Returning to Sam’s Golf Pro Shop in the chapter, Sam really wants to hone in on what part of his sales package is working and what is not. In talking about it, Sam notes, “The easiest solution would be to hire a golf pro and put in a few more tees on the driving range. But these are costs it won’t be easy to justify if I don’t get both individual and group classes going strong. I also have to use the push from these activities to make sure that I get more merchandise sales, because a pro shop with dusty, out-of-date merchandise won’t help anyone out. I need a more comprehensive plan.”

To help do further analysis, Sam has pulled together actual unit sales in each of the categories of revenue (merchandise sales, instructional sales, driving range revenues) that he relies upon to make his business grow. These numbers are in the following table.

Sam needs some help in analyzing his results. Specifically, he wants to try to separate the causes for his gains and losses in the various categories of value-creating e orts he makes for his clients.

REQUIRED:

a. Complete a total gap and trend analysis for Sam’s business. Pay particular attention to sales trends that fall in the same revenue category but move in different ways.

b. What would you recommend to Sam?

c. Craft a two- to three- paragraph recommendation to Sam, including your views on whether he should hire a golf pro that would cost him $60,000 a year if this golf pro could improve both individual and group class quantities and all of the related merchandise and driving range revenues. Remember, if he hires a golf pro, he will have to add more tees to his driving range at the cost of $500 per tee. Factor these tees, which last a long time, into your assessed impact on Sam’s business this year. Assume that merchandise sales will go up by 20%, number of private instruction hours will increase to 1,000, number of classes taught will increase to 250, and number of buckets of golf balls sold will increase by 40%. He will need to add six tees to the driving range if he hires the pro.

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Sam's Golf Pro Shop Measure Plan Actual Number of sets of golf dubs sold 50 40 Number of packages of golf balls sold 1,000 1,200 Number of golf gloves sold 250 225 Number of bags of tees sold 1,500 1,600 Number of hours of private instruction 320 400 Number of golf dasses given 80 65 Number of golf sweaters sold 75 100 Number of golf jockets sold 40 50 Number of driving range budckets of balls sold 6,500 8,000 Total revenues from merchandise $40,750.00 $38,650.00 Total revenues from instruction $23,200.00 $23,750.00 Total revenues from driving range $32,500.00 $40,000.00 Total cost of goods sold $22,445.00 $27,055.00 Total operating costs $38,580.00 $35,840.00 Onerating profit $35,425.00 $39,505.00