Starting A Sports Club Business In Saudi Arabia Essay.

The business plan aims to start a sports club that offers a number of sports and games to members of the club e.g., playing activities swimming pools, billiards and other athletics. The Sports Club is aimed to be opened in Saudi Arabia. The mission of the business is to provide the best and value added services to customers through sports and fitness activities needed in the target market. The unmatched pleasant experience will help satisfy and retain customers of the sports club.

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There exists a great opportunity for the business of sports club in Saudi Arabia as there are many favourable reasons for its success. Saudi Arabia usually has extremely hot climatic conditions throughout the year. Therefore, the club offering indoor sports in air conditioned atmosphere is hoped to be welcomed by a large number of people. Also, a prolonged physical inactivity among children, adolescents and adults has resulted in many health problems (Al-Hazzaa 2004). So, this gives another reason for this business to flourish as people would entertain offerings of the sports club to maintain a good health. Since, the business proposal is beneficial for the society as a whole; it expects to receive favours from government bodies too.

Though the sports club welcomes members from all age groups, it mainly focuses on younger generations. The segmentation for the business has been done on the basis of age. The business targets the people of age between 15 to 25 years. The market has been segmented on the basis of the potentiality of the market. Saudi Arabia has a majority of youth in the population so the chosen segment of the existing market will hopefully yield great profits for the business.

There are various reasons that have led to the conclusion that a demand exists for a sports club in Saudi Arabia. Since, the country has one of the highest birth rates in the world and has a majority of young population, the proposal of a sports club appears lucrative and favourable (Long 2005).

Besides, residents of the country are aware of adults and adolescence’s health issues related to physical inactivity in the country. Thus, there is a huge market for a new and high-quality sports club as the project focuses on the younger generation of the country.

The competition is expected to come from existing sports club in the country. There are various types of possible memberships available to members of different sports clubs in Saudi Arabia. The potential club members are likely to compare services provided by the existing sports clubs and would choose the club that best satisfies needs of customers. Thus, value to customers plays a key role in attracting the potential customers to the new sports centre. The main competitors of the sports club in Saudi Arabia are Saudi Arabian Sports Club and Jeddah United Club. Jeddah United club has existed for many years now and offers sports of various kinds, especially for women (Saudi Gazette, 2013). The well established sports club pose a challenge before the new sports’ club as a strong strategy and management will be required to win the trust of the potential market.

Market Opportunities

Moreover, traditional sports are a competition to the sports club that may still be preferred by a large chunk of the target market. In recent times, Saudi Arabia has faced massive urbanisation and increased interest in computer and telecommunication technology (Al-Hazzaa 2004). This remains a challenge for the sports club to pull the market from computers to sports club.

The strategy of the sports club focuses on being unique and competitive. The club will not only offer air conditioned ambience (which is unique), but also ensures that offerings made by the club are more advanced and improved than any existing sports club. The next thing the business will take care about is the appropriate location, size and facility of the club so that it attracts a large number of potential customers. With the help of the strategic planning, marketing, program development, it will be ensured that the sports club attains a highly competitive position (Cole 2003). No matter how powerful a strategy is, it may be still be diluted over a period of time. Thus, there will always be a consideration given to the current trends of sports and fitness programs so that the business remains successful throughout the life of sports club.

It will be ascertained that customers associated with the club remain content with services provided to them. Customers would be given the best value for their money. Customers will be briefed about services, programs and amenities that the club has to offer them. Since the great importance of relationship management is considered during the planning of the business, it will be ensured that efforts are made to establish a strong relationship with the club members. This will not only build trust of members, but also help retain customers for a longer time.

The customer oriented strategy of the club aims to satisfy customer needs in the best possible manner. The business strategy, thus formulated, appears favourable to customers, as well as, the club.

This sports club will be a multi-sport complex that provides members with a range of services. There will be two full size swimming pools in the club, one for beginners and second for good swimmers. The floors of the club will also accommodate badminton, indoor soccer, indoor field hockey, touch football, gymnastics, dance, aerobics, and others. Besides, it will be ensured that the club has qualified, and knowledgeable people to help members meet their fitness needs. There will be a fitness room that will include -of-the-line equipment in free weights, machine weights, and aerobic machines. The management of logistics in the sports club will be done through taking services of suppliers of sports equipments on online order basis. This practice will help the club to render desired and innovative services to the target customers.

There will also be a separate food and beverage area for replenishment of members. This area will be designed in a manner such that members may have a view of the happenings on various courts while enjoying the non-alcoholic drinks and/ or snack of their choice. This area will also include two big screen TVs that show sporting events, sports news, or related programs that members of sports club may want to watch. This kind of facility will help in creating the kind of atmosphere the business desires to have.

Target Market

Moreover, pro show will be placed with a strategy of attracting the impulsive buyers. The shop will be placed in such that members cross the shop while entering and exiting the club. The pro shop initially plans to sell sports shoes and apparels. The shop will eventually introduce club’s production with the private labelling that will offer a wide range of products exclusively at the club’s pro shop.

Promotion also plays a crucial role in the future of the business (Pride and Ferrell 2011). Since the target market of the club is the youth, the business will take help of banners for advertising in schools and universities. A distribution of pamphlets outside schools and colleges may also turn out to be a smart way of communicating with the youth.

The pricing strategies need to be formulated such that it is affordable by the target markets while generating sufficient revenues for the sports club. Since, the main target market includes students of schools and colleges who are dependent on families for their expenses, it is important to keep prices fair and moderate to make the business a successful one.

A proficient management team is the key to the success of a business. The people involved in the important roles of management are responsible for the viability and health of the business (Abrams and Abrams 2003). The initial management team for club largely depends on the general partners of the club business. The key roles of scheduling, marketing and promotions, will be taken care of by them. There will be a team of 15 members in the first year that will look into the operational activities of the business. There will be a small staff for food and beverage centre and pro shop of the club. There will be an addition of 3-4 new staff members each year as per the requirement of the club. The increment in salaries of the staff will be based on the functioning and success of the club.

The business will initiate the sports club in one city and eventually expand in other cities. The business proposal hopes to receive an encouraging reaction from the market. Depending on the response of members, new sports club will be introduced in various other locations after two years of successful functioning of this club. There will also be an addition of other sports and facilities on the basis of the demand from the existing and potential customers.

• There exists a strong economy without major recession.
• The rate of growth in the number of sport and fitness club membership will continue and there will constant growth in membership subscription.
• In beginning collection days are very critical.
• Interest rate, tax rate, and personnel burden are based on conservative approach.
• Current Interest rate = 10 %.
• Long Term Interest rate = 10 %.
• Tax Rate = 15 %

Total Start up requirements cost come to SAR 5,000,000. This cost includes land, building, all development costs, equipment cost and other cost.

Formula = Profit/Total investment * 100

Year 1

= (131,313.10/2,500,000)*100

= 5.25 %

Year 2

= (293,773.60/2,500,000)*100

=11.75 %

Time period of return on investment = 100/(5.25+11.75) = 5.88 years

It is estimated that investors will get return on investment in about 5 to 6 years depending upon certain conditions (Correia, Flynn, Uliana and Wormald 2012).

References

Abrams, R. and Abrams, R. M. 2003. The Successful Business Plan: Secrets and Strategies. The Planning Shop.

Al-Hazzaa , H.M. Prevalence of physical inactivity in Saudi Arabia: a brief review. Eastern Mediterranean Health Journal, 10, pp. 663-669.

Cole, G.A. 2003. Strategic Management. Cengage Learning.

Correia, C., Flynn, D., Uliana, E. and Wormald, M. 2012. Financial Management. Juta and Company Ltd.

Long, D.E. 2005. Culture and Customs of Saudi Arabia. Westport: Greenwood Publishing Group.

Pride, W.M. and Ferrell, O.C. 2011. Foundations of Marketing. Cengage Learning.

Saudi Gazette. 2013. Women sports clubs begin licensing procedures.

Shim, J. K. and Siegel, J. G. 2008. Financial Management. Barron's Educational Series.