The document proposes opening a nightcare center called the Full Moon Nightcare Center to meet the needs of parents who work late hours. It will operate from 2:30pm to 10:30pm on weekdays and 1:00pm to 10:30pm on weekends. The center will provide activities, tutoring, and a safe environment for children ages 2 to 12 while their parents work. It will target middle-income parents and offer a membership discount. The business plan analyzes the growing childcare industry and identifies nightcare as an underserved market opportunity.
Executive SummaryThe demand for childcare services is increasi.docx
1. Executive Summary
The demand for childcare services is increasing and is expected
to grow through 2020.
Today, it is more common for both parents to work to provide
for their family compared to the typical old age structure where
the father would bring home the income, and the mother would
care for the family. We are aware that childcare services is a
multi-billion dollar industry. However, we have also recognized
that there are limitations as far as the hours of operations, and
cost to the current childcare industry. The average child care
center closes at 6:00 pm while many jobs extend pass those
hours. The average work week has increased to 47 hours,
according to Lydia Saad of Gallup. That is an hour and a half
longer than a decadnie ago. With that being said, our group’s
proposal is to open a nightcare center for those hard working
parents whose work day doesn’t end at regular hours.
The Full Moon Nightcare Center will segment the market based
on income, lower, middle, and upper class. Our company will
meet the needs and wants of parents that work late hours and
are in the middle class. Our night care center will operate
Monday through Friday from 2:30pm to 10:30pm and weekends
from 1:00pm to 10:30pm. We feel that offering different hours
than our competitors and by having a well-rounded, highly
qualified staff will create both opportunities and strengths to
our company. We will offer a variety of stimulating activities
that are appropriate for children ages two to twelve. These
activities will include a balance of outdoor activities, social
games, arts and crafts, and much more. Not only are we
providing fun, engaging games, we also have skilled tutors to
aid with homework and educational improvement. Parents will
feel confident that their children are in capable hands, while
also having a fun time.
Parents also have the wonderful opportunity to earn a discount
2. by opting for the membership. Our regular rate is $16 per hour.
However, if someone signs up the Full Moon Nightcare Center
membership, the price decreases to $14 per hour. This
membership discount is mutually beneficial for the customer
and our company. It will create loyal customers, a steady flow
of income, while also making the customers happy.
Our research led us to rent a four bedroom house in Fullerton.
The house is in a top safety rated neighborhood and provides a
lot of open space for safe and fun activities. There are three
elementary schools within a three mile radius of the house.
They are all walking distance which allows us to offer a
chaperoning service to children going to our nightcare center
after school. The house is also walking distance from two parks,
which both host youth sports leagues. First of all, this is a great
place to take the kids for sports and nature walks. Secondly, we
can easily promote our service to the youth league parents.
With our extensive advertising budget, we are able to invest in
flyers, social media, a mobile-friendly website, online
advertising, and radio advertising. By touching upon a wide
variety of mediums, we will reach our target market more
effectively. Our proximity to three elementary schools gives us
the opportunity to form a strong relationship with them and
reach our target market directly. As was mentioned previously,
we will also approach the youth sports leagues at each park to
promote our service to their parents. In addition, there are many
popular eateries in the surrounding area. By also targeting them,
we can reach those who work late restaurant hours.
The Full Moon Nightcare Center’s financial goal is to break
even within the first two years of operation. For our nightcare
service, we will be charging $14 per hour for membership
individuals and $16 per hour for non-membership individuals.
Based on research, we determined that it is most probable that
our daycare center will have two non-membership children and
four membership children per hour on average. If these numbers
hold true, we will have a profit of about $50,000 during our
first year of operations. In our pessimistic model, we
3. determined that we will break-even after the second year of
operations. For the next two future years, we determined that
we will have a steady growth rate of 10% of the first year and
20% of the first year respectively. This is because we are a
newer company and will gain market share as our service
becomes more well-known. Thus, as a business, we are a very
viable option and will start generating profits by the end of our
second year of operations.
Introduction
Child care is the action or ability of looking after children,
which can be someone else’s children or your own. There are
many different types of child care services such as, mother’s
helpers, babysitters, nannies, daycare centers, family day cares,
and relative cares. A mother helper is a kind of childcare
provider that help parents while the parents are still at home,
they are usually between the ages of 13 and 18. A babysitter is
someone that watches children in exchange for an hourly wage.
A nanny watches children most days for multiple hours and
usually has a weekly schedule. Nannies are usually more
involved with the family and are more dedicated to making their
job a profession. A daycare center is a drop-off child care
service that is usually in nonresidential areas. They usually
provide half or full-day care for children only during the day. A
family day care is a child care service at someone else’s home.
Finally, there is relative care, which is when relatives provide
child care to the children. This is more comforting to parents
because they trust them very highly and is a cheap form of child
care (Kate Bayless, 2013).
Dr. Sonya Michel, a Professor at the University of Maryland
states, “In the United States today, most mothers of preschool
and school age children are employed outside the home” (2011).
Michel also believes that mothers across America have invented
many different ways to have their children cared for when they
are working.
The child care centers came to the United States because of the
4. Industrial Revolution and out of response to the large amount of
immigration from 1815 to 1860. Kaspar Burger states in her
paper, “The first actual descendant of the French crèche was the
Nursery for the Children of Poor Women in New York City,
which was founded in 1854” (2012). They started out as day
nurseries, while both of their parents were working. This
prevented children from wandering the streets to fend for
themselves and from being put into orphanages. After the war,
most women went back to their home and a lot of these day
nurseries closed down.
It was not until the last thirty years, since women’s rights
began, that childcare has become popular again. The reason
behind this is that parents have become more dependent and
comfortable with both incomes during the past thirty years.
Today, the childcare service is a multi-billion dollar industry,
that has been constantly growing for the last thirty years.
Because women are deciding to work instead of staying at home
to care of their children, the rate of the daycare industry market
has increased significantly. The majority of the market has only
been consisting of day care services for children under the age
of 6 years old who haven’t started school. However, our
company believes that the industry has missed a large part of
the market, the single men or women that have children and men
and women that work the night shift. In order to fulfill the
needs and wants of the customers, a night child care center
needs to be created.
Brief Description of the Product
The concept of The Full Moon Nightcare Center is to focus on
the parents that work at night, providing their kids a safe place
to have fun and meet friends. The need of a service after five
has been a big issue for parents that work later than the typical
nine to five job. By creating a night child care center and
focusing on that specific target group, it will allow the company
to better serve the customers’ needs and wants.
Industry Analysis
5. In the United States, there has been a rise in the recognition of
the economic importance of child care. Early child care and
education is being understood as a crucial piece of social
infrastructure, which helps support child development in young
kids. Market Data Enterprise did marketing research and found
that the 2008 market size in the United States for child care
services was over $58.6 billion (2010). There is no company
that completely dominates this market in the United States. The
top six companies control around $2 billion of the total sales,
which is only 3.41% of the total market. Since this large market
size does not include babysitters, we can see there is a potential
to obtain a large amount of customers. Therefore, this would be
a beneficial investment. A marketing research firm called IBIS
World completed an industrial analysis stating that in January
2016 there was over 768,021 child care businesses in the United
States (2016). The number of child care businesses has been
increasing since the recovery from the 2009 recession. Due to
unemployment decreasing and more parents going back to work,
there is a growing need for child care services. First Research
forecasts that the child daycare services will have a steady
growth in revenue in US dollars of around 4% between 2016
and 2020 (2016). This is the result from the increase of
disposable income of families due to factors such as
demographics, income, and low-cost child care. This favorable
increase of the overall industry will drive in a large amount of
businesses just hoping to get a portion of the 60 Billion dollar
industry.
The need for a child care service for parents that work non-
working days or longer hours is greatly needed. Today, only a
handful of child care businesses offer 24 hour child care or
extended hours for parents. From Lynda Laughlin’s study on
Household Economics in 2011, she concluded of Mother’s that
are employed over 26.7% of 20.4 million Children under five
years old use multiple arrangements for child care (2011). That
is over 10.9 million children under five years old have to use
more than one type of child care. For mothers that are employed
6. and have children 5 to 14 years old, the need for multiple child
care arrangements is 21.7% of the overall 40.5 million children
(2011). This is about 24.1 million children needing more than
one child care service. This proves that parents are doing
anything in order to fulfill what they need in the childcare
industry.
There are a few competitors that would be competing with The
Full Moon Nightcare Center these are, babysitters and family
day care centers. Near Fullerton with a five mile radius, from
sittercity.com there are over 368 babysitters and over three
child care centers (2016). Babysitters are not our initial
competitors because our target market is children that have
parents that work at night consistently. Another target market
we are focusing on is parents that just want to go out which
babysitters would directly affect that market. While we are not
able to find the actual size of this particular competitor, but due
to the amount of active babysitters we know that we have to
take them into account.
There are centers that provide child care within a five mile
radius of our desired location, 1613 Central Ave Fullerton, CA
92831. Most of these child care centers start at 6:30am and
close at 6:00pm causing a large problem for the parents that do
not have the regular schedule. Therefore, our only competitors
are babysitters and family day care centers. The closest centers
to our location are the following:
-Morningside Presbyterian Children’s Center and Preschool
located at 1201 Dorothy Lane Fullerton, CA 92831.
-Friends in Christ 2311 located at E Chapman Ave Fullerton,
CA 92831.
-Little Angels’ Day Care & Montessori located at 2013
Nutwood Ave. Fullerton, CA 92831.
Our competitive edge over our competitors is that we offer
night care service whereas our competitors only offer daycare
services. Even though these centers are not our main
competitors, they are considered a threat because they are also
open during our hours of operation. The industry structure of
7. each competitor is also unique. Friends in Christ is a religious
school that offers day care. This is a weakness for the company
because they have narrowed their target market. On the other
hand, Morningside Presbyterian Children’s Center and
Preschool is also a school, but it is not as religious as Friends in
Christ because they offer Christian education and welcome all
religions. Their staff is CPR/First aid certified and Early
Childhood Education certified. One of their biggest resources is
that they offer free transportation service to and from school.
The facility offers a daycare environment with an additional
learning aspect. Little Angels’ Day Care & Montessori is a
daycare center that is home-based.
There are less expenses in running a daycare from home because
there is less stringent licensing requirements. In a home setting,
the business can operate with less employees because the
number of children will be less. According to code 102416.5
STAFFING RATIO AND CAPACITY, for a Small Family Child
Care Home, the maximum number of children cared for,
including children under age 10 who live in the home, is one of
the following:
· Four infants, or six children, no more than three of whom may
be infants.
· Six children, or up to eight children when one child is at least
six years of age and one child is enrolled in and attending
kindergarten or elementary school and no more than two infants
are in care. Parent notification and property owner consent must
be on file.
For a large family child care home, the maximum number of
children cared for when there is an assistant provider in the
home is either:
· Twelve children, no more than four of whom may be infants
· Up to 14 children when one child is at least six years of age,
one child is enrolled in and attending kindergarten or
elementary school, and
no more than three infants are in care.
8. The advantages of having kids in daycare is that helps children
develop social interaction skills, learning, etc. Also, it gives a
safe environment for the kids to go to after school. However,
there are also weaknesses. For example kids could learn about
something that their parents wanted to wait to tell them until
they were older. Child care centers typically have larger staff
(lots of caregivers/teachers, as high as 30+), larger facilities
with a more institutionalized feel, many more children
(anywhere from around 20 to 150 or more), and separate age
groups. A home-based child care program includesa home-like
environment, a closer teacher-to-child bond since the caregiver
often cares for the child the entire day, mixed age groups
allowing for more sibling interaction, better teacher to child
ratios since there are fewer children per teacher, a more flexible
caregiver who is accommodating to your needs, and typically
lower rates.
TRENDS:
With different child care alternatives, it is important to offer the
latest trends. Industry trends for child care are presented below:
Higher Standards- Parents want to leave their child in care of a
trusted person. Family day care providers can pursue
accreditation from the National Association for Family Child
Care (NAFCC). The NAFCC examines different practices like
the environment, developmental activities, and health.
Safety Standards- Safe surroundings is an essential for parents.
Additionally, having cameras around the premises is a new
trend to monitor both the children and the care providers.
Education- Parents are seeking places that not only offer care
but a place where their child can also learn. Centers offer
learning through reading, singing, and other daily activities.
Closer Relationships- Parents are also looking for feedback on
their child habits. It is important to build a strong relationship
between the parents, care providers, and children. Building a
relationship will help the child ease with the transition.
Technology- Technology is a common trend in any industry.
9. However, it plays a major role in child care. Childcare centers
use computers, tablets, and other electronics to entertain
children. Apps and programs are helping children learn material
while playing.
Specialized Services- There is a demand for specialized services
for children with Autism, Attention Deficit Hyperactivity
(ADHD), and other disabilities.
All of our competitors have a small market share, so we can
expect our market share to be small as well. This is an
advantage because parents may be more trusting toward a small
family child care center in comparison to a large corporate
daycare center (Allison Rizzolo, 2000). Even though we will
have a small market share, the child care segment is a $58.6
billion industry. Getting even a small portion of this would
make us a great and profitable company (Market data
Enterprise, 2010).
Market Analysis
The Full Moon Nightcare Center is offering a child care service
for children into the late hours of the night. This can be
appealing to working parents that do not have the typical nine to
five jobs. Many working parents have difficulty finding
childcare for their children, when most day care centers close in
the early evening. Therefore, our target market will be parents
that work late in the evening. The nightcare program would
include various activities and a sleeping room. This
environment will allow the children to gain communication and
social skills. With this environment, parents will be comfortable
leaving their children in our care.
According to the Center for American Progress, less than one-
third of children have a full-time, stay at home parent (Glynn).
In other words, more than two-thirds of children, do not have
someone at home all of the time to take care of them. This is
where the nightcare can come in. The 2010 census, resulted in a
population of 135,151 people in Fullerton, California. It also
showed that 18.9% of the population are children under the age
of 14 (Community Profile for Fullerton). Taking this deeper,
10. this would be about 25,544 children that live in Fullerton. To
continue, if two-thirds of these children do not have a mother or
father home all of the time to take care of them, this would be
about 17,029 children that would have to be put in a child care
service. This shows the large market that our company can
appeal to and that this would be a great business to start up.
Another statistic is that 75.2% of full-time employed mothers
use some type of child care part of the time. Also, 86.3% of
part-time employed mothers use a child care service also
(Glynn). This shows the vast size of the market our company
can cater to and satisfy their needs and wants. According to the
2014 Fullerton records, about 50.77% are females. Then, take
into consideration that 65,267 of Fullerton residents are
employed, which results in about 33,136 working women in the
city of Fullerton (Community Profile for Fullerton). Now relate
this to 75.2% of full-time employed mothers use some form of
child care, which equals about 24,919 working mothers that will
use a child care center. This shows the large market and
opportunity that our company can capitalize on. This shows the
great amount of opportunity that this company has, and this is a
financially attractive company and industry to enter.
Market Analysis Pie Chart:
From the graph that above, you can see that there is a large
segment of the market whose needs are not being met with child
care at night. Since many daycares end between 5:30-6:00pm,
the blue portion of the graph represents the population where it
would be very difficult or impossible to pick their children up
from daycare. Our business will provide great after school child
care, which has extended hours into the night for the
convenience of the customers and to satisfy their need.
Market Segmentation
The market can be segmented into three different categories,
lower class, middle class, and upper class. Since pricing can
11. influence who our target market is, it is best to divide the
market this way. The segment of our target market is middle
class working parents that have jobs that work late into the
night. This company will satisfy the need of the customer by
having a place to watch their child while they work. For
working parents, it can be extremely difficult to find someone
to watch their children. Furthermore, hiring a nanny or
babysitter can be very expensive. If the working parent is
making minimum wage or even a little above minimum wage,
her pay check would not be enough to hire a nanny or babysitter
and provide for their family. These working parents need a
better solution that is less expensive, but still satisfies their
need. The Full Moon Nightcare Center will do both of these
things by providing a quality and relatively inexpensive
alternative to hiring a nanny or babysitter. This helps them by
eliminating the process of trying to find a babysitter or nanny.
This would be a great alternative for them.
SWOT Analysis
The SWOT Analysis is a tool that demonstrates the strengths,
weaknesses, opportunities and threats associated with opening a
night care center.
Strengths
Night care service is a business that is not typically seen
because most child care
services are offered during the day. In today’s world, it is
crucial that we give alternatives to
parents who work late. The night care center will give parents
the peace in knowing that their kids are being supervised by
licensed babysitters. The children will benefit from a learning
environment where they will interact and socialize with other
children at the center. Background checks will be administered
to all staff for the protection of the children. The facility will be
near schools for the parents’ convenience. The night care center
is a good option for parents who would otherwise leave their
children with babysitters or home alone.
12. Weaknesses
There are not many weakness is opening a night care center
because it is a service
that is not offered by many. One main weakness with opening a
night care center is that this is a
new service that is being offered. Therefore, there is no
community reputation. There is also a large start-up cost that
encompasses furniture, rent, equipment, etc.
Opportunities
There are several opportunities that arise with opening this
center. There is a high demand for parents working late shifts.
The center is nearby schools for easy transportation. Opening
the first center will allow expansion to other communities.
There will be different advertising techniques to gain
recognition. Finally, establishing business awareness within the
community will help us dominate the market.
Threats
Our main threat is babysitters. They can also offer night care
services and most likely at lower prices. Another possible threat
is daycare centers. Daycare centers can see this as an
opportunity and might want to offer night services as well. We
are confident that if we meet and exceed the parents’
expectations, we will generate adequate revenue. Our friendly
environment will ensure that parents bring their children and
recommend us to friends and families.
Market Strategy
Marketing/business goals
· Break-even within the first two years
· Generate profits within the first three years
· Increase sales by 10% within the second year and 20% in the
third year
· Stimulate brand awareness
· Expand into one or two more location in Southern California
13. within three to five years.
As our team researched and evaluated all calculations from
variable costs, overhead costs, and fixed costs, we are confident
that the Full Moon Nightcare Center has the potential to break-
even within the first two years. As demonstrated on the
financial analysis, our revenue for the first year is estimated to
be $253,440. The cost and expenses for our services is roughly
around $203,181. Thus, not only will we meet our break-even
mark, but we will also generate a profit of $50,259 in our
realistic model. As a result, we can take this as an opportunity
to nurture and grow our company. As a small start-up business,
we want to make it our priority to improve in every way.
Through experience, we can determine what areas we need to
enhance, whether it is: customer relations, number of hours,
variety of activities, or focusing more on school work. These
factors are all important in the contribution of higher sales. As
mentioned above, we would like to increase sales by 10% in the
second year, and 20% in the third year. To achieve this goal, we
must stay on top of our competitors and promote our brand
effectively.
Once the Full Moon Nightcare Center is established at our
prime location 1613 Central Ave, Fullerton, CA 92831, we can
further focus our attention on increasing our presence in nearby
cities in Southern California. One city that we considered is
Anaheim because the population is in the high 300,000s, and the
median household is just slightly under our target income
bracket. Since we do plan on expanding within the next three to
five years, monitoring the city of Anaheim median household
income in the meantime can dictate whether we will move
forward with that location as our second establishment or
choose a different location.
Detailed Description of the Product
The Full Moon Nightcare Center is a service based facility that
provides childcare services for parents that have to work late
hours. Since most facilities operate from 6am to 6pm, this
caters to parents that have the typical nine to five job.
14. Therefore, working parents that have occupations in the
restaurant, hospital, entertainment, and retail industries are
unable to take advantages of those hours. Fortunately, here at
the Full Moon Nightcare Center, we are available from 2:30pm
to10:30pm. Along with the extended hours, parents can take
advantage of the quality of service we aim to deliver for both
the parent(s) and their children.
Staff
Parents that decide to have their children attend the Full Moon
Nightcare Center can feel at ease knowing that their children
are in the hands of professionals. We make it our duty to
provide a safe environment for the children. Every staff member
that is hired will have to meet strict qualifications. Before even
being considered, applicants must be well educated, have at
least one year of experience working with kids, and have special
skills. Some skills required include proficiency in art, music,
dance, or sports. In addition to that, they must pass a drug test
and have no criminal background. Once all standards are met,
we would then pay for their CPR certification and additional
training.
Transportation
The Full Moon Nightcare Center is within walking distance of
many nearby elementary schools, so we do not feel it is
necessary to offer vehicle transportation. However, we will
have our staff meet the children at the school and escort them to
our facility. Thus, the children can use their energy in a healthy
manner while the parents can feel a sense of comfort and relief
knowing that their children arrived at the nightcare safely. Once
all the children arrived, we will send out an email or text letting
the parents know that they have arrived at our facility.
Activities
At the Full Moon Nightcare Center, children can enjoy many
fun games, outdoor space, and extra curricular activities that we
have set up for them. Below is an illustration of a sample chart
of activities that you could expect from the Full Moon
Nightcare Center. As you can see, we offer kickball, soccer,
15. basketball, dance, music, art, and movies. The group activity
time slot is scheduled to be from 3:30pm to 4:30pm because we
want to make sure that the kids have enough time to do their
homework and appreciate the tutoring services that are offered.
Target Market:
Middle Income Parents
The Full Moon Nightcare Center target market is aimed toward
working middle class parents who earn an annual income of
$60,000 to $70,000. Since we are charging a fee of 16 dollars
per hour for non-membership clients and 14 dollars per hour for
membership clients, we believe that the middle-income bracket
would be the best fit in terms of financial viability. We believe
that the lower income bracket would not have enough
disposable income to meet our rates, and the upper income
bracket would be more in favor of hiring a nanny. Taking this
into account, we have reviewed three potential cities to
determine the location we want to start offering our services to:
Anaheim, Fullerton, and Cypress.
According to the United States Census Bureau, we found that
the city of Anaheim has a population of 346,997, Fullerton’s is
135,235, and Cypress’s is 49,240 (2014). By evaluating the
populations, we can estimate how big our potential market is.
However, based on data from the United States Census Bureau,
the median household income held in these cities are: $59,707
for Anaheim, $65,909 for Fullerton, and $83,819 for Cypress
(2014). As a result, we can exclude the city of Cypress.
Although Anaheim has a bigger market, it does not meet the
income bracket range, leaving us with our target market city of
Fullerton, California.
It is also important to note that, although we are targeting
middle class parents that live in Fullerton, California, we are
also narrowing our target market for those that are in demand
for later hours. Some individuals in our target market include:
staff in the restaurant industry, hospital industry, retail
industry, and parents that are in need of alone time to go on
16. occasional dates. This market has been overlooked, and the Full
Moon Nightcare Center’s goal is to meet their demand with our
operating hours of 2:30 to 10:30pm.
Marketing Mix
1. Product
What is it?
The Full Moon Nightcare Center is a facility that provides a
safe and fun environment for children whose parents work late
night. Parents can drop off their children and pick them up later
in the night after their late shift. Our staff of trained and
certified caregivers set the standard for childcare and will treat
each child with love and care.
What do we provide?
The Full Moon Nightcare Center provides children between the
ages of two and twelve with a host of fun activities for each age
group, healthy balanced meals, comfortable sleeping quarters,
and designated homework time for educational improvement.
· ACTIVITIES: The activities vary by age group from reading
to sports. For example, the children in the older age range (7-
12) will be provided with a supervised sports tournament in the
sport of choice. For those who prefer not to join the sports
tournament (medical reasons or simply uninterested), they can
replace that activity with half an hour of outside play. For the
younger age range (2-6), there will be choices between arts and
crafts, building blocks/toys, and board games. Once each age
group is finished with their own activity, the two age groups
will come together along with the staff for a group activity.
During free time we allow an allotted time of video gaming and
electronics. A detailed schedule of homework, activities, snack,
and meal time will be provided.
· STUDY TIME: Homework and study time is provided for
those who have assignments due or those who need tutoring in
certain subjects. We have staff members who provide tutoring in
math, science, english, and reading from kindergarten to the
sixth grade level. An hour a day is designated for homework and
17. study time between activities. For those who do not need this
service, there will be indoor activities such as board games,
video games, arts and crafts, etc. During this time, the younger
group will be taking a nap. It is up to the parent(s) to let the
staff know which subjects the child needs help with and what
assignments are to be completed.
· FOOD: Snacks and meals are predetermined, taking into
account any dietary restrictions and allergies. We also like to
incorporate the children's favorite foods as long as they are
consistent with a healthy and balanced diet. For children who
adhere to a specialized diet, parents are asked to provide pre-
made meals or ingredients that our staff will prepare. These
meals must be approved (allergies/dietary restrictions) before
the parents provide them.
· NAP TIME/STORY TIME: We have set aside an hour each
afternoon for nap time/story time for the 2-5 year-olds (napping
is optional for 5 year-olds, decided by parents). During this
time, the older children will be working on homework with the
tutors or participating in free-play. We will provide comfortable
beds and cots with sheets, pillows, and blankets. Once bedtime
approaches, we will provide twin sized bunk beds divided by
age group. Bedtime is at 7:00pm for the younger group and
8:00pm for the older group. The staff will be checking in on the
children periodically until each child is picked up. Pick up can
be any time until we close at 10:30pm.
How do I sign up?
Parents can sign up for our night care service through our
website or onsite at our care center. Sign-ups involve filling out
the required information for each child which includes:
allergies, medication, illnesses, emergency contacts, and special
requests such as napping, bedtime, and food preferences. The
form takes approximately 10 minutes to fill out.
Hours of Operation:
· Mondays-Fridays 2:30pm-10:30pm
· Weekends 1:00 pm-10:30pm
18. 2. Price
Our night care service is provided at $16 an hour, constant rate.
The average cost of child care in Fullerton according to
care.com is $11.50 per hour plus a fee for each additional child.
Although our price is higher, we are offering a rare service that
is not as readily available.
Those who require our services regularly can utilize our
membership option. Instead of paying $16 per hour, members
will only pay $14 per hour. We offer this membership on a
monthly or yearly basis depending on the customer’s
preference. By becoming a member, customers will save as
much as $496 a month and $5,340 a year.
Check-in: 2:00pm-3:00pm
Snack time: 3:00pm-3:30pm
· Cheese and crackers
· Carrots, dip, and pretzels
· Fruit cups and yogurt
· Veggies, hummus, and pita bread
· Whole grain cereal treats
Age Group Activity Time: 3:30pm-4:30 pm
· Ages 2-7: Arts and crafts, board games, video games, dance,
etc.
· Ages 8-12: Sports tournament→ Soccer, basketball, or
volleyball
Nap Time & Homework: 4:30pm-5:30pm
· Ages 2-5: Nap time/ Story Time
· Ages 6-12: Homework/study or quiet free time (read, draw,
etc.)
Dinner: 5:30pm-6:15pm
· Macaroni & cheese with broccoli
19. · Spaghetti and meatballs with peas
· Grilled skim cheese sandwich and tomato soup
· Chicken noodle soup
· Grilled chicken pizza
Group Activity: 6:15pm-7:00pm
· Musical chairs
· Hide and go seek
· Tag
· Dance party
· Obstacle course
Bed-time for ages 2-6: 7:00pm-7:30pm
· Ages 7-12 have an hour of quiet free play
Bed-time for ages 7-12: 8:00pm-8:30pm
· Older kids can forgo bedtime with permission from their
parent
Pick-up: 10:30pm
3. Place
We considered three cities: Fullerton, Cypress, and Anaheim.
As was detailed in the Target Market section, Cypress is above
our desired income bracket and Anaheim is below our desired
income bracket. The median income for Fullerton is in the
middle of our $60,000 to $70,000 target income bracket sitting
at $65,909.
Once we chose a city, we looked for a building or house within
a mile of at least one elementary school. We located a closed
Albertsons grocery store at 120 N Raymond Ave Fullerton, CA
92832. We considered this location because of all the potential
use of space. However, the neighborhood did not fulfill our
requirements, and the rent is expensive.
We located a house for sale at 1613 Central Ave, Fullerton, CA
92831 with the cross streets, E Chapman Ave and N Raymond
20. Ave. The rent is affordable at $2,775 per month, and it is within
a one mile radius of three elementary schools. It is also close to
our headquarters at California State University, Fullerton.
The house is 1,384 square feet with 4 bedrooms and 2 baths and
features a large backyard. It is near two parks that are three
minutes away by drive and fifteen minutes away by walk. In
addition, the E Chapman Ave / N Raymond Ave is a great
option for families, according to NeighborhoodScout's research
on this neighborhood. The combination of top public schools,
above-average safety ratings, and owner-occupied single family
homes, makes this neighborhood among the top 7.9% of family-
friendly neighborhoods in the state of California. Because of
these reasons, we chose this facility as our location of
operations.
4. Promotion
What are we promoting?
Our main goal in promoting is to create awareness of our
service and convey its benefits.
The best way to create awareness is to emphasize what
differentiates us from other child care services. Parents now
have the ability to leave their child in capable hands while they
work late at night. By emphasizing our unique service, we can
appeal to our target market, create awareness, and leave a
lasting impression.
Promoting our benefits is another way we will gain the attention
of our target market. We will make sure to emphasize the
following benefits to appeal to our target market’s needs and
wants:
· Extended hours for those parents who work past the nine to
five job
· Tutors available for help with homework and educational
improvement
· A variety of activities from the latest video games to dance
parties
· Discounts for those who become members
21. Where are we promoting?
Our target market is made up of middle income parents who
work past the regular working hours, specifically in Fullerton,
California. To promote to our target market we will reach out to
the E Chapman Ave / N Raymond Ave neighborhood, the
surrounding parks, restaurants, and schools.
We will speak to the faculty of the surrounding elementary
schools and seek to partner up with them and their after-school
program. With their help, we can reach a lot of parents who
already use an after-school program who may be in need of our
service. This can serve as a convenient transition for the parent.
There are two parks within one mile radius of our location:
Acacia Park and Beyerrum Park. Both parks have a recreation
center that hosts youth leagues in a variety of different sports.
By reaching out to these recreation centers, we will have access
to many parents with children 12 and under who could
potentially use our service.
There are several restaurants within half a mile of the property
due to the surrounding colleges. By promoting at these
restaurants, we can potentially reach people who work those
late night hours. These late night workers could have children
who need to be looked while they are working.
How are we promoting?
We will promote our service by word of mouth, flyers, social
media, a mobile-friendly website, online advertising, and radio
advertising. According to our income statement, we have
allocated $12,000 for advertising. Using this budget, we will
have the ability to extensively promote our service. We believe
that advertising using a variety of mediums will establish our
presence and encourage potential customers.
Our first step in promoting will be reaching out to the
surrounding elementary schools. It makes sense to start here
because we are likely to have direct access to our target market.
Most schools have some sort of after-school program where
22. parents pick up their children after work. We will reach out to
these programs and find out if there are parents in need of our
service. Our goal is to establish a good relationship with the
surrounding schools because they will have the most influence
over our target market.
In addition to reaching out to the schools, we will also hang up
and hand out flyers in our target areas (schools, parks,
restaurants, etc.). These flyers will have our information on it
as well as our unique logo that catches the attention of foot
traffic. Our flyers will emphasize our night time availability,
something that isn’t offered by other child care centers. With
eye-catching colors, bold font, and strategic placement, our
flyers will be a positive investment. Printing 2,500 flyers will
cost around $50, which leaves a large amount of the advertising
budget up for use.
Advertising through mobile platforms is the next big thing in
marketing. We will take advantage of this new frontier by
creating a mobile friendly website. The design of the site will
be simple, clean, modern, and easy to use. The reason we want
to keep it simple is due to the frustration of navigating a
website on such a small screen. We will put our website address
on our flyers. All our information including registration will be
readily available on our website making the registration process
a breeze. Having all our information readily accessible will
encourage our potential customers to consider our service.
In addition to a mobile-friendly website, we will also utilize
online advertising. Online advertising is more cost effective,
measurable, and accessible than traditional advertising. The
digital age has changed the way people obtain information. We
must change with it if we are going to reach our target market.
First, we will conduct research on which websites are most
popular among our target market. Secondly, we will determine
the size, location, and quality of our ads. Thirdly, once we have
figured out the logistics, we will strategically place our ads
based on our target market and research.
Since we are a new company, we should also focus on
23. increasing our company presence. We can do this by promoting
our company through social media: Facebook, Instagram, and
Twitter. Through social media, we will cater to the opinion
leaders since they have the most influence in the realm of social
media. By emphasizing our unique child care service, we plan to
catch the attention of people who serve as opinion leaders to
many parents. With their credibility and loyal followers, we can
reach and encourage many people to consider our service.
While online advertising is the new frontier, radio advertising is
surprisingly still an effective medium for marketing. According
to Nielsen Catalina
Solution
s, in this first major radio effectiveness study, the research
found that each dollar spent on ads generated an average sales
return of $6 from the listeners in the 28 days after they heard
the ads. The first step in creating a significant radio ad is to
grab the attention of the listener. The initial second of the ad
will determine whether or not people will continue to listen.
Secondly, the ad needs to be distinctive. People are exposed to
hundreds of ads a day that try to steal their attention. The most
important thing is to stand out in their minds. Lastly, the
message needs to be simple. Radio ads do not have the added
help of visuals like commercials on TV. It needs to be clear if it
is going to make an impact.
Financial Analysis
24. Included in our financial analysis are realistic, optimistic, and
pessimistic pro-forma income statements as well as a
contribution margin income statement for the break-even
analysis for our first three years of operations. The revenues
were derived by multiplying the hourly fee of $14 for
membership clients and $16 for non-membership clients by the
expected number of hours that the daycare will be open during
the year. Our nightcare will be open for eight hours a day, 360
days of the year, which equals 2,880 total hours that we will be
open per year. Since Kindercare is one of the most prominent
local daycare centers, we decided that it would be beneficial if
we used them as a benchmark for comparison purposes. After
calling Kindercare, they said that they have about 60-70
children per hour during operations (K. Funk, personal
communication, April 25, 2016). We determined that since we
were a new company with less capacity, we would be able to
have ten percent of the amount of customers that they have.
Since membership clients will be given a discount, we
determined that we would have, on average, four membership
clients per hour and two non-membership clients per hour
during our hours of operations. Based on this model, we would
generate a total of $253,440 in revenues during our first year of
operations. For our breakeven calculation for our realistic
income statement, we determined that we would need $177,896
to break-even during our first year of operations. This was
25. determined by dividing our fixed expenses by our contribution
margin ratio.
Furthermore, since our company is new and will gain more
market exposure during our first couple of years of operations,
we predict that we will have a growth rate of 10% in sales based
on our first year, in year two, and a growth of 20% in sales
based on our first year, in year three.
Moreover, we believe that our location will play a huge role in
these predictions. The address of our facility is 1613 Central
Ave, Fullerton, CA 92831. This house is in a nice middle class
neighborhood that is next to a couple of elementary schools. We
believe that advertising at these schools will attract customers
because our facility is in walking distance of their houses and
schools.
For our expenses, we will have startup costs for furniture,
hiring and training, appliances, and recreational equipment that
will total $14,166. In addition, we will have two employees
working per hour that will be paid $12 each during our first
year of operations, $12.50 during the second year, and $13
during the third year. We wanted to increase their wage to
incentivize them to stay with our company. In addition, we will
have a manager that oversees the schedule and facility. They
will be paid $55,000 per year. Also, we had depreciation
expenses. We depreciated the recreational equipment,
appliances, and furniture over seven years on a straight-line
26. basis. Lastly, we will have other expenses like marketing, food,
toiletries, utilities, and rent.
Taking all of this into consideration, our company will break-
even in our second year in our pessimistic model. This is a very
safe investment to make that will yield returns. In the future,
after our first facility stabilizes, we will start expanding into
other cities throughout Orange County that fulfill the necessary
requirements of earning a good return on investment.
Full Moon Nightcare Center
Realistic Income Statement
For the Years Ending [Dec 31, 2016, Dec 31, 2017, and Dec 31,
2018]
Revenue
2016
2017
2018
27. Daycare Service(nonmembership)
$ 92,160.00
$ 101,376.00
$ 110,592.00
Daycare Service(membership)
161,280.00
177,408.00
193,536.00
Total Revenues
$ 253,440.00
$278,784.00
$ 304,128.00
[42]
Cost of Goods Sold
Wages of Babysitters
$ 69,120.00
28. $ 72,000.00
$ 74,880.00
Total Cost of Goods Sold
$ 69,120.00
$ 72,000.00
$ 74,880.00
[42]
Gross Profit
Gross Profit
$ 184,320.00
$206,784.00
$ 229,248.00
[42]
Period Expenses
33. 670.86
670.86
670.86
Depreciation on Recreational gj ggg Equipment
482.86
482.86
482.86
Depreciation on Appliances
441.43
441.43
441.43
Total Additional Expenses
$ 107,895.15
$110,795.15
$ 113,695.15
Total Period Expenses
$ 134,061.15
34. $120,795.15
$ 121,695.15
Net Income Before Taxes
$ 50,258.85
$ 85,988.85
$ 107,552.85
Full Moon Nightcare Center
Contribution Margin Income Statement
For the Years Ending [Dec 31, 2016, Dec 31, 2017, and Dec 31,
2018]
Revenue
2016
2017
2018
Daycare Service(nonmembership)
$ 92,160.00
40. $ 106,895.15
$ 104,895.15
Net Income Before Taxes
$ 53,854.00
$ 89,584.00
$ 111,148.00
Contribution Margin Ratio
0.69176136
0.69905016
0.70512416
Break Even Sales
$ 177,895.38
$ 152,914.85
$ 148,761.25
Full Moon Nightcare Center
41. Optimistic Income Statement
For the Years Ending [Dec 31, 2016, Dec 31, 2017, and Dec 31,
2018]
Revenue
2014
2013
2015
Daycare Service(nonmembership)
$ 138,240.00
$ 152,064.00
$ 165,888.00
Daycare Service(membership)
201,600.00
221,760.00
241,920.00
Total Revenues
47. 1,200.00
1,600.00
2,000.00
Food and Drink (V)
5,000.00
7,000.00
9,000.00
Miscellaneous Expenses (V)
5,000.00
6,000.00
7,000.00
Depreciation on Furniture
670.86
670.86
670.86
Depreciation on Recreational gj gg g Equipment
482.86
482.86
482.86
Depreciation on Appliances
48. 441.43
441.43
441.43
Total Additional Expenses
$ 108,095.15
$111,495.15
$ 114,895.15
Total Period Expenses
$ 134,261.15
$121,495.15
$ 122,895.15
Net Income Before Taxes
$ 136,458.85
$180,328.85
$ 210,032.85
Full Moon Nightcare Center
Pessimistic Income Statement
49. For the Years Ending [Dec 31, 2016, Dec 31, 2017, and Dec 31,
2018]
Revenue
2014
2013
2015
Daycare Service(nonmembership)
$ 46,080.00
$ 50,688.00
$ 55,296.00
Daycare Service(membership)
120,960.00
133,056.00
145,152.00
Total Revenues
$ 167,040.00
$183,744.00
50. $ 200,448.00
[42]
Cost of Goods Sold
Wages of Babysitters
$ 34,560.00
$ 36,000.00
$ 37,440.00
Total Cost of Goods Sold
$ 34,560.00
$ 36,000.00
$ 37,440.00
[42]
Gross Profit
55. 1,600.00
Food and Drink (V)
3,000.00
5,000.00
7,000.00
Miscellaneous Expenses (V)
3,000.00
3,500.00
4,000.00
Depreciation on Furniture
670.86
670.86
670.86
Depreciation on Recreational g gg Equipment
482.86
482.86
482.86
Depreciation on Appliances
441.43
441.43
56. 441.43
Total Additional Expenses
$ 103,695.15
$106,595.15
$ 109,495.15
Total Period Expenses
$ 129,861.15
$118,595.15
$ 120,495.15
Net Income Before Taxes
$ 2,618.85
$ 29,148.85
$ 42,512.85
Full Moon Nightcare Center
Startup Costs
Furniture Cost
59. 360.00
1 Xbox One
300.00
1 Wii U
320.00
10 Video Games
600.00
1 Basketball Hoop
200.00
Basketballs, Footballs, Baseballs
100.00
Total Recreational Equipment Cost
$ 3,380.00
Other Startup Cost
61. According to our financial and other analyses, investing in The
Full Moon Nightcare center could yield great returns. Based on
our expected net incomes and break-even analysis, it would take
two years to generate a positive net income in our most
pessimistic scenario. This means that there is very low risk and
a possibility of great returns as an investor. In addition, our
company is experimenting with a new business concept. Since
most daycare centers are specifically open only during the day
time, we thought that there is a huge opportunity in the market
that we can take advantage of. Not only will we be providing a
new service, our facility will have state-of-the-art equipment,
appliances, and furniture as well as certified babysitters to
ensure that the children have a great time and want to come
back. In addition to having all of these amenities, we will have
a schedule of activities that the children can partake in order to
get the most out of their day care experience. Additionally, our
facility is located in a prime spot for our target market. It is in a
nice middle class neighborhood that is in walking distance to a
couple of elementary schools. Furthermore, since the number of
households in which both spouses work is on the rise, this
increases the target market compared to that of a few years ago.
Because Orange County has a huge middle class population, it
would be the perfect place to launch our nightcare service.
Moreover, once the first facility has a stable stream of revenues
62. and customers, we will expand to other locations in Orange
County. This will give us the opportunity to increase our
sources of revenues. In conclusion, based on all of these factors,
it would The Full Moon Nightcare Center would make a great
investment.
Motivation: From Concepts to Applications
Chapter Eight
1
Job Design Theory
Characteristics:
Skill variety
Task identity
Task significance
Autonomy
Feedback
Job Characteristics Model (JSM)
Identifies five job characteristics and their relationship to
personal and work outcomes.
63. 2
Job Design Theory (cont’d)
Skill Variety
The degree to which a job requires a variety of different
activities (how may different skills are used in a given day,
week, month?).
Task Identity
The degree to which the job requires completion of a whole and
identifiable piece of work (from beginning to end).
Task Significance
The degree to which the job has a substantial impact on the
lives or work of other people.
3
Job Design Theory (cont’d)
Autonomy
The degree to which the job provides substantial freedom and
discretion to the individual in scheduling the work and in
64. determining the procedures to be used in carrying it out.
Feedback
The degree to which carrying out the work activities required by
a job results in the individual obtaining direct and clear
information about the effectiveness of his or her performance.
The way elements in a job are organized (job design) impacts
motivation, satisfaction, and performance.
4
CharacteristicsExamples
Skill Variety
High varietyThe owner-operator of a garage who does
electrical repair, rebuilds
engines, does body work, and interacts with customers
Low varietyA bodyshop worker who sprays paint eight hours a
day
Task Identity
High identityA cabinetmaker who designs a piece of furniture,
selects the wood,
65. builds the object, and finishes it to perfection
Low identityA worker in a furniture factory who operates a
lathe to make table legs
Task Significance
High significanceNursing the sick in a hospital intensive care
unit
Low significanceSweeping hospital floors
Autonomy
High autonomyA telephone installer who schedules his or her
own work for the day, and decides on the best techniques for a
particular installation
Low autonomyA telephone operator who must handle calls as
they come according to a routine, highly specified procedure
Feedback
High feedbackAn electronics factory worker who assembles a
radio and then tests it to
determine if it operates properly
Low feedbackAn electronics factory worker who assembles a
radio and then routes it
to a quality control inspector who tests and adjusts it
Examples of High and Low Job Characteristics
67. Alternative Work Arrangements
Alternative Work Arrangements
Flextime
Employees work during a common core time period each day
but have discretion in forming their total workday from a
flexible set of hours outside the core.
Job Sharing
The practice of having two or more people split a 40-hour-a-
week job
Another Alternative: Telecommuting
Telecommuting
Employees do their work at home at least two days a week on a
computer that is linked to their office.
The Virtual Office
Employees work out of their home on a relatively permanent
68. basis.
Typical Telecommuting Jobs
Professional and other knowledge-related tasks
Routine information-handling tasks
Telecommuting
Advantages
Larger labor pool
Higher productivity
Less turnover
Improved morale
Reduced office-space costs
Disadvantages (Employer)
Less direct supervision of employees
Difficult to coordinate teamwork
Difficult to evaluate non-quantitative performance
11
Employee Involvement
69. A participative process that uses the input of employees to
increase their commitment to the organization’s success.
By increasing worker autonomy and control over work lives
(involvement), organizations:
Increase employee motivation
Gain greater organizational commitment
Experience greater worker productivity
Observe higher levels of job satisfaction
Types of Employee Involvement Programs
Participative Management
Subordinates share a significant degree of decision-making
power with their immediate superiors
Representative Participation
Works councils
Groups of nominated or elected employees who must be
consulted for any personnel decisions
Board representative
An employee sits on a company’s board of directors and
represents the interests of the firm’s employees
70. Four Major Strategic Reward Decisions
What to pay? (pay structure)
How to pay individuals? (variable pay plans and skill-based pay
plans)
What benefits to offer? Do we offer choice of benefits?
(flexible benefits)
How to build recognition programs?
How to Pay - Variable Pay Programs
Types of Variable Pay Programs
A portion of an employee’s pay is based on some individual
and/or organizational measure of performance
Piece Rate:
Workers are paid a fixed sum for each unit of production
completed
Merit-Based:
Based on performance appraisal ratings
Gap increasing between average and top-performers
Bonuses:
Rewards employees for recent performance
71. How to Pay - Skill-Based Pay Programs
Types of Skill-Based Programs:
Also known as knowledge-based pay sets pay based on skills or
number of jobs an employee can perform
Profit Sharing:
Organization-wide programs that distribute compensation based
on some established formula designed around a company’s
profitability
Gain Sharing:
An incentive plan in which improvements in group productivity
determine the total amount of money that is allocated
Employee Stock Ownership Plans (ESOPs)
Company-established benefit plans in which employees acquire
stock as part of their benefits
What Benefits to Offer - Flexible Benefits
Employees tailor their benefit program to meet their personal
need by picking and choosing from a menu of benefit options.
Modular Plans
Predesigned benefits packages for specific groups of employees
Core-Plus Plans
A core of essential benefits and a menu-like selection of other
benefit options
72. Flexible Spending Plans
Allow employees to use their tax-free benefit dollars to
purchase benefits and pay service premiums
How to Build Recognition Programs
Intrinsic Rewards: Stimulate Intrinsic Motivation
Personal attention given to employee
Approval and appreciation for a job well done
Growing in popularity and usage
Benefits of Programs
Fulfill employees’ desire for recognition
Inexpensive to implement
Encourage repetition of desired behaviors
Implications for Managers
In Order to Motivate Employees
Recognize individual differences.
Use goals and feedback.
Allow employees to participate in decisions that affect them.
Link rewards to performance.
73. Check the system for equity.
19
Motivation Concepts
Chapter Seven
1
Key Elements
Intensity: how hard a person tries
Direction: toward beneficial goal
Persistence: how long a person tries
Motivation
The processes that account for an individual’s intensity,
direction, and persistence of effort toward attaining a goal.
74. What is Motivation?
2
Early Theories of Motivation
These early theories may not be valid, but they do form the
basis for contemporary theories and are still used by practicing
managers.
Maslow’s Hierarchy of Needs Theory
McGregor’s Theory X and Theory Y
Herzberg’s Two-Factor Theory
McClelland’s Theory of Needs
Hierarchy of Needs Theory (Maslow)
Hierarchy of Needs Theory
There is a hierarchy of five needs—physiological, safety, social,
esteem, and self-actualization; as each need is substantially
satisfied, the next need becomes dominant.
75. Self-Actualization
The drive to become what one is capable of becoming.
4
Maslow’s Hierarchy of Needs
Lower-Order Needs
Needs that are satisfied externally; physiological
and safety needs.
Higher-Order Needs
Needs that are satisfied
internally; social, esteem,
and self-actualization
needs.
5
Assumptions of Maslow’s Hierarchy
76. Movement up the Pyramid
Individuals cannot move to the next higher level until all needs
at the current (lower) level are satisfied.
Maslow Application:
A homeless person
will not be motivated to
meditate!
Individuals therefore must move up the hierarchy in order
6
Theory X
Managers See Workers As…
Disliking Work
Avoiding Responsibility
Having Little Ambition
Theory Y
Managers See Workers As…
77. Enjoying Work
Accepting Responsibility
Self-Directed
7
Douglas McGregor said that managers hold one of two sets of
assumptions about human nature: either Theory X or Theory Y.
Seeing people as irresponsible and lazy, managers who follow
Theory X assume the following:
1.Employees inherently dislike work and will try to avoid it.
2.Since employees dislike work, they must be coerced,
controlled, or threatened to achieve goals.
3.Employees avoid responsibilities and seek formal direction, if
possible.
4.Most workers place security above all other work-related
factors and will display little ambition.
Since they see people as responsible and conscientious,
managers who follow Theory Y assume the following:
1.Employees can view work as being as natural as rest or play.
2.When committed to their objectives, people will exercise self-
78. direction and self-control
3.The average person can learn to accept, even seek,
responsibility.
4.Many workers besides managers have innovative decision-
making skills.
No hard evidence confirms that either set of assumptions is
universally true. It is more likely that the assumptions of
Theory X or Theory Y may or may not be appropriate,
depending on the situation at hand.
Herzberg’s Two-Factor Theory
Bottom Line: Satisfaction and Dissatisfaction are not Opposite
Ends of the Same Thing!
Separate constructs
Hygiene Factors---Extrinsic & Related to Dissatisfaction
Motivation Factors---Intrinsic and Related to Satisfaction
Hygiene Factors:
Salary
Work Conditions
Company Policies
Motivators:
Achievement
Responsibility
79. Growth
8
David McClelland’s Theory of Needs
Need for Achievement
The drive to excel, to achieve in relation to a set of standards,
to strive to succeed.
Need for Affiliation
The desire for friendly and close personal relationships.
Need for Power
The need to make others behave in a way that they would not
have behaved otherwise.
Bottom Line: Individuals have different levels of needs in each
of these areas, and those levels will drive their behavior
9
80. Self determination Theory/Cognitive Evaluation Theory
Goal-Setting Theory
Management by Objectives (MBO)
Self-Efficacy Theory
Also known as Social Cognitive Theory or Social Learning
Theory
Reinforcement Theory
Equity Theory
Expectancy Theory
Contemporary Theories of Motivation
Cognitive Evaluation Theory
Cognitive Evaluation Theory
Providing an extrinsic reward for behavior that had been
previously only intrinsically rewarding tends to decrease the
overall level of motivation.
The theory may only be relevant to
jobs that are neither extremely
dull nor extremely interesting.
Hint: For this theory, think about how fun it is to read in the
81. summer, but once reading is assigned to you for a grade, you
don’t want to do it!
11
Goal-Setting Theory (Edwin Locke)
Basic Premise: That specific and difficult goals, with self-
generated feedback, lead to higher performance.
But, the relationship between goals and performance will
depend on
goal commitment
“I want to do it & I can do it”
task characteristics (simple, well-learned)
national culture
12
What is MBO?
Key Elements
Goal specificity
82. Participative decision making
An explicit time period
Performance feedback
Management by Objectives (MBO)
A program that encompasses specific goals, participatively set,
for an explicit time period, with feedback on goal progress.
13
Cascading of Objectives
14
Self-Efficacy
Self Esteem, which is….
Individuals’ degree of liking or disliking themselves.
An individual’s feeling that s/he can complete a task (e.g. “I
know I can!”)
Enhances probability that goals will be achieved
Not to be confused with:
83. 15
Self-Efficacy and Goal Setting
16
Four Ways of Increasing Self Efficacy (Bandura)
Enactive Mastery gaining relevant experience with the task of
the job
Vicarious Modeling becoming more confident because you see
someone else doing the task
Verbal Persuasion becoming more confident because someone
convinces you that you have the skills necessary to be
successful
Arousal increases self efficacy and it leads to energized state,
so the person performs better
84. 17
Reinforcement Theory
Assumptions:
Behavior is environmentally caused.
Behavior can be modified (reinforced) by providing
(controlling) consequences.
Reinforced behavior tends to be repeated.
Argues that behavior is a function of its consequences.
18
Equity Theory
Equity Theory
Individuals compare their job inputs and outcomes with those of
others and then respond to eliminate any inequities.
85. Employees compare their ratios of outcomes-to-inputs of
relevant others.
19
Equity Theory (cont’d)
20
Equity Theory (cont’d)
Choices for dealing with inequity:
Change inputs (slack off)
Change outcomes (increase output)
Distort/change perceptions of self
Distort/change perceptions of others
Choose a different referent person
Leave the field (quit the job)
86. 21
Justice and Equity Theory
22
Distributive Justice
Perceived fairness of the outcome (the final distribution).
“Who got what?”
Procedural Justice
The perceived fairness of the process used to determine the
outcome (the final distribution). “How was who gets what
decided?”
Interactional Justice
The degree to which one is treated with dignity and respect.
“Was I treated well?”
Three types of Justice
87. 23
Ethical Values and Behaviors of Leaders
Bottom line
All three links between the boxes must be intact or motivation
will not occur. Thus,
Individuals must feel that if they try, they can perform
And
If they perform, they will be rewarded
And
When they are rewarded, the reward will be something they care
about
Expectancy Theory
24
Summary and Managerial Implications
Need Theories (Maslow, McClelland, Herzberg): Well known,
88. but not very good predictors of behavior
Goal-Setting Theory: Consider goal-setting theory, as clear and
difficult goals often lead to higher levels of employee
productivity.
Reinforcement Theory: Powerful predictor in many work areas
Equity Theory: Consult equity theory to help understand
productivity, satisfaction, absence, and turnover variables.
Expectancy Theory:offers a powerful explanation of
performance variables such as employee productivity,
absenteeism, and turnover.
