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- 2012-4-23
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原题
The following appeared as part of a business plan created by the management of the Take Heart Fitness Center.
“After opening the new swimming pool early last summer, Take Heart saw a 12 percent increase in the use of the center by members. Therefore, in order to increase the number of our members and thus our revenues, which depend on membership fees, we should continue to add new recreational facilities in subsequent years: for example, a multipurpose game room, a tennis court, and a miniature golf course. Being the only center in the area offering this range of activities would give us a competitive advantage in the health and recreation market.”
作文
Regarding the business plan, the management of the Take Heart Fitness Center claims that they should add new recreational facilities to keep their competitiveness and increase revenues which are mainly based on membership fee. They derived the conclusion from the fact of a 12% increase in the use of the fitness center because of the open of new swimming pool. Though increases in usage and in revenue have their correlation, however, due to the poor assumptions, the judgment from the management team is unsubstantiated and deeply flawed.
To begin with, management team equalized the increase in usage of the fitness center as the increase of the number of members, which leads to an increase in revenue. However, it’s not always true. According to our own experience, we are more attracted to new staff and would like to try them out. It is possible that the new swimming attracted a lot of existing members instead of new members. Consequently, in order to make the assumption hold, a thorough and detailed analysis should be conducted, for example examining the number of members before and after the open of the new swimming pool.
Additionally, the management team made a fallacious analogy between the effects of swimming pool for summer and of other recreational facilities. In summer, due to the hot weather, swimming is comparatively superior to other activities ceteris paribus. Thus, the increased usage due to the open of new swimming pool in summer is not a necessary assurance of an increased usage in other seasons. Meanwhile, it’s as well not an insurance of an increased usage because of the opening of other new recreational facilities. More grounds should be provided to verify the argument, such as the usage of the center throughout of the year.
Moreover, an increase in revenues doesn’t necessarily mean an improvement on profits. With the expansion on the facilities, maintenance cost will surge. If the increase in revenue couldn’t compensate the increased cost, the profit margin would deteriorate and Take Heart would be at a disadvantage in the competition. Therefore, it is recommended for Take Heart to evaluate its cost and profit carefully before jumping to the judgment.
Although the background information provided is not sufficient to verify the statement and assumptions that the decision is based are not stainable, it is quite a good brain-storm idea for further evaluation. However, in this context, the proposal is implausible and to be further examined. |
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发表于 2012-5-15 14:33:01
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