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Making the best use of limited resources
A War Child case study
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Page 1: Introduction
Page 1: Introduction

One of the challenges facing every

organisation today is how to make best use of its limited resources. In any
aspect of business, there should be no room for poor use of resources
through inefficiency, wasteful administration and poor co-ordination of
activities. Nowhere is this more true than in the case of a charitable
organisation. Money provided for good causes is at a premium it needs to
be used effectively because the beneficiaries are in urgent need.

This case study examines how War Child, one of this countrys fastest
growing influential charities, ensures it works in an effective way.
Effective organisations are ones which have clear goals and overarching
strategies. They know where they are going and establish methods of
ensuring that these strategies are effectively put into practice.
War Child is an international aid agency dedicated to improving the lives of
children affected by war around the world. War Child is involved in relief
work, such as the delivery of emergency food and medical supplies into
war zones or supporting those who have been forced to flee their homes
because of conflict. War Child is also involved in developmental initiatives,
such as the rehabilitation of war-traumatised children and 'education for
peace' programmes. At the heart of War Childs philosophy is the
realisation that the war-scarred younger generation is the key to a peaceful
future.

The start of War Child

Most charity organisations start out as good ideas - someone recognises
the need for such an organisation and acts accordingly. For example, the
organisation Shelter was set up in 1966 to help the many homeless people
on the streets. The Toybox Charity was founded in 1991, by the Dyason
family, who were horrified by a television documentary showing the plight of
some of the 250,000 children orphaned by civil war in Guatemala. The
charity has grown into a comprehensive rescue strategy for children who
live on the streets of Guatemala City.

War Child was founded in 1993 by film

makers Bill Leeson and David Wilson as an emotional response to the
plight of children caught up in the war in the former Yugoslavia. Initially
raising money through entertainment events and public appeals, War Child
set out to bring immediate material help to children of all ages and ethnic
backgrounds.
With a few old trucks and the help of a handful of unpaid volunteers, War
Child began delivering food, clothing and medical equipment to wherever it
was needed most. It also supplied musical instruments and CDs to young
people and radio stations and initiated a diabetic programme supplying
insulin and blood testing equipment throughout Bosnia. In all, thanks to
significant financial support from the general public and the music and
entertainment industries, War Child provided millions of pounds worth of aid
to the former Yugoslavia.
The Overseas Development Agency also provided grants to War Child
which were used to establish a mobile bakery.
War Ch

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Page 2: Extending War Childs remit

War Child has grown from a two-man

organisation working out of a sitting room in North London, into an
international aid agency with offices in half a dozen countries. As the
fighting finally came to an end in the former Yugoslavia, the focus of War
Childs work moved from short-term emergency aid to longer-term
rehabilitation and construction projects, the largest of which was the
Pavarotti Music Centre in the southern Bosnian town of Mostar.
'Pavarotti and Friends' concerts, staged in 1995 and 1996, helped fund the
Pavarotti Music Centre in Mostar, Bosnia-Hercegovina - a major rebuilding
project which refurbished a devastated school to provide a purpose-built
therapy centre and bring music and the arts to Bosnias war-traumatised
children. The opening of the Centre in 1997 was a fitting culmination to the
first phase of War Childs activities in Bosnia and marked the beginning of a
new chapter in War Childs development.
Today, War Child is involved in numerous projects in over a dozen
countries across four continents. However, its fundamental goal remains
the same - to advance the cause of peace through investing hope in the
lives of children struggling for survival in war zones around the world. War
Child interprets the term 'war zone' to include areas of current armed
conflict or where children are suffering from the devastation left by war.

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Page 3: Establishing aims

For any business organisation to be

successful, it is necessary to establish clear aims. Without clear aims, an
organisation has no sense of direction and will be unable to monitor and
record the progress it is making.
The aims of War Child are to:
focus public attention on the plight of children in war zones
alleviate the suffering of children by bringing material aid into war
zones
support those children who have been evacuated to refugee camps
initiate rehabilitation programmes once children return safely to their
homes - this includes identifying needs for capital reconstruction projects
be instrumental in healing the psychological damage caused to
children by their experience of war.
The founders attempted to identify and prioritise the greatest needs of
children in areas of conflict and determine how best to help them. They
incorporated this into the organisations aims. War Child was established as
both an implementing agency - funding, staffing and operating its own aid
programmes, such as medical programmes in Bosnia and West Africa and
the mobile bakery in Mostar and as a grant-making trust, providing
financial and logistical assistance to dozens of other Non Governmental
Organisations (NGOs).

The main advantage of this dual mode of operation is greater flexibility and
a speedier response to emergency situations. It also allows War Child to
avoid some of the problems that often hinder the work of the NGO
community - when competition takes the place of co-operation and
duplication of effort (similar projects running in the same place) wastes
resources.

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Page 4: Balancing the books - revenues and expenditures

Any well-run organisation must keep a

detailed account of the financial side of its operations. Not only must the
organisation give the best value for money for every pound that it spends, it
must also make sure that it can always easily cover its expenditures by its
revenues.
A well-run charity therefore operates with the utmost respect for sound
financial housekeeping. It is only by operating in this way that the charity is
able to give the best value for money. For example, a charity which spreads
its expenditures at random over a range of good causes on a 'by request'
basis might find that, by failing to prioritise its aims and expenditures, it has

no money left for the most important projects which might be of a long-term
nature. Careful control of an organisations finances is vital.

How War Child raises its revenues

War Child tends to concentrate on a fund-raising strategy of fewer, high
profile, highly profitable events, as opposed to numerous, small and less
profitable events. Of course, donations of any size are always greatly
appreciated but the cost of employing extra staff to co-ordinate numerous
small events would outweigh the money raised from these events (i.e. in
economic terms, the marginal cost would be greater than the marginal
revenue).
High profile events fit well with War Childs strong support base in the
media, music and entertainment businesses and add to War Childs
reputation for working hard to build events which are fun and unusual, while
at the same time raising money for a great cause. Typical events include
celebrity auctions, 'Pavarotti and Friends' concerts, the Help CD (featuring
top rock stars to raise funds for war children in the former Yugoslavia) and
Club Child, a recent innovation which involves a monthly club night in
London.
A War Child trading company all charities are bound by law from making
investments involving anything other than very small risks - even if the
investment promises higher yields than 'safer' deals. The reasoning behind
the law is that donations are not given to War Child, or any other charity, for
speculative purposes; rather donors expect their money to be used directly
to further the aims and objectives of the charity. Consequently, War Child is
in the process of setting up a War Child trading company. This is a
separate but associated commercial organisation, whose sole purpose will
be to sell merchandise, run fund-raising events and generally make money
for War Child Trust (the charitable arm of War Child).

It is planned that the War Child trading

company will be established using start-up funds loaned or invested by
corporate partners and donations from commercial companies, thus limiting
the charitys financial liability. Donors/sponsors will be rewarded by small
dividends on their investments or interest on their loans and the knowledge
that the bulk of the profits from the War Child trading company is going to
War Child Trust.

How War Child allocates its expenditures

Making best use of resources means spending money in the best possible
way. In order to do this, it is necessary to establish a clear set of criteria
which are determined by the aims of the organisation.
Once projects are chosen, specific budgets are allocated. War Childs
project team regularly meets to decide on the best way of allocating funds.
The team must consider both on-going projects and likely future
commitments.
By working through a network of specialist NGOs, War Child can react
swiftly and effectively to a wide range of problems, whilst keeping the
organisations administrative infrastructure to a minimum. War Child is
proud that its current administrative overhead is less than 5%. This is an
important measure of efficiency.
Expenditures include material aid (food, medical supplies etc.), transport,
staff salaries and travel costs, administration and office expenses plus
public awareness raising campaigns. In addition to the project budget, War

Child always keeps financial reserves in the bank to cover a minimum of

three months total running costs, as well as an additional fund of 50,000 in
case of unforeseen emergency. The southern Sudan food airlift, for
example, required 20,000 at very short notice to provide food to the areas
worst hit by famine.

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Page 5: Fundraising case study

Recently, West Africa (and, in

particular, victims and refugees from the Liberian civil war) has become an
important focus of War Childs work. After seven long years, the civil war in
Liberia has reached an uneasy peace. The population of Liberia has been
decimated by mass killings and a whole generation of children have had
their lives completely disrupted by the war. They face a bleak and uncertain
future, ill-prepared for this new, peaceful phase in Liberias history.
War Child has reacted to the situation by establishing healthcare
programmes, food provision and clean water initiatives for Liberian
refugees in Buduburam Refugee Camp in Ghana, and plans are currently
underway to establish a childrens village in Liberia.
The Pavarotti Liberian Childrens Village will be on the outskirts of
Monrovia, Liberias capital. It will be funded by proceeds from 'Pavarotti and

Friends in Concert for Liberia 1998' and will provide educational, medical,
cultural, recreational and sports facilities for young people in Liberia.
'Pavarotti and Friends in concert for Liberia 1998' was the latest event in a
long period of co-operation between Luciano Pavarotti and War Child, and
featured Pavarotti, Stevie Wonder, the Spice Girls, Celine Dion, The Corrs,
Jon Bon Jovi and many more.

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Page 6: Conclusion

This case study has highlighted how

important it is for any organisation to have clear goals and strong financial
accountability.
As an aid agency, it is essential for War Child to work in the most efficient
way possible, carefully controlling limited resources to help improve the
lives of children affected by conflict throughout the world.
War Child | Making the best use of limited

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A business case for investing in rail

A Railtrack case study
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Page 1: Introduction

Today, there is growing concern about

the number of cars and lorries on the UKs roads, the amount of time
wasted in traffic jams, and the dangers of traffic-related pollution to peoples
health and the environment. Britains railways provide the opportunity to
solve some of the transport and distribution problems individuals and
organisations currently face. This case study is designed to encourage
students to think about and then set out a good business case for investing
in the railway service.
The 1993 Railways Act paved the way for the process of rail privatisation
which has rapidly reformed Britains railways. The overriding aim of this
privatisation was to improve the quality and efficiency of rail services by
introducing private sector investment and management. Privatisation was

designed to deliver new and improved benefits for passengers and to

create opportunities for business.
Privatisation in the railway industry involved the creation of nearly 100
different business units, the most significant of which was Railtrack.
Railtrack was released from the public sector when it was floated on the
Stock Exchange in May 1996 to become Railtrack Group Plc - a privately
owned company.

Railtrack owns almost all of Britains

railway infrastructure, including tracks, signalling, bridges, tunnels, stations
and depots. Railtrack plays a pivotal role in the provision of rail services. It
is a purchaser of services such as maintenance and track renewal and a
seller of access to the UK's rail infrastructure. Railtrack's main customers
are train operating companies and freight operating companies - not the
general public and rail travellers.
Stations are a vital part of the Railtrack network. They should be pleasant,
secure and well-lit places with excellent amenities to enhance the start and
end of every journey. A 1 billion station regeneration programme was
launched in 1997. Work at over 400 of Railtracks 2,500 stations has been
completed and the programme is on schedule to complete before 2001.
The upgrading of Railtracks stations can involve anything from
redecorating a platform and canopy, to reroofing or completely rebuilding
entire station areas, whilst meeting the heritage challenges. Disability

access, passenger security and heritage are top priorities. Good examples
of improvements include:

Euston Station roof - here and throughout the country, over 250,000
panes of glass will be replaced, covering more than 60 acres.

Birmingham Station platform resurfacing - more than 1,000 platforms

throughout the country will be resurfaced or repaired.

Conservation work at York Station - many stations have heritage

value and consultations are made with English Heritage, the Victorian
Society and the Royal Arts Commission before work commences.

Creating a business case

In setting out a business case for investing in a new railway or improving an
existing railway service, there are a number of questions that need to be
considered. These include:
1. Who are the key stakeholders in the new railway investment? How
can the needs of the stakeholders best be taken into consideration?
2. How will other modes of transport work in conjunction with railway?
3. What is the market? For example: Is it freight? Is it short distance
commuting? Is it long distance?
4. How, if at all, will the proposed service fit within the current network?
5. What could be done to encourage new customers to use the service?
E.g. train operating companies and freight companies.
6. How could the railway service be marketed to the widest audience?
7. What are the key environmental issues that need to be considered?
8. What are the key safety issues to be considered?
9. How should the new or improved service be marketed? What is the
main point of difference?
Railtrack | A business case for investing in rail

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Page 2: Stakeholders and infrastructure

This is an important starting point.

Stakeholder groups are collections of individuals and organisations that are
involved in and influenced by the actions of an organisation. Typical
stakeholders in private sector organisations include:
shareholders (people who own shares in Railtrack)
employees (over 1,100 work for Railtrack)
customers (e.g. the passenger train operating companies and freight
operators)
suppliers (e.g. track renewal companies)
the Railway Regulator (who acts on behalf of Government and people
to ensure that Railtrack operates in a proper and efficient way).
Creating an efficient railway infrastructure is of major importance to each
group of stakeholders. An organisation like Railtrack cannot simply operate
to maximise profits. It must respond to the needs and demands of its
stakeholders. For example, Railtrack makes sure that its stations have
suitable disability access. Another example of stakeholder concern is
shown by the way in which Railtrack has a formal employee review process
which looks after the training and development needs of its employees. A
key criterion for any investment decision, therefore, should be that
adequate attention is given to the range of key stakeholders.
The integration of transport systems has a high priority on the agenda for
the development of modern economies. Whilst it makes economic sense
for providers of transport services to compete against each other, it is also
essential that the transport systems are integrated. For example, children
going to school need to be able to use transport links which are convenient,

cheap, safe and reliable. Their journey may involve several modes of
transport - getting the bus to the station and then taking the train to school
and therefore efficient links between bus services, rail and roads are vital.
Wise investment in railways involves working closely with other providers of
transport to provide a high quality service. Railtrack is strongly behind the
Governments decision to develop an integrated transport policy. A recent
example is the Heathrow Express. This service, operated by BAA, runs
from Paddington to Heathrow Airport and was launched in January 1998.
Another system which is key to developing integrated local transport plans
is the Light Rapid Transit System (LRT). LRT has a broad definition which
includes variants from almost heavy rail systems through to very lightweight
guided vehicles. One of the benefits of LRT is that it is cheaper to construct
than conventional heavy rail. Many LRT systems involve an element of onstreet running as well as dedicated infrastructure for part of their operation.
Modern train protection systems can allow joint running with heavy rail on
the same track. Railtrack currently has systems under construction in the
West Midlands and Croydon. In addition, Railtrack has been involved in
studies of variants of LRT in a number of cities including Oxford, Bristol,
Cardiff, Portsmouth and Nottingham, as well as the extension of the Tyne
and Wear Metro system.

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Page 3: The market

In order to invest intelligently in rail

provision to meet increasing demand, it is necessary to understand how
demand will change over time and the factors that will contribute to this
change. Railtrack is therefore developing a number of models which will
enable the organisation to understand both the overall level of demand for
transport services and rails potential within that demand.

Passenger transport
The passenger transport market has grown in line with the growth in
economic prosperity. In Britain, total passenger miles travelled have
increased by 250% since 1960. The rail market, however, has shown little
overall growth (the lions share of the market increase has been car
transport). Government and industry forecasts show that the demand for
passenger transport will increase substantially over the next 25-30 years.
The critical factor for Railtrack is what element of this demand will be for
travel by rail.
In the years leading up to 1998, the rail passenger industry experienced a
period of very substantial growth with rates of increase of 10% a year.
However, optimism associated with this figure needs to be weighed against
the fact that the mid 1990s was a period of economic boom in which growth
would be expected.

Currently, Railtracks central forecast is that rail passenger demand will

increase by around 15% over the next ten years. However, figures ranging
from 5-30% are possible. The higher figure would be associated with
Government policies such as taxes on workplace parking and steadily
increasing fuel prices.
London is a very important part of the passenger transport market around
48% of all peak time journeys to central London on public transport are by
rail. Increasing use is being made of rail for off-peak journeys for leisure
and shopping. Railtrack believes there is a considerable opportunity for
growth in the use of rail travel in and around London.

Freight transport

Currently, three-quarters of all rail

freight lifted (measured in tonnes) and carried (tonne kilometres) is linked
to just four industrial activities - coal-fired electricity generation, the
production and distribution of iron and steel products, petroleum products
distribution and the construction sector. However, for the first time in many
years, rail freight value is growing, with a 5% increase in tonne kilometres
in 1997/98 in comparison with 1996/97. Intermodal and international traffic
is growing by 12% and 20% per year, respectively.

Business organisations are beginning to recognise that they will need to

seek alternatives to road transport for an increasing proportion of activities.
The Government is expecting private industry to pay the full environmental
cost of distribution, e.g. by increasing fuel taxes and possibly, in the future,
through road pricing. Railtrack estimates future growth scenarios of 80% in
rail tonne kilometres, with alternative figures ranging from 40% to nearly
200%.
An important part of any justification of investment in rail development is to
show how this development will fit in with the current network. This can be
exemplified by Railtracks existing objectives for the development of its
investment in infrastructural developments and services in London, i.e. to:

maximise use of the existing network and ensure that the existing
network is managed efficiently and used safely

develop new journey opportunities and new markets including better

interchanges with other transport modes

develop cross-London routes and orbital links to minimise journeys

that currently involve crossing central London

ensure that enhancement schemes are planned to meet the needs of

customers, the train operating companies, and their customers.
An example of a key plan to meet these objectives in London is the
Thameslink 2000 project, which will provide additional routes through the
heart of London by upgrading and installing extra connections to the
present Thameslink route. On completion in 2004, the number of train
paths through London will be increased from eight each way per hour in the
peak to a maximum of 24 each way. The route will be capable of operating
12 car-length trains and cross-London journey times will be reduced.

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Page 4: Attracting customers

Railtracks income comes principally

from access charges for using its network and facilities, such as stations,
depots and other properties, from the 25 new train operating companies, as
well as the freight operators who have leases for the occupation and use of
freight terminals, sidings and yards. Railtrack has recently invested in track,
stations and facilities in order to attract new customers and develop the rail
services further.
One example of the way in which Railtrack has encouraged new customers
is its investment in the West Coast Main Line. This is Great Britains busiest
mixed-traffic railway corridor, running from London Euston through
Birmingham, Manchester and Liverpool to Glasgow as well as connecting
with Edinburgh. Railtrack is spending 2.2 billion on modernising this line to
accommodate high speed tilting trains.
Railtracks investment in the line has meant that the Virgin Rail Group (the
company with the franchise to run trains on the line) has been willing to
invest in tilting train technology allowing trains to run at 140mph. The

project will reduce journey time and provide increased performance and
reliability, and improved customer satisfaction.

Marketing
It makes sound business sense to try to capture a large proportion of the
available market. Railtracks market consists of the train operating
companies and freight companies. In the case of the train operating
companies, Railtrack also needs to consider their customers needs (i.e. rail
passengers needs). Marketing involves identifying and anticipating
customer requirements and then formulating the right marketing mix
(product, price, promotion and place) to satisfy these needs.
Since privatisation, Railtrack has carried out extensive marketing activities
and has engaged in communications activities (e.g. advertising, publicity
and public relations) to ensure that the messages about rail improvements
were reaching the target audience.
Rail investment, therefore, needs to be built on extensive market research
and detailed analysis of this research. It is important to devise a marketing
mix which supports product improvement.

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Page 5: Environment and safety issues

Railway is one of the most sustainable

forms of transport available in the UK today. It is generally accepted as
being more 'environmentally friendly' than most other forms of transport.
For example, rail travel is more energy efficient, creates lower noise levels,
fewer emissions and less congestion.

The environment
The environmental impact of new investment projects is a key area
requiring control. New procedures have been introduced to ensure that all
projects consider environmental issues at the outset and plan to manage
any risks identified. Environmental Statements which document the
assessment of the environmental effect of new projects such as
Thameslink 2000 and the West Coast Modernisation Project have to be
submitted to the Government.

Safety
Safety is a priority for any business and even more so in the transport
industry. New investments in the rail transport field should always aim for
the highest standards of safety. Currently, railway has the enviable record
of being the UKs safest form of land transport (it is now 22 times safer on
average to travel by train than by private car), but accidents can and do

happen. The most common cause of train collision and derailment is

signals being passed at danger.
Railtrack has therefore invested heavily in improving and updating
signalling facilities and is constantly seeking ways of eliminating potential
sources of risk and danger.

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Page 6: Conclusion

It is essential for business organisations to establish

the key points of difference between what they have to offer and what
competitors are offering. In the case of the railways, there are a number of
possibilities including:
our railway heritage
the comfort of rail travel
the speed of rail travel
safety

sustainability
avoidance of stress.
These and other factors need to be weighed up in supporting the case for
new railway investment.

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http://thinkgagnonassociates.com/case-studies/orvis-company

Case Study: Strategic Plan Development & Implementation

This Case Study describes how Gagnon Associates helped in the development and
implementation of this clients first, comprehensive strategic plan.

The Company
Americas oldest direct-mail catalogue marketing company.

The Situation
After years of enviable growth, the company encounters a business down turn and
withstands the first layoffs in its history. Impact on company morale is significant, and
though the imperative to resolve on a future course is clear, consensus on future
direction remains to be achieved. This will also be the first time the company has
developed a comprehensive plan for the entire enterprise vs. managing its separate
business channels independently.

The Approach
Orvis engages Gagnon Associates to lead the executive team and a select group of
additional senior managers through a comprehensive team-based Strategic Planning
Process. Extensive, confidential interviews of the Executive Team provide, in the words
of the CEO, a needed and welcomed opportunity to go to confession, while a
consolidated reporting of key interview themes provides them with new and valuable
insights critical to moving forward.
Guided by Gagnon Associates, executives conduct a comprehensive Scan of the Orvis
operating environment and an assessment of the companys strengths, weaknesses,
opportunities and threats to serve as a context for planning. Next, over a two-to-three
month period Gagnon Associates leads Orvis senior executives through the rigorous
planning process itself. Executives achieve consensus on company direction and, for
the first time, develop concrete, corporate-wide goals, strategies, initiatives, timetables
and accountability structures to achieve their common vision.

The Results
Within little more than a year, the COO reports that, due to the heightened focus on
growth and profitability resulting from the plan, a key distribution channel experiences
an 80% increase in sales. A second channel is forecast to grow by 20%. A
comprehensive brand-building initiative is completed along with the complete
revitalization of the human resource function and associated programs.

A reengineering initiative in the companys merchandise operations/sourcing

function transforms the new product development process and achieves 70% of the
resulting cost-savings targeted for the next year by year end of the current year.
The CEO credits the Strategic Planning Process with providing valuable insights that
encouraged me to change my style and approach to leading the Company. He asserts,
The Planning Conferences themselves provided the leadership group some valuable
benefits, especially in the area of clarifying and improving the effectiveness of how we
make high-level decisions. . . . We do a better job of ensuring clear disposition of issues
and avoiding drift than we did before.
The plan results in a strategic refocusing of company direction, a revitalized
organization, and improved business results described by the client as nothing less than
a turnaround.