Case Study: The Fit Stop Ltd.

Case Study

The Fit Stop Ltd. is a new firm that will open its doors exactly four months from today. Its business objective is to sell all types of training, fitness, conditioning, and exercise equipment to the general public. The Fit Stop plans to specialize in this equipment and to provide customers with personalized advice geared to a customer’s specific training or conditioning needs (e.g., training for a particular sport, injury rehabilitation, strengthening of muscles to deal with back pain, general conditioning, and fitness), whether the customer is eight or 80 years of age. In order to provide high-quality advice, each store will employ a physiotherapist (to provide advice on problems such as injuries or chronic back pain) and a person with a bachelor’s degree in kinesiology (to provide advice on training for various sports or other physical activities).

A staff member will even sit down with customers and develop a personalized training or conditioning program that meets their own specific objectives and needs, at no cost to the customer. The remainder of the staff in the store will consist of a manager, with a Bachelor of Commerce degree, and sales staff, who will have at least high school diplomas.

Aside from personally helping customers, the roles of the physiotherapist and kinesiologist will be to train other employees in how each type of equipment can be used for various conditioning and rehabilitation purposes. Initially, sales staff will be given general training, but as time goes by, each salesperson will be expected to learn in depth about all the different pieces of equipment, to help customers diagnose their needs accurately, and to be able to explain proper use of the equipment. Because of the high level of training required, all employees will be full-time. The founder of the business is Susan Superfit, who has undergraduate degrees in kinesiology and commerce from the University of Saskatchewan.

While at university, she participated in many sports (and suffered many injuries due to her all-out style of play). She came up with the idea for this business while laid up with one of her injuries. While there were businesses that sold fitness and conditioning equipment, she often found that the people selling it had very limited knowledge and often gave poor advice on what to buy and how to use it. She has secured funding from private investors and from Growthworks, a large Canadian labour-sponsored investment fund.

In order to get volume discounts on the equipment she will be purchasing and to beat competitors into the market, she wants to start off quite large, with stores in major cities in Ontario and the four western provinces, before expanding to Quebec and the Atlantic provinces. She knows that this is a risky strategy, and that cost control will be essential to keep the business going long enough to become well known and develop a stable clientele. She does not expect the business to make a profit for at least one year, or maybe even two. Her main competitors will be sporting goods megastores and department and discount stores, each of which sells some of the same equipment. Some of these outlets will be able to price their equipment lower than The Fit Stop will be able to, but none have the range of equipment that The Fit Stop will have, and none provide the personalized services that The Fit Stop will.

Susan believes that the key to her business success will be highly motivated and knowledgeable employees who have a strong concern for their customers and who are able to work as a team with the other employees to provide the best possible customer service. Because no two customers are exactly alike, employees will have to be innovative in developing solutions that fit their needs. It will also be crucial to keep up with the latest fitness and training trends, as knowledge about fitness is continually increasing, along with new and different types of specialized equipment. A key aspect of company strategy is to be the most up-to-date and advanced supplier of new products and techniques. Although Susan has given a lot of thought to her business, one thing she hasn’t really given much thought to is how to compensate her employees. Because she doesn’t really know much about compensation, she tends to feel that the safest thing would be to just do what her competitors are doing.

• Which managerial strategy you have chosen and why
• Summarize your compensation and reward strategy
• Summarize your findings in regards to your market survey (of published compensation data)
• Using the five main contextual variables (environment, strategy, technology, size, nature of workforce) to determine which Managerial Strategy would be most effective for this firm.
• Give your rationale for each element of the strategy – justify your recommendations! (each section worth 5 marks)
• Define the required behaviour (membership behaviour, task behavior and/or citizenship behavior)
• Define the Role of Rewards and Compensation (intrinsic vs. extrinsic rewards)
• Determine the Compensation Mix (Base pay, performance pay, indirect pay) and complete the Compensation Strategy Template
• Determine the Compensation Level (Lag, lead or match the market)
• How would you evaluate the Proposed Strategy? (affordability, legality, and employee attraction)
• Develop a compensation survey questionnaire (as if you were going to contact other businesses/organizations to collect compensation data from them, ie, create an in-house survey)
• Choose one position at the Fit Stop and complete a market survey (summarize compensation data from published third-party sources) using four different web sources.
• To help you do this, assume that Susan Superfit will open her first store in Toronto.