Lady Gaga Harvard Case Solution & Analysis

INTRODUCTION

Stefani Joanne Angelina Germanotta, born in 1986, better known by her stage name “Lady Gaga”, is an American recording artist. The first album of the Lady Gaga is The Fame; it gained huge success in the music industry. Lady Gaga is very famous among a wide variety of people, due to her unique, inspirational, daring outfits and repetitive lyrics. Moreover, Lady Gaga participates in causes like AIDS, Cancer, supporting Gay/lesbian society, child labor and women protection.

According to the case, in November 2009, Lady Gaga and Kanye West booked to embark a joint concert, namely Fame Kills. However, in September, Taylor Swift was awarded for Best Female Video at VMAs award, but Kanye West interrupted in the acceptance speech of Taylor swift by grabbing the microphone from her and proclaiming that Beyoncé should deserve the award instead of her. The music industry and audience were both appalled by this controversial action, and led Kanye West out of the concert with Gaga.

Troy Carter, the manager of pop star, Lady Gaga, realized that revisiting the touring plans might be necessary. He knows that continuing the solo artist tour involves huge risks. Therefore, Carter and Gaga team faced three options in order to solve the issue. First, they could continue with the arena tour. Second, they could develop a smaller, theater tour. Lastly, they could cancel any tour plans. Furthermore, Carter would consider the implications for Gaga’s partners in the venture, which include the concert promoter Live Nation and the William Morris Endeavor agency.

BEST OPTION FOR TROY CRATER

It is suggested to choose option 1 in order to gain long term career benefits for Lady Gaga.

Option 1: Continue with the Arena tour but going alone:

This option comprises of greatest risk, but leads the potential for the greatest reward. The large concerts are the best option to generate higher revenue, even though Kanye West is not the part of the concert. However, it is a huge challenge, to move the Gaga’s first solo concert, which leads to $12 million startup production cost. Apart from that, other costs also include  production, design, and rehearsal costs. Moreover, ticket prices between $100 and $150 with an average capacity of 16,000 to 20,000 seats in the arena, would lead to great success.

Lady Gaga won three major awards at VMA that include Best New Artist, Best Special Effects and Best Art Direction, these awards are the breaking point for Lady Gaga’s career. Further, Gaga’s performance in her song, Paparazzi, ended up with a standing ovation from the audience. This performance led the career of Gaga to the next level and gained more fans. In the original concert, Kanye West was the main artist and center of attraction, but after the controversial action she pulled out of the concert. However, this action will raise the stardom of the Lady Gaga, if she performs alone.

The management and Gaga’s team had already set up the ground for her career by utilizing the social media network such as Facebook, YouTube, and Twitter. The social website would help the team to create a more fan base.The timing is perfect for Gaga to take fresh starts of her career and concert will be beneficial for her to take the career to the whole new level. In the large concert, the artist get the potential to make more money.

This first option consists of 25 numbers of concerts with an average capacity of 16,000 to 20,000. The ticket would be priced from $100 to $150, along with $12 million production costs. The large venues and publicity would provide more benefits, while exceeding the disadvantages.

If they choose the second option, then they would develop the smaller venues and tours, in order to adjust the economics accordingly. This option leads to less risk because the costs of the show would be less and potential reward would be high. However, this option generates less revenue and covers the net loss, which is already associated with the initial Fame tour.

COST ALLOCATION UNDER EACH OPTION

The potential loss which occurred in option 3 is $4 million. If the management decided to choose this option by cancelling the tour, they would have to bear a loss of $4 million. This option also affects the visibility of Lady Gaga because she won three awards and people appreciate her work, therefore, continuing the concert will benefit her career. The cancelling of the concert may also lead to the fans’ disappointment and all investment losses..........................

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