Reference no: EM132733921

The Fit Stop Ltd. is a brand-new firm that will open its doors exactly four months from today. Its business objective is to sell all types of training, fitness, conditioning, and exercise equipment to the general public. The Fit Stop plans to specialize in this equipment and to provide customers with personalized advice geared to a customer's specific training or conditioning needs (e.g., training for a particular sport, rehabilitation from injuries, strengthening of back muscles to deal with back pain, general conditioning and fitness), whether the customer is eight or 80 years age.

• In order to provide high-quality advice, each store will employ a physiotherapist (to provide advice on problems such as injuries or chronic back pain) and a person with a bachelor's degree in kinesiology (to provide advice on training for various sports or other physical activities). A staff member will even sit down with customers and develop a personalized training or conditioning program that meets their own specific objectives and needs, at no cost to the customer.

• The remainder ofthe staffin the store will consist ofa manager, with a Bachelor ofCommerce degree, and sales staff, who will have at least high school diplomas. Due tothe long opening hours, it is expected that between 8 and 12 salespeople will be needed

• for each store. Because the stores are located in shopping malls, they will operate on a seven-day-a-week basis, open 9:00-9:00 weekdays, 9:00-6:00 Saturdays, and noon to 6:00 on Sundays.

• Aside from personally helping customers, the roles o f the physiotherapist and kine- siologist will be to train other employees in how each type of equipment can be used for various conditioning and rehabilitation purposes. Initially, sales staff will be given general training, but as time goes by, each salesperson will be expected to learn in depth about all the different pieces ofequipment, to help customers diagnose their needs accu- rately, and to be able to explain proper use ofthe equipment. Because ofthe high leveloftraining required, all employees will be full-time.

• The founder ofthe business is Susan Superfit, who has undergraduate degrees inkinesiology and commerce from the University of Saskatchewan. While at university, she participated in many sports (and suffered many injuries due to her all-out style ofplay). She came up with the idea for this business while laid up with one other injuries. While there were businesses that sold fitness and conditioning equipment, she often found that the people selling it had very limited knowledge and often gave poor advice on what to buy and how to use it. She has secured funding from private investors and from Growthworks, a large

• Canadian labour-sponsored investment fund. In order to get volume discounts on the equipment she will be purchasing and to beat competitors into the market, she wants tostart offquite large, with stores in major cities in Ontario and the four western provinces, before expanding to Qyebec and the Atlantic provinces. She knows that this is a risky strategy and that cost control will be essential to keep the business going long enough tobecome well known and develop a stable clientele. She does not expect the business to make a profit for at least one year, or maybe even two.

• Her main competitors will be sporting goods megastores and department and discount stores, each ofwhich sells some ofthe same equipment. Some ofthese outlets will be able to price their equipment lower than The Fit Stop will be able to, but none have the range of equipment that The Fit Stop will have, and none provide the personalized services that The Fit Stop will.

• Susan believes that the key to her business success will be highly motivated and knowledgeable employees who have a strong concern for their customers and who are able to work as a team with the other employees to provide the best possible customer service. Since no two customers are exactly alike, employees will have to be innovativein developing solutions that fit their needs. It will also be crucial to keep up with the latest fitness and training trends, as knowledge about fitness is continually increas- ing, along with new and different types of specialized equipment. A key aspect of strategy is to be the most up-to-date and advanced supplier ofnew products and techniques.

• Although Susan has given a lot of thought to her business, one thing she hasn't really given much thought to is how to compensate her employees. Since she doesn't really know much about compensation, she tends to feel that the safest thing would be to just do what her competitors are doing.

Problem 1: What compensation mix (components) would be appropriate for the employees of the Fit STOP? Briefly offer your justifications in favour of your recommendation.

Problem 2: Assuming that base pay is one of the components of your recommended mix, briefly examine the suitability of each of the base pay methods (as learned in the course) for the employees of Fit Stop Ltd. What would you recommend Susan to determine the base pay of her employees.