The Crown Sports Company - Essay Example

Crown sports Introduction Crown Sports was founded in 1994 ,they started opening up into a new market where the golf courses maintaining companies under pressure when the number of such assets were under financial Pressure .Crown sports were into operating the health and fitness activities .The Company has nearly 50,000 club members with 22 mid sized health and fitness clubs across England on a whole all over U.K . The crown company is well known for their health services like gymnasiums, swimming pools and their environment areas crown sports plc was formed with the merging of the golf club holdings a famous golf course operating company in U.K with assets of eight golf courses at the time of acquisition. The other strategic business entities include sports based publishing, horse racing and sporting information, land and property investment. Strategic business unit The main strategic business unit is the health clubs, as the company has much presence in the health club market. Crown has diversified in various business entities as the company performance registered a considerable growth in the initial phase of the new millennium. The crown sports company has a large number of members around the U.K. to enhance the customer experience they have entered into a new market avenue by exploiting the market share of the local players who already existed in that region. In the golf industry, according to the then the MARTIN KNIGHT the Deputy Chairman of Crown Sports PLC growth potential for crown sports very good because there are a large number of courses that are not fulfilling their potential. The deputy backed the management skills, operational skills and understanding of the company fulfill customer requirements and propel will give the ability to acquire courses and manage them better. Resources and capabilities As we say services, it is performances and is frequently produced by humans and no two services will be precisely alike. The employees delivering the service frequently are the service in the customer's eyes, and people may differ in their performance from day to day or even hour to hour. The consumer is a part of the production process so the delivery system must go to the market or the customer must come to the delivery system. The concept of bringing customer to the product started working well as it has registered profits in 1999 and 2000. Analysts predicted there is huge potential for Crown to drive revenues by selling products to its members. The company superiors planned to expand the business to other sports related entities as a dynamic expansion strategy. It was revealed in the company chairman's words as "We think that there is a significant amount of consolidation likely to happen in the sports asset industry in the United Kingdom and that is where we are going to concentrate our activities over the next two years". Initially the company started thinking that it should not confine to a specific sport utility supplier and measured the options of diverging into new avenues and started working to that path. The basic idea behind this move is to expand their span of market and to increase the potential market base by merging with a company which has good customer base and was in healthy condition to takeover and to move with the crown sports . crown sports initiatives succeeded in acquiring the Dragon health club plc in last month of December 2000.The dragon's health club equally big as crown sports and has an admirable number of customer. The company performance can be actively studied with the help of the porter's generic strategies. Porter's theory specified that the company with different entities should have freedom in their performance, which would lead to profitability of specific business entity and it increases the image of the parent company. According to the porters generic graph the companies other than the associated companies will struggle to compete with the crown sports as it is having strategic market base of the individual strategic business units. The loyalty base has been increased with the acquisitions it has done at that time. Porter stated that when the SBU's were given the individuality, they deliver to their maximum efforts and innovate in that business and makes profitable to the parent company. The crown sport has realized exactly in the same way as it acquired different firms with good operational excellence. The crown sport is a service based industry and it should deal with the customer introducing his service by drawing them to their clubs. Here the customer should be made to approach his product to make his business profitable. The customers for these health clubs would be the people of all ages When a service industry wants to satisfy an array of varied customer tastes it should differentiate itself from the rest of the competitors. Satisfying the varied customers itself is a complex task normally and its complexity increases when a competitor is existing around your market. So, the most viable option to avoid this situation is by collaboration with the similar companies would allow the respected companies to coordinate or acquire the market share and will be able to cut some operational costs like the promotional investments etc . The acquisitions started with dragon's health clubs, a service based company with 15 health clubs in U.K The next to fall into the basket of crown sport plc was the Esporta plc a firm has a considerable number of health clubs and fitness centers to cater the premium market .Acquisition has opened an area the premium market. In march 2000 the joint managing director Hon. Robert Rayne of London Merchant Securities plc was made the non-executive director of crown sports to enhance the man power resource of the company and thus imbibing the expertise of a person with experience in running plc. The companies major break through was acquisition of the information Australia, a content developer, providing crown sports to publish the happening of the sport activities with a physical visible media like publications. The "information Australia" the last 20 years were in the business as a content creator for a broad range of sports, leisure and business publications. The acquisition gave the scope to use a active media distribution channel to promote the core sporting activity and the products related to the sports. The Australian company has provided the introduction of crown sports to the customer base of "information Australia". Crown sports roped in Sally Gunnell a former Olympics gold medalist to promote the marketing aspects of the crown sports by writing books on health and fitness. Thus the Acquisition has provided a new range of products available by which it can educate the existing members. Crown chief executive Jeff Chapman hoped to build up a wide membership base from a variety of small health and fitness club acquisitions together with a portfolio of already profitable small product companies which will drive 'net new income' from products. The acquisition has resulted in enhancing the service to lead to brand loyalty. The acquisitions has created an atmosphere for the growth for both the merged company and the merger. The product of one company has an indirect influence on enhancing the image of the other company as we have seen in this case. The publication company increases the visibility of the crown sports health club activities and services which in turn drive the performance of the health clubs and golf courses thus increasing the value of the golf course asset as well. The sales of the publication might increase considerably. The addition of The Winning Line (Sport & Leisure) Limited in the mid term of 2002 has added up the existing club members with a new value addition of horse racing to their gamut of service offering leading to varied sport service activity. The acquisition was an asset to winning line as it was planning to launch its activities abroad to Ireland. The Stephen Winstanley, founder of The Winning Line said, Crown Sports will enable us to bring successful and affordable racehorse ownership to an even wider audience. Crown Sports plc ("Crown Sports") announced the acquisition of the entire issued share capital of "Trainstation Limited" . The Trainstation limited has provided various facilities like swimming pools, food and beverage facilities to their customers thus adding up new facilities to the existing club members of the crown sports clubs.. The phenomenal acquisition techniques rose the members count to 78,000 36 health clubs ,8 golf courses. The acquisitions has projected the crown plc as a gaint in the sports and leisure activity business with highest club members and major associations. Thus the market share has rose to a phenomenal heights. Health and fitness accounted to 91% of 2002 revenue sports publishing 6%and horse racing 3%. This fact has driven the crown sports plc to reorganize their resources into the highest revenue generating entity "the health clubs" To captivate on this growing demand it sold the holding of 16,555,625 ordinary shares in Esporta, and diverted the funds to cover the bank loans. The three major entities the "crown golf", "the crown content" and the "winning line" were in their operational losses.. http://www.lse.co.uk/shareprice.aspshareprice=CSP&share=crown_sports Conclusion Crown sport has aggressively done the art of acquisition and in span of two years, it has added up a few companies which were related to sports and health business. This has enhanced the customer base rapidly; however the company strategy was a flop when it was unable to maintain the momentum and submitted to the prevailing situation. The crown sports predicted a huge potential for Crown to drive revenues by selling products to its members. But it was not done as the health club market has increased but the golf clubs ,fitness business suffered with low revenue. The porter's generic strategies can be ideally related as the company has experienced the complexity of running into too many business entities and unable to cater the service standards and miss the momentum. Crown sports plc has experienced the principle concerns raised by porter unable to satisfy the product differentiation principle and started on focusing on specific core service in which they were in for a long period. Crown sports had gradually started to focus on the core service network the health club. The company has started to recapitulate the past performance standard by focusing their resources on to health clubs. The crown sports has started confining itself to a single market, the Health clubs and unify its debts into sole business entity. Reference sources www.quickmba.com www.crownsportplc.com/history http://www.twst.com/notes/articles/kao065.html http://www.crownsportsplc.com/companyhistory.htm http://www.business.com/directory/media_and_entertainment/sports/golf/crown_sports_plc/profile/ http://www.lse.co.uk/shareprice.aspshareprice=CSP&share=crown_sports Read More