Corporate Strategy - Fitness Industry New York Fitness - Assignment Example

?Corporate Strategy - Fitness Industry "New York Fitness" Table of Contents Introduction 3 PESTLE Analysis of the Fitness Industry in the UK 4 Competitive Rivalry 9 Analysis of Bowman’s Strategy Clock 11 Application and Justification of the Ansoff’s Matrix 12 Conclusion 14 References 16 19 Introduction The fitness industry is one of the growing business sectors in the United Kingdom. It has remained robust despite deteriorating economic trends in recent years and amid various sectors facing enormous difficulties in the last decade especially in the last five years. However, the gyms And fitness Centres industry has expended strongly in the last five years because of growing disposable income levels, increasing health consciousness as well as augmenting concerns about personal appearance. This industry renders the facility of fitness specially gym and health clubs as per membership basis. The benefits provided by this industry include the use of exercise equipments and weights, along with facilitating personal training, group classes and other club amenities. As per the data of IBIS World (2012), the fitness industry especially gym and health clubs have inculcated an estimated figure of around 8.7 million members across the United Kingdom, which is nearly 17% of the adult population. The London Olympics specially provided the extra motivation in this industry; as a result, the revenue increased by around 9.5% over the last five years (IBIS World, 2013). The fitness industry is incredibly successful with innovation and changing technologies which provides the adapting capability of the products for suiting its own requirements. Though there are around 6000 gyms and health clubs in the UK but they cater to the different market segments. These include women only gyms, traditional body building gyms, budget model gyms, premium full service health club, and 24-hour gyms among others. In London, there are around 70,200 people employed in the active leisure, learning as well as wellbeing sector among them 5900 are employed in the health and fitness industry. Therefore, the government of the UK also provides help for ensuring sustained growth of this sector. London has a rich mix of active leisure and learning facilities, high profile sporting clubs and also a host of international, national and regional events. Therefore, the industry skills fill the gap of sports specific technical skills and health consciousness (AACS LMI, 2010). Contextually, on the basis of research initiatives on management theory the analysis is done with the help of PESTLE analysis of the external environment. Besides, in this paper, Bowman’s Strategy Clock and application and justification of the Ansoff’s Matrix are also going to be provided as analysing tools for finding out marketing and growth strategy of a new company. Thus, by analysing the external and internal factors a set of recommendations is also drawn on the development options of the business (Jarzabkowski & et. al, 2009). PESTLE Analysis of the Fitness Industry in the UK A PESTLE analysis at times referred to as PEST analysis is one of the imperative and useful tools for analysing and understanding the industry position as a whole and is often used in conjunction with a SWOT analysis to access the situation of an individual business. A PESTLE analysis is one of the most important frameworks regarding to the assessment of macro environmental analysis. Therefore, it is one of the most important frameworks and a key part for designing of strategic management. The term ‘PESTLE’ refers Political, Economical, Social, Technological, Legal and Environmental factors. This analysis enables to draw varied pertinent responses regarding various questions such as what are the political factors which likely to affect the industry, important economic factors, cultural aspects, technological innovations, present and imminent legislations of the government as well as environmental considerations. However, it is also needed to highlight that these factors definitely depend and vary from industry to industry (Jarzabkowski & et. al, 2009). Firstly, the political factor represents: The government rules and regulations which represent the specific areas, such as government law, tax policy, tariffs, and trade restrictions along with environmental laws However, in relation to this aspect, the fitness industry has very little to be concerned about trade restrictions and trade Besides, the government of the UK takes various steps for the improvement of health, such as health at work through autonomous reassessment of sickness absence, health and work appraisal and advisory service for the solving of any types of health issue, the ‘statement of fitness’ for performing work or fit note, for the helping of people with health scenarios to withhold or return to work (Department for Work and Pension, 2013) As a result, it can be comprehensively stated that the government policy of the UK is quite favourable (Department for Work and Pension, 2013) With the regard to economical factors, It renders information on the research of key economical areas such as the interest rate, economic growth or exchange rate and income level among others It is a key factor for the fitness industry. This is because the companies of this industry provide the leisure service. For this reason, there might be a decrease in number of customers when there is an economic decline in the country and the level of income of the mass gradually goes down This is due to the reason that people might not be too much willing to spend money on leisure activities when they have less disposable income. Nevertheless, as per the report of UK Economic Outlook (March 2012) the Gross Domestic Product (GDP) of the economy in the UK has witnessed a growth by 1% in 2013 and is expected to rise by around 2% in the 2014 (Goodwin, 2013) Though it is not a huge growth but in keeping with the ongoing challenges of the Eurozone crisis, it is also showing a positive growth. On the other hand, it can be noticed that though in the period of 2007-2011 the economy of the UK faced a vital economic slowdown, the fitness industry of the UK remained robust and very successful Besides, for the continuous growth of the service sector in the UK economy, the job options are enlarging day-by-day. Therefore, it is a very positive sign for making investment in this sector (Goodwin, 2013) Contextually, the social factor refers mainly to the demographic aspects which comprise population growth rate, cultural aspects, gender, age distribution and health consciousness. The nation i.e. UK is experiencing an increase of young working population which is very fruitful for enhancing the business and opening of such activities It can help to acquire greater manpower and make sustained growth of the business. As per the poverty report in the UK, around 80% of the young generation is employed so it is quite encouraging for the leisure industry and for starting the new business in this sector In the UK, there are very high demand from both young as well as old people for the fitness and physical development. Moreover, the technological factors include the rate of technological changes, research and development and innovation among others. These factors very much depend on the effective production level, costs, quality and outsourcing related assessments. In the UK, there are plenty of companies in functioning in the fitness industry, for this reason to enter in the market highly developed equipments and expert staffs are required Similarly, in order to compete with the existing competitors, New York Fitness should be aware about the advancement of the technology along with providing the latest equipments to its customers within a very reasonable price. The term ‘customisation’ is the key factor in the new business world and it is only possible when the innovative technology is available and utilised (Dale & et. al., 2010) Furthermore, a vital factor for starting of a new business is legal issues and adherence to legal requirements. The legal aspect refers to the laws which directly are connected to the business and the company and its region of action including consumer law, anti discrimination law as well as health and safety law For this reason, with regard to New York Fitness legal issues relate to the health and safety matters In this regard, rules and regulations are very strict in the UK regarding quality of the equipments used and services. For the quality testing by the government agency the companies have to recruit qualified trainers. It is no doubt that this aspect would be a major challenge for the organisation because it might increase the cost of operations (Office of Fair Trading, 2008) In relation to environmental factors, there are certain crucial implications for the company. In this aspect, the factors which directly influence and possess distinct influence on the company include weather, climate change, geographical position and pollution among others Regarding this aspect, industry environmental factors also can be considered because to run the equipments energy is required As a result, the environmental protection laws of the UK come in the way to abide by the guidelines for pollution control along with ensuring less utilisation of electricity (SEPA, 2007) Thus, the PESTLE analysis describes the external environment of the UK regarding fitness industry which is quite valuable for the starting a new business. This is because the economic and social condition as well as technological innovation is quite favourable for New York Fitness to start up a new business in this industry. Competitive Rivalry In the UK, there are around 6000 fitness and health care centres, so undoubtedly it can be indicated that there is a huge competition in the market. Among the top 10 key market players, one of the leading companies SP Health at 3 Jubilee Place, London, is not only UK’s but also one of the world’s most exclusive gyms. It was opened by celebrity sportsman Stephen Price and the core mission of the company is to provide unique prescription service to it’s mostly celebrity clientele (Ask Men, 2013). Moreover, The Third Space, London is designed for the rich and famous persons. The gym at times look like star-trek with energy crystals including climbing wall, boxing ring, DJ playing and a number of altitude training room (Ask Men, 2013). Additionally, ThirtySevenDegrees, London, besides the river Thames contains a few of the capital’s most high tech fitness facilities. For the magnificent viewed bridge, triple height workout room and concealed swimming pool the interior of the ultra exclusive gym, it won award for its innovative design (Ask Men, 2013). Moreover, The Harbour club, London, is quite popular for its mere portals as well gym going princesses. The club consists of fully equipped gym studious for the group exercise, swimming pool, waterfall pool, spa and clinic among others (Ask Men, 2013). Furthemore, Esporta is reputed for brimming with good looking musclemen. Besides, the gym is designed with beautiful hand painted ceiling and high tech workout equipments (Ask Men, 2013). In addition, Exclusive Fitness clinics are famous for the Olympic training equipments, separated free weight spaces, and on-site physiotherapist among others (Ask Men, 2013). Moreover, there are numerous famous fitness centres in London such as Champneys Health Resort; The Laboratory, Muswell Hill, East Sussex National Health Club, and GL-14 The Health Club among others. As a result, for maintaining the position in the market, the companies always should be innovative regarding technologies of the equipments, hiring experienced trainers and rendering value added services as per leisure facility and including promotion with celebrities. Taking into the consideration these factors, definitely it can be said that there are huge challenges in the market for a new company for entering in the market. Therefore, the company, New York Fitness should be very focused about the mission and vision of the big market players and their targeted market. As per company analysis of the big players, it is observed that they are specially focused on high profile customers, so this company can focus on middle and low income group level (Fleurets, 2012). Analysis of Bowman’s Strategy Clock Bowman Strategic clock is a marketing analysis tool. It is very important to analyse the competitive standing of a company for making comparison with the competitors and to take appropriate marketing strategy. This strategic tool defines the eight parameters for the analysis of market position along with offering of the competitors, such as hybrid, differentiation, low price, low price/ low added value, low value/ standard price, increase price/low values, increase price/standard product and focused differentiation. Firstly, Hybrid signifies reasonable price with reasonable differentiation. These types of the companies are very appealing because they offer products at low price but provide more value than the low cost competitors. Therefore, this strategy helps to build customer loyalty for the combination of better quality with reasonable price. Secondly is Differentiation, which comes with offering high-perceived value to the customers. Differentiation among the companies may come in terms of product quality, price, margins as well as brand value and awareness. In this regard, for the any company which is going to enter in the market it is better to provide the product at low price with less extent of margin for ensuring sustainability and increasing the market share. Thirdly is low price strategy which a company only can take when it has large volume of the sales and strong market position. This is because if the sales are more then the company can afford the low margins. Fourthly comprises low price/ low added value, which is not an attractive strategy for any company. This is because by this method, any company can get customer loyalty. But, this strategy is helpful for the short-term policy by providing attractive prices of the products and increasing the sale. Fifthly entails increase price/standard product method which is applicable for the companies who have already a good image in the market of their products. In this case, the company can increase the price but simultaneously it does not increase the product quality. As a result for the acceptance of the high price by the customer the company can get more profit. Sixthly entails low value/ standard price strategy, taken by the company for dumping the demand of any product. This method is helpful for withdrawing of any product from the market and launching a new one in that very gap. Seventhly, the increase price/low value strategy is only helpful for the monopolistic market, but this strategy cannot be applicable in the long run of the business because if the quality does not increase then organisations cannot sustain and have to face the new growing players. Lastly is focused differentiation, which only comes with good brand image. This is because it is based on the good quality of the products and services with high price (Johnson & et. al., 2008). Therefore, as per the analysis of Bowman’s Strategy Clock for the new company which is just going to enter in the competitive market only two or three strategies among them can be applied. Hybrid method is very fruitful for the new comers in the fitness industry in the UK. By this strategy, the company can easily compete with the companies that are providing the product at the same price. However, the company can get competitive advantage from it for the better quality of the product. It is also helpful to create the loyalty of the customer and sustaining in the long run of the business. Besides, the company can use partly the method of low price and differentiation for sustaining in the market and increasing market share (Johnson & et. al., 2008). Application and Justification of the Ansoff’s Matrix Igor Ansoff is a renowned American/Russian mathematician. He is very famous in the business world for his Ansoff Matrix. This matrix facilitates the managers to take the strategy through which they can grow their business through present or fresh products as well as present or fresh markets. It offers four strategies to achieve the objectives, such as penetration of the market, extension of the market, new products and Diversification (Luxinnovation G.I.E., 2008). Market penetration involves rising the market share within the prevailing market segments. It can be attained by the selling of more products and services by finding fresh customers in the prevailing market (Bartscher & Bomke, 2009). Product development involves developing new product for the existing markets. Product development is closely related with the innovation and technological development. Core thinking is required regarding how new products can meet the needs of the customers very closely and create challenge for the competitors (Bartscher & Bomke, 2009). Market development strategy entails the finding of new market for the existing product. Proper primary market research and further segmentation of the product as well as market help to identify the new potential customers (Bartscher & Bomke, 2009). Lastly, diversification provides the theory of moving in the new market with new products. It is the most risky management strategy for the entering of a new market (Bartscher & Bomke, 2009). Therefore, it can be justified that this matrix is used by the companies which have the growth target or a strategy of specification. This tool is very helpful for the strategic decision making. For this reason, it is considered in this regard to analyse the fitness industry of the UK and take a fruitful decision to enter in this industry for a new company. Opportunity and Risk are the two coin sides of this strategy. But for the new company taking more risk is not fruitful, thus the company ‘New York Fitness’ should take product development strategy to enter in the existing big challenging market. This is because with the innovativeness of the technology regarding equipments and other facilities it can also enter in the market with medium level of risk (The Times 100, 2013). There are also various opportunities regarding to enter in the fitness industry in the UK, because the population growth rate of the country also quite good which has doubled in every 23 years as per the rate of increase. Therefore, it is a positive sign for the business of any company. However, as per fitness industry, it is to be noted that this industry is mainly focused in the age group of 18-34 and the population of the UK also has a huge section in this part (The Times 100, 2013). Conclusion After the brief analysis of the fitness industry in the United Kingdom with various marketing and analysing tools i.e. PESTLE, Bowman’s Strategy Clock, and Ansoff’s Matrix it is found that there are big opportunities to invest in this sector. This is because the fitness and healthcare sector of the UK has been growing even in the time of economic slowdown in the whole Euro zone. It is very interesting to say that innovation and investment are also continuously enhancing in the fitness industry of UK and this is able to touch a major section of the population. Besides, finally also it can be highlighted that the young generation of the UK is also very health conscious. Therefore, it can be noticeably indicated that there is a big market opportunity in the UK regarding fitness industry. However, entering in the market will be not easy for any new player because there are enormous market players in this industry. 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