Decisions that May Lead to Errors (Essay Sample)

MANAGEMENT
DECISION MAKING
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DECISION MAKING
Decision-making is the identification and selection of alternatives with the decision maker basing his or her reasoning on values and preferences. This process ensures there is a final choice, which may influence the triggering of an action. In a business such as a gym, decision-making ensures that the decision selected is the most profitable either programmed or unprogrammed decision. Making a programmed decision is easy, as the situation has occurred in the past but for an unprogrammed decision, there is uncertainty leading to logical reasoning.
Every business is in existence to make a profit and make gains on capital invested. It is important that all enterprises get the financial aspect correct to avoid over and underestimations. The gym business is in a boom as many individuals are starting to understand the importance of good health. Therefore, whenever there financial decisions, there is the need for proper assessment and evaluation. Gyms such as Power Punch Gym receive income from customers mainly through periodic membership subscription. The gym also makes money through the daily collections of those not willing to subscribe for longer periods. Hence, there is the need for the management to make a sound subscription and regular fees that are competitive to ensure that they are not too high while ensuring that the gym can still be profitable. It means that the gym management must ensure that it sets reasonable prices to the potential clients and to its existence. An error that occurs when it comes to setting fees is the overestimation of the expected customers. Overestimation of expected clients has an adverse effect on the fee chargeable. It is because of the concept of economies of scale. This concept ensures that as the number of customers goes up, the cost of providing the services decreases hence lower fees. Since it is unprogrammed decision, it is a bit tricky to the management. A possible solution to the estimation of the expected number clients is to consult large gyms to try to know the number of customers. The importance of sound financial decision is to ensure profitability of the business.
Many gyms may have grown and made huge profits over time. However, not all gyms may be in a position to maintain the revenue it earns as the number of clients may drop. It may repeatedly occur in the course of a gym's life. It meanings that the revenues made are not sustainable by the management. The management must come up with decisions to ensure that clients start to enroll in the gym again. As the management is deciding on how to attract clients