Managing Finance....Accounting Essay Example | Topics and Well Written Essays - 1000 words

Managing Finance....Accounting - Essay Example break even volume is equal to fixed costs divided by the differences of the unit sales price and the unit variable costs. Since no proportion is given as regards the sales of the hotel whether for single or double occupancy, the 70% occupancy rate of rooms is computed for single occupancy. This gives a break even sales volume of 25480. With the fixed costs being '5600000 and the unit variable costs at '15, computing it algebraically, the unit sales price is '234.78 in order for the hotel to achieve break even. Since the consortium requires 20% ROCE, the assumption that the whole '50 million belongs to shareholder funds, without any other loans to finance it gives a required profit before interest and taxes of '10,000,000 in order to meet the ROCE. After the PBIT has been determined, in order to compute for the unit selling price to achieve it, the hotel can use the break even equation. The PBIT will then be added to the fixed costs. Computing algebraically, the unit sales price in order to generate a PBIT of '10,000,000 is equal to '627.24. Since depreciation is deducted from the contribution margin as part of the fixed costs, the PBIT figure is not the hotel's annual operating cash flow. In order to get the hotel's annual operating cash flow, the depreciation has to be added back. ... In order to get the hotel's annual operating cash flow, the depreciation has to be added back. In reality, where there is presence of taxes, depreciation has some effect on the hotel's total operating cash flow. Since no tax rate is stated, the assumption of a tax-free economy is made. By adding back the depreciation to the PBIT, which is essentially the net income, because of the absence of taxes, the total annual operating cash flow is '12,800,000. After determining the annual operating cash flow of the hotel, the present value of these cash flows is determined. With the horizon of ten years, and the minimum weighted average cost of capital of 12% as the hurdle rate, the present value of the annual operating cash flows amount to '72,322.854.76. After computing for the present value of annual operating cash flow, the initial outlay of '50 million should be deducted to get the net present value. The net present value of this cash flow stream amounts to '22,322,854.76. A positive net present value denotes an internal rate of return which is higher than the hurdle rate, thus it can be safely concluded that the IRR for this project is higher than 12%. The actual IRR of the cash flow stream is 22.13% for the ten year period. D. Evaluate the possibility of a hotel charging '80 per night on Fridays and Saturdays. With Fridays and Saturdays offering a different rate compared to the other days, the capacity has to be revised, under the assumption of full occupancy again. This revision gives a volume of 7280: 2 days for every week, multiplied by 52 weeks, multiplied by 70 rooms. This will constitute one segment of the revenue. For Sundays

Launch of Zico in the 2012 London Olympics Essay

Launch of Zico in the 2012 London Olympics - Essay Example This is because of the fact that considering the advantages coconut water has to offer to the consumer, it can prove to be an essential drink for the elderly too. Keeping in mind the target audience, Coca Cola is launching Coca Cola Zico in the UK market by using the London 2012 Olympics as the major platform for it since the Olympics is considered to be the most prestigious sporting event to take place once in four years. The Zico campaign can certainly attract a lot of audience who are sport loving. For this to happen, Coca Cola can employ both advertising and public relations program to achieve their aim to successfully launch their new product. Let’s first define the two marketing strategies. Advertising is an act of selling a product by conveying a message to the audience about the existence of a product. It can be done using both the print and electronic media to reach the masses. On the other hand, Public Relations (PR) refers to the establishment of strong relations wi th the company’s publics which helps in building a strong brand image. Public relations can include activities like sponsorships, covering sport events, etc. (CIPR, 2012) Carrying out advertising may not sound as simple because it entails a lot of aspects that need to be taken account of. Marketers all over the world come across many hurdles before coming up with an advertising strategy. These environmental challenges include the following: 1. Demographics: income distribution, changing lifestyle, standard of living and the likes; 2. Economic environment: per capita income, state of the economy, etc. ; 3. Cultural environment: for instance, the ad on the right of Vita Coco, the market leader in terms of coconut water in the US, maybe unacceptable in the South Asian culture but accepted in the UK culture; (Buss, 2012) 4. Political and social environment: legislation, ethics, laws, society itself, etc. Since the case is such that a new product is being launched in to the UK mar ket, the role of advertising shall be to both inform and remind the consumers about Zico. The reason for this is that the public relations program will be taking place during the Olympics and it will be followed up by the advertising campaign. The initial step to outline an advertising campaign for Zico would be to decide upon the advertising budget that Coca Cola will spend after the end of London Olympics. Since it’s a new product, it will require a large budget. Considering the ?500,000 media budget, a 60:40 split should be done with advertising getting more as opposed to public relations. The primary reason is that advertising helps in conveying the message to a larger audience with a lower cost per audience. Considering the budget constraints, it is imperative to make the best use of the finance available. Market share also plays an impact on the advertising budget. Since we don’t have sufficient information as to how many players are already in the market, itâ₠¬â„¢s hard to comment about it. For instance, the US market comprises of Pepsi’s ONE and Vita Coco that are doing very well. In case, they exist in the UK market, the role of advertising will also be persuasive in addition to informing. (Esterl, 2012) The second step in designing the advertising strategy would be to create an advertising message. In order to overcome the issue of message retention and attention, the campaign has to be clutter breaking. The concept