Essay: Business Management And Strategic Analysis Of Planet Fitness: A Case Study.

Provide the analysis of business management and strategy management of the American fitness firm Planet Fitness.

History of Planet Fitness

In today’s world there is a high demand for variety of new and innovative business strategies to grow the market of their products and services. Today, with the changes in technologies, the age of competition in which all the restrictions related to institutions and legal are getting easier and different barriers in business are crumbling.  In this report, business research on Planet fitness has been conducted.. In the last decade many studies have published by recognized authors around the world and these studies states that growth of an organization can only lead by the innovations and strategic management. (UME, 2015). Planet Fitness has used several strategies and an effective management to grow its business in United States of America successfully. These strategic approaches are the imperative steps which help Planet Fitness to become the largest fitness club in terms of number of locations and members with a total 1500 clubs. In this paper a complete analysis of business management and strategy management of the American fitness firm Planet Fitness is presented. Planet Fitness is one of the largest fitness firms operating in different states of United States with an effective management in both the business management and strategy management (Rastislav & Silvia, 2015).

In the year of 1992, Planet Fitness was founded by Michael and Marc Grondahl, in Dover, New Hampshire. This was the time when Michael and Marc acquired a struggling gym and they reduced their product prices to make a stand against the well-known brands at that time. After one year in 1993, Grondahl brothers decided to hire a front man as the current CEO of company to grab the opportunity to serve the larger segment of population by simple strategy to provide a better fitness environment to the customers. This change in the environment was all about changing both the format and attitude of the company for its customers. For this change they hired Chris Rondeau as the current CEO of the company. After this change Planet Fitness was known as the “Judgment Free Zone” focusing more at the average user than the passionate bodybuilding users. Then, in the year of 2003, it was the management who decided to open its first ever franchised location in Florida, with Eric Dore and Shane McGuiness. In 2013 TSG Consumer Partners LLC became the equity partner of Planet Fitness (Lawrence, 2013). Planet fitness has reached a milestone of 1500clubs claiming its clubs in all 50 states of US (Kufahl, 2018).  

Internal Factor Evaluation (IFE) Matrix

This technical analysis has been used to identify present strategic plans, all the internal and external factors of the business.

Internal factor evaluation is used to evaluate strengths, weaknesses an all the internal environment factors of the Planet Fitness  The IFE is used by Planet fitness to compete in the market and improve its existing business functioning. To work on the internal factors of the company Planet Fitness has two key strengths which are given as below

Cost leadership- The price of planet fitness gym membership and the second one is its judgment free zone philosophy. Planet Fitness charges just 10$ per month for the unlimited services which is the key sales element.

Product offering/ differentiation- The second key factor of judgment free zone philosophy attracts the main segment of the market instead of the body builder segment. This is because the Planet Fitness organization has found that the market growth of the company is in providing its services to the average person. And to attract the average person company create this “Judgment Free Zone” philosophy to make sure that the environment of their stores must be comfortable for the average person (Jurevicius, IFE & EFE Matrrices, 2014).

External factors evaluation matrix used to identify the major variables on which the planet fitness should react against its rivals. Target market for the Planet Fitness is between the ages of 15 and 44 who are looking for the population around the locations of its franchise outlets. This segment being the main target of organization requires evaluating the external factors related to the particular segment (Zkjadoon, 2016). For this, Planet Fitness thinks about some major external factors such as:

• Globalization makes it easy to enter international market.
• People are looking for cheap gym memberships.
• Demand for new products.
• Increase in inflation rates creates a demand in lower priced products.
• Many gyms are pricing their membership to attract the people.
• Increase in the number of competitive fitness firms.

In this manner Planet Fitness study its above mentioned external factors and calculate their respective weighted ration to prepare this matrix as

This score of EFE matrix for Planet Fitness comes out 3.275 which makes the company to be placed in quadrant numbe

CPM is one of the management analysis methodologies. This methodology is implemented to determine the best suitable way to reduce the overall time period to perform a competitive repeating task which are required to provide a better support every time. In the beginning this method was used to detect the suitable path to perform any routine task for an organization. But today in this very competitive market all the organization use this method to reduce the time period for the implementation of some innovative tasks to make their organization survive in the current market. This method provides the best estimated time to the decision makers and the executives of the organization to help them for the execution of any task. This method also helps to identify the alternate ways to perform any task without any hurdle (Agyei, 2015). This method helps Planet Fitness to decide the below prepared strategic action plan in order to extend their business over the seas and attract 80% of their targeted market segment who were not having a gym.

External Factors Evaluation (EFE) Matrix

Growth- share matrix or the BCG matrix is a planning tool used by the management of Planet Fitness, to determine the quadrant of relative market share on horizontal axis and the speed of market growth on the vertical axis of the quadrant.  This tool was created by the Boston Counseling Group to determine the strategic growth or the stand of the organization and potential of the organization to grow in the near future. This analysis assisted management to determine that Planet fitness fall in the star quadrant.  (Jurevicius, Strategic Management Insight, 2013).

Grand strategy matrix is an important analysis tool used for creating alternative strategy plans for the company or an organization. This matrix method consists for four quadrants similar to the BCG matrix plan. In this matrix plan each quadrant contains alternative strategies and entire firm with its respective divisions. This below given matrix chart shows that Planet fitness will under the Quadrant-2

An organization must decide its strategic planning, like when, where and how it can engage the existing as well as the potential customers through any means of medium. These mediums can be pricing tactics, advertising, customer services, sales representatives etc. Quantitative strategic planning matrix is used to evaluate the best strategic planning of an organization from all the strategies developed by above methods. The analysis can be done by different methods as discussed above but the best strategy is given by the QSPM (David, David, & David, 2016).

Strategy formation is the process in which the organization develops the new innovative strategies and in this way company chooses the effective strategy to achieve its new goals. Planet Fitness, being known for its judgment free zone philosophy, should provide some additional adventurous facilities to its members like pool area, rock climbing zone, cafeteria etc. these facilities can be proven beneficial for the market growth of the firm. In additional, today Planet Fitness is the largest fitness brand in US, so now it should expand its business in international market too. To penetrate the market there are three main concentration strategies: (1) market penetration, (2) market development, and (product development. An organization can adopt any one, two or all three strategies according to its suitability to implementation (UMN, 2016). Planet Fitness is already providing the franchises, in different states of United States of America, it will not be too difficult for Planet Fitness to expand its brand value in international market therefore, Planet Fitness, can use all three strategies to grow its business. Another strategy, Planet Fitness can implement on, is providing essential training for the staff working in its outlets, in different cities, to enhance the efficiency to perform their activities effectively (Blahova & Knapkova, 2011).

Strategic action plan is an over view of all the actions can be taken by the company to implement its new strategies for the expansion or growth of its business in the near future.

(Source: By Author)

Conclusion

This report is a complete discussion of Business Management and Strategy Management of an organization, in this specific all the strategic discussion is about the leading fitness firm “Planet Fitness” in United States. This report contains all the required analysis to perform new strategies for the company with proper research and planning for the business management and the strategic implementation for the business growth, in different ways. This report also includes a strategic action plan for next 2 years for the implementation of its strategies to withstand in the competitive market

Agyei, W. (2015). Project Planning and Scheduling Using PERT and CPM Techniques with Linear Programming: Case Study. International Journal of Scientific and Technology Research , 4(8), 222-227.

Blahova, M., & Knapkova, A. (2011). Efective Strategic Action: From Formation to Implementation. International Conference on Economics, Business and Management, 2, 61-65.

David, M. E., David, F. R., & David, F. R. (2016). The Quantitative Strategic Planning Matrix; A New Marketing Tool. Journal of Strategic Marketing, 25(4).

Jurevicius, O. (2013). Strategic Management Insight. Retrieved from https://www.strategicmanagementinsight.com/tools/bcg-matrix-growth-share.html

Jurevicius, O. (2014). IFE & EFE Matrrices. Retrieved from Strategic Management Insight: https://www.strategicmanagementinsight.com/tools/ife-efe-matrix.html

Kufahl, P. (2018). Club Industry. Retrieved from https://www.clubindustry.com/news/planet-fitness-hits-1500-clubs-1000-more-club-agreements-signed

Lawrence, K. (2013). A World of Their Own. Retrieved from Profile Magazine: https://profilemagazine.com/2013/planet-fitness/

Rastislav, R., & Silvia, L. (2015). Strategic Management of Business Performance Based on Innovation and Information Support in Specific Conditions of Slovakia. Journal of Competitiveness, 7(1), 1-21.

UME. (2015). Mastering Strategic Management. Retrieved from University of Minnesota: https://open.lib.umn.edu/strategicmanagement/chapter/5-1-selecting-business-level-strategies/

UMN. (2016). Selecting Corporate-Level Strategies. Retrieved from https://open.lib.umn.edu/strategicmanagement/part/chapter-8-selecting-corporate-level-strategies/

Zkjadoon. (2016). How to Prepare the External Factor Evaluation Matrix. Retrieved from Business Study Notes: https://www.businessstudynotes.com/finance/strategic-managment/how-to-prepare-the-external-factor-evaluation-matrix