because information was not recorded during the process. Level 4 •Optimizing – Did we get there? No. •Even though the company is aware of delays and mishaps in the process, the process improvemevt process is inefficient. There is Level 5 defined role in the company for measurement and evaluationMaturity Level 2 out of 5
6 Value driversFinancial: Throughput = Profits from events. The company has a policy to lower costs and resources, so waste is minor. Operating Expenses: Costs of labor and General administrative costs. Small player in a giant’s market. The company does not have high expenditures such as advertising and other.
6 Value driversCompetitive: Lead Time= The time of event production. from first communication with the client, to the day of the event. There is no wait time for a new project (because the company has strong marketing and creative), but the production process takes too long (3 months while most of the industry is 2 months). The company can get more projects by reducing negotiating time with suppliers. This is bottleneck in the process, By contracting a more quality long term supplier, we may reduce waste time in the bottleneck by 50% (and also increase increase costs, but waste time Due-Date-Performance- Since the event has a due date that is fixed, the company must deliver on due date no matter what ( assumingly no waste but The performance is sometimes low quality as a consequence- explained below in qulaity)
6 Value driversFunctional: Inventory: Raw materials= the human resources, concepts, company’s experience , marketing and operating teams. Work-In-Process= production process. Finished Goods= the events produced. Quality= measured by client feedback, mishaps and flaws in the event, and mostly by number of returning clients. Since poor time management has an effect on quality of work- this effects returning clients therefore there is waste in the process which we asesed as approximately 20% (1 out of 5 clients). By improving the time management we can provide better results.
6 Value drivers The main challenge: Improve lead time by lowering the negotiating time with suppliers (abottleneck in the process) and creating long term relations with quality suppliers. This is how we will add maximum value.
Control ChartDays of negotiations with suppliers353025201510 5 0 The average is 21 days while the benchmark in the industry is 12. room for improvement: 9 days =43% improvement
Pareto Analysis100 100 9790 91 848070 656050 4540302010 0 High rate of Low clients Finding the cheapest Losing suppliers to Contracting process No organised data employee turnover willingness to pay suppliers on the bigger rivals with new suppliers base market
Ishikawa (fishbone) Terms of Recruiting Long hours employment process Low wages No defined process Poor training Long hours Inexperienced Interview not workers professional Long hoursHigh rate ofTurnover Reduce Low reputation Workforce CEO is also the Seasonality Marketing owner of the Crisis company No feedback Working for a small company Not enough social events Employees External Factors ambition
Action TableWhat? Who? Ease of Value Classification Letter accomplish on ment chartOutsourcing VP of High Low Quick Win Athe humanrecruitment resourcesprocessCreating a Manager of High Low Quick Win Bdata base eventsfor suppliersLong term Legal Low High Oyster Ccontracts departmentTraining Manager of High Low Quick Win Dprogram for eventsnewemployees
Action TableWhat? Who? Ease of Value Classification Letter accomplish on ment chartEstablishing Marketing High High Pearl Ea fixed ManagerpricelistRaising VP of High Low Quick Win Fworkers humanmotivation resources
Ease Value Table High Oyster Pearl C E B Value D Quick Wins FExpected White Low Elephant A Difficult Easy 80% 20% Ease to Implement
Threats1) Losing to the gorillas in the market- highly competitive market and reduction of small rivals.2) Social megatrend- the recent protests in Israel had an enormous effect on the event market which is considered to be a normal good (luxury).3) Substitute good threat- increasing number of companies trips instead of events.
Shield Hedge Prevent SocialGorrilas Megatrend Substitute trips with events
Shield Hedge Capture Engage Social MegatrendShield: Can’t shield from a megatrend but can reduce damage.Hedge: Requiring cancellation fees, advance paymentCapture: Identify the potential threat of the protest in it’s earlier stages.Examine the effects on other arenas that are close in nature.Engage:Reduce of work force, reduce marketing expenditures. Diversifying line ofproducts (private events, government events, students). Entering new arenas(the company went into facebook campaigns and online marketing).