Business adaptive strategies in crises

: the impact of the Corona Crisis on Crystal Sound an Event Technology Provider

Abstract

The COVID-19 pandemic has a significant impact on the event sector. Large events are fully prohibited in Germany since March 2020. Crystal Sound, as a provider of event technology, had to adjust its operations as well as its strategy to the changed external environment. To compensate this decline in sales, Crystal Sound cut costs. Furthermore, Crystal Sound launched together with competitors a new legal entity to organize events for visitors in cars. This vertical integration shifted Crystal Sound from a pure service provider to a more forward integrated organizer of events. This strategic alliance enabled to achieve a regional monopoly leading to enforcing higher prices and generating higher profits. In addition, Crystal Sound shifted its focus more towards innovative digital solutions, e.g. streaming of events.However, these adjustments did not suffice to achieve break-even. Therefore, Crystal Sound decided to sell a portion of its non-current assets to disclose hidden assets to retain a positive equity-ratio. In the fiscal year 2021, Crystal Sound will generate probably again a loss. The management has to decide whether to compensate the loss by injecting additional equity or by raising additional loans.This dissertation shows how an enterprise is able to respond very quickly to significant changes in the external environment. Adjustments in the product portfolio, vertical integration, collusion with competitors, disclosing hidden reserves of the balance sheet, and tremendous cost-cutting enabled that Crystal Sound generated a profit in the fiscal year 2020 despite the pandemic and massive reduction in revenue from traditional customers.

Date of Award	2 Feb 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ricardo Reis (Supervisor)