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Question: What adjustments would you make at this point? Would you cancel the program or run it at a loss?

Question: What adjustments would you make at this point? Would you cancel the program or run it at a loss?

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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  • Question: What adjustments would you make at this point? Would you cancel the program or run it at a loss?
"P am" (a disguised name but a real person) was director of training at a large, Midwestern training com- pany Leadership Development Center (LDC). One of Pam's responsibilities was to plan the launch of LDC's new training pro- grams. The company had a reputation for excellent programs targeted at mid-level managers. However, LDC's top executives felt that the company should offer more training programs for senior executives, arguing that if senior executives personally experi- enced the quality of the firm's training, they would be more likely to recommend and approve training requests for their mid-level managers. Pam discussed the program objectives for the new Senior Executive Leadership Program with her boss and her peers. Some thought the program should be a "loss leader" or in other words, that it should lose money but pay for itself by generating more participants for LDC's mid-level managerial programs. Others thought that the new program should break even financially. Everyone agreed, however, that the program should be of suffi- cient quality that participants would have a very favor- able impression of LDC. As a result, they would be more likely to encourage their employees to attend LDC pro- grams and approve their requests to do so. Pam determined that the program's success would be measured in three ways. First, the number of participants taking the first program would be monitored. Pam calcu- lated it would take about 18 participants for the program to break even financially. Second, she would survey all par- ticipants regarding their satisfaction with the program, its content, materials, facilities, administration, and instruc- tors. Finally, LDC would track the number of mid-level managers from the companies of those attending the senior executive program to determine if there was an increased participation level over time. In launching the program, Pam examined the past marketing costs of other new programs. Previous new launches had cost about $30,000 in brochure and mailing expenses. She expected that an extra $5,000 ought to be enough to launch the new senior executive program. The current budget did not anticipate the launch of the senior executive program, but another program in marketing had been cancelled. Consequently, $20,000 remained in the budget for that program, which Pam thought she could spend on the new senior executive program. In addition, she thought she could access $15,000 from the general contingency budget of $30,000. One of the first things she needed to do was to talk to LDC's possible instructors and select a "faculty director." This person would design the specific content of the pro- gram and coordinate the other instructors along with the content of their training efforts. After the faculty director was chosen, the program would need to be designed and, based on the design, a brochure created. She esti- mated that the program design would require about three weeks and that the development of the brochures would take an additional two weeks. Printing the brochures would require four days, and assembling them for mailing would take another three days. Delivery of the mailed brochures would take about a week. Normally, LDC allowed about 12 weeks between the time people received brochures and the due date for their program applications. In general, program applications were due (along with the program fees) three weeks before the start of the program. Two weeks before the program starts, all materials (handouts, notebooks, etc.) would need to be assembled. Pam had two people who reported directly to her and could assist in the implementation of the plan. Tammy would be responsible for contacting the brochure design firm and the printing company and ensuring that the brochure would be ready on time. In addition, she would secure the mailing list and arrange for an outside contractor to stuff the envelopes with brochures for mailing. Dan would be responsible for venue details. LDC had its own training facilities and had contracts with several nearby hotels for lodging arrangements. Dan would also be responsible for the assembly of all training materials, which required obtaining the handouts and other materials from the instructors on time. As the plan was put into action, everything seemed to go fine. A faculty member was selected to be the fac- ulty director, and the program design and content were ready in two rather than the anticipated three weeks. The outside design firm quickly produced a brochure that with a few modifications was ready for mailing. Tammy obtained several mailing lists that had the names of senior executives in medium-to-large companies. The mailing was sent out about five days early. Inquiries regarding the program were 100 percen higher than those for other new programs LDC had launched in the past. However, as the program's start date drew nearer, the ratio of inquiries to registrations was not good. Traditionally, one in ten people who con- tacted LDC for further information regarding a particular program ended up registering for it. However, eight weeks before the program's start, the inquiry to registra- tion ratio was 100 to 1 (not 10 to 1). Four weeks before the start of the program, only ten had signed up. Pam was stressed about what she should do.
Transcribed Image Text:"P am" (a disguised name but a real person) was director of training at a large, Midwestern training com- pany Leadership Development Center (LDC). One of Pam's responsibilities was to plan the launch of LDC's new training pro- grams. The company had a reputation for excellent programs targeted at mid-level managers. However, LDC's top executives felt that the company should offer more training programs for senior executives, arguing that if senior executives personally experi- enced the quality of the firm's training, they would be more likely to recommend and approve training requests for their mid-level managers. Pam discussed the program objectives for the new Senior Executive Leadership Program with her boss and her peers. Some thought the program should be a "loss leader" or in other words, that it should lose money but pay for itself by generating more participants for LDC's mid-level managerial programs. Others thought that the new program should break even financially. Everyone agreed, however, that the program should be of suffi- cient quality that participants would have a very favor- able impression of LDC. As a result, they would be more likely to encourage their employees to attend LDC pro- grams and approve their requests to do so. Pam determined that the program's success would be measured in three ways. First, the number of participants taking the first program would be monitored. Pam calcu- lated it would take about 18 participants for the program to break even financially. Second, she would survey all par- ticipants regarding their satisfaction with the program, its content, materials, facilities, administration, and instruc- tors. Finally, LDC would track the number of mid-level managers from the companies of those attending the senior executive program to determine if there was an increased participation level over time. In launching the program, Pam examined the past marketing costs of other new programs. Previous new launches had cost about $30,000 in brochure and mailing expenses. She expected that an extra $5,000 ought to be enough to launch the new senior executive program. The current budget did not anticipate the launch of the senior executive program, but another program in marketing had been cancelled. Consequently, $20,000 remained in the budget for that program, which Pam thought she could spend on the new senior executive program. In addition, she thought she could access $15,000 from the general contingency budget of $30,000. One of the first things she needed to do was to talk to LDC's possible instructors and select a "faculty director." This person would design the specific content of the pro- gram and coordinate the other instructors along with the content of their training efforts. After the faculty director was chosen, the program would need to be designed and, based on the design, a brochure created. She esti- mated that the program design would require about three weeks and that the development of the brochures would take an additional two weeks. Printing the brochures would require four days, and assembling them for mailing would take another three days. Delivery of the mailed brochures would take about a week. Normally, LDC allowed about 12 weeks between the time people received brochures and the due date for their program applications. In general, program applications were due (along with the program fees) three weeks before the start of the program. Two weeks before the program starts, all materials (handouts, notebooks, etc.) would need to be assembled. Pam had two people who reported directly to her and could assist in the implementation of the plan. Tammy would be responsible for contacting the brochure design firm and the printing company and ensuring that the brochure would be ready on time. In addition, she would secure the mailing list and arrange for an outside contractor to stuff the envelopes with brochures for mailing. Dan would be responsible for venue details. LDC had its own training facilities and had contracts with several nearby hotels for lodging arrangements. Dan would also be responsible for the assembly of all training materials, which required obtaining the handouts and other materials from the instructors on time. As the plan was put into action, everything seemed to go fine. A faculty member was selected to be the fac- ulty director, and the program design and content were ready in two rather than the anticipated three weeks. The outside design firm quickly produced a brochure that with a few modifications was ready for mailing. Tammy obtained several mailing lists that had the names of senior executives in medium-to-large companies. The mailing was sent out about five days early. Inquiries regarding the program were 100 percen higher than those for other new programs LDC had launched in the past. However, as the program's start date drew nearer, the ratio of inquiries to registrations was not good. Traditionally, one in ten people who con- tacted LDC for further information regarding a particular program ended up registering for it. However, eight weeks before the program's start, the inquiry to registra- tion ratio was 100 to 1 (not 10 to 1). Four weeks before the start of the program, only ten had signed up. Pam was stressed about what she should do.
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