Private Fitness, LLC |
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Management Control Systems |
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Beginner |
2 |
Available.
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$9.00
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“I don't know how much money I might have lost because of Kate. She is
a longtime friend whom I thought I could trust, but I guess that trust
was misplaced. Now I've got to decide whether or not to fire her. And
then I've got to figure out a way to make my business work effectively
without my having to step in and do everything myself”
Rosemary Worth was talking about the consequences of a theft that had
recently occurred at the business she owned, Private Fitness, LLC.
Private Fitness was a small health club located in Rancho Palos Verdes,
California, an upscale community located in the Los Angeles area. The
club offered personal fitness training and fitness classes of various
types, including aerobics, spinning, body sculpting, air boxing,
kickboxing, hip hop, step & pump, dynamic stretch, Pilates, and
yoga. Personal training clients paid $50 per hour for their instructor
and use of the club during prime time. During slower times (between
9:00 a.m. and 4:00 p.m.) the price was $35 per hour. The price per
student for each hour-long fitness class was $12. Some quantity
discounts were offered to clients who prepaid. Unlike the large health
clubs, Private Fitness did not offer memberships for open access to
fitness equipment and classes.
Prior to starting Private Fitness, Rosemary had been working as an
aerobics instructor and fitness model. She had won many local fitness
competitions and was a former finalist in the Ms. Fitness USA
competition. She wanted to go into business for herself to increase her
standard of living by capitalizing on her reputation and knowledge in
the growing fitness field and to have more time to spend with her two
young children. Private Fitness had been operating for six months.
To open the club, Rosemary had to use almost all of her personal
savings, plus she had to take out a bank loan. The building Rosemary
rented, located in a convenient strip mall with ample parking, had
formerly been operated as a fresh food market. Rosemary spent about
$150,000 to renovate the facility and to buy the necessary fitness
equipment. The club was comprised of five areas: an exercise room, a
room containing aerobic equipment (e.g., treadmills, stair climbers,
stationary bicycles, cross country ski machines), a room containing
weight machines and free weights, men's and ladies' locker rooms, and
an office.
Rosemary contracted with five instructors whom she knew to run the
classes and training sessions. The instructors were all capable of
running personal training sessions, but they each tended to specialize
in teaching one or two types of fitness classes. Rosemary herself ran
most of the spinning classes and some of the aerobics classes. The
instructors were paid on commission. The commission, which ranged
between 20% and 50% of revenue, varied depending on the instructor's
experience and on whether the instructor brought the particular client
to Private Fitness.
Assignment
1. Describe a solution to Rosemary Worth's control
problem that emphasizes results controls, action controls, and
personnel/cultural controls.
2. What should Rosemary do?
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