Day Care in Public Housing Case Study Solution
The operating profit of the company is calculated by subtracting the costs, including:fixed and variable costs from its revenues. The company is seeking for ways to generate sufficient amount of returns to cover the fixed & variable cost,in order to remain profitable. There are four situations which vary in accordance with the number of students, which are considered to be 20, 25, 30 and 37. The analysis shows that the company has low safety margin because of lower number of students enrolled in the center. Also, the minor reduction in the number of students would make it challenging for the company to reach the level of break-even.
Furthermore, the analysis of cost incurred to the business shows that the variable cost does not include the expense of marketing or advertising, which are of immense-importance to promote the viability of program and to increase its awareness among general public. Additionally, one of the business’s major concerns is that Alta Vista Day Care center tends to incur operating loss in case of enrolling 20, 25 or 30 students at the center, and would only be able to generate the operating profit of 111 dollars, when there would be 37 students enrolled at the center.
Additionally, the fixed cost of the business is high, which could not be covered by having low number of students enrolled at the center. To cover the fixed cost, the business is in dire need to compel and coerce parents to enroll their children or the company could access other source of funds, such as: grantors, local businesses, finical support groups and other community firms. By doing so, the company would be able to meet the operational fund requirements. The breakeven point calculated without considering the administrative fee is lower in all scenarios as compared to the breakeven calculated with administrative fee, which shows that administrative expense is estimated to be 14 percent of revenue, which has a direct impact on the contribution margin and break even.
Recommendations/suggestions
Based on assessing the benefits and drawbacks of opening the day care center in Alta Vista housing community, Mr. Schaefer must take the decision of opening the day care center by being positive and optimistic towards the acceptance and admiration of program in the market. The decision is based on the fact there is strong demand for the development of child care which is driven by employment opportunities and training which would be provided to the recipients of ADC. Furthermore, the benefits of the day care center such as enhancing the emotional and cognitive development, preventing emotional difficulties, shaping their personalities and developing social skills - would inspire the parents to enroll their children at day center.
In addition to this, Mr. Schaefer needs to cover the high amount of fixed cost by requesting the external financing providers to provide funds for the betterment of the society. The fund could be received from financial support groups, local businesses and grantors. Moreover, he must ensure the maximum attendance of students with core consideration over achieving the high level of activity. Also, the administrative fee is 14 percent of revenues due to which Mr. Schaefer should eliminate or reduce the administrative fee if Volunteers of America (VOA) would offer fee registration in first year. It is supported by the fact that mission of VOA is to help individuals in realizing their own potential. Therefore, if the administrative fee would be eliminated, it would lead towards an improved contribution margin and lowered breakeven, which means that the program would start generating profit sooner.
One of the effective ways of growing the number of students enrolled at center, is to build collaborative and strong partnership with potential partners, in order to ensure the continued success and growth of the business. This could be done through identifying the shared goals and objectives, building trust and communication, identifying the obstacles and sharing information. A majority of people live under poverty line due to which they are exposed to various risk factors, which ultimately affect their ability to achieve their goals in life. The provision of high quality care to children would reduce the gap between disadvantaged children andadvantaged peers by enhancingtheir learning abilities, physical and mental strength, improving the school readiness and empowering them to uplift their living standards and making their contribution in the overall growth and economic development of country (REBECCA MADILL, 2018 ). Mr. Schaefer must take under consideration the importance of hiring the qualified and competent educators, who would contribute hugely in overall development of children as they would be entitled to develop warm and respectful relationships with children and would encourage their active role and engagement in learning programs.
The management must realize the importance of developing strong and informative channels of communication in order to effectively communicate with the parents and to address their concerns in order to increase the number of students’ enrollment at the center. To make the business profitable;Mr. Schaefer should take various factors under consideration, such as:efficient operations, effective marketing and advertisement and meet the diverse needs of parents and children. Also, he should focus on each and every area to make the program effective and successful in the long run. In the quality area of health and safety of children;he must make sure that each and every child is provided with quality care and education, and he should protect and stress over the significance of providing the safety, health and well being to children. Mr. Schaefer should also make sure that the physical environment is safe and suitable for the development and growth of children and should provide rich and diverse range of experience to them in order to successfully promote the development and learning of children.Additionally, Mr. Schaefer should make sure of an effective leadership and governance structure in place as they contribute to the development of quality environment for learning and development of each child. Also, the effective leadership and governance would help in ensuring the clear directions and growth strategies for continued success of the company.
The continuous improvement of the program begins with the staff and leaders of the program, reflecting the area of growth through collecting data from child care homes, and taking valuable feedback from parents. These strategies would help the firm in remaining the market leader and improving its reputation in the market. Moreover, the decision of opening the day care center would help in improving the local economy and it would support the stable workforce due to which the government would provide funding to the program to continue providing such services and the awareness of benefits of early learning would be increased, which in turn would drive the industry’s growth...............
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