Case Analysis

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Case 1 Riverside Leisure Centre Introduction The Riverside leisure centre was opened in 1973 with a leisure pool, sports hall, 4 squash courts and changing rooms. June West is the new and very ambitious manager. Squash courts 1 and 2 have been recently refurbished and are fully booked most of the day. The other two squash courts next to the fitness room are now in urgent need of repair and are rarely booked. The fitness room is too small. It is clear that the leisure centre is losing members because the fitness room is too busy. Other leisure centres locally are reporting a big increase in membership of their fitness rooms. June believes it is important to increase the size of the fitness room by incorporating one or both of the…show more content…
Probability % I - The fitness room will be an initial success but too few new members will be attracted. Usage will vary throughout the year. P 210,000 20% II - The fitness room will be very successful initially but then membership will slowly fall. Usage will be seasonal. P 225,000 50% III - The fitness room will be very successful. A lot of new members will be attracted and as existing members become more health conscious they will use the room throughout the year. P 250,000 30% Alternative 2 State of World Total annual revenue for the fitness room. Probability % I - The fitness room will be an initial success but too few new members will be attracted. Usage will vary throughout the year. P 240,000 50% II - The fitness room will be very successful initially but then membership will slowly fall. Usage will be seasonal. P 250,000 40% III - The fitness room will be very successful. A lot of new members will be attracted and as existing members become more health conscious they will use the room throughout the year. P 270,000 10% (The additional revenue equals the total revenue calculated above less the existing revenue of P 180,000). Cost of capital Laura suggests that it is appropriate to use a cost of capital of 7% for this project. Other related information from Laura Laura wants the following information to be considered. (1) Both squash courts 3 and 4 are in urgent need of
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