Parker Pen Company

Topics: Revenue, Operating expense, Management Pages: 6 (1511 words) Published: May 7, 2012
Case Analysis: Cosmos Club

I – Time Frame

In January 1983, Mr. Joseph Kabiling, Cosmos Club’s Business Manager, was left with the decision of whether or not to present his proposal to acquire a point-of-sale equipment at this year’s Finance Committee meeting on capital expenditures. Through the years, the club’s restaurant registered higher than expected losses, compared to any of the club’s revenue-generating services. Thus, he left that this might improve the dining room operations although he was unsure of its viability and adoptability to the club’s environment.

Company Background

The Cosmos Club which started in 1878, is a private social club and its purpose was to provide a venue for discussions and an exchange of ideas among individuals who were distinguished in the arts and sciences. Its office is located along Massachusetts Avenue, right at the center of Washington D.C.’s embassy row.

The club had an original membership of ten. But its membership roster had currently reached 9,500; however, only 3,500 were active. To limit its members, the club enforced a policy that applications were accepted only upon the demise or resignation of existing members. Among its members were several Nobel Prize winners, award-winning writers, known politicians, and other distinguished individuals.

There were three committees that governed the operations of the club: 1) the House Committee; 2) the Finance Committee; and 3) the Admissions committee.

The House Committee was responsible for the overall operations of the club. It also looked into its facilities and is responsible for supervising the daily activities of the club. The Finance Committee, managed the club’s assets, and reviewed all capital expenditures request. All proposals for changes in the operating system of the club were reviewed by this committee. The Admissions Committee required each member to pay $500 annual dues. New member were also required to pay an invitation fee of $400 for members over 40 years old, and $350 if below 40 years, and around 100 new members were admitted each year.

The Cosmos Club, being a non-profit entity, depended heavily on the dues and initiation fees collected by the Finance Committee to cover its operating expenses. Service revenue alone was insufficient primarily because the club offered its services at subsidized prices.

II - Perspective

This case analysis was taken from the view point of the Top Management in deciding what strategy to use and how to implement the strategy to address the root cause of the major issue of the company.

III – Statement of the Problem

The club offers several revenue-generating services which includes the restaurant. However, the income from the restaurant showed higher losses, compared to any of the club’s revenue generating services. The root cause of this problem is the unorganized overall order servicing system that is being practiced in the operation of the restaurant. IV – Statement of Objective

To improve the operation of the order servicing system in the restaurant and promote honesty and company loyalty among the employees.

V – Areas of Consideration
SWOT Analysis
* Has a strong reputation and carry a prestigious company image, having the most distinguished personalities as members. * There is variety in services offered by the club which serves as a venue for discussions and an exchange of ideas among individuals who are famous in the arts and sciences. * The nature of business offers exclusivity among members and promotes privacy in extending facilities and services for the benefit of its distinguished members, which is not commonly offered in other social clubs and makes the club unique; therefore, the company has fewer competitors. * Constantly conducting research studies and development activities which are necessary for decision making and innovation. * The club’s long existence provides a certain amount of prestige to...
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