The U.S. Health Club Industry, 2005-2016 SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The U.S. Health Club Industry, 2005-2016
In 2015, the U.S. health-club industry generated revenues of $25.8 billion, up from $14.8 billion in 2004. Members of health clubs accounted for 17% of the population, up from 14%. The number of clubs had grown from 26,830 in 2004 to 36,180. In the process, the list of leading chains had changed significantly. While a higher proportion of Americans exercised on any given day, the majority still did not, and the average number of hours exercised had remained essentially flat. Meanwhile, the prevalence of people classified as overweight and obese had grown from 66.3% to 70.2%. A slowdown in growth and other challenges that the health-club industry had faced since 2004 meant that investors were more careful with their money. The steady rise of LA Fitness to industry leadership with a 7% market share suggested that there were still opportunities for consolidation. However, some observers argued that the industry would always be fragmented-it was simply too easy to enter. Another key debate concerned how best to position in an industry where new formats and business models proliferated. The sector had attracted a great deal of private equity in the past. Would it prove a good opportunity for investors in future?
Swot Analysis of "The U.S. Health Club Industry, 2005-2016" written by John R. Wells, Gabriel Ellsworth includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Club Exercised facing as an external strategic factors. Some of the topics covered in The U.S. Health Club Industry, 2005-2016 case study are - Strategic Management Strategies, Customers, Health, Strategy, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The U.S. Health Club Industry, 2005-2016 casestudy better are - – cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings,
challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of The U.S. Health Club Industry, 2005-2016
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The U.S. Health Club Industry, 2005-2016 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Club Exercised, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Club Exercised operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of The U.S. Health Club Industry, 2005-2016 can be done for the following purposes –
1. Strategic planning using facts provided in The U.S. Health Club Industry, 2005-2016 case study
2. Improving business portfolio management of Club Exercised
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Club Exercised
Strengths The U.S. Health Club Industry, 2005-2016 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Club Exercised in The U.S. Health Club Industry, 2005-2016 Harvard Business Review case study are -
Training and development
– Club Exercised has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The U.S. Health Club Industry, 2005-2016 Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Club Exercised has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in The U.S. Health Club Industry, 2005-2016 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Club Exercised is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Club Exercised has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Club Exercised to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Club Exercised is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by John R. Wells, Gabriel Ellsworth can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Club Exercised has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Club Exercised in the sector have low bargaining power. The U.S. Health Club Industry, 2005-2016 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Club Exercised to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Strategy & Execution field
– Club Exercised is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Club Exercised in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Club Exercised digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Club Exercised has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Club Exercised is present in almost all the verticals within the industry. This has provided firm in The U.S. Health Club Industry, 2005-2016 case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Organizational Resilience of Club Exercised
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Club Exercised does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Club Exercised are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses The U.S. Health Club Industry, 2005-2016 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The U.S. Health Club Industry, 2005-2016 are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Club Exercised supply chain. Even after few cautionary changes mentioned in the HBR case study - The U.S. Health Club Industry, 2005-2016, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Club Exercised vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Club Exercised needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Club Exercised has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study The U.S. Health Club Industry, 2005-2016 has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Club Exercised 's lucrative customers.
Aligning sales with marketing
– It come across in the case study The U.S. Health Club Industry, 2005-2016 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case The U.S. Health Club Industry, 2005-2016 can leverage the sales team experience to cultivate customer relationships as Club Exercised is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Club Exercised has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Club Exercised is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Club Exercised needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Club Exercised to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study The U.S. Health Club Industry, 2005-2016, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Club Exercised has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Club Exercised has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Club Exercised, firm in the HBR case study The U.S. Health Club Industry, 2005-2016 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities The U.S. Health Club Industry, 2005-2016 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study The U.S. Health Club Industry, 2005-2016 are -
Creating value in data economy
– The success of analytics program of Club Exercised has opened avenues for new revenue streams for the organization in the industry. This can help Club Exercised to build a more holistic ecosystem as suggested in the The U.S. Health Club Industry, 2005-2016 case study. Club Exercised can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Club Exercised in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Club Exercised can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Club Exercised can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Using analytics as competitive advantage
– Club Exercised has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study The U.S. Health Club Industry, 2005-2016 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Club Exercised to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Club Exercised can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Club Exercised to increase its market reach. Club Exercised will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Club Exercised can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Club Exercised can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Loyalty marketing
– Club Exercised has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Club Exercised in the consumer business. Now Club Exercised can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Club Exercised can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The U.S. Health Club Industry, 2005-2016 suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Club Exercised can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Club Exercised can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Threats The U.S. Health Club Industry, 2005-2016 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The U.S. Health Club Industry, 2005-2016 are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Club Exercised needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Club Exercised demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that Club Exercised is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Club Exercised will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Club Exercised in the Strategy & Execution sector and impact the bottomline of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Club Exercised.
Regulatory challenges
– Club Exercised needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High dependence on third party suppliers
– Club Exercised high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Club Exercised in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Club Exercised can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Club Exercised
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Club Exercised.
Weighted SWOT Analysis of The U.S. Health Club Industry, 2005-2016 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study The U.S. Health Club Industry, 2005-2016 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study The U.S. Health Club Industry, 2005-2016 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study The U.S. Health Club Industry, 2005-2016 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of The U.S. Health Club Industry, 2005-2016 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Club Exercised needs to make to build a sustainable competitive advantage.