Strategic Application Problem in a Workplace
You run a highly successful chain of high-end indoor cycling studios in New York City that targets working professionals. Your company runs 10 classes every day at an average price point of $25/class for non-members with the hope that they will sign up for a monthly membership of $250. On average, half of the students that occupy any given class are paying class-by-class while the other half has monthly memberships. Each class fits, on average, 40 students, and you typically have 75% of the seats in each class reserved before they begin. You have begun to notice that your studios are experiencing an increased number of customers who sign up for classes, but do not show up to the class. The number of no-shows has increased from 10% to 20% over the past five months. This is problematic because it makes it highly unlikely for them to sign up for a monthly membership (because you want them to do so). Instead, they will just walk-in and sign up which makes it even less likely that they would actually show up for a class. Eighty percent of them are paying class-by-class because those with month-to-month memberships get fined $10 for every class they no-show.
With some assumptions, I want you to give me an analysis of how much you are losing every month with this rate of no-show. Next, I want you to give me 3 ideas that you believe would help alleviate this problem. They can be promotional offerings, new products/services, new customer bases – basically anything. Your ideas have to be justified through your assumptions and your analysis
Please provide a spreadsheet and try to use simple words. Let me know if any questions.
Strategic application problem
Name
Institution/ Affiliation
Note
1 The company runs 10 classes every day. Every class can only accommodate 40 professionals.
2 A class can only start when 75% of professionals have subscribed.
3 Subscription is either monthly (members) or class-by-class (non-members).
4 In any class, 50% of the professionals are members, and the other 50% are non-members.
Solution
This case can be solved into two different ways.
Scenario one.
Number of professionals attending the class before it starts 75%* 40 professionals = 30 professionals
Number of professionals with monthly subscription = 50% * 30 professionals = 15 professionals
Number of non-members = 50%* 30 professionals = 15 professionals
Assuming that every month has 30 days; Non-shows = 10%*30 days = 3 days
Incomes for members = 15 professionals* $ 250 per professionals*10 classes = $ 37,500
Fine for non-show up = $10*3*10 classes= $ 300
Income for non-member = 15 professionals * $ 25 per professionals * 10 classes *27 days = $ 101, 250
Total amount = $300+ $101,250 + $37,500= $ 139,050
Scenario two
Attendance for members 20% and non-members 80%
Number of members = 20% * 30 professionals = 6 professionals
Non- members = 80%*30= 24 professionals
Number non show = 20%*30 days = 6 days
Income of members = 6 professionals * $250*10= $15,000
Income for no-shows = 6 days *10 classes* $10 = $600
Income of non-members = 24 days * 10 classes* $25 * 24 professionals= $144,000
Total incomes = $15,000+ $600+ $144,000 = $159,600
Total revenue increment = $ 159, 600 - $139,050 = $20,550
Analysis
From the calculation, the company revenues increase by $20,550, which is equivalent to 12.87%, while revenues from member’s subscriptions fell with 60%. On the other hand...
👀 Other Visitors are Viewing These APA Essay Samples:
-
Ethical Company Essay Management Essay Research Paper
3 pages/≈825 words | No Sources | APA | Management | Essay |
-
Enterprise Sytems. What an Enterprise System Is. Management Essay
4 pages/≈1100 words | No Sources | APA | Management | Essay |
-
Components of an Emergency Action Plan Management Essay
2 pages/≈550 words | No Sources | APA | Management | Essay |