Operations

Case #10 - Murphy's Ice Land

Eduardo Black manages Murphy's Ice Rink, the only indoor rink in a northern US city of approximately 450,000. He currently runs a successful hockey program that more than breaks even in profits. His main objective is to increase profits by expanding his public skating program. The city's recreation department operates some outdoor rinks in the winter, but they do not offer regular skating programs, and these vary due to weather conditions. Eduardo has calculated that, with this new expanded program of 14 new sessions, he could significantly increase the number of patrons in a session at a given time, dramatically increase revenues through rentals, concessions, etc, enlist a new target audience, and develop a new market for "social activity" adapted from the roller-skating rinks. Monies from this new program and increased sessions would substantially increase profit potential, not only for rentals, but concessions as well. Eduardo has also taken into consideration the prime times for skating are Friday and Saturday evenings, and Saturday and Sunday afternoons, and he is well aware that just because he can implement these changes does not necessarily guarantee a profitable outcome.

Eduardo's fire and enthusiasm were dampened by the lack of patronage from his "young adult" constituents on Friday and Saturday evenings. Even though the Saturday and Sunday afternoon public skating sessions were successful, he felt he was lacking that "couples" draw he so desperately wanted. Eduardo, being a resourceful man, decided that, instead of limiting the sessions to adults only, or cutting the number of sessions, he would try a new tactic; he invested in new softer "mood" lighting, enlisted the help of a local rock station that catered to the "younger" crowd, advertised the Friday and Saturday evening sessions, and even offered a free skating session. Alas, despite all of Eduardo's efforts, the "social activity" market seems to have

slipped through his fingers. His cost benefit ratio is clearly skewed, and he must do something to offset his losses.

Eduardo's first tactical error was the lack of research regarding the expansion into the "social" scene. By research I mean evaluating the different outlets for "young" adults in his area such as meeting with the city's park department to discuss the turnout for their winter