TOWS Strategic Alternatives Matrix - Essay Example

Matrix Analysis Table of Contents Table of Contents 2 TOWS analysis 3 Threats 3 Opportunities 3 Weakness 4 Strengths 4 SPACE matrix 6 References 9 TOWS analysis Threats The spending of the consumers is highly dependent and relative to the economic condition of the country. A tight condition of the economy highly limits the availability of disposable income and thereby tightens the customer’s ability to spend on the health benefits sector (Dcstrategy.com). Though there are multiple variants of business for the healthcare benefit sector with varying range of entry barriers, yet the barriers to entry in regards to the personal training centre is comparatively the lowest. This will provide ample amount of competitors to grow in a market, which is supposed to flourish in the next few years. This will simply enhance the level of competition (Dcstrategy.com). Strong levels of competition that might emerge in the course of time, with regards to the large competitors, who will try eradicate competition by buying out smaller players (Dcstrategy.com). Opportunities The sector has achieved a growth rate of 1.4% per annum and is poised to generate revenue of around $3.43 billion by the year 2017. The government as well as the local council is increasingly focusing on promoting a healthy lifestyle thereby promoting an increase in health awareness in the country For the 5 years period, ranging from 2012- 2017, it can be said that the forecasted annual growth rate is around 3 – 5% per annum. This growth will be the upshot of the fact that the health benefit industry will be increasingly moving towards the point of maturity over the period of 5 years, thereby providing more opportunities and avenues for growth for businesses related to the health benefits sector (Dcstrategy.com) Weakness The fact of having full time employees rather than having contractors in an attempt to provide a high level of customer satisfaction increasingly leads to the fact of having a high fixed cost. The fitness club does not have a brand backup and is a very small time player in the highly competitive Australian market. With its single outlet located in Perth, the club stands to lose out on potential growth opportunities of the upcoming years. Strengths The health and fitness club, CBD Health Spa is highly focused on providing high level, customized service for the customers, while increasingly taking into account the diversified and personalized needs of each customer (cbdhealthspa.com) The fitness programs are designed while taking into account, the customer’s special requirements, if any. The health club provides a wide and highly diversified range of health benefitting programs ranging from 12 week transformational programs to massage and physiotherapy as well. The health and fitness club provides highly dedicated customer services to its customers, who focus on giving the customers, with the required level of motivation that is needed for maintaining continuity of the exercise and thereby helping them to gain benefits out of the program. The health and fitness club provides round the clock service. TOWS Strategic Alternatives Matrix Source: Mindtools SO: In order to take maximum advantage of the high growth possibilities in the future, the CBD Health Spa can focus on launching new clubs in new regions while offering the diversified gamut of services to the new customers. ST: In an attempt to prohibit the threat of low barriers to entry and emergence of new competitors, the brand can opt for forming a joint venture with some of the major players, thereby safeguarding themselves from being eradicated due to competition from strong market players. WO: The club can focus on opening new centers in new areas and taking advantage of the prospective growth opportunities that are being promoted by the government. This will eradicate the weakness of the club’s limited existence in only a particular location. WT: The WT is focused on reducing the weakness and threats (Koontz & Weihrich, 2006, p. 108). The club can increasingly build up on the brand factor by forming collaboration with some major players in the fitness sector of Australia. This will reduce its threat factors of being taken over in the competition from the major players while also eradicating the weakness related to the absence of a brand image. SPACE matrix The SPACE matrix is an innovative approach taken out to identify the appropriate position of the company with respect to its competitors. The SPACE matrix has four quadrants which comprises of the aggressive, competitive, conservative as well as defensive quadrants (Chandra, 2009, p. 2.30). The SPACE matrix is increasingly dependent on four factors, which comprises of two internal as well as two external factors. The internal strategic dimensions comprises of the financial strength as well as competitive advantage, whereas the external strategic dimensions comprises of the factors of environmental stability and industry strength. (Prasad, 2009, p. 272, 273) In this case, the position of the health club, CBD Health Spa in regards to its competitors can be best identified by the process of charting out the SPACE matrix for the health and fitness club. The factor of financial strength has been increasingly estimated by the process of calculation of cash flow for the company, the return on assets as well as the company’s ability to raise funds. Also, factors of liquidity and leverage are increasingly taken into account while estimating the financial strength of the company. It can be assumed in this case the health club has a very low score in terms of its financial factors, and hence will have a low rating in this zone. The factor of competitive advantage is being estimated while taking into account the product or service quality, brand image, market share as well as factors related to brand and customer loyalty. In this case, it can be said that the health club, is a very small player and has a relatively negligible share in the health benefits markets. Yet, since the market is growing a tremendously fast pace, hence it can be said that the clubs stands to have a comparatively strong competitive advantage with regards to new entrants in the market place. The factor of environmental stability is being estimated by the process of taking into account, the criteria of price elasticity, demand variations, inflationary conditions etc. It can be said that the business prospect of the club is strongly dependent on the factors of economic conditions of the region. This has led to the fact of low rating for the factor related to environmental stability. The factor of industry strength is increasingly evaluated while taking into account a wide range of factors. The factors increasingly comprises of the barriers to entry for rival firms, growth potential of the firm, product life cycle, taxation, etc (Gupta, 2011, p. 39). With the factor, that the industry is supposed to be growing at an exponential rate, it can be increasingly said that the club has a tremendously high growth potential in regards to the current forecasted growth rate. Also, taking into account the high growth potential, it can be expected that the club will significantly opt for optimum utilization of capacity to achieve a high growth rate. References Dcstrategy.com. The Australian Health and Fitness Industries – Market Snapshot . 03 Oct 2012 Dcstrategy.com. News And Events. 03 Oct 2012 Cbdhealthspa.com. Phjilospohy and Mission. 03 Oct 2012 Prasad, A., 2009. A Dictionary of Strategic Management. India: Excel Books Chandra, P., 2009. Project 7/E . India: Tata McGraw Hill Education. Gupta, R.M., 2011. Project Management. New Delhi: Phi Learning Private Ltd. Mindtools.com. The TOWS Matrix. 05 Oct 2012 http://www.mindtools.com/pages/article/newSTR_89.htm Koontz, H. and Weihrich. H., 2006. Essentials Of Management. India: Tata McGraw Hill Publishing Company, Ltd. Read More