Decision to Expand or Not to Expand Services
Century 2000 Daycare Center, a local childcare center, based in Alabama, currently accepts children ages three weeks to 15, offering part-time and full-time care. Current hours of operation are 5:00 a.m. – midnight, Monday through Friday. According to the Department of Health and Human Services Administration on Aging (AoA) (2009), the US population is aging fast, and the growth of the older population will continue significantly into the future. Century realizes population growth within the 65 and older population brings significant opportunities to service this community, therefore owners and operators are trying to decide whether or not to expand services and provide adult daycare services for people 65 years and older.
According to the AoA, the count of people 65 and older was 37.3 million in 2006 but the AoA expects it to approximate 71.5 million by 2030 (Department of Health and Human Services Administration on Aging, 2009). Providing adult daycare for this population could result in a significant increase in revenue and profits for Century, if the rate of growth continues as expected, but it would also cause significant increase in risks and costs associated with the services provided.
Century’s owners and operators must decide whether to expand current daycare services based on the likelihood the 65 and older population in the United States will continue to increase in record numbers, affording an opportunity for significant revenue growth. Another option for Century is to continue with business as usual, only recognizing marginal revenue growth, thus forgoing the opportunity to recognize unprecedented profits.
In an attempt to make the right decision for the company, Century decided to research expanding based on population growth in the 65 and older segment of the US population. Century researched data sets obtained from the Department of...