The UR UMUC Healthy Fitness Center has been in operation since 1980, and it was able
to grow rapidly due to the competitive advantage that it had over other fitness centers. This was
in part due to its myriad and specialized exercise equipment, rooms for martial arts as well as
various social amenities under one roof. However, this advantage has been dwindling rapidly due
to increase in competition from small fitness centers, Internet Exercise channels and sites, TV
Game Consoles, and a huge supply of Exercise DVD’s. So, in order to take UR UMUC Healthy
Fitness Center to the 21st century, strengths of the center will be enhanced, while weaknesses
will be overcome. Porter’s Five Forces will be used in the business environment analysis,
including creation of a strategic direction, improving the center’s business model and use
technology to drive strategic goals.
Porter's Five Forces Analysis
Porter’s Five Forces are used to analyze the competitive forces in the environment that a
business operates, so that a firm can check the probability of profitability within a given industry.
Porter (2008) points out that that the five forces analysis is important since it can be used to
combat forces by identifying competitive intelligence, advantages and opportunities; and where
forces are strong, competition tends to increase, whereas forces are weak, competition decreases.
Buyer power is defined as the ability of buyers to change or affect the price due on a
given item (Baltzan, 2012). UR UMUC Fitness Center has been the sole fitness center in our
neighborhood for a while now, but with the entrance of Gold’s Gym a few blocks away, we will
have less business and lower revenues. So, yes; buyer power in our business environment
analysis will affect our strategy and its impact will be negative on the center’s strategic direction.
Supply power is the bargaining powers a supplier gains due to the ability to influence the charges
of supplies. Thus, profit can be greatly lowered in case suppliers decide that they will charge
higher prices for services and products. The force of supply power on our business strategic
direction will be negative in case we decide to terminate existing contracts since newer contracts
may have more costs, and yes; supply power in our business environment analysis will affect our
strategy. Similar to supply power, the threat of substitute products or services will affect our
business strategic direction.
The threat of substitute products or services is high when there are many choices to a
product or service, but low when choices are few. In our case, the threat of new services will
impact negatively in our business due to the entrant of Gold’s Gym, and yes; it will affect our
strategy. The threat of new entrants is defined as high when it is easy for new competitors to join
a market, but low when there are major barriers to joining a market (Porter, 2008). The health
and fitness market is a growing industry, and competitors are always joining the market to get
new health enthusiasts. In our business environment analysis, the impact of the threat to new
entrants will be neutral since competitors will push us to offer better services, hence gain more
customers but on the other hand, our customer base will be reduced. The threat of new entrants
will not affect our strategy since this market force will be handled together with the threat of
substitute products or services.
Finally, rivalry among existing competitors is the last market force that our business
environment analysis will consider. This force assumes that customers can pick substitute
products, and so it is high when competition is high and low when the level of competition is
low. In our strategy, rivalry among existing competitors will have a negative impact since the
fitness industry is a highly competitive industry, and it is inevitable that we will face some sort of
rivalry, and yes; this force will affect our business strategy.
Porter’s Three Generic Strategies
In order to enter the market, Porter denoted three generic strategies that can be used to
improve a firm’s chances in the market. These strategies include broad cost leadership, broad
differentiation and focused strategy. Cost leadership emphasizes low cost relative to competitors;
differentiation focuses on creating a unique product or service recognized industry wide so that a
company enjoys higher than average prices while the focus strategy is focusing of a firm on a
specific “group of customers, geographic markets, or product line segments” (Dess & Davis,
1984, p. 469).
UR UMUC Fitness Center will adopt a broad cost leadership strategy. This is because
the fitness center is not only facing new competition, but existing services and products are
outdated, clientele makeup unknown and service provision generally low. The various classes,
exercise equipment, programs and resources can be implemented in a program meant to ensure
low cost relative to competitors and increase the profit margin. In relation to the five forces, a
differentiation strategy will work because it will reduce the impact of buyer power to the firm,
remove the threat of new entrants since the company will be a low cost high quality service
provider; neutralize the bargaining power of suppliers by partnering with suppliers who can offer
economies of scale, get rid of the rivalry among existing competitors by offering lower prices
services at better quality; and remove the threat of substitute products or services by myriad
services at low costs since diversification is allowed by the lowered operational costs.
Strategic Business Area
The strategic business area that will be pursued by UR UMUC Fitness Center will be the
organizational components of the business. This is because these are components that include the
human resources, the running of the business, business development and financial outlook of the
firm. By focusing on the organizational components of UR UMUC Fitness Center, we will be
able to enhance processes such as digitize all records, adopt modern marketing methods, and use
better employee management systems. Organizational components of the fitness center relates to
the broad cost leadership strategy because by adopting cost effective processes and eliminating
redundant processes, the fitness center will reduce overall expenses and in turn lower operational
costs, and bring in more profits.
Process to Improve
According to Baltzan (2012) a process is a standardized set of activities, which
accomplish a specific task. The strategic business area that will be pursued by the firm is that of
organizational components, and one major element within is human resource management. So,
one daily process that is within this strategic area and needs work on is employee management.
The UR UMUC Healthy Fitness Center Case Study points out that a major problem in the fitness
center is that employees who are supposed to work each day are not known, and workers who are
free and can offer substitution is not also known. Thus, this daily process of allocating
employees work, determining hours worked, and also showing current status of employees will
be improved through UR UMUC Healthy Fitness Center Case business environment analysis via
development of an employee management system.
GENERIC STRATEGY:Broad Cost Leadership
STRATEGIC BUSINESS AREA:Organizational Components
PROCESS TO BE IMPROVED: Employee Management System
References
Baltzan, P. (2012). Business Driven Information Systems (3rd ed.). The McGraw-Hill
Companies, Inc.
Dess, G. G., & Davis, P. S. (1984). Porter's (1980) Generic Strategies as Determinants of
Strategic Group Membership and Organizational Performance. Academy of Management
Journal, 27(3), 467-488. Retrieved from http://amj.aom.org/content/27/3/467.full
Porter, M. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business School
Publishing Corporation.
Attribute
Full Points
Partial Points
No points
Five Forces
Analysis
Analysis covers all
5 forces, correctly
defining them and
their impact on the
Fitness Center
(Positive, Negative
or Neutral) and
whether it should
affect your strategy
(Yes/No)
demonstrates
understanding of
course concepts,
analysis and critical
thinking.
Analysis covers 1-5
forces, and/or lacks
correct definitions
and/or affect on the
Fitness Center
(Positive, Negative
or Neutral) or
strategy (Yes/No);
and may be lacking
in demonstration of
understanding of
course concepts,
analysis, and/or
critical thinking.
Analysis not
included, or
does not
address any
of the 5
forces.
Generic strategy
identified,
explained and tied
to the 5 forces
analysis; and
demonstrates
understanding of
course concepts,
analysis and critical
thinking.
Generic strategy not
identified and/or not
defined; and or not
tied to the 5 forces
analysis, may be
lacking in
demonstration of
understanding of
course concepts, tie
in to the 5 forces
analysis and/or
critical thinking.
Strategic Business
area is selected
based on the
analysis of the
Business Model and
is adequately
described
demonstrating
understanding of
course concepts,
Strategic Business
area does not come
from analysis of the
Business Model
and/or is not
adequately
described and/or is
lacking in
demonstration of
understanding of
Comments:
Generic
Strategy
Comments:
Strategic
Area for
Improvement
Possible
Points
30
Points
Earned
27
Generic
strategy not
included.
15
15
No
identification
and
discussion of
strategic
area for
improvement
is provided.
20
20
Comments:
Process for
Improvement
Comments:
External
Research
Comments:
Report
Format
analysis and critical
thinking.
course concepts,
analysis and/or
critical thinking.
Business Process
identified is aligned
with strategic
business area
above; process is
applicable to the
Case Study and is
appropriate for a
technology solution
improvement.
Business Process
identified is not
aligned with
strategic business
area above and/or
process is not
applicable to the
Case Study and/or
is not appropriate
for a technology
solution
improvement.
Process for
improvement
is not
identified.
10
10
At least one source
other than the
textbook is
incorporated, is
substantive and
used effectively.
Source(s) used are
relevant and timely
and contribute to
the analysis and
support
conclusions.
A source other than
the textbook may
be used, but is not
properly
incorporated,
substantive or used
and contribute to
the analysis and
support conclusions,
and/or is not
effective or
appropriate and/or
is not relevant or
timely.
No external
research is
incorporated.
10
10
Report reflects
effective
organization;
correct sentence
structure, grammar
and spelling;
presented in a
professional
format; references
are appropriately
incorporated and
cited using APA
style.
Report is not well
organized, and/or
contains grammar
and/or spelling
errors; and/or does
not follow APA style
for references and
citations.
Report is
extremely
poorly
written and
does not
convey the
information.
15
15
100
97
Comments:
TOTAL
Points
100 points =10% of Points
final course grade
Recorded
(total points
x .10)
Recommendations:Finally! A Stage 1 that I really enjoyed! Excellent!
9.7