Case Study

GOOD MUSIC BROADCASTING CORPORATION: Ebb Tide

Engineer Frederick Panganiban was reading the advertising sales report handed to him by his assistant. The report contains information consolidated from the ten radio stations owned and operated by Good Music Broadcasting Corporation (GMB). These stations are located in the various parts of the country.

GMBC headquarters and sales office are located in Makati. GMBC derives income from advertisements lodged by companies like San Miguel Corporation, Ayala Life, and others. The sales office receives the cassette tapes and written text containing the advertising messages of the client companies.

The tapes are meant to be played at regular intervals in all of the ten radio stations operated by GMBC. The written text is an alternate advertising form read by the radio announcers at regular intervals. An advertising message does not exceed one minute. The advertisers are billed depending on the frequency of exposure of their messages.

Each station is managed by a station manager who reports directly to Engineer Panganiban, the general manage. The stations are allowed to slots after accommodating the national advertisers.

A certain portion of the advertising income is credited to the account of the individual stations depending on the assignments sent to them by the GMBC headquarters. The total advertising income of station consists of the credited account from the head office plus whatever income from local advertisers is derived.

Engineer Panganiban is now reviewing the consolidated sales report. He wants some improvement in operations so that the overall income will increase. He feels that the sales report is useful, but he believes some other data may help him make a better decision.

Exhibit A

GOOD MUSIC BROADCASTING CORPORATION

Consolidated Advertising Income

For the Three-Year Period, 1995, 1996, and 1997

(P000)

Station Advertising Income 1995 1996 1997

1. Dagupan P 15,450 P 16,998 P 17,038

2. Santiago P 12,338 P 11,465 P 10,308

3. Cabanatuan P 10,440 P 12,444 P 14,486

4. San Pablo P 8,988 P 7,676 P 6,493

5. Naga P 11,048 P 12,121 P 8,788

6. Dumaguete P 11,540 P 10,001 P 9,494

7. Tacloban P 12,490 P 12,500 P 12,606

8. Cebu P 20,465 P 22,030 P 24,848

9. Davao P 16,370 P 17,017 P 18,644

10. Zamboanga P 13,466 P 12,506 P 11,897

TOTAL P 132,595 P 134,758 P 134,602