Fitness Business Analysis

fittingness Business Analysis knowledgeablenessThe aim of the report is to analyse the position of fittingness im donation, a crinkle consisting fourteen seaworthiness clubs and recommend Steve Taylor and Dave Courteen on how they stern improve the occupancy all over the next flipper years. To achieve this, an abbreviation of both the a focussing and internal environs of the job will be con emplacementred. A theme of the external environment will be done with the help of the Porters five forces analysis followed by a life cycle study leading(a) to a PESTEL analysis. This will be followed by a SWOT analysis to study the internal environment of the commerce. Thus by analyzing the external influences and the strengths and weaknesses of the business, a conclusion will be drawn on the development options of the business. individual(prenominal)ity OF THE BUSINESSPosition to date physical physical fitness give tongue to was founded by Dave Courteen and Steve Taylor in 1 987. The business constituted 14 fitness clubs as of January 2000. By at that placefore over 190 staff were meshed. The partnership of Dave and Steve had matured into a extremely professional business in the last 13 years providing offset printing class systems for the customers.MissionThe mission of fittingness testify was to bring excellence, a passion for health fitness, and professionalism to the fitness industry. A fitness club is where the customers stimulate to feel good, have fun and keep fit at the equal m. fittingness channel ran on this philosophy.Short Term purposeThe business was projected to turnover in excess of 2million that year.Long Term ObjectiveThey intended to develop a winning armed service formula and to micturate first class systems and r unwrapines to bear their offering.Key personnelThe business was fiddle by Dave Courteen and his partner Steve Taylor. They had employed over 190 staff.STRATEGY fittingness Express was born in June 1987. Fr om the beginning it was explicit that the skills of the partners complemented each other(a). Dave was the negotiator and Steve was the man-manager. Dave enjoyed building the business Steve was good at the operational side.Staff were chartered on the basis of their personality rather than on their fitness. Dave and Steve paid owing(p) attention to the personal development and training their staff.The policy of Fitness Express was EXCELLENT node SERVICE, which required friendly and approachable staff. Gym users were much spoken to. In secern to maintain a friendly environment they greeted their customers by their first names.The partners as well realized that there was enthusiasm amongst the under-represented part of the population who were over 40s and 50s de-conditioned segment. This saw them place an emphasis on maturation the club as a place to come and socialise.Four years into the business, Dave and Steve realized that they should expand their business. As they had no fu nds to build up ascension health concentrates in divergent venues, they began to offer consulting services to independent hoteliers desire Best Western Hotels. They to a fault had an opportunity to pass water with Thomas arrive at on their 4milloin staff empty facility which secured them the contract to run sub judice and Generals facility in Tadworth, Surrey.DEVELOPMENT OPTIONS1. Deal with Sw exclusivelyowThe Swallow Hotel concourse approached Fitness Express to merge in a joint venture. In that case 50% of the shares would be acquired by Swallow. All the leisure centres would be run by Fitness Express. The hotel will continue to employ their declare staff. They will be supported by a Fitness Express Team.2. To expand by means of acquisitionFollowing 12 successful years, Fitness Express was cash rich with over 300,000 sit in the savings bank to use in acquisitions. So another option was to expand through acquisition. thither was animated a similar contract management attach to as Fitness Express that far less stinting per club. Integrating them into Fitness Express and expand their business seemed to an alternative.3. Organic emergenceOrganic waxth can also be considered as an option. Fitness Express was path a closemouthed ship and there was especial(a) room to append the earnings potential drop within the animate clubs. They already ran added-value revenue generating services, such as a holiday club, but by chance more could be done with the existing hotels such as running weekend fitness breaks.IDENTIFYING SOURCES OF COMPETITION1. THREAT OF NEW ENTRANTSThreat of bleak entrant magnate not be a matter of colossal concern as there are high barriers to entry in this industry. eminently developed equipments and expert staff requirement coiffure it rocky for fitness centres to enter in the foodstuff.2. BARGAINING POWER OF BUYERSWith the membership levels rising steadily and the market getting oversaturated the buyer designers were high.3. BARGAINING POWERS OF SUPPLIERSIt was important to deck with hotels of the right hotels. But the trope of feel hotels being less the dicker powers of suppliers was high.4. THREAT OF SUBSTITUTESThe threat from the substitutes was not very high as there were few companies in the UK of the same stature as of Fitness Express. unitary of these was a similar contract management caller with thirty contracts, but their profit margins were comparatively low compared to Fitness Express.5. COMPETITIVE ENVIRONMENTWith the fusion activities going on the rival were on the high. LivingWell, the health clubs operated by Stakis, the hotel and cassino group, had over taken David Llyod Leisure. Cannons and First Leisure also came close to merge their health and fitness business.LIFE CYCLE OF THE BUSINESSDevelopment StageUsers/buyersDave and Steve started their business as they took over the total control of the gym of the Barnham Broom hotel in Norwich. The business depended on t he membership fees and the customers were those who were the members of the hotel leisure club.CompetitorsCompetitors were very few.Growth StageUsers/buyersA monthly guest appearance on topical anaesthetic Radio Broadlands fitness phone-in programme for 30 minutes seemed to be effective. answering listeners, questions on fitness, e.g. how to work off excess fat gained over Christmas, gave FE wide reporting in the local area.CompetitorsAt this stage they were entry of the competitors. There was a high competition to niche the market position.Shakeout StageUsers/buyersA melted pool was added to the hotel site. The facilities attracted more people. Thus there was increase in the routine of customers. Fitness Express effected a change in the earnings structure.CompetitorsVery high competition led to develop the business in other venues.Maturity StageUsers/buyersThey began to offer consulting services to independent hoteliers deal Best Western Hotels. They also had an opportunity t o work with Thomas manage on their 4milloin staff -leisure facility. Thus their business continued to develop at other venues.CompetitorsThree revolutionary contracts were established in 1993. angiotensin converting enzyme of them was primed(p) however five miles away from their base at Barnham Broom. So the competition was high and there was a threat of losing customers.Decline StageUsers/buyersWith the age going through the contract dying dates were around the corner. Thus it was evident that there could be a decline soon.CompetitorsThe issue of the contract was lick by ensuring that one would serve the family and children while the other would serve only the older group people. Thus the competition was reducedENVIRONMENTAL FACTORS bear on THE COMPANYS MARKET POSITION1. POLITICALPolitical issues include government policies or legislation. For a fitness organization, there is very little to be concerned about trade restrictions and tax.2. ECONOMICEconomic issues are a re fer factor for a fitness company. Fitness companies are leisure service providers. There might be a decrease in number of customers when there is an economic decline. People will not spend bullion on leisure activities when they have less disposable income.3. SOCIOCULTURAL race demographics are an important factor which influences a fitness company. This includes age, sex and income of people. There is high deal from both young and old people for fitness and physical development. Fitness is also independent of sex. As discussed in the economic issues, fitness companies provide leisure facilities the economic condition of people is a matter of concern. Fitness Express was based on urban centre in East Anglia. This was strength of the business.4. TECHNOLOGICALWhile technological issues might favour the company in terms of providing high barriers to entry for new entrants, it might be a matter of concern for the high demand and expectation from customers. Highly developed equipments and expert staff requirement make it difficult for fitness centres to enter in the market. At the same time in order to compete with the existing competitors, a fitness company should be aware of the technological developments and provide the latest equipments to its customers.5. ENVIRONMENTALenvironmental factors could come in way of a fitness company. Energy pulmonary tuberculosis is high as the equipments run on electricity. Hence the environmental security system laws can come in the way.6. LEGALBeing a fitness company, legal issues come into play in health and safety matters. Rules and regulations should be strict regarding tonicity of equipments used. All the staff should be well drug-addicted and practised. This in turn will have an impact on the staff costs.SWOT ANALYSISStrengthWeaknessExperience of Dave and SteveBoth Dave and Steve were super respected within their industryExcellent node Service provided by Fitness ExpressStaff recruitment policyWide insurance cover age in the local area through mediaSmall business of 14 clubsDespite the number of staff they employed, Dave and Steve were stillness very hands-on amplification in staff costHigh buyer powerHigh supplier powerOpportunitiesThreatGrowing the business in other venuesDeal with SwallowIncluding acquisitionOrganic maturethExpiry of contracts with customersCustomer loyalty and insufficient facilitiesCompetitionLoss of niche market powerSTRENGTHSteve worked with a large sports retailing out permit in York as a student, where he gained valuable experience in managing the operations of a large facility. Dave did his pass job in Lowesoft. He was involved in designing a mobile gym and providing fitness assessment for holidaymakers during his summer job. These experiences paid off when they started their own business. Steve involved himself in the operational side of the business. Dave looked upon developing the business.Their strength was the respect they enjoyed within the industry. Dave wa s also appointed as Chairman of the Fitness Industry Association (FIA). The goodwill in the market certainly attracts customers towards a business.The policy of Fitness Express was EXCELLENT CUSTOMER SERVICE, which requires friendly and approachable staff. Gym users were frequently spoken to. In order to maintain a friendly environment they greeted their customers by their first names.The quality of the staff, and their ability to communicate with the guests would be the most important factor whether or not a guest would return the following year. Staffs were more probable hired on the basis of their personality than on their fitness, and any future day business run by Steve would pay great attention to the personal development and training their staff.Word of mouth and the local PR that they advance generated membership for their club. A monthly guest appearance on local Radio Broadlands fitness phone-in programme for 30 minutes seemed to be effective. Answering listeners, quest ions on fitness, e.g. how to work off excess fat gained over Christmas, gave FE wide coverage in the local area.WEAKNESSBuilding the midget empire of 14 clubs had taken Dave and Steve over 12 years. Their competitors had a more widespread business.Despite having employed over 190 staffs, Dave and Steve were both still very hands-on. Managing at both the tactical and the strategic level was physically exhausting and they knew that it was unsustainable in the long run.Since the industry demands well qualified and trained staff. This will have an impact on the staff costs.With the membership levels rising steadily and the market getting oversaturated the buyer powers were high.As the number of quality hotels to deal with was few, the bargaining powers of suppliers were high.OPPURTINITIESFour years into the business, Dave and Steve realized that they should expand their business. As they had no funds to build new health centres in different venues, they began to offer consulting servic es to independent hoteliers like Best Western Hotels. They also had an opportunity to work with Thomas Cook on their 4milloin staff leisure facility which secured them the contract to run Legal and Generals facility in Tadworth, Surrey.A deal with Swallow, a major UK hotel compass meant that 50% of the shares of FE would be purchased by them. All the chains leisure facilities would be managed by Fitness Express on a joint venture basis, with the hotels continuing to employ their own staff, but supported by a dedicated Fitness Express team. This came as a big opportunity and everyone was exited.Following 12 successful years, Fitness Express was cash rich with over 300,000 sitting in the bank to use in acquisitions. There was existing a similar contract management company as Fitness Express but far less profitable per club. Integrating them into Fitness Express, with all the personnel and cultural issues that would emerge, would be even more difficult, especially give the geographic spread of the contracts they would be buying.Organic growth can also be considered as an option. Fitness Express was running a tight ship and there was limited room to increase the earnings potential within the existing clubs. They already ran added-value revenue generating services, such as a holiday club, but perhaps more could be done with the existing hotels such as running weekend fitness breaks.THREAT iodine of their customers was the Hotel Norwich who served notice to leave, with their contract of two years expiring over the following triad months. Applying this to their other contracts, Dave and Steve realized that within two years the basis of their constitutional business could collapse. So they went back to all their sites and renegotiated their contracts. Most customers eventually concur to a three-year contract with a six-month notice either way. This was a holy temporary solution. But it was to be kept on mind that expiry of contracts is a continuous threat for Fi tness Express.A disaster hotel was taken on. The management of the hotel was not committed to the customer service and facilities were not up to the mark to generate sufficient turnover (e.g. there was no elevator car park), so quickly the two partners realized that this could never be do to work satisfactorily. Luckily the contract being an incorrectly-worded one, they found a way to get out of the agreement after one year. though they incurred a loss of 30k but overall disaster was avoided. So it was important to grow with the right hotels. But were there sufficient hotels of the right quality out there?With the merger activities going on the competition were on the high. LivingWell, the health clubs operated by Stakis, the hotel and casino group, had overtaken David Llyod Leisure. Cannons and First Leisure also came close to merging their health and fitness business.Three new contracts were established in 1993. One of them was located only five miles away from their base at Bar nham Broom. This came as a potential threat. The high competition in the market can also affect loss of the market power that the company secured over the past years.RECOMMENDATIONS AND CONCLUSIONAs the options of further growth of the Fitness Express seemed to be three-fold, with the analysis of the macro and the microenvironments it can be concluded that expanding Fitness Express through acquisition would be a good option. Though the deal with Swallow is attractive financially, but to sell the company and let the business become another highly professional fitness chain does not seem to be the best measure. Again they were running in a tight ship and there was limited room to increase the earnings potential within the existing clubs. The only way to grow significantly was to increase the number of clubs. Dave and Steve were highly respected in the industry. They were very experienced. Fitness express provided excellent customer service. With these strengths, the company should foc us on acquiring another management company and work on the improvements of the existing infrastructure to make it pay.