Question
Page 129: When U2 embarked on its 2009 world tour, Rolling Stone magazine called it the biggest rock show ever. Visiting large stadiums across the
Page 129: When U2 embarked on its 2009 world tour, Rolling Stone magazine called it the biggest rock show ever. Visiting large stadiums across the USA, Europe, South America, Africa, Australia and New Zealand, the Irish quartet performed on an imposing 164-foothigh stage that resembled a spaceship, complete with a massive video screen and footbridges leading to ringed catwalks. With an ambitious 48-date trek planned, U2 actually had three separate stages leapfrogging its global itinerary each one costing nearly US$40 million dollars. As a result, the tours success was dependent not only on each nights concert, but also on recouping its tremendous fixed costs costs that did not change with the number of fans in the audience. To cover its high fixed costs and make a profit, U2 needed to sell a lot of tickets. To maximise revenue, the tour employed a unique in-the-round stage configuration, which boosted stadium capacity by roughly 20%, and sold tickets for as little as US$30, far less than most large outdoor concerts. The bands plan worked despite a broader music industry slump and a global recession, U2 shattered attendance records in most of the venues it played. By the end of the tour, the band had played to over 3 million fans, racking up almost US$300 million in ticket and merchandise sales and turning a profit. As you read this chapter, you will begin to understand how and why U2 made the decision to lower prices. Question: The practical world case of U2s 2009 world tour on page 129 of the prescribed text book. The concept of Operating Leverage (OL) is embedded in the expression of this case. Considering the OL concept, give another example of a business situation, actual or imaginary, in your own words, that would show your clear understanding of the OL concept (in about 300 words), giving reference to a published scholarly research article in your response.
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