Strategic Management

Executive Summary

Strategic management is about analysing, monitoring, and implementing strategies for gaining a competitive edge in the industry. The report is focused on analysing the external and internal environment of the UK’s leading provider of Fitness and Education, Study Active. Their competitors included in the report are the Fitness Circle, Educate Fit and YMCA fit. The entire three organisations have different resources and capabilities helping them in surviving in the market. Several strategic tools are used in the report for monitoring the external environment and internal capabilities of the organisation to achieve profitability and growth. PESTLE and Porter’s five forces are used for analysing the external environment and it has been found that market competitiveness is tough along with high customer bargaining power due to the availability of substitutes. The company offers diverse advantages to their customer for increasing customer satisfaction but there is a requirement of improving technologies to stay competitive.

Introduction

The present report sheds light on the critical evaluation and analysis of the corporate environment concerning a leading provider of Gym Instructor and Personal Training qualifications, named, Study Active. The firm is located in the United Kingdom (Algar,2021). The report analyses the firm’s external and internal environment by applying suitable tools and techniques. The key tools include PESTEL, VRIO, SWOT, and Porter’s five forces. These tools and techniques hold the potential to analyse and highlight the overall industrial attractiveness

PESTEL Analysis

Political factors: The Gym industry in the UK does not encounters any hindrances within its political environment. No restrictions and polices related to pricing, trade, taxation, or other regulations govern the Fitness and Gym industry (Brightonet. al.2020). However, the law demands that any standard contract terms should be clear, fair, and transparent. The surroundings and equipment must also fulfil government requirements.

Economic factors: The growth of Fitness and Health industry highlights an increase in sport-related employment in the UK. Also, increased flexibility offered in gym memberships by various gyms like Study Active, YMCA Fit, Educate Fitness, and others further attract customers and reduce gym costs. However, the present recession conditions highlight serious challenges to the gym industry and fitness corporations in the UK.

Social factors: The modern customers are more aligned towards social media for communicating and interacting with corporations, searching for discounts, general information, and offers. Also, an increase in feminine fitness trends positively affect the gym industry. The present society requires more from gyms so new services can cater to the needs, thereby, highlighting competitiveness in the industry (Chekhovska, 2017). Additionally, celebrity culture largely influences the number of people who tend to improve their health and physique. The new demographic of “Fitness Fanatics”drives the growth of health firms and apps, within different age groups.

Technological factors: The new applications of health and fitness attract customers’ attention, like Apple Health App, Google Fit, and Microsoft Health. Also, digital fitness classes are the new technological trend. Gym memberships and entry systems have completely shifted towards the web-and-software based technologies.

Environmental factors: The Gym and Fitness industry in the United Kingdom is not affected by the environmental factors (Beaucheminet. al.2019). However, climatic and weather conditions may affect the revenue of corporations within the Health and Fitness industry. The customers may avoid workout or gymnastics during certain climatic conditions or weather.

Legal factors: These include policies and laws related to intellectual property rights for the firm, laws against discrimination based on sex, consumer protection, employment, health and safety. Also, the gym corporations should protect the personal information and data of the customers. Hence, the PESTEL Analysis highlights that the external environmental factors do not have a serious or large-scale impact on Study Active. Therefore, the industry reflects desirable growth-opportunities and development trends for the firm.

Porter’s five forces

Power of supplier: The Gym industry in the UK integrates a huge number of suppliers concerning fitness equipment, machines, and other technical requirements (Miragaiand Constantino, 2019). This further implies that the suppliers of different gym and fitness corporations have less control over the pricing methods. It highlights a weak bargaining power of the suppliers. Study Active may easily switch from one supplier to other in order to ensure cost-effectiveness. Therefore, it highlights low level of threat related to supplier power.

Figure 1 Porter’s five forces model

(Source: Zhukova, 2021)

Power of buyer: The UK-based Health and Fitness industry is crowded with a lot of gyms and other fitness corporations. This implies that the buyers or customers can easily switch from one gym to the other in order to avail low prices and discounts. Furthermore, the quality of health and fitness services offered to the customers is a significant aspect which regulates the power of buyers in the industry. Study Active is known for offering superior and the best quality services, assistance, and consultation of the customers, thereby, attracting them towards its firm and services.

Competitive rivalry: The number of firms within the Health and Fitness industry in the UK is high. Study Active faces serious competition from the well-established and leading competitors like YMCA Fit, Educate Fitness and the Fitness Circle (Kantola, 2020). These competitors adopt and implement price-effective techniques and offer attractive membership discounts in order to attract customers. Therefore, it highlights a high level of threat associated with existing competition and intense rivalry. Hence, Study Active should focus on providing the best and superior quality health services and assistance to its customers, low-priced gym membership, and other discounts or offers in order to capture and retain significant customer base.

Threat of substitute product: Every firm within the UK-based Health and Fitness industry offers a majority of similar gym and health services. The integration of similar fitness machines and health equipment highlight a high level of threat related to substitute products. Therefore, the fitness and gym firms, like Study Active, adopt the technique of providing low-priced gym memberships and other attractive offers or discounts in order to capture a significant customer base (Hurstet. al.2019). However, a small difference in the pricing strategies and techniques of firms within the industry may offer serious threats and challenges

Threat of new entrants: The capital and investments required within the Health and Fitness industry is relatively higher. Health equipment, fitness machines, and other such requirements as well as large-scale premises require high level of investment and capital. Also, government regulations and policies within the industry also demand fulfilment of legal requirements and strict licensing. These aspects highlight complexities and difficulties for new entrants within the industry (Clark, 2018). Hence, it reflects low level of threat related to new entrants. Therefore, the UK-based Health and Fitness industry highlight favourable aspects and factors for the Study Active to focus on its long-term development and growth.

Resource-based view

The model is used for identifying the company’s resources that can be used by them for achieving market competitiveness. By identifying the resources companies can utilise them for meeting the emerging external opportunities as per customer demands. It helps in enhancing organisational performance by taking advantage of the company’s resources adequately (Ristyawan, 2020). It is then followed by using the VRIO framework to identify the resources that help in gaining sustained or temporary competitive advantage. In the technological era, it becomes essential for a company to stay market competitive so they can survive and gain profitability in the market. It is mandatory to bring the strategies and implement them so the organisation can take advantage of resources and achieve benefits. There are two types of assets in the RBV model that includes intangible and tangible assets.

Intangible assets: It can be described as the resources owned by the company without having any physical presence. It could be brand reputation, goodwill, trademarks, customer satisfaction, and intellectual property. It requires lots of effort and time to earn intangible assets and these are the resources other organisations cannot replicate. But it is in the hand of the organisation to hold them and achieve advantage from them (Collins, 2021). These resources are described as the primary source of gaining sustainable competitive advantage. Study Capital has brand reputation and continuously enhances customer satisfaction that could be beneficial for gaining sustainable competitive advantage in comparison to its competitors.

Tangible assets: These are the assets physically owned by the company and are quantifiable. It involves all the properties, products, machinery, equipment, infrastructure, capital, and many more. It is easily replicated by the competitors and can’t help the organisation in gaining sustainable competitiveness (Maijanen, 2020). Tangible assets of Study Active include gym equipment’s, property they operate, technologies and some other products they provide to their customers.

Based on the critical assumptions made by the RBV model states the heterogeneity between companies. It explains the way that can be used by the organisation to transform short-run competitiveness into a sustained competitive advantage (Shaw, 2021). The RBV model states that resources could be immobile and heterogeneous.

Heterogeneous:This property of resources describes that an organisation must have some diverse resources, strategies, and competencies to achieve market competitiveness. It is said that having the same mix of resources won’t help the organisation in achieving a competitive advantage (Furr and Eisenhardt, 2021). It is mandatory to implement strategies different from another so they can stay out of the crowd. Their heterogeneity can be reflected in their strategy that provides an option to customers for funding their course with the government 19+ Advanced Learner Loan.   

Immobile: Immobility of resources describes those resources do not move from one company to another at least in the short run. This feature stops other organisations to replicate their resources expertise and plan for an adequate strategy (Arbeloet. al. 2021). Immobile resources reflect intangible assets like brand reputation and customer satisfaction that can’t be replicated.

VRIO-Framework

Even though organisations have heterogeneity and immobility in the resources it is not enough to gain sustained competitive advantage. For sustaining the competitiveness VRIO framework is analysed that stands for valuable, rare, inimitability, and organisational system (Miethlich and Oldenburg, 2019). After analysing the four elements’ organisations could enhance their sustainable competitiveness and they can also implement strategies for achieving competitiveness.

Valuable: Valuable resources can be described as the resources that could help the organisation in achieving its goals and objectives of the organisation. In the case of Study Active, all the resources like gym equipment, physical assets, employees, technologies, R&D, customer satisfaction, Brand reputation, and financial resources. Study active offers government 19+ Advance Learner Loan that is different from their three competitors described above.   

Rare: The intangible and tangible assets acquired by few organisations are described by rare resources. These rare resources help the organisation in acquiring greater competitive advantage but it has to be noted that some of the rare resources can be replicated by other organisations (Haseeb et. al. 2019). 19+ Advanced Learner Loan, employees, R&D, customer satisfaction, brand reputation, and financial resources are rare resources acquired by Study Active.

Inimitable:Resources that are valuable and rare and can’t be imitated by their competitors are described as inimitable resources. It is only achieved if the rate of compensation is higher than the cost of other companies to replicate these resources and capabilities. R&D, customer satisfaction, Brand reputation, financial resources, and 19+ Advance Learner loan are inimitable resources for Study Active.

Organisational: The organisation must design the process, system, and resources in such a manner that helps the organisation in achieving maximum productivity. For this, the company must have an adequate resource management system to assure that all the resources are managed and optimised.

Looking at the above VRIO resources of Study Active, it can be seen that gym equipment is valuable but doesn’t offer sustained competitive advantage as their competitors also have similar or advanced equipment to provide better training and education. They allow their customer to fund their courses using government 19+ advanced learner loan and it helps the company in gaining sustainable competitive advantage as no other competitor have this kind of facility. Technologies they offer are valuable but not rare as in today’s technologically advanced world their competitors are constantly bringing updates and latest technologies. For instance, Fitness Circle is the UK’s leading provider of digital fitness education and they focus on keeping rapid pace with the latest technologies that can’t be imitated easily (The Fitness Circle, 2021). Due to this, technological resources don’t help Study Active in gaining competitiveness.

Furthermore, R&D, financial resources, brand reputation, and customer satisfaction help the company in gaining effective and sustained competitive advantage. These are the resources that can’t be replicated easily as the efforts they made in enhancing their brand reputation and customer satisfaction is different (Study Active, 2021). It is recommended that Study Active needs to focus on enhancing its technological advancements and must advertise and promote its services using different digital platforms.

SWOT Model

Strengths: On assessing the internal factors of Study Active, it has been observed that the key strengths of the firm include strong brand image and reputation, as well as well-established customer base. In addition to this, Study Active offers a wide service portfolio to its customers, which include personal training course, Level 3 Personal Training, Level 2 Certification in Gym Instructing, and Nutritional Assistance. Furthermore, the offered service portfolio also includes Mental Health assistance and support, Online Diploma, and Physical activities and Lifestyle strategies course. Moreover, the automation of activities has brought quality consistency to the Study Active firm services (Algar,2021). This further highlights a strength of scaling up and down depending upon the demand conditions in the UK market. Additionally, the combination of learning delivery method using practical workshops, e-learning, dedicated tutorials, and webinars empower the Study Active clients to become fitness professionals. Therefore, these strengths combined with a significant customer baseposition Study Active as a leading provider of Fitness Instructor qualifications and Personal Training.

Figure 2 SWOT Matrix

(Source: Parsons, 2021)

Weaknesses: Lack of effective strategies concerning the promotion and marketing of varied service portfolio, limited investment in technologies and digital advancements, and limitedwithin the UK market are certain weaknesses of Study Active (Brightonet. al.2020). Also, ineffective and less attractive online visibility as well as lack of customer engagement over social media accounts further highlights the firm’s weaknesses.

Opportunities: Product diversification by introducing sportswear and other gaming equipment can be an excellent growth-oriented opportunity for Study Active. Also, international expansion into nations surrounding the UK, low-priced memberships, and effective online visibility or presence offer great opportunities to the firm. Lastly, enhancing the quality of courses and the offered services will also enable Study Active to build and retain strong competitive advantages in the industry.

Threats: The ongoing recession conditions in the UK, shortage of health professionals and fitness experts, technologies developed by the competitors, and aggressive competition offer serious threats to Study Active (Chekhovska, 2017). The competitors including YMCA Fitness, Educate Fitness, and The Fitness Circle have been observed to implement techniques and strategies for capturing customers. The key techniques include low-priced memberships and other fitness courses, attractive offers and discounts, as well as online platforms for engaging and interacting with their customers. Therefore, the SWOR Analysis highlights that Study Active highlights robust and strong financial position of health within the industry. The firm maintains a well-developed brand name and image within the Health and Fitness industry in the UK. However, the firm encounters certain threats and challenges, which further can be mitigated by implementing effective strategies and approaches.

Conclusion

It has been concluded from the report that every organisation needs to bring the best out of their resources so they can attain competitiveness. In today’s tough competitive market it becomes difficult for the organisation to survive and fitness training and education is a leisure service so it can be chosen by the customers when the economy is at peak. During the pandemic, they are the ones that get affected heavily. Study Active is the UK’s leading provider of fitness training and education and also supports their students to guide them in getting employment. On the other hand, RBV-model is used to analyse the resources that help the company in gaining sustainable competitive advantage. VRIO framework is used as an analysis tool of resources offering a temporary or sustainable competitive advantage. Looking at this, it can be seen that brand reputation, financial resources, customer satisfaction, R&D, and 19+ advanced learner loans can’t be imitated and offers sustained competitive advantage. At last, SWOT is done and based on that it can be depicted that market competitiveness can become a major threat to a company’s growth.

References

Books and Journals

Algar, R., (2021). The Fitness Industry in the United Kingdom. In The Global Private Health & Fitness Business: A Marketing Perspective. Emerald Publishing Limited.

Arbelo, A., Arbelo-Pérez, M. and Pérez-Gómez, P., (2021). Profit efficiency as a measure of performance and frontier models: a resource-based view. BRQ Business Research Quarterly, 24(2), pp.143-159.

Beauchemin, J.D., Gabana, N., Ketelsen, K. and McGrath, C., (2019). Multidimensional wellness promotion in the health and fitness industry. International Journal of Health Promotion and Education, 57(3), pp.148-160.

Brighton, J., Wellard, I. and Clark, A., (2020). Introducing (our) gym bodies and fitness cultures. In Gym Bodies (pp. 1-19). Routledge.

Chekhovska, L., (2017). Fitness industry: state and prospects of development in the countries of the world. Slobozhanskyi herald of science and sport, (2 (58)), pp.19-24.

Clark, A., (2018). Exploring women’s embodied experiences of ‘the gaze’in a mix-gendered UK gym. Societies, 8(1), p.2.

Collins, C.J., (2021). Expanding the resource based view model of strategic human resource management. The International Journal of Human Resource Management, 32(2), pp.331-358.

Furr, N.R. and Eisenhardt, K.M., (2021). Strategy and Uncertainty: Resource-Based View, Strategy-Creation View, and the Hybrid Between Them. Journal of Management, p.01492063211011760.

Haseeb, M., Hussain, H.I., Kot, S., Androniceanu, A. and Jermsittiparsert, K., (2019). Role of social and technological challenges in achieving a sustainable competitive advantage and sustainable business performance. Sustainability, 11(14), p.3811.

Hurst, W., Shone, N., Tully, D., Shi, Q., Chalmers, C., Hulse, J. and O’Hare, D., (2019). Developing a productivity accelerator platform to support UK businesses in the industry 4.0 revolution. In Third International Congress on Information and Communication Technology (pp. 517-525). Springer, Singapore.

Kantola, P., (2020). Consumer Brand Awareness–Fitness Industry, Instagram and Influencing Female Millennials.

Maijanen, P., (2020). 3 Approaches from strategic management: Resource-based view, knowledge-based view, and dynamic capability view. In Management and Economics of Communication (pp. 47-68). De Gruyter Mouton.

Miethlich, B. and Oldenburg, A.G., (2019). Employment of persons with disabilities as competitive advantage: An analysis of the competitive implications. In 33nd International Business Information Management Association Conference (IBIMA), Education Excellence and Innovation Management through Vision (2020), Granada, Spain, 10-11.04. (2019) (pp. 7146-7158). King of Prussia, PA: IBIMA Publishing.

Miragaia, D.A.M. and Constantino, M.S., (2019). Topics and research trends of health clubs management: will innovation be part of the fitness industry research interests?. International Journal of Sport Management and Marketing, 19(1-2), pp.129-146.

Ristyawan, M.R., (2020). An Integrated Artificial Intelligence and Resource Base View Model for Creating Competitive Advantage. GATR Journal of Business and Economics Review, 5(1), pp.28-37.

Shaw, J.D., (2021). The resource-based view and its use in strategic human resource management research: The elegant and inglorious. Journal of Management, p.0149206321993543.

Online

Parsons. (2021). What Is a SWOT Analysis and How to Do It Right (With Examples).[Online:]. Accessed through:<https://www.liveplan.com/blog/what-is-a-swot-analysis-and-how-to-do-it-right-with-examples/>

Study Active. (2021). [Online]. Accessed through: <https://studyactive.co.uk/pages/why-choose-study-active>

The Fitness Circle. (2021). [Online]. Accessed through: <https://www.thefitnesscircle.co.uk/>

Zhukova. (2021). Understanding Porter’s Five Forces Model (How to Use It + Template). [Online]. Accessed through: <https://www.semrush.com/blog/understanding-porters-five-forces-model/>

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