Introduction
It is a common activity for a firm to make decisions from the employee responsible to keep the floors clean to a manager who thinks about diversification. However, decision-making becomes complex as business partners and customers are taken into considerations. With this, there is a need to identify and assess the level of risk attached to a certain decision making. Then, presentation becomes crucial as investors and board of directors listen and evaluate plans and proposal of the firm in the future. All of these are tackled in this paper with pertinent samples not only in the fitness club industry but extends to manufacturing and other service industries that can serve as guides for a gym manager. Theories and concepts are also presented for a deeper analysis on how to handle crucial decisions, business partners and customers, business risks and finally deal with annual general meeting.
Decision-Making
Appropriate approach to democratic decision making, responsive pattern involves identifying a situation and select a course of action consistent to the situation named. The more inputs involved in the process, the more acceptable the outcome to everyone in the organization to reach the consistency pattern which is in nature, based on value judgement. For strong leadership, goal-oriented pattern will attach decision alternatives and consequences to a fixed and unambiguous goal. Unlike responsive pattern that is largely characterized by general acceptability, goal-oriented is based on suitability of decisions to the identified goal. Informed debate, on the other hand, requires at least two courses of actions and comparison is necessary to arrive on the final decision. Originative pattern does not invoke consistency patterns and goals. The chosen alternative should be preferred based on the consequences accrue herein that are delivered by the informed debaters (1997).
. In improving decision-making processes, the traditional research approach like Rational Choice method focuses on decision processes and how to rationalize the option by identifying what process obtain the highest score. The method does not have something to speak about the decision-maker, the situation and the vitality of time pressure although behavioural biases of people are often measured. In the aviation profession, however, the applicability of Naturalistic Decision Making (NDM) is highlighted as decision failure is deemed fatal. In NDM, the experience and expertise of decision makers, strategies used to come-up with the decision, context and situation, and the awareness to the circumstances are put in a veil for research. The method understands and prioritizes experience of decision makers, dynamism of the group of decision makers, uncertainty of environment, importance to identify the situation and the significance of the consequences to decision makers and other organizations affected by the decision (1997).
Agents of change, for , will direct the whole organization to achieving more valuable ventures that the firm never tried before. It was her definitive claim for the corporate challenges under the 1980s recession of the United States. Agents of change provide the platform to remind firms that value-added capabilities are important to them, generally to the country as it could loose its industrial leadership, and can only be realized by establishing a culture of change. When decisions are inclined in the context of change, ideas tend to be diverse and the management is more responsive to employees’ needs which enforce cooperation needed to materialize a managerial decision. As a result, a more adaptive and comprehensive choice is recognized which embodies the strengths and weaknesses of every unit of the organization ( 1998).
Further, sustainable competitive advantage can be monitored by these agents and inform the top management every now and then its significance for the survival and prosperity of the firm. They will push their firms to neutralize threats and exploit opportunities to create capabilities that are valuable, rare, costly-to-imitate and non-substitutable. Serving as spark and light to the whole organization towards the culture of change, agents can affect decisions and strategies in an aggressive and passionate manner (2003).
As to speed in the deliberation of decisions, change agents have the willingness and capability to explain the need of change and its accompanying advantages that suit to individuals or group. According to (2002), the chief reason of change failure is resistance. The phenomenon impedes success objectives infused by decision makers and implementers to organizational changes. Because they do not merely monitors the occurrence of such, change agents actually act as coaches and champions of change. They might be called as transformational leaders that possess the charisma to halt impediments to the application of decision that generally includes organizational changes in work-related issues. They create readiness by influencing beliefs, attitudes, intensions and behaviour of those individuals to be affected by the decisions. Hence, decision makers and the objectives wrapped in their course of action could realize the fruits of the effort efficiently because resistance-prone areas are managed by the agents of change (2000).
At the Rutger’s University, school officials appropriated a budget for the gym construction at Rockoff Building. It was aided in construction and funding by a non-profit firm Devco. The joint venture, however, was obstructed by a delay in the formal opening of the Gym until January 2006. Initially, officials at both sides are blaming each other with shortcomings from the university who held the blue print of its planned designs for a long time while Devco had been accused to manipulate material prices. As a result of this, the original school appropriation amounting to 0,000 was increased to 0,000 while Devco shouldered a larger increase from 5,000 to 0,000. The latter confirmed that it can finish construction earlier than next year, however, the school demanded more time to train gym assistants. This conflict can be regarded as the root cause of coordination failure and partly “pride in action” wherein the final victims are the building residents who must wait longer even the construction is already been done and the conflict at both sides tamed (2005).
In this specific case, the decision to appropriate money for school ventures demonstrated a quotation-based approach. The process involves scrutiny of concerned school officials to the quotation of a contracting partner (Devco), comparing the quotation to their existing budget and levelling “what they could afford” in accordance to the quotation. The Dean of Recreation, Executive Manger for Community Projects, and Executive Vice President for Academic Affairs are the common actors that participate in the decision making process and execution. For the part of Devco, the Vice President linked its company to the university and effect coordination (2005).
However, this methodology created loopholes in communication that ultimately delay plan execution and project completion. The original design plans of the university was forwarded to Devco several months after agreeing to the latter’s quote. As a result, Devco demanded an appropriation increase of 0,000 from the university’s 0,000 which the latter could not afford as argued by the VP for Academic Affairs. On her part, the Dean of Recreation disputed the design of Devco as she expected a spa-like atmosphere in the gym. Devco officials reacted to these by emphasizing the delay of blue print of the ideal design of the university. Finally, at the time financial bottleneck was settled, the delay could not be addressed because of the inability of university officials to train gym staffs ahead of time. The delay problem persisted even construction was possible to reach deadline as claimed by Devco (2005).
The decision-making process between the two organizations was heavily burdened by the type the university officials conducted their internal affairs. Quotation drafts had the contracting firm’s blueprint, time frame, materials to be used and costs of construction. The university should have accomplish an early request to include their own version of the gym, so at the same time, the budget sharing could also be adjusted. Another, the university’s planning should also be improved to avoid their faults passed-on to their business partners. To do this, the model of planning should be changed form the complex and quantity-based responsive pattern, as many actors have their concerns on minimizing budget and maximizing the gym’s potential, into goal-oriented pattern. This could be carried by creating a group of people that have background and experience in the field of appropriation, engineering, management and income-generating projects. Their knowledge will provide goal-oriented inputs to rationalize alternative courses of action and identify consequences of such actions. Responses are likely unbiased and based on cause-and-effect. This change in decision process can be enforced by young faculty who are likely not fully inclined to the ordinariness and formality of academic policies. They can be catalyst of change in this respect. Finally, the leader of the university should also affect his constituents to act pro-actively rather in a reactive manner especially when huge amount of money is involved in a decision ( 2005).
Trading with Others
Gold’s Gym is forty years in the fitness industry with more than 600 facilities in 43 states and 25 countries. A firm that highlights the potential of human strengths, it continued to offer modern equipment, personal and group training, yoga and its core niche, weight lifting as illustrated by its yellow brand logo of a man holding a barbell. Among its core business portfolio are franchising, selling fitness machines (Powerflex) and fitness apparels while its business partners are real state developers, equipment suppliers, textile companies, internet providers and franchisees. However, aerobic gyms like Les Mills threatens the position of Gold’s Gym in the fitness industry as the former operates its patented seven groups of fitness accompanied by music in 55 countries worldwide ().
To have a suitable sale and purchase, the firm relies to the efficiency of its marketing channel. Activities involve in the process are gathering of information from customers and competitors, stimulating purchase, reaching agreements in price from manufacturers, placing orders, acquisition of funds, storing and moving physical products, providing customers intermediaries for payment and overseeing actual transfer of product to the organization or person. These activities are divided into two kinds of activities: the forward flow (promotion) and backward flow (ordering and receiving payment). In evaluating major intermediary alternatives, the firm should be informed and aware on the pros-and-cons selecting a business partner in the marketing channel. The Internet and telemarketing are relatively cheaper but have limited value-add of sale. On the other hand, creating own sales force and building alliances like distributors and retail stores cost more but provide higher value to customers and suppliers (2003).
There is also the option for the firm to internalize the marketing channel activities through vertical integration in view to keep its core competencies private and gain market power over rivals. It can save operating costs, improve quality of products and services, and prevent unfair imitation. Franchising became popular in industries where competitions among small firms are prevalent because it consolidates independent companies in contractual relationships. In the franchising, the franchisor controls the sharing of resources and capabilities with the franchisees ( 2003).
The search for a suitable company partner, on the other hand, should be consistent to the strategy of the firm. As Peter Drucker says, “There is no right organization anymore. Rather, the task… is to select the organization for the particular task and mission at hand.” Cisco, a global information technology company, created cooperative relationships with suppliers and maximize the use of the Internet to provide critical information about customers and inventories. It also formed a series of “ecosystems” to provide solutions to customers through business partnerships in the distribution channel making e-learning to transfer freely to salespeople. This marked Cisco’s success especially in Japan (2003).
The franchising scheme at Gold’s Gym offers a Master Franchise Agreement () in which the buyer is entitled to create sub-franchisees in provinces or states the latter deemed advantageous to their contract. On the other hand, it partners to business consultants, advertising agencies and other significant entities to infuse add-on support to its franchisees. To cut the cost of external negotiations, a crucial activity in franchising, it adapted the technology of Avaya Incorporated (VoIP and Gadgets Blog). The communication breakthrough provided Gold’s Gym with cheaper communications facility. The technology also allowed the corporate employees to move in a central headquarters, unlike the old days wherein they are situated in local communities.
The franchising scheme that is central to Gold’s Gym business portfolio of selling its brand name and providing resources, capabilities and historical reputation to franchisees also has limitations. The cost of franchise is 0,000, of which 0,000 is paid in cash ( ), could be too costly for a starting fitness gym owner. The limited business portfolio aside from slow-moving and low-margin line of products like fitness facilities and apparels put high pressure to demand soaring franchise fees. To recoup from this bottleneck, internet platform and impersonal selling to prospects should be reduced and back-up with direct advertisement to potential franchisees. Affluent businessmen and politicians all over the world are the most probable people to bite the expensive venture. International visits to such countries can intensify the potential of add-on value of direct marketing as an offset to short-term communication and transaction savings. It should be remembered that franchising is a long-term relationship, the headquarters can even extend the length of the contract life, and that long-run profits are far more important in strategic planning.
On a different solution to narrow portfolio, Gold’s Gym could learn from Les Mills activity-based approach embodied in its patented group fitness system developed over 20 years of industry experience. The prominence of aerobic exercise, both for males and females alike, is likely to defeat the core business advantage of Gold’s Gym that necessitates extensive and dedicated training. Because of this, it limits its market segment to men undermining the more sensitive and figure conscious women. This could give explanation to the four million participants at Les Mills compared to Gold’s Gym three million. In their websites, Les Mills highlights its pool of international fitness instructors and offers seven different kinds of program while Gold’s Gym merely show the celebrity figures who uses its facilities without considering that customers may think if those names continue their subscription ().
Seemingly, Gold’s Gym franchisees operate under a cost leadership strategy in which goods and services are made acceptable at lower cost to customers. On the other hand, Les Mills operate under differentiation strategy in which goods and services are priced acceptable but perceive by customers as being different in ways that are valuable to them. As a result, Gold’s Gym is limited to franchising unlike Les Mills that provide support services to fitness gym partners under latter’s own brand names. The consultancy-based offerings of Les Mills give it the chance to regularly update the features of its fitness systems through the help of its internationally-acclaimed partner instructors. On the contrary, Gold’s Gym products and services tend to be stagnant and fixed to bodybuilding interested males and few females (2003).
As a lesson, Gold’s Gym should broaden its business portfolio touching new offerings and markets to compete the shifting preference to aerobic exercise. Although it admitted that such activities are offered in its gyms, the logo speaks it off that it is still focusing on heavy weight lifting. It should show the market that its services are untied to the history, where Arnold Schwarzenegger works-out, and equipped with manpower and facilities to provide emerging customer needs. It could change the outlook of its internal gym visible to the outside viewing by replacing the lay-out with an aerobics group of women. It could also widen the scope of its business competencies by classifying anaerobic exercise from aerobic ones that can cater to men and women alike including young and old enthusiasts. Diversification is needed by a company who needed to increase profitability and maintain leadership in the industry. Since Gold’s Gym can be argued to reach its maturity stage along its product life cycle, putting flavour to its current offerings can mean change but such is necessary to compete with emerging strong competitors like Les Mills.
Business Risk Management
Traditionally, risk management is viewed exclusively in the lens of financial instruments like acquiring insurance. By creating financial hedges to firm’s liquidity, preservation of the firm’s resources from the risk of loss due to decision-making can be possible. In the contemporary view, however, risk management is considered an integrated process and risks are deemed to affect the whole operations of the firm. As a result, traditional management techniques are directed to particular problems in order to operate the risk management system of modern firms ( 2003).
The first task is to identify the occurrence of potential loss in the company’s key departments and evaluate the impact of such looses to the financial attribute of the firm. This phase is done in a proactive manner. The second step is to select among the identified risks those that will be disengaged in management decisions and those that will be retained and controlled to reduce the severity of the possible loss. It can be quite distorted to accept losses, but these looses are elements of a certain corporate activity that cannot be entirely depleted. In this stage, coordination and expertise of involved managers are crucial to rationalize retained risks. The third level is to inform the budget department of the firm if the company has the financial capability to absorb the retained risks. If not, those activities could be transferred to other capable companies. This situation can be illuminated by a banks, human resources agency and insurance firms wherein internalization could mean huge amount of risk exposure (2003).
The fourth step is the implementation stage wherein managers allocate the scarce resources from the programmed risk retained activities to people, money and time. This includes activities such as safety program for employees, purchasing insurance and provision of petty cash revolving funds. At the end of the process, monitoring of the internal (improvements in net income) and external environment (federal regulatory changes) is necessary to identify the need to restructure the existing risk management model for the firm to obtain optimal use of its resources and economically leverage risks (2003).
In insurance industry, being risk-averse counted the most especially when the sector looks the experience of the once untouchable Lloyd. In 1906 San Francisco earthquake, one distinguished underwriter instructed his agent to pay all the policy-holders in full even the terms do not claim for such. However, its “Confidence” motto and “Utmost Good Faith” as its trading standard including its emblem of anchor that connotes “Security”, all sank as 1980s asbestos and pollution catastrophe wherein risks were absorbed by Lloyd. It was aggravated by diversification to vast markets that resulted to quote the firm’s managing director as greedy, incompetent and bad manager due to careless risk-taking without commitment. Due to adverse impact to the company, Lloyd learned to adopt the thinking to limit the shouldering of policy holder’s risks (1995).
On the other hand, a firm limiting its decisions and activities within the veil of being risk-verse looses entrepreneurial opportunities which are important to growth and innovation. As the firm do not have such culture, it will also have effects to dependent and mechanical employees, technology remains stagnant, decisions tend to be reactive rather than proactive and loose competitive aggressiveness crucial to outperform competitors ( 2003).
In today’s hypercompetitive and fast-phased business landscape, there is need of a systematic and continuous assessing mechanism for an enterprise risk. Enterprise Risk Management (ERM) system operates like an alarm clock wherein firms can be assured that it ventures to certain risks wherein the path towards achieving their objectives is sustained. Through ERM, the firm can understand the interdependency of risks, their nature and potential impacts to the organization. In addition the approach is holistic that the entire organizational actions and strategies are studied to succeed in the program wherein internal auditors are key people in its implementation (2003).
ERM does not exclusively involved hard numbers and hard analysis. Before preparing an ERM framework, organizational culture, management’s philosophy and ethical values, and the entire human resources practices and competencies are considered. At the time the program is already established, the commitment of managers to meet and identify the worst-cases rely its continuum. Risk taking attitude also decides over findings of quantitative measures to risks. It serves as the traffic light that signals resources to accelerate, wait or totally detour. Even though internal audit shows both risk impact and the possibility to occur as low, when management are risk-averse or hate change, opportunity in such venture could not be realized. Further, the program requires creation of risk nervous system in which risks are filtered with the aid of an existing knowledge and anticipating stance. With presence of cultural impediments like the failure of the firm to discuss sensitive but significant issues, misunderstood and underestimated risks are not mitigated. As shown managerial and human resources’ behavioural factors are the most important aspects to the success of the program (2003).
Finally, risks cannot be avoided rather controlled. With the use of risk management breakthrough in ERM, top management are pressured to create the platform (culture) that embraces continuous coordination and optimal se of available quantitative risk measures. It should also adjust its human and physical resources towards adherence to the program through risk policy enforcement, manager commitment, creating oversight and monitoring teams and databases (2003).
In the operation of Gold’s Gym, risks are intolerable to aggressively innovate new products and services. They expand even to other countries but offerings remained the same. This can be emphasized its licensing feats that controls the operations, advertising and products of franchisees. Because of this centrally-planned structure, it added impediments to search for value-adding products apart from weight lifting. In addition, the location of its franchisees abroad like the Philippines are located in the urbanized areas near the capital of the country that suggested that it is limited to cater in the high-end slice market. This lack of entrepreneurial commitment of the firm will prevent them to achieve profitable income at the log-run.
In a different manner, Les Mills acquires international fitness instructors all over the world and in different industries. Some of them came from martial arts sector, choreography and sports. This service-oriented approach suggests that the firm is risking its finances to pay relatively high compensation to these internationally-acclaimed instructors. The advantages of which is continued upgrade of consultancy services to worldwide subscribers of its Les Mills Fitness Group System. Unlike Gold’s Gym that do not prefer to risk the fruits of its innovation and kept it within itself (as it use licensing for control), Les Mills tap on several opportunities to offer new ways of performing fitness regimes that the risk of diminishing the value of its publicized routines are offset.
Gold’s Gym must understand that being risk-averse and entrepreneurial has its pros-and-cons. However, without innovation and risking some investments to improve product and service diversification, firm performance will not improve while rivals will capitalize on the former weaknesses. It claims that it is the number one in the fitness industry and being such requires strong differentiation and customer-value apart from competitors. To get out from this bottleneck, the top management must create a committee to operate the risk identification and evaluation in the firm. Resources and capabilities should be measured to give concrete rational to limit offerings. Of course, the idea to execute this endeavour should be accepted by the entire organization, especially the top management. As proved, ERM can only be possible if behavioural factors are supportive of its continuum.
Planning and Managing an Annual General Meeting
A firm manages communication by undergoing steps to develop effective communication. First, there is a need to identify the target audience and evaluate their familiarity with the subject one hand and favourability with its attributes. The second stage is to determine communication objectives that seeks to transfer information, change attitude and obtain action from the receiver. Third, it is time to design the message by determining its content, structure, format and source. The next step is to select communication channels that can be face-to-face or utilize several forms of media. Fifth, there is a need to take a crucial step to establish communication’s budget wherein methods are available that could emphasize the cost, benefit and objectives of the design which only managers can decide. Lastly, the need to manage integrated communication process is stimulated by the proliferation of new types of media and growing sophistication of people (2003).
Channels of communication that are frequently used by managers are face-to-face, voice mail, teleconferences, electronic mail, employee publications and computer conferencing. Although the personal type is crucial in discussing critical issues, first-time acquaintances and detailed problem analysis, it emphasizes the restrictive time and space constraints between the sender and receiver that the use of other forms of media is preferred in day-to-day operations (1991).
Internet is one of the prominent media wherein corporate communications are networked and corporate data are integrated. However, security in critical network assets and services are hindrances to effectively harvest the fruits of information technology. As a result, a developer and communications provider in North America, American Tower, sought partnership with Mazu Profiler that provided insight into the firm’s network behaviour to reduce risks, costs and complexity of securing critical networks. In this case, American Tower preferred to judge cost effective in the lens of future threats to its internal operations or in a pro-active stance. Being a technology-based and –resourced firm, investments is needed to protect the wires from hackers that can adversely affect internal communications and loss revenues for the company (2004).
In the similar manner, did not plunge to lower cost of labour from Far East countries in an abrupt manner even it can soften higher compensation rates from United Kingdom’s 10,000 manpower-level manufacturing centres. The managing director argued that the high level of compensation to English workers is nothing to be upset as they know how to speak not only English but also French and German. Such communication advantages is seen in a holistic and futuristic manner wherein the importance of coordination to efficiency at work is indispensable than cost-savings in labour itself (2006).
Conducting an annual general meeting (AGM) basically entails matters pertaining to company shares, financial and management reports, adoption of balance sheet and resolution of any loss, election of new set of directors, incentive programs for the management and other matters pertaining the resolution of directors over matters concerning shareholder’s pre-emptive rights (2005).
In the cost side, preparing an AGM largely involve information dissemination costs wherein notices are delivered several months before the actual date. The host management has the option to use over a wide variety of media devices but the most common is through direct mail. However, the number of shareholders will indicate the efficiency of such use. If the number is too large, management could spend more while the effectiveness and timeliness of delivery of those mails are questionable. To be cost effective, succeeding AGM should be announced before the current AGM meeting is held. However, the firm should prevent schedule shifts and delays as this will equate financial allocation for media information.
Further, the level of difficulty organizing AGM relies in the preparation of the host management. If the event is ill-prepared, contingency measures are more prevalent and these could cause additional tasks burden to the organizers. Perhaps, the lack of planning to meditate about future threats to the event like recession, threats to security and firm’s financial standing could suggest selecting a tentative stance in the events schedule. This is the result of consolidating reports that accrue from the present hazardous situation the company is involved. Using pro-activeness approach to planning, the less laborious is the job of the organizers.
Being a small fitness club firm, the key objectives of AGM are to provide clear and interesting agenda, focus discussions on firms performance and opportunities, encourage queries from the directors and creating a lively meeting all throughout. To spark further investment, there might also be the need to present SWOT of the firm, its position for expansion and risks attach in such action. This should be supported by facts and figures to prevent directors from the thinking that discussions are bias and baseless. Their status and professionalism should be counted in the preparation of the agenda.
To ensure that every director understands and confirms with their responsibilities, a documented lists of each are prepared for reading. After the declaration, every director is entitled to comment the scope and limitations of their duties and if alterations should be made in the original paper. This will suggest that the meeting is done in a democratic manner, professional one and emphasis is given to elite officers and investors. A committee is established to monitor the propensity of directors to use these powers and refrain from unauthorized ones. They will be the one to advise the presiding manager if there is a need to waive requests for modifications from the directors. However, being the managing director, he has the discretion to determine if such advise do not obstruct the purpose of the firm as directors may not like the idea of being rejected.
When contingency actions are required and execution should be fast and accurate, the managing director will use the goal-oriented pattern. This will guide him to stay in firm’s objectives behind the agenda and performance reports and achieve the intended outcome. His experience and authority should be clear to employees of the firm who help consolidate his reports. In the same manner, his qualities and reputation should be known throughout the directorship. In the process, even though he did not accurately estimate the exact figures, like losses, from certain alterations of the directors to a prepared project, he can measure the level of risks in general. And although he might miss important financial considerations, emplaning them to the concerned employees and managers can be carried out rather easy. Before the meeting, his agents of change should be attentive enough to decipher consequences of approved projects that later will be disseminated in different levels of organization.
At the end, the manager and his committed employees are the responsible authorities of their actions. Upholding behavioural considerations in the approved projects in the AGM, their confirmations and decisions with the directors would not be largely affected by the lack of numerical application to calculate risks. If leadership is strong in the entire organization, their decision in front of investors will be respected and accepted by the rest of the firm units. However, resistance could occur but these are resolved in the planning stage in which employees pulse are measured including the bounds of physical resources and financial status.
Conclusion
There are no ideal decisions that can serve as a model for any firm at any given circumstances. As discussed, organizational culture is important and the stating point of every strategic decisions. There is a need to study the characteristics of both trading partners and customers before entering a venture and cross-examine the activities involve in additional transactions against the firm’s resources and capabilities. When they are compatible, managers should be courageous enough to inform investors and board of directors of such opportunities while crediting employees that act as catalyst and agents of change. Sound management and harmonious coordination in the firm can establish its decision-making and risk-taking endeavours in a manner that is favourable to employees, management and investors alike. Hard analysis and numbers cannot replace the employee motivation and enthusiasm to affect competitive advantage and achievement of organizational objectives. If commitment is present, risks will not be as risks rather a quest where everyone is counted to obtain fruits as well as mitigate unwanted outcomes from it
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