After months of weighing their options, the management team has decided to increase all park employee...

  
 

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After months of weighing their options, the management team has decided to increase all park employee wages from the currently blended rate of $11.50 per hour to $15 per hour, regardless of their position. It's a bold move, but they think it's the right one for the park, especially considering their difficulty keeping Paradise Park fully staffed, the national discussion surrounding a $15 minimum hourly wage and the park's recent commitment to DEI (Diversity, Equity & Inclusion). Now, they want to know the best way to pay for it and make it happen. Option 1: Pass increase onto customers While Paradise Park did raise its prices on food and beverages about 10 months ago due to increased costs resulting from supply chain issues, it's been several years since ticket prices were increased. Currently, 392 employees work in the park. Knowing that raising ticket prices can't be done too often, management decided the price of admission would go up $2. Option 2: Attract more visitors This would mean doubling your annual marketing and communications budget from $1M to $2M to include more advertising and public relations work. The firm you've chosen recommends a blend of highly targeted paid media, including ads on streaming platforms and social media driving to the park's own updated website. The firm also wants to leverage its own social media properties to amp up efforts. Further, they plan to position the new $15 hourly wage in a very positive light to get the benefit of earned media and news coverage. Option 3: Find cost savings Another way to pay for this increase in wages would be to find ways to save money. After examining expenses, it seems the areas that have the most potential for cost savings are food costs, office space (for corporate headquarters) and inventory. For food costs, with some negotiating, the park can save about 3% by switching vendors. By moving the current downtown high-rise to a mid-rise closer to the park, office space could be close to 20% lower. Lastly, the park could decide to stop carrying the lowest-performing 10% of unique inventory items. After months of weighing their options, the management team has decided to increase all park employee wages from the currently blended rate of $11.50 per hour to $15 per hour, regardless of their position. It's a bold move, but they think it's the right one for the park, especially considering their difficulty keeping Paradise Park fully staffed, the national discussion surrounding a $15 minimum hourly wage and the park's recent commitment to DEI (Diversity, Equity & Inclusion). Now, they want to know the best way to pay for it and make it happen. Option 1: Pass increase onto customers While Paradise Park did raise its prices on food and beverages about 10 months ago due to increased costs resulting from supply chain issues, it's been several years since ticket prices were increased. Currently, 392 employees work in the park. Knowing that raising ticket prices can't be done too often, management decided the price of admission would go up $2. Option 2: Attract more visitors This would mean doubling your annual marketing and communications budget from $1M to $2M to include more advertising and public relations work. The firm you've chosen recommends a blend of highly targeted paid media, including ads on streaming platforms and social media driving to the park's own updated website. The firm also wants to leverage its own social media properties to amp up efforts. Further, they plan to position the new $15 hourly wage in a very positive light to get the benefit of earned media and news coverage. Option 3: Find cost savings Another way to pay for this increase in wages would be to find ways to save money. After examining expenses, it seems the areas that have the most potential for cost savings are food costs, office space (for corporate headquarters) and inventory. For food costs, with some negotiating, the park can save about 3% by switching vendors. By moving the current downtown high-rise to a mid-rise closer to the park, office space could be close to 20% lower. Lastly, the park could decide to stop carrying the lowest-performing 10% of unique inventory items.

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Given The management has decided to increase the wages of employees of the park from 1150 per hour to 15 per hour considering the difficulty of keepin... View the full answer