Case Analysis
Short Description
Case Analysis...
Description
Case 1 Riverside Leisure Centre Introduction The Riverside leisure centre was opened in 1973 with a leisure pool, sports hall, 4 squash courts and changing rooms. June West is the new and ver am!itious manager. manager.
"quash courts 1 and # have !een recentl re$ur!ished and are $ull !oo%ed most o$ the da. The other two squash courts ne&t to the 'tness room are now in urgent need o$ repair and are rarel rarel !oo%ed. The 'tness room is too small. (t is clear that the leisure centre is losing mem!ers !ecause the 'tness room is too !us. )ther leisure centres locall are reporting a !ig increase in mem!ership o$ their 'tness rooms. June !elieves it is important to increase the si*e o$ the 'tness room ! incorporating one or !oth o$ the squash courts that are rarel !oo%ed. +aura is the management accountant $or the leisure centre and she has !een as%ed to evaluate the alternative proposals. Proposals
ii-
lte lterrnati native ve 1/ (nco (ncorp rpor orat ate e squ squas ash h cou court rt 0o. 0o. 4 (ncrease (ncrease the si*e o$ the 'tness room ! incorporating incorporating squash squash court court 4. This would increase increase the si*e o$ the 'tness room $rom #,# sq. $t to #,7 sq. $t. "quash court 3 would remain and it would !e re$ur!ished immediatel. immediatel.
iiii-
lte lterrnati native ve # 2 (nc (ncor orpo pora rate te squ squas ash h cour courts ts 3 and and 4 (ncre (ncrease ase the si*e si*e o$ the 'tness 'tness room room ! incorp incorpora oratin ting g squash squash courts courts 3 and 4. This would would increase the si*e o$ the 'tness room $rom #,# sq. $t to 3,# sq. $t.
Capital costs The capital costs o$ the alternatives include !uilding wor%s, services, equipment, and pro$essional $ees. stimates are given !elow ! elow Building works
5oors Remove e&isting walls 0ew ceilings 8ire e&it 5ecoration Total Total
lte lterrnati native ve 1
lte lterrnati native ve #
6 1,1 6 #,# 6 1,9 6 3,3 6 7,1 6 1,
6 1,1 6 3, 6 3,# 6 3, 6 1, 6 ##,1
Services
lectrical +ighting ir conditioning Total Total
lte ltern rnat ativ ive e1
lte lterrnati native ve #
6 4, 6 #, 6 14, 6 #,
6 ,7 6 3,# 6 1#, 6 #,9
Equipment
:ardio/vascular machines !i%es, rowers:ardio theatre 5rin%ing $ountain Total Total
lte ltern rnat ativ ive e1
lte lterrnati native ve #
6 3;,
6 7;,
6 7, 6 1,1 6 4,1
6 7,; 6 1,1 6 ;,9
residual 'gure at the end o$ ears was estimated at 6 , $or alternative 1 and 6 9, $or alternative #. Professional fees and charges
6ro$essional $ees and charges have !een estimated at 6 ,. This cost will !e incurred as soon as a decision is madeAnnual costs
The management wants to appoint onl one permanent mem!er o$ sta< and then increase the num!er o$ casual sta< at pea% times. nominal estimate $or utilities and cleaning costs has !een included in the costings as these costs are not e&pected to change signi'cantl. The maintenance and repair repair contracts contracts are $or the 'rst ear onl and the suppliers suppliers will not commit themselves themselves to providing providing estimates a$ter the 'rst ear. ear. n estimate $or the costs are given !elow
6ermanent sta< :asual sta< =tilities >aintenance contracts :leaning and other
lte ltern rnat ativ ive e1
lte lterrnati native ve #
19, ;, 1,4 ;,# #,1
19, 1#, 1,; 1#,# #,1
The cost o$ advertising the new $acilities at the leisure centre is estimated at 6 1, in the 'rst ear. ear. June !elieved an aggressive advertising polic was essential to ensure the pro?ect was a success. 0o estimate $or advertising was considered $or later ears. Estimating additional annual revenue for tness room (two dierent approaches are to e considered!
June "he has suggested that additional revenue should !e estimated ! dividing the current income o$ 6 1;, ! #,# sq. $t to determine determine income per sq. $t. The income per sq. $t. is assumed assumed to remain constant as the si*e o$ the 'tness room is increased. @asing income on square $ootage is seen as a simple !ut accurate wa o$ estimating $uture income. +aura +aura +aura sugges suggested ted a diidland 5ivision I "ales
0orthern 5ivision I
ast 5ivision
1,, 1,;, 1,11#,
:ost data :ontrolla!le cost o$ goods sold
,
#,
3;,
0on /controlla!le cost o$ goods sold
11,
11,
1,
4,
37,
:ontrolla!le "elling general L dministrative overheads 37, 0on/controlla!le "elling general L dministrative overheads #, Total costs 1,3;,
#, 1#, 1,3;, 1,1#,
:apital emploed Total investment :ontrolla!le investment
1,44, 1,4, ;, 1,#, 1,111, ;,
"ales growth #3 "ales growth #4
4.;A
.#A
#;.A
4.3A
.1A 37.A 1,, 1,;, 1,11#,
)ther measures
0on/productive time hours percentage o$
0on/productive direct la!our total hours paid-.
# 1 # # :ustomer complaints percentage o$ total num!er o$ # customers1
+ead time Time $rom order to deliver
# # # 1 # #
>idland 5ivision 4A
0orthern 5ivision 4A
ast 5ivision A
4.1A
3.;A
7.A
1A
1.#A
A
1.1A
1.1A
A
1 das
9 das
1 das
11 das
9 das
1; das
The head oCce has estimated that the group cost o$ capital is 1A Ranking divisions in 2000 (n # the data on controlla!le and non/controlla!le costs and investments will !e used to ran% divisions.
$uestion 1 @ased on the data provided comment on the relative 'nancial per$ormance o$ the two divisions and discuss how the ran%ing o$ the divisions changes i$ controlla!le and non/controlla!le costs and capital emploed are analsed. $uestion %
valuate the choice o$ per$ormance measures $or the 3 divisions $uestion &
(denti$ and evaluate the diCculties $aced ! managers when measuring capital emploed $or a division. $uestion , 5iscuss how using R)( can result in managers ma%ing poor investment decisions. $uestion 0
5iscuss the particular pro!lems multinational companies have when evaluating the per$ormance o$ divisions. Case 0 +ewshire chool Closure
Topic 6u!lic "ector, 5ecision >a%ing, ac2ground
The local residents in 0ewshire have started a campaign to tr and stop the closure o$ local schools. :ouncillors claim that their hands are tied and ne&t ear there will have to !e cuts in the education and social services !udgets. chool closure
ll o$ the schools included in this case stud are rural schools. 0ew!ridge 6rimar and )ld!ridge 6rimar were originall 1 $orm entr schools admitting 33/3 pupils a ear with a school roll o$ appro&imatel # pupils. The decision to e&pand to 1. $orms o$ entr was to meet increasing demand $or places. s 1. $orm entr schools the ma&imum class si*e was reduced to 3 with 4 pupils in each ear group. With 1. $orms o$ entr the school roll $or each school increased to appro&imatel 3 pupils. @lac%!ridge 6rimar has alwas !een a # $orm entr school. 0ew!ridge 6rimar and )ld!ridge 6rimar report that with $ewer applications $or places at the schools the headteachers estimate that the will need $ewer classes and teachers ne&t ear. @lac%!ridge 6rimar does not have an concerns over the num!er o$ applications ne&t ear. report has !een prepared to discuss the possi!le closure o$ one o$ the schools and the $ollowing options are to !e considered. iiiiii-
0ew!ridge 6rimar will !e closed. )ld!ridge 6rimar will !ecome # $orm entr and @lac%!ridge 6rimar will not change.)ld!ridge 6rimar will !e closed 0ew!ridge 6rimar will !ecome # $orm entr and @lac%!ridge 6rimar will not change@lac%!ridge 6rimar will !e closed. 0ew!ridge 6rimar and )ld!ridge 6rimar will !ecome # $orm entr-
Pupils
8orecast school num!ers are as $ollows
0ew!ridge 6rimar )ld!ridge 6rimar @lac%!ridge 6rimar
:urrent :apacit 3
:urrentl on roll ##/3-
stimated #3/4-
#;
#3
3
#
#3
47
4;
E-isting sta3ng
0ew!ridge 6rimar )ld!ridge 6rimar @lac%!ridge 6rimar
Fead
5eput head
ssistant teachers
1 1 1
1 1 #
11 11 1
6art/time sta
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