Rocky Mountain Case Analysis

Written Analysis and Communication

(WAC)

Assignment

Rocky Mountain Case Study

ROLL NO. 15XPGDM37

To: Mr. Zachary Evans, Vice President of Operations

From: Joseph Mirola JM

Date: 18th June,2015

Subject: “Fitness Center” valuable asset of the company.

Thank you for allowing me to explain to you the benefits of having the company fitness center. Company half yearly reports indicate that the Fitness Center has led to an overall decrease in employee absenteeism, reduction in employee medical expenses, and an increase in productivity.

Also the medical costs are affected in a huge way given below :

• Frequent users (10% using 3 times a week): Average medical cost of $100 per year.

• Average users (25% using once or twice a week): Average medical cost of $300 per year.

• Non-users (65% not using center at all): Average medical cost of $500 per year.

We can balance cost of fitness center through greater productivity and lesser medical costs.

An emerging company is coming with state of the art fitness equipment to make their employee health frisk, in this situation if we shut our fitness centre it might be set back for our company. Fitness center can also act as an incentive to attract young talent in company.

Also employees will suffer as there is no other fitness center located nearby. Also those who joined us keeping in mind fitness center will feel betrayed and overall morale will fall and this may even lead to greater setback. I hope that you strongly consider keeping the Fitness Center because, in the long run, it will only increase company profits. Thank you!

Executive Summary:

Rocky Mountain Mutual is has recently opened a branch office in a remote area of Utah. The distinguishing feature of this branch is its fitness center which is lavishly built and provides facilities not found nearby. According to company records users of fitness center have shown reduction in their medical expense but the operating cost is too high and also only about 35% employees are using it. Zachery Evans, the vice president of the operations wants to close it due to expenses and space constraints. Analysis shows that company should continue with fitness center eliminating unnecessary stuff and using the space for office purposes. Recently one survey conducted inside the premises of the company among staffs to continue or not the fitness centre, 60% of the staff replied to be continued.

Situational Analysis:

 My view is that it could become a distinguishing factor for our company when compared with the rest, and also contribute to improve the external image of the organization. Moreover, the building was originally designed to be a fitness center, and will involve humungous costs to convert it into an office style space suitable for the new Corporate Information Systems Department, if at all it is possible. Such a move will also create a huge wastage of money in terms of all the equipments and other assets purchased for the fitness center, which will become useless. I agree with your concern that the upkeep of the fitness center involves a huge annual expense of $100,000. While it’s true that the cost per user is high for the fitness center as of now, it does not make sense to consider it as a reason to close it down. Most of the costs involved can be attributed to fixed costs like lighting, maintenance of equipment , swimming pool water costs etc, while the variable costs are low. This means that even if we increase the number of users at the facility considerably, the costs of maintaining the facility will not rise much from the present status. Ours is a company that has plans to grow in the next few years and a lot of young employees will be joining us shortly, who will definitely make better use of the fitness