Case Study

U-Beaut Apparel is a department store that operates across six different sites on the Gold Coast. Senior management allocates the total overheads across each of the different sites based on their proportion of the total company floor area available.

The site at Mermaid Beach has a coffee shop as part of the area used. At the end of 2008, the coffee shop did not achieve the profit target for contributing its proportion to covering the allocated overheads for the Mermaid Beach site. It did cover variable costs of staff wages and other resource inputs. Senior management decided that the coffee shop should be closed.

The coffee shop was located next to the ladies clothing department that occupied 70 per cent of the total floor space. In 2009, the space previously occupied by the coffee shop became an extension of ladies clothing making it 80 per cent of the total floor space. At the end of 2009, the performance of the ladies clothing area was significantly lower than the previous year and well under the required profit level for contributing to their share of the allocated overheads. Senior management is now considering closure of the Mermaid Beach site altogether.

Based on the case study, identify the people who should have been consulted in developing the operational plan for 2009 and the issues you would raise with them.

What reports or documentation would you consider relevant in relation to the activities at Mermaid Beach?

What KPIs would you use to assess the performance of the coffee shop and the ladies department in 2008?

Imagine you have to provide a brief report (one page) to U-Beaut Apparel senior management. Provide at least three recommendations for consideration and approval in developing the 2010 operational plan.