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 inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , technology disruption, geopolitical disruptions, increasing household debt because of falling income levels,
increasing transportation and logistics costs, increasing energy prices, 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 -
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.
Sustainable margins compare to other players in Technology & Operations industry
– Fitpass: Toward Democratizing Fitness firm has clearly differentiated products in the market place. This has enabled Fitpass Fitness to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Fitpass Fitness to invest into research and development (R&D) and innovation.
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.
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.
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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Fitpass Fitness digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fitpass Fitness 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.
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.
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.
High switching costs
– The high switching costs that Fitpass Fitness 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.
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.
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.
Ability to recruit top talent
– Fitpass Fitness is one of the leading recruiters in the industry. Managers in the Fitpass: Toward Democratizing Fitness are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 -
Slow to strategic competitive environment developments
– As Fitpass: Toward Democratizing Fitness HBR case study mentions - Fitpass Fitness takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Fitpass Fitness is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Fitpass Fitness needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fitpass Fitness to focus more on services rather than just following the product oriented approach.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Fitpass: Toward Democratizing Fitness, is just above the industry average. Fitpass Fitness needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fitpass: Toward Democratizing Fitness, it seems that the employees of Fitpass Fitness don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Anupama Prashar, Leena Ajit Kaushal suggests that, Fitpass Fitness is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Fitpass Fitness 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.
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.
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 -
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. Fitpass Fitness can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Using analytics as competitive advantage
– Fitpass Fitness 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 Fitpass: Toward Democratizing Fitness - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fitpass Fitness 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, Fitpass Fitness 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.
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.
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.
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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fitpass Fitness can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Fitpass: Toward Democratizing Fitness, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Fitpass Fitness in the consumer business. Now Fitpass Fitness can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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 -
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 .
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.
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. Fitpass Fitness 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 Fitpass Fitness in the Technology & Operations sector and impact the bottomline of the organization.
Increasing wage structure of Fitpass Fitness
– 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 Fitpass Fitness.
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.
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.
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.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fitpass Fitness can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
High dependence on third party suppliers
– Fitpass Fitness 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.
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.