Business Decision of River's Dance School
When making a drastic business decision such as the one proposed by
River’s Dance School, it is important to go about making the decision
in the appropriate manner, through the use of a formal decision-making
model process. This should be done with the aid of relevant
information generated in the accounting process and through an
evaluation of the effectiveness of the dance school’s ownership
structure.
When deciding whether or not to close the River’s Dance School, it is
in the best interests for Dana and David to follow a formal decision
making process such as the CACE decision making model.
CLARIFY.
The first step is to clarify the dance school’s objectives, diagnose
the problem and outline any possible constraints associated with
solving the problem.
Dana and David’s objectives when they established the River’s Dance
School was most likely to run a successful, profitable business with
good student relations and positive feedback. It is imperative that
Dana and David clearly identify these reasons, for running the
business as Dana and David can then ensure that they meet these
objectives in making a decision. The reason they are now contemplating
closing the business is because of the schools decreasing annual
profitability – an important objective that over the past three years
they have failed to meet. Using reports generated in the accounting
process, Dana and David now need to establish the reason behind the
decline in profitability such as ineffective advertising. In order to
turn this around there is however obvious constraints such as time,
money, legal issues a...
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... responsible for covering this
debt, by law. Even if it is solely one member’s fault, the others are
still responsible if he/she is unable to cover it, called unlimited
liability. Secondly disagreements are frequent in partnerships and can
result in the business being unworkable. Finally partnerships
generally have a limited life – with endings resulting from possible
disagreements, as mentioned or from the death of one partner for
example.
In conclusion it is essential that Dana and David follow a decision
making model before they decide on closing down the Rivers Dance
School, to ensure all alternate possibilities have been looked at.
However this may not revolve solely around items relating to the
business’s profitability, with the success of operating in a
partnership structure also a vital point to consider.