Case Study Description of Fitpass: Toward Democratizing Fitness
It was July 2017 when the co-founders of Fitpass Business Ventures Private Ltd. (Fitpass), an online platform providing passes to fitness establishments in the Delhi-National Capital Region, were reflecting on the need for continuous innovation to stay relevant to their users. Launched in June 2015, the company intended to satisfy the unmet market need for flexible workout options at an affordable price for fitness-conscious Indian youth. The company's application, FITPASS, had been downloaded 100,000 times, and the company had gained 60,000 registered users and created a partner network of 1,500 fitness establishments in the region. Generating 100 per cent growth in month-on-month revenue, the company was among the leading platforms in this region. However, the online marketplace was becoming crowded with look-alike competitors, and the founders faced some tough questions: How could the company sustain its position in the current market? Was the company ready to move into other similar markets using the current business model and innovative capabilities? Anupama Prashar and Leena Ajit Kaushal are affiliated with Management Development Institute.
Swot Analysis of "Fitpass: Toward Democratizing Fitness" written by Anupama Prashar, Leena Ajit Kaushal includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fitpass Fitness facing as an external strategic factors. Some of the topics covered in Fitpass: Toward Democratizing Fitness case study are - Strategic Management Strategies, Technology and Technology & Operations.
Some of the macro environment factors that can be used to understand the Fitpass: Toward Democratizing Fitness casestudy better are - – increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%,
there is increasing trade war between United States & China, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Fitpass: Toward Democratizing Fitness
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fitpass: Toward Democratizing Fitness case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fitpass Fitness, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fitpass Fitness 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 Fitpass: Toward Democratizing Fitness can be done for the following purposes –
1. Strategic planning using facts provided in Fitpass: Toward Democratizing Fitness case study
2. Improving business portfolio management of Fitpass Fitness
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fitpass Fitness
Strengths Fitpass: Toward Democratizing Fitness | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fitpass Fitness in Fitpass: Toward Democratizing Fitness Harvard Business Review case study are -
Highly skilled collaborators
– Fitpass Fitness 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 Fitpass: Toward Democratizing Fitness HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Fitpass Fitness in the sector have low bargaining power. Fitpass: Toward Democratizing Fitness has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fitpass Fitness to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Fitpass Fitness is present in almost all the verticals within the industry. This has provided firm in Fitpass: Toward Democratizing Fitness 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 Fitpass Fitness
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fitpass Fitness does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Fitpass Fitness is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Fitpass Fitness has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fitpass Fitness has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Fitpass Fitness has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fitpass Fitness to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Fitpass Fitness in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Fitpass Fitness has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Fitpass: Toward Democratizing Fitness - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Fitpass Fitness 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.
Analytics focus
– Fitpass Fitness 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 Anupama Prashar, Leena Ajit Kaushal 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.
Innovation driven organization
– Fitpass Fitness is one of the most innovative firm in sector. Manager in Fitpass: Toward Democratizing Fitness Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Fitpass: Toward Democratizing Fitness | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fitpass: Toward Democratizing Fitness are -
Skills based hiring
– The stress on hiring functional specialists at Fitpass Fitness 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fitpass Fitness is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Fitpass: Toward Democratizing Fitness can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Fitpass: Toward Democratizing Fitness 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 Fitpass Fitness 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Fitpass Fitness 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.
High cash cycle compare to competitors
Fitpass Fitness has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Fitpass Fitness has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Fitpass: Toward Democratizing Fitness should strive to include more intangible value offerings along with its core products and services.
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 Fitpass Fitness supply chain. Even after few cautionary changes mentioned in the HBR case study - Fitpass: Toward Democratizing Fitness, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fitpass Fitness vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Fitpass Fitness 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 Fitpass Fitness, firm in the HBR case study Fitpass: Toward Democratizing Fitness needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Fitpass: Toward Democratizing Fitness 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 Fitpass: Toward Democratizing Fitness can leverage the sales team experience to cultivate customer relationships as Fitpass Fitness is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Fitpass: Toward Democratizing Fitness, it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
Opportunities Fitpass: Toward Democratizing Fitness | 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 Fitpass: Toward Democratizing Fitness are -
Building a culture of innovation
– managers at Fitpass Fitness 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 Technology & Operations segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fitpass Fitness to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Fitpass Fitness to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fitpass Fitness can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fitpass Fitness 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. Fitpass Fitness 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.
Buying journey improvements
– Fitpass Fitness can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Fitpass: Toward Democratizing Fitness 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fitpass Fitness in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Fitpass Fitness to increase its market reach. Fitpass Fitness 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.
Leveraging digital technologies
– Fitpass Fitness can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Fitpass Fitness can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fitpass Fitness is facing challenges because of the dominance of functional experts in the organization. Fitpass: Toward Democratizing Fitness case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Fitpass Fitness to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Manufacturing automation
– Fitpass Fitness can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Loyalty marketing
– Fitpass Fitness 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.
Threats Fitpass: Toward Democratizing Fitness External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fitpass: Toward Democratizing Fitness are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fitpass Fitness with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fitpass Fitness business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Fitpass: Toward Democratizing Fitness, Fitpass Fitness may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Environmental challenges
– Fitpass Fitness needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Fitpass Fitness can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Technology acceleration in Forth Industrial Revolution
– Fitpass Fitness has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Fitpass Fitness needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Shortening product life cycle
– it is one of the major threat that Fitpass Fitness is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Fitpass Fitness in the Technology & Operations sector and impact the bottomline of the organization.
Consumer confidence and its impact on Fitpass Fitness 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.
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 Fitpass Fitness.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fitpass Fitness can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Fitpass: Toward Democratizing Fitness .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fitpass Fitness in the Technology & Operations industry. The Technology & Operations 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.
Stagnating economy with rate increase
– Fitpass Fitness can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Fitpass Fitness 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 Technology & Operations industry regulations.
Weighted SWOT Analysis of Fitpass: Toward Democratizing Fitness 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 Fitpass: Toward Democratizing Fitness 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 Fitpass: Toward Democratizing Fitness 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 Fitpass: Toward Democratizing Fitness 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 Fitpass: Toward Democratizing Fitness 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 Fitpass Fitness needs to make to build a sustainable competitive advantage.