We will write a custom Case Study on UK Health Club Industry’s Strategic Management specifically for you
301 certified writers online
The U.K. health club industry faced numerous challenges since 2000 there have been more entrants in the health and fitness industry. 2007-2009 also posed more challenges as more health clubs formed without a substantial increase in the number of consumers across the U.K. It is apparent that the current situation is dire for the Fitness First Company despite being the leading company in the industry. The forces that the company is facing are relatively out of the company’s control; hence, there is a need for the leadership and management function to ensure that the relevant adaptive measures are applied in the company to ensure it does not close down. The industry is no longer as attractive as it used to be because of the factors discussed hereafter.
Supplier power refers to the ability of the supplier to control the price of the different commodities required by the company (Hill, Jones, and Schilling 43). Supplier power in this industry is an important factor in enhancing the competitiveness of the associated business entities. Being the largest company in the industry, Fitness First has developed strong negotiating power against its suppliers. However, it is apparent that other companies in the industry are gradually developing higher power against their suppliers; hence, they can afford to provide products and services at relatively lower prices.
Consumer power refers to the ability of the consumers in determining the prices of the products and services (Hanlon par. 2). During the 2007 to 2009 global economic recession, the purchasing power of the consumers in the U.K. decreased significantly, and it has since been sluggish, which has led to more consumers viewing health and fitness clubs as replaceable luxuries (Grant and Jordan 74). This trend has led to an increase in consumer power for the associated services and products. The fact that there are more facilities being developed implies that the companies in the industry have to compete for market share through the adjustment of prices.
Competitive rivalry addresses the nature of the competition in the industry (Schwarzinger 15). Since the establishment of the industry in the 1980s, there have been numerous challenges regarding the competition. Many public and private companies have been established in the market to compete for consumers. Recent challenges in the growth of the industry have led to the establishment of health and fitness companies that offer relatively low prices for similar services. This development implies that competition by prices will increase in the future. The standardization of prices and offering enticing packages to the consumers will be the only way to maintain a loyal customer base.
Threat of Substitution
There is an extensive threat of substitution because more companies in the private sector, especially in the hospitality industry are offering cheaper products and services (“Porter’s Five Forces Analysis” par. 3). The similarity of the associated commodities with the commodities offered by the Fitness First Company implies that the company needs to review its supply chain and prices.
The threat of New Entry
While the industry is still sluggish, the threat of new entry is high. More private companies targeting low-budget consumers will enter the industry. This development implies that competition for consumers will increase in the future (“Decision Support Tools” par. 2). The company needs to respond to the highlighted forces in a manner that will ensure it retains its current loyal customer base while increasing its market share. Diversification of services and reviewing the associated prices to a competitive level will increase the chances of success for the company.
Decision Support Tools 2015. Web.
Grant, Robert M., and Judith J. Jordan. Foundations of strategy. New Jersey: John Wiley & Sons, 2015. Print.
Hanlon, Annmarie 2013, What is Porter’s five forces model? Web.
Hill, Charles, Gareth Jones, and Melissa Schilling. Strategic management: theory: an integrated approach. Boston: Cengage Learning, 2014. Print.
Porter’s Five Forces Analysis 2015. Web.
Schwarzinger, Andreas. Porter’s Five Forces Framework-An Analysis of the Swiss TV-Broadcasting Industry: Seminararbeit der Veranstaltung” Business Policy and Strategy” an der Universität Zürich. Munich: GRIN Verlag, 2012. Print.