From Local Tradition to Global Capitalism

Rachel Turcott, Megan Liles, Grant Sportelli, Romel Soltero

AgendaBackground AnalysisOption EvaluationProposalImplementationRisk MitigationQ & A

Background Options Propos

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ProductBackgro

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Implement Risks Q & A

Oktoberfest is more than a sum of its products, but a celebration of culture itself…

Oktoberfest sells to its customers a way to come together and celebrate a culture.

Tangible

• Beer• Local Food• Music

Intangible

• Culture• History• Heritage

Demographic of VisitorsBackgro

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Munich60%Rest of

Bavaria12%

Rest of Germany

9%

Foreigners19%

Background Options Propos

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Stakeholders

Consumers

Vendors

Government

Suppliers

Hospitality

Transportation

Market AnalysisBackgro

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StrengthsGlobal Reputation

Strong Supplier/Consumer

BaseKnowledge of the

Market

WeaknessesUnprofitable Niche Market

Smaller demographic

OpportunitiesNew TechnologyExisting Demand

Global Interconnectivity

ThreatsEconomic ConditionsInternational Laws

Competition

SWOT

Global FranchisingWhat • Franchising Munich Oktoberfest

How

• Regional Analysis• Liaising with Councils Abroad

Why

• Long-Term Profit Expansion• Potential Growth• Cultural Expansion

Background Options Propos

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AnalysisBackgro

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Criteria Potential Profitability

Feasibility

Growth Potential

Maintaining Heritage

Expanding Cultural AwarenessShor

t Term

Long Term

Global Franchising

2 5 3 5 3 4

1 = Not at all support2= Unlikely to support3 = May or may support4 = Likely to support5 = Extremely likely to support

Improving Local Operations

Background Options Propos

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What • Adjusting Revenue Structure

How

• Replacing Rent Formula• Aggressive International Marketing

Why

• Short-Term Profit Expansion• Feasibility• Maintaining Heritage

Analysis Backgro

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Implement Risks Q & A

Criteria Potential Profitability

Feasibility

Growth Potential

Maintaining Heritage

Expanding Cultural AwarenessShor

t Term

Long Term

Improving Local Operations

5 2 5 2 5 2

1 = Not at all support2= Unlikely to support3 = May or may support4 = Likely to support5 = Extremely likely to support

ComparisonCriteria Potential

Profitability

Feasibility

Growth Potential

Maintaining Heritage

Expanding Cultural AwarenessShor

t Term

Long Term

Global Franchising

2 5 3 5 3 4Improving Local Operations

5 2 5 2 5 2

Background Options Propos

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Background Options Propos

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EnhanceExpand

Evaluate

Enhance Oktoberfest Model

Background Options Propos

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Old Revenue via Rent

Based on Space

Minimal Marketing

NewRevenue via Sales TaxBased on Units SoldAggressive International Marketing

Background Options Propos

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Expanding to New Countries

Evaluate Based On Criteria

Background Options Propos

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Potential ProfitabilityFeasibilityGrowthMaintaining HeritageExpanding Cultural Awareness

TimelineBackgro

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2016-2020

2015

2020 +

Refine existing Munich model

Conduct market research on UK

Trial Oktoberfest in UK

Evaluate successfulness of Munich model

Evaluate Oktoberfest in UK

Continue to research new countries

Risk MitigationBackgro

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Implement Risks Q & A

• Control of AuthenticityBrand Dilution

• Trial PeriodRejection of Franchising

• Aggressive International Marketing

Cannibalization of Munich

Oktoberfest

Q & ABackgro

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AppendicesAppendix 1 Our Evaluating Criteria

Appendix 2 Scale for Evaluating Criteria

Appendix 3 Global Franchising Criteria

Appendix 4 Improving our Current Operations Criteria

Appendix 5 Location Analysis

Appendix 1: Evaluating Criteria

We have prioritized the criteria we feel are important to the future and reputation of Oktoberfest and have then evaluated all of our

options according to these criteria. The criteria is as follows:

Criteria Explanation

Potential Profitability This refers to how much potential there is to create value and turn a profit. Although this profit will be ploughed back into the event.

Feasibility This is how easy it will be to implement the option.

Growth Potential This considers how much potential future growth is likely to

Ability to Maintain Culture This is how easy it will be to continue expressing the history and core values of Oktoberfest.

Expanding Cultural Awareness This refers to the ability to educate new attendees on the Bavarian culture.

Appendix 2: Scale for Evaluating Criteria

Ranking Definition

1 This option will not at all support this criteria

2 This option is unlikely to support this criteria

3 This option may or may support this criteria

4 This option is likely to support this criteria

5 This option is extremely likely to support this criteria

Appendix 3: Global Franchising EvaluationCriteria Ranking Justification Evidence Potential Profitability

5/5 Long term

2/5 Short Term

 In the long-term franchising the Oktoberfest brand in Europe would be more profitable because it would expose Oktoberfest Munich to a new consumer base. 

  19% of attendees come from

outside Germany 55% of international visitors return

to Oktoberfest Combined, the largest cultural

festivals in the world attract over 28 million attendees.

 Feasibility 3/5  

We already have a longstanding knowledge of Oktoberfest, however we don’t have a full understanding of how this will translate to other countries. Therefore, it is feasible but it would be easier to enhance the current Munich operation. 

  Oktoberfest has been running

successfully for over 200 years.

Long Term Growth Potential

5/5  Obviously, when moving to a new market segment there is high potential growth.  By Franchising the Munich Oktoberfest name abroad it will give us a wider customer demographic. After our first successfully expansion abroad it could also potentially open up even more markets.

Maintaining Heritage

3/5  It may be harder to maintain the history and heritage of Oktoberfest when moving to another country.

Expanding Cultural Awareness

4/5  By taking Oktoberfest abroad we can educate other countries on the culture of Bavaria. 

Appendix 4: Improving Current Operation Evaluation

Criteria Ranking Justification Evidence

Potential Profitability

5/5 Short Term

2/5 Long Term

 Opportunity to capture more growth by changing how vendors are “taxed”. Munich doesn’t advertise to tourists who spend more money than locals.

• 1.1    billion EUR revenue

• Tax of food/beer could bring in 8.4 million EUR

• Only 30,000 EUR spent on marketing, for art competition 

Feasibility 5/5  Revenue policies are an easy adjustment. No drastic changes to venue, product, or vendors.

 

• Munich government already developed a formula to charge for beer/food for revenue

Long Term Growth Potential

2/5 Relative to globalization, room for long term growth is limited. The venue is fixed and limits the amount of vendors/ visitors.

•  Theresenwiese is  fixed, they have to use location. This means that there is a cap to how many vendors they can have.

Maintaining Heritage

5/5  Long standing tradition, Bavaria is the flagship Oktoberfest, celebration of Bavarian culture.

 

• Oktoberfest has been running since 1887.

Expanding Cultural Awareness

5/5  Worldwide advertisement would further associate Oktoberfest with Bavaria.

 

• Currently only 30,000 EUR is spent on advertising, which extends to only producing local brochures from the funded art competition.

Appendix 5: Location Analysis

These are some potential locations we have analyzed for potential franchising: We have considered the “World Bank Organization: Ease of Business Rankings” for this recommendation.

Location Analysis

United Kingdom • United Kingdom visitors comprise almost 13% of international visitors, the second largest group behind Italy.

• UK already celebrates German culture; there are traditional German markets in Birmingham, Bournemouth, Leeds, London, Glasgow, and Oxford. the United Kingdom is close by and Germany has a good relationship with the United Kingdom.

• Furthermore German is 5th most popular foreign born nationality in the UK, providing a solid base and a large opportunity for growth

Denmark: Copenhagen • UNWTO World Tourism Rankings show that Denmark had 8.7 million visitors in 2010.

• Of all EU citizens 35% are interested in Denmark as a holiday destination.

• Denmark is trying to grow its tourism industry so they could be open to Oktoberfest.

Switzerland • In 2007 World Economic Forum found that Switzerland had the most competitive travel and tourism sector in the world.

• Switzerland’s Economy is based highly on having a qualified labor force which could make implementation more feasible.

Oktoberfest profitability today

Background Options Propos

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• Grosses approximately 1.1 Billion EUR• Who captures these profits?• Local vendors• Hired local staff• Ride operators• Tent hosts• Local hoteliers

Oktoberfest: MunichBackgro

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• Munich is regulated to not profit from Oktoberfest

• Costs of Oktoberfest = ~2.5 million EUR

• Currently uses a rent formula to cover projected costs

Capturing/Creating Value

Background Options Propos

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• Replace rent formula with beer/food tax formula

• Lowers barrier to entry• Market beyond art/design• Attract more tourists• Day trip spends :46 EUR/day• Tourists 213 EUR/day