Case 7 - London Millennium Dome

Introduction
This case follows a format that may be different from others you have practised in that
we are going to work through a problem together. I am going to ask you questions to
guide you through the analysis and I am going to look to you to draw conclusions and
solve the clients problem.
If you are ready, I am going to read you a short description of the situation and
begin asking you questions. Ready?
Context
The business we are talking about is the London Millennium Dome. The Dome is a large
recreational and leisure experience facility in Greenwich in London. The facility consists
basically of a large tent. Inside the tent there are 17 Zones each of which has a different
theme, and each of which is sponsored by a different company. Sponsors have full
creative control over their exhibits, and some zones are extremely popular while others
are less popular.
The Dome is suffering from significant financial problems as well as a large
amount of negative publicity. It is now March 2000, and you have been appointed by the
UK government to come up with a solution for how to turn this thing around. To make
matters worse, the facility has a life of one year, and will be closed in 10 months.
I want you to come up with the plan.
Can we start by you telling me what the key elements of your plan will be?
Good answers will cover the following:
x Because the London Millennium dome is suffering significant financial problems,
Id like to structure my answer by using the profit equation:
Profit = Revenues Costs
Going into this equation in more detail,
Revenues = price * volume, and in this case price and volume are not just the
price of tickets *number of tickets sold, but also other revenue sources, e.g., car
parking, money from food and drink, so Id want to explore all these other sources
of revenue.

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 Costs = fixed + variable costs, and in this case, Id imagine that fixed costs were
actually very high, as the dome is a static structure with minimum level of
maintenance, heating, lighting, minimum staffing levels, perhaps rent, etc.
x Id also want to look into whether there are any operational/product problems. Is

there anything wrong with the product / the experience?

x Lastly because I know that the Dome suffered a lot of negative publicity, Id like to

look at the spin and how we manage the negative publicity

If the candidate mentions something very micro (i.e. not big picture), challenge
them about why s/he thinks this is important.
If candidate goes into minutiae of case, ask to summarise what the three key
headings will be, based on what theyve said.
The above should form a framework for the conclusions and be a guide for the
candidate to come back to at the end. They should get into each of these areas at some
stage to have a thorough plan.
Thats a very comprehensive structure and youve got all the main points. Now lets
talk more about the financial situation. Have a look at the following data and tell me
what your thoughts are.
Show candidate Exhibit 2 and 3, with operating costs. Usually generates questions and
discussion, there are some themes that emerge:
x Operating costs have gone down generally (note the dates are this month on the left

many candidates miss this and think costs have increased and start analysing this
increase)
x Increase in personnel costs could be good (if spent on better people / training etc,

bad if its just increased turnover etc). Certainly Queue times suggest that we need
to make sure we have great people to manage peoples frustrations (e.g. performers
in queues etc. An answer that suggests cutting this should be challenged.
x Head office costs down. Probably not much more to be cut out of this.

x Marketing also very low, and we have little or no budget left.

x 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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 x 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 dont 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:
x Number of people

x Ticket price

x Spending on other park services (food etc)

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 x Car parking

x Merchandising

x Fees collected from displays and other operators who share the facility (by way of

rent etc)
x 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
x What is the ticket price?

o Adult ticket is 24.30, Child ticket is 11.60

x What is the capacity of the venue

o Around 22,000 visitors per day, but we are not operating at capacity for
the venue
x 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
x 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.
x 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, lets 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
like this based on weather etc.
How would you change the distribution channels?
Obvious answer is to start selling tickets at the door which could generate significant
additional revenue. Also will have a cost impact as we own this distribution channel.
Ok, as you are completing this analysis, the Prime Minister rings you on your mobile.
He is about to give a press conference, and needs a one minute summary of what you
are going to do and what the effect will be. He wants the hard facts. Tell him.
Candidate should go back to original three points. A well structured answer will be as
follows:
o Firstly, going to increase revenue by establishing at-venue ticket sales and
distribution. Could increase revenues by up to 30%
o Secondly, going to use this increased cash to fund maintenance and develop a
system for queue management. Focus on improving product to improve
satisfaction.
o Some comments on the management of communications etc.
There are loads of little things that can be done and mentioned in the case, but a good
answer will cover the above factors.

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EXHIBIT 1

Internet sales 30%

Pre-sale offices in London 60%
Other non-venue based locations 10%
Total 100%

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EXHIBIT 2 ( 000)

This month Last month

Service Personnel 7,109 ` 6,231
Head office costs 1,128 5,798
Maintenance 422 519
Marketing 574 546
TOTAL 9,233 13,094

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