This document provides an overview of the ‘She’s FIT’, which is a Canadian group of fitness centers. The company has won a strong position at the special niche in the fitness market and provides fitness services only for women. ‘She’s FIT’ positions itself as a company with friendly prices, where every woman is able to train in comfortable and non-judgmental atmosphere.
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However, in order to keep its position in the market the firm should work on improving its strategic vision and developing appropriate strategy, which will help it to achieve higher sales and stable growth. Thereby, the analyses of external and internal factors that influence the firm’s business operations were conducted. It allowed formulating potential threats and opportunities for “She’s FIT’. On the basis of the provided analyses, three strategic options were developed for the company. While formulating these options, the Ansoff’s matrix and Porter’s generic strategies were used, which allowed critically evaluating each strategy and describing its advantages and disadvantages. Further, the most appropriate strategy, which focuses on developing new product and providing it for the existent base of customers, was chosen. Finally, the paper discussed possible issues related to the strategy implementation. It also describes actions, which will help to avoid these risks, and proposes alternative way, which will help to achieve strategic goal if it is impossible to implement chosen strategy. However, potential benefits exceed the risks, and the proposed strategy was chosen as most efficient for the company.
She’s FIT Company
Introduction and Company Overview
The purpose of this report is to identify the features of strategic development of the Canadian company She’s FIT and formulate appropriate strategy for the company on the basis of the internal and external analysis. The document focuses on the overview of the company’s business, its mission, and core values. Further, in order to formulate appropriate strategy for business development, an external analysis using Porter’s five forces analysis and PESTLE analysis were conducted. Next, SWOT analysis allowed indicating company’s strengths and weaknesses. Grounded on the provided analyses, three strategic options were indicated and described. Finally, the most appropriate strategy was chosen, and the recommendations for its implementation were formulated.
Limitations to this report depend on sources used for collecting the information about She’s FIT. The major source for looking data about company’s history, business processes, etc. was its web site. However, since She’s FIT is not a publicity trading company, its managers are not required to present their reports to the community. Thereby, it is assumed that the available information about the company’s business will allow fully analyzing its activity and formulating appropriate strategy. Thus, more detailed and confident analysis could be provided on the basis of financial reports.
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She’s FIT is a group of fitness centers located in the Lower Mainland and Fraser Valley, Canada. It includes 13 locations across the country (The She’s FIT, 2016a). The main feature of the company is that its fitness centers provide services only for women. The company also positions itself as a low-cost fitness center, where women can join training sessions only for $4 per week.
According to the company’s web site, its fitness centers provide about 80 types of equipment for cardio trainings (The She’s FIT, 2016a). Each center has also a large area for strength training and an area of free weight. Their training facilities also include private shows and changing booths, studios for sun training, parking stalls, etc. In order to attract more clients, She’s FIT has developed three membership options: regular, elite, and elite plus, which differentiate by the level of membership discounts and possibility to use different locations of the organization.
She’s FIT group training program include seven different training types. The first one is a Speed Zone, where women are able to take part at the cardio workout and weight training. At this class, the company’s coaches are focused on losing weight of their clients and improving their endurance. The second group training program is Keiser XPress. It is a weight training program, where women are able to address their various fitness preferences and work on their weight improvement. In the Interval Training class, women can take part in high-energy cardiovascular workout. The Cardio Intro class is equipped by the state-of-the-art Precor Cardio equipment, where women are able to train their cardio. In the Stretch and Core class, fitness coaches are focused on improving women’s flexibility and increasing their strength. Finally, the Seniors Fitness Program allows women to train all muscle groups.
Mission Statement or Core Purpose
According to the company’s web site, the She’s FIT’s mission is to help its customers to reach their fitness goals. The company states that every woman despite her health and fitness goal is able to find the appropriate fitness program. Moreover, in its mission statement the company also focuses on low costs of its services; thus, almost everyone is able to participate in its membership programs.
Vision and/or Major Goals
The company focuses on providing comfortable and safety environment for women who would like to train in proper conditions without any possible disturbing. The company’s managers realize that many women avoid visiting gyms because they feel uncomfortable while training together with men. Thereby, its fitness clubs encourage women to attend fitness programs regardless of health, physical conditions, and age. The company’s main goal is to develop a non-judgmental atmosphere, where women will encourage each other and will move to better body condition and health together. She’s FIT also aims at creating fun and energetic atmosphere during its training sessions so that women will feel respected there.
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Core Values and Guiding Principles
The analysis of the company’s mission and vision proves that its core principle is to provide the most appropriate training conditions for women. These conditions are based on developing non-judgment environment with no men present, and women are encouraged by each other and their coaches to improve their bodies and their health. Thus, She’s FIT uses the highest level of privacy and safety while developing its training areas.
External stakeholders. External stakeholder analysis includes the description of the customers/members’s interests and She’s FIT’s interaction with other local businesses.
Members/customers. Company’s customers and Group members are highly dependent stakeholders. If compared with other stakeholders, they have little power of influencing the company’s activities. They are dependent on the company’s policies and are directly influenced by the outcomes of the training programs. However, they are highly interested in efficient development of the company’s activities. Since they have low power and are high interested, it is necessary to constantly keep them updated and informed about the equipment information, opening dates, membership prices, etc.
Local businesses. Other local businesses have also low power on the company’s activities. However, developing strong relationships with them through corporate membership packages will allow the company to boost its customer traffic. Unlike the members/customers, local business has low interest in the company’s operation. Thereby, it is necessary to keep these businesses informed via e-mails, newsletters, and other correspondence in trying to avoid any unnecessary communication and information overload.
Internal stakeholders. Internal stakeholder analysis includes the description of shareholders’ and employees’ power and interest.
Shareholders. Company’s owners and shareholders have a high level of power for influencing company’s activities and policies. Thereby, the company’s managers should ensure that owners/shareholders are satisfied with the company’s business performance. However, since these stakeholders remain having low interest in the project, it is necessary to respond to their queries and provide feedback about the company’s performance without overloading them with unnecessary information.
Employees. If compared with other stakeholders, the employees have both high power and high emotional interest in company’s business. Thereby, the company’s managers should ensure that employees are motivated in order to ensure the company’s success, i.e. through implementing bonuses, promotions, and job satisfaction to the staff. It is also necessary to ensure close communication between the managers and employees, which will help to develop employees’ interest in business success.
In order to provide the external analysis of the She’s FIT’s business environment, two approaches were used. The first approach is based on using Porter’s five forces model, which includes the analysis of the following elements: risk of entry, rivalry among established companies, bargaining power of buyers, bargaining power of suppliers, and threat of substitutes. The second approach is a PESTLE analysis, which provides the analysis of the following elements: political, economical, social, technological, legal, and environmental.
Porter’s Five Forces Model
Risk of entry. In the fitness industry, the risk of a new entrant is not significant. It can be explained by huge entrance barriers, which include high investment costs for building and equipment. Moreover, professional and expert staff seems to be one of the critical elements for the fitness centers’ success. Thereby, new companies should make a right choice while recruiting coaches in order to succeed.
Rivalry among established companies. In the Lower Mainland and Fraser Valley, She’s FIT Group faces low competition. It can be explained by the fact that in the chosen locations at Lower Mainland and Fraser Valley, She’s FIT is the only fitness club focused on women. Despite the fact that there are numerous fitness centers in that location, the company is absolutely unique in its services provided. However, on the rest part of the Canada, there are several other fitness groups, which position themselves as fitness clubs only for women. One of the biggest groups is Womens Fitness Clubs of Canada (WFCC). In case WFCC decide to expand its activities to Lower Mainland and Fraser Valley, She’s FIT may face a strong competitor.
Bargaining power of buyers. The bargaining power of buyers is high since the Canadian fitness market seems to be oversaturated. In case of changing customers’ attitudes, they may start demanding other sport facilities, e.g. yoga or dancing centers. Thereby, due to vast choice offered, target customers can change their demand preferences.
Bargaining power of suppliers. The bargaining power of suppliers remains moderate. It is evident, that fitness gyms are dependent on professional equipment since customers pay much attention to the fitness center training conditions. Thereby, fitness clubs may purchase various supplements that can enhance the effectiveness of training processes, thus making them more attractive to customers.
Threat of substitutes. Training-at-home exercise programs serve as a substitute with low level of threat. There are numerous videos, books, and magazines in the internet and offline shops, which provide recommendations and training programs for the at-home fitness. These instructions usually require little or no equipment; thus, the customer is able to do exercises without any help. It can become an important substitute for those customers who have no time or possibility to train at fitness clubs. However, the number of customers who prefer attending group classes still exceed the number of those who prefer separate trainings.
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Political. Political factors that may influence the company’s business include governmental policies. Since She’s FIT is a fitness organization, it does not depend on external trade conditions or import/export tariffs. However, the company significantly depends on the governmental health policies. In case of promoting healthy life styles, more people may seek fitness trainings. Moreover, since its customers are women, the company also depends on the government policies related to encouraging young (especially single parents) back to work. In case of realization the governmental policy that encourages mothers with little children to work at least part time, it may result in an increase in the number of the She’s FIT’s customers because of their improved finance conditions.
Economical. Economic conditions are the factors that influence the fitness company. It is related to the fact that She’s FIT provides leisure for its customers, and the company will face the significant decrease in the number of its customers in case of decrease in buying power caused by economic decline. This can be explained by the fact that people try to avoid unnecessary costs if they do not have enough money. Thus, wage rates, inflation, exchange rates, and consumer prices have significant impact on the demand for fitness training services. Moreover, in case of growing supplier prices, the company ought to increase its own membership prices. This may also have a negative impact on the number of customers because they will have to cut their spending in terms of prioritized expenses.
Social. Social factors that affect fitness company’s business include the following elements: age, income, children, employment status, etc. The analysis proves that both young and old women attend fitness classes. However, working women, women with low income, or those who have no possibility to leave their small children with nurse may decrease their demand for sports activities. Indeed, the lifestyle factors have also a significant impact on the demand for fitness services. Modern culture requires women to look better at any age and constantly improve their bodies. Thereby, high pressure on those who do not care for their health and body exists, which makes more women to attend fitness classes.
Technological. Technological issues related to highly qualified fitness staff and developed equipment create complex barriers of entering the market by new fitness companies. On the contrary, the existing companies should also pay attention at ensuring the appropriate level of modern technologies available in their centers. Constant improvements will allow She’s FIT to effectively compete with other alternatives for its fitness clubs from competitors. Moreover, the increased needs of the fitness club members will be also satisfied, which will allow the company to increase the loyalty of its customers and ensure constant cash flow.
Legal. Labour legislation is a concern for the fitness company, since its professional and experienced staff is one of the key facilities. The regulations require that the staff members should have appropriate qualification and training experience. Moreover, labour taxes have also significant impact on the company’s costs. Thereby, in case of any increase in minimum wages or labor taxes, the company’s costs will also increase, and, in order to keep the same profit margin, the company’s managers may decide to dismiss the most ineffective employees or exchange several employees with low qualification for one employee with high qualification. Indeed, as a company which deals with human health, She’s FIT must also follow the governmental health regulations and pay special attention to specific requirements, for example in the area of health procedures. This will help to reduce possible injuries and ensure that the company provides its activity with respect to the state laws.
Environmental. Environmental factors have also an impact on the She’s FIT’s activities since the energy consumption is one of its key expenses. In order to stay environmentally friendly, the company should consider the environmental issues related to the electricity and heat consumption. A high demand for ‘green’ initiatives may require the company to pay attention to implementing similar activities in its fitness centers. For instance, using solar energy or recycling products may become an appropriate decision for the company in terms of attracting more loyal customers.
The analysis of internal factors that affect the She’s FIT’s business was provided using the SWOT analysis approach. It allowed distinguishing strengths and weaknesses of the company’s current condition. Indeed, the possible threats and opportunities were formulated on the basis of the company’s strong and weak sides.
One of the company’s strengths is its huge experience in the fitness industry. It is evident that building 13 different fitness centers requires much efforts and experience. Thus, the current scale of the Group’s business facilities proves that the company has got a significant experience, which allows it to effectively improve its business. Further, high recognition level of the company’s brand ensures that it has gained appropriate level for attracting new customers without significant efforts. Excellent customer service provided by the She’s FIT’s coaches also plays an important role in increasing the customers’ satisfaction and loyalty. Moreover, its staff equipment policy is based on high requirements for the potential candidates. Thereby, the company ensures providing the highest level of fitness services by its highly qualified staff (The She’s FIT, 2016b). Finally, the low-cost membership program implemented by the company allows attracting more customers, thereby decreasing average costs.
Despite the significant experience in the fitness industry, having 13 centers is not enough for covering the necessary locations. The company still faces competition from other fitness centers. Moreover, focusing on one geographical area does not allow the company to develop appropriate business network. Next, there are large costs of attracting new corporate clients. Finally, focusing only at the low-cost programs does not allow the company to attract clients who prefer luxury fitness services.
On the basis of the provided analysis of internal environment, the growth opportunities can be formulated. First of all, there is an opportunity to expand the market and start playing more active role in fitness business. Further, it would be appropriate to develop common classes for couples, especially aged 65+, where women together with their husbands will be able to attend gym classes. It would increase the target market and allow the company to gain more profits since old ladies will be interested in getting their partners to joint their gym trainings. Finally, the constant increase in programs and trends that promote healthy life style will bring additional clients and will have a positive impact on attending fitness classes as well.
The key threat for She’s FIT is the increase in various sports equipment for the home use differentiated by size and cost. That may be the influences by the low number of free hours for attending gym or the customers’ desires to ensure full confidentiality while training. Indeed, other well-established fitness groups may start developing in Lower Mainland and Fraser Valley. Thereby, She’s FIT may lose its niche market power and start feeling the lack of immunity due to the potential economic downturn.
In order to ensure the best realization of the company’s mission, three distinct strategies were formulated. In order to ensure the appropriate strategy formulation, the Collis and Rukstad’s (2008) approach and five basic elements of a strategy formulated by Hambrick and Fredrickson (Appendix A) were used.
Strategy description. The first chosen strategic direction can be called product/ service, as the RBL Group. Inc (2009) recommends. As it is shown in Appendix D, this strategy is used when the company is going to move from existing product to a new one. According to the Ansoff’s matrix, this strategy refers to the market development (Appendix C). As Hambrick and Fredrickson (2005) recommend, the following elements of the given strategy were formulated.
The company’s arena is the fitness industry. A particular product (existing fitness services) will be used as anchor for future development. The possible vehicles for entering a new arena include organic growth and investments in additional fitness facilities. This growth will be created by expanding sales of the fitness services to new customer segment – couples (women and men) aged 65+. Further staging includes using available human capital in order to develop new training programs for a new target market. Consequently, the proposed strategy is based on delivering high-quality fitness services to the new target market of people aged 65+ using available professional staff and appropriate investments. The economic logic for this strategy is based on delivering these services with discounts, which will allow collecting necessary profits by the increased number of new customers using the same training facilities.
Advantages and Disadvantages. This strategy is useful for She’s FIT because of the perspectives it opens. Achieving new target market will not only expand the overall company’s market share but become presented in other geographical areas as well. However, there is a risk to make a mistake while choosing new target market. Thus, all investments and efforts will be inefficient.
Strategy description. The next proposed approach is called customer/market strategy (The RBL Group Inc., 2009). Unlike the previous strategy, this one allows the company to move with a new product to the existing customers (Appendix D). According to the Ansoff’s matrix, this strategy is called product development (Appendix C). Thereby, in order to satisfy present customers, a new product should be developed. This is done to develop new dancing and yoga classes, which will allow meeting customers’ goals of healthy and strong body funnier and more effectively. Thereby, a differentiation focus generic strategy distinguished by Porter is useful in this case (Appendix B).
Consequently, yoga and dancing classes should be implemented in She’s FIT’s training programs in order to achieve higher level of customer satisfaction and increase customer loyalty. It is necessary to hire new coaches and organize enough space for new classes. Despite all the needed investments, this strategy will not only attract new customers but also stimulate existing ones to attend additional classes. The return on investment will be obtained by the increased number of new customers and additional hours of fitness center services bought by the existing clientele.
Advantages and Disadvantages. This strategy will allow achieving additional growth since current fitness capacities do not have a possibility to expend further. Subscription sales to the new classes will leverage existing assets (Gates, 2010) and also reduce the cost base for existing products. However, this strategy should be carefully implemented since there are risks of overstretching the brand and lowering its value (Gates, 2010). As a result, it may lead to low sales of the present products.
Strategy description. The last proposed strategy is called production capacity strategy. Unlike the previous ones, it focuses on delivering new products to new customers (Appendix D). According to the Ansoff’s matrix, this strategy refers to diversification (Appendix C). The RBL Group Inc. (2009) recommends using particular asset or resource as an anchor since its full utilization will maximize business growth.
In case of She’s FIT, it is recommended to develop a new line of fitness clothes created under its own brand. Thus, the company will enter the sports apparel market and engage additional customers. In order to differ from other apparel companies, She’s FIT should focus on providing high-quality design of its apparel, which, however, will have lower prices comparing with its main competitors in this market such as Adidas, Nike, etc. An organic investment in a new unique product line will help to reach the market and be distinguished from other firms. It is expected that the future return on investment will be obtained by sales collected from the existing customers who attend fitness centers. It will allow expanding to a new market and increasing the company’s sales. Thereby, the proposed strategy is to create a fitness apparel line for women with the lowest price possible, which will still have creative design and good quality.
Advantages and Disadvantages. This strategy allows maximizing the utilization of company’s facilities and optimizing unit costs (Gates, 2010). Moreover, it exceeds the target market and attracts new customers. However, since diversification strategy brings the company to a new industry field, there is a risk of ineffective using the existing facilities, which will increase the company’s costs.
Recommendation and Implementation
Among three proposed strategies mentioned, the customer/market strategic option is recommended as the most appropriate for the firm. According to this strategy, a new service (dancing and yoga classes) should be developed in addition to existing fitness classes and be proposed to the same customer groups, which include women who have already became the members of She’s FIT. The purpose of implementing this strategy is satisfying different customers’ needs and generating additional revenue from membership fees. The mentioned classes are genuinely new service because they significantly differ from traditional fitness classes. In case of She’s FIT, new classes are the only way to achieve business growth. The company’s sales to the existent customer base will allow it to achieve higher convention rates comparing with the sales campaigns focused on absolutely new customers.
The key risks of implementing product development strategy rely on specifics of the recommended strategy. First of all, there is a financial risk based on ensuring whether the investments spent on developing new classes will be covered by membership fees. There is a possibility that people will continue attending only fitness classes without paying attention to the new ones. Indeed, those women who are interested in yoga or dancing will prefer attending specialized centers, and will refuse attending similar classes in general fitness center.
Secondly, there is a risk of missing critically important people for the strategy implementation (Susterova, Lavin, & Riives, 2012). For instance, in order to develop high-quality yoga and dancing classes, it is necessary to find professional coaches who will be able to provide high-quality teaching. There is also a possibility that necessary staff members will be engaged in other projects or will require higher salaries. This will not only increase company’s costs but also cause delays in organizing new classes.
In order to avoid these risks, the company’s managers should provide the following steps. Firstly, to ensure that new classes will gain the necessary number of visitors, they could provide special discounts on the core membership fees if customers buy additional hours for attending new classes. This will help to cover the fixed costs related to the coach salary, which depends on the number of hours and the alternative costs of using training areas. Secondly, before implementing new yoga and dancing classes in all 13 fitness centers, a testing of new services should be conducted in one of them. It will allow collecting necessary data about the customers’ demand and tastes. Moreover, an early feedback will allow the company to avoid possible mistakes present in the training programs of other centers.
Consequently, She’s FIT is a well-established fitness company, which has successfully occupied a niche of only-women fitness. Its 13 centers provide various fitness training programs including cardio and weight improvement workouts. The company states that it delivers the best fitness services for women with the focus on creating non-judgmental and comfortable atmosphere. Conducting internal and external analysis of the company’s business environment allowed formulating three strategic directions. According to the conducted analysis, the customer/market strategy was chosen as the most appropriate one. With this strategy, it is recommended to create new dancing and yoga classes for the existing customers. Consequently, the strategy will allow not only to attract new women to the fitness clubs but also to increase the number of hours purchased by the existing customers. However, there are several implementation issues, which can cause significant cost implications, delays, and failing while trying to satisfy customers’ needs. Therefore, in order to avoid these risks, the company’s managers should ensure early testing of new services on the chosen group of customers and continue implementing these new services only after prior feedback.