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" Overall probably not much room to reduce costs further, in fact should actually be
increasing costs in some key areas, e.g., marketing.
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" The most important one here though is maintenance as this is a symptom of the
major problem the park has. Basically:
o Maintenance is low given that we have to pay for all maintenance. The
evidence for this is that the number of maintenance requests is going up
for most zones, while the cost of providing maintenance has gone down.
For an experience oriented business like this, everything needs to work,
and maintenance costs and demands needs to reflect this.
o Secondly, if we use queues as a proxy for popularity (which does not
necessarily have to be the case of course but it is a good proxy) can
query whether maintenance is being spent effectively because many
attractions that have no queues have significant maintenance requests.
May also be that as these are always broken, there is no demand rather
than that it is an unpopular attraction.
o Sometimes a candidate will assume that a request for maintenance also
means that it was fulfilled which is not the case. A request is merely the
logging of a request to have something repaired. Should therefore
challenge candidate if they claim that maintenance is now cheaper per
visit. We don t actually know how many maintenance visits took place,
only how many were required.
Overall, this is meant as a prompt for discussion, with the overall conclusion being that
we want to increase maintenance and potentially marketing expenditure. Once this
general conclusion is identified, move onto next question.
By how much do you believe we should increase these costs?
Given that there is no way of working this out from bottom up, need to consider the
revenue side. A good candidate will identify this. If not, they should be prompted to
consider funding sources.
What do you believe the key revenue sources for a business like this are?
Candidate should mention the following:
" Number of people
" Ticket price
" Spending on other park services (food etc)
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" Car parking
" Merchandising
" Fees collected from displays and other operators who share the facility (by way of
rent etc)
" Bonus points if they come up with anything else, but the above is pretty exhaustive.
OK, I can tell you that the revenues for the park are predominantly driven by ticket
sales. What information do you need to calculate this months revenues?
A good candidate will probably ask for this information
" What is the ticket price?
o Adult ticket is ¤ 24.30, Child ticket is ¤ 11.60
" What is the capacity of the venue
o Around 22,000 visitors per day, but we are not operating at capacity for
the venue
" What are our current visitor numbers?
o EITHER do this as an estimation question based on population in UK,
how many people will try to go to the dome in the year, number of repeat
visits, length of time the dome is open (12 months in total) etc try to get
to around 15,000 per day OR
o Last month we had an average of 15,231 per day
" What proportion were children?
o Ask you that question: Usually try to get the candidate to around 50 / 50
as this is a facility that people go to with their children in general, so
assume high proportion of kids.
" How many days a month is the Dome open?
o 7 days a week
Final figure should be that at this time we are making around
15,000 x (0.5 x ¤ 25) + (0.5 x ¤ 12) x 30 days
equals ¤ 8.3 million, call it around ¤ 8 million
Given that operating costs are around 9 million and we have concluded that we want to
increase this to cover increased maintenance and potentially marketing, we need to
increase our revenue to breakeven (Candidate should recognise that this is about cashflow
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breakeven, not about big profits). If they start talking about profit margins, challenge this
ask why need to make a profit. So, we need more cash.
If candidate is stuck, the interviewer will ask for what initiatives could be used to
increase ticket sales
o More money from the government (this is NOT possible)
o Change price (again this is not possible)
o Increase in number of franchisees in the dome
o Increase visitor numbers
o Marketing etc
o Distribution
OK, let s focus on distribution for the moment. What is your reaction to this data (give
candidate data in exhibit 1)
Should realise that zero revenue is currently received from sales at the venue itself. Point
out to candidate that typically 30% of people make an impulse decision to go to a facility
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