Due in 24 hours - 13 page Word & 10 power point slides - use attached homework

External Environmental Scan for Planet Fitness

Ysidro Vasquez

Argosy University

September 19, 2018

External Environmental Scan for Planet Fitness

The external environmental scan is an organizational process where the external economic and non-economic factors are identified and forecast into the future. Economic factors and trend have been identified as one of the critical external environmental factors which can affect a business. For quite a long time the American economy has been stable with little incidents of economic challenges (Sassatelli, 2010). The stable economic growth has enabled most people to be able to afford the gym services hence making the business sustainable. Nevertheless, in the event of an economic recession, the business may not be sustainable since most people treat the fitness services as a luxury service.

Correspondingly, political factors and trend can present both positive and negative effect on the fitness business (Sassatelli, R. 2010). Political factors can significantly influence the regulatory and legal factors. For instance, through political factors and trends, the business licensing policies can change either to the detriment or benefits of the business. Over the last decade, the US government has been trying to make the country the best business destination globally through the introduction of investment-friendly policies that would encourage business development and success (Planet Fitness, 2011). These policies can be of significant benefits to the success of Planet Fitness center business.

With regards to the societal factors and trends, initially, the society stereotyped masculine individuals as criminals. This form of stereotype on individuals who work out led to a downfall in the number of individuals participating in fitness activities (Sassatelli, 2010). Similarly, some employees would not employ masculine people in the top management position but rather in the lowest ranks as security personnel. These occurrences led to significant downsizing in the number of people attending gym services. Nevertheless, with the increase in obesity in the US, the demand for gyms has significantly escalated (Sassatelli, 2010). Medical practitioners have been increasingly advising their patients on the importance of involving themselves in physical activities to avoid certain lifestyle diseases like obesity and other fitness complications (Sassatelli, 2010). Furthermore, the Planet Fitness gym is geographically located in Durham, North Carolina. Being a highly populated urban area, the gym location will enable the business to acquire many patrons.

Technology has also played a critical role in the development of the health and fitness industry. In the advent of the social media, businesses operations have significantly changed. Currently, it is easier to advertise a business through the various social media platforms. Similarly, through the online picture sharing and exchange services, there has been a trend of individuals trying to have the best body appearance possible. This phenomenon where individuals are increasingly trying to acquire a media perfect body physique has led to the increase in the number of people attending the fitness classes (Greefield, Almond, Clarke, & Edwards, 2015). Furthermore, technology has led to the circulation of digital video, movies, and commercials which promote the importance of working out. The digital content can significantly help in increasing the number of people in need of fitness classes and training.

The Porter’s five forces

The threat of new competition

According to Porter (2008), the threat of new competition in the industry can directly impact the industries profitability. The threat of new competition usually depends on whether the industry under discussion presents low or high barriers of market entry (Mathooko & Ogutu, 2015). As a result of the escalating economic growth, more entrepreneurs have been increasingly venturing into the fitness business, resulting in increasing competition in the business sector (Planet Fitness, 2011). The potential of new competitors entry into the market depends on several factors including; the economy of scale, capital requirements, the competitors' reaction, and the buyers' resistance to change their allegiance from one company to the other (Mathooko & Ogutu, 2015).

The threat of substitute products or services

According to Porter (2008), a substitute is a business which performs similar functions through different means. The substitute threat is usually higher when the substitute services can provide cost-effective trade-off which is better than that provided by the original business (Jaradath, Almomani, & Batanineh, 2013). In the case of Planet Fitness, the company has resolved to use pricing strategies as their key competitive advantage which shields the business from substitute products.

Bargaining power of customers

The bargaining power of customer or buyers usually increases with the increase in service competition. Competition allows clients to be able to compare offerings and make informed choices (Porter, 2008). The power of the customer usually increases with the increase in the number of options that the customer has to choose from (Mathooko & Ogutu, 2015). Planet Fitness has resolved to offer a unique intimidation-free environment for its clients hence making them have little choice regarding the best fitness centers that can offer the best training environment.

Bargaining power of suppliers

According to Mathooko and Ogutu (2015), suppliers are the organizations or individuals who provide materials which an organization uses to produce its goods or services. The bargaining power of suppliers usually increases with the increase in demand for the products as well as the reputation of the client organization (Porter, 2008). The lower the suppliers' cost the lower the cost of service delivery and the higher the business revenue.

The intensity of competitive/industry rivalry

Competition and rivalry are usually brought about by pricing strategies, the introduction of new products, advertising methods, and the improvement of services (Porter, 2008). In the fitness industry, rivalry usually arises from the differences in membership policies, and the diversity of services offered. According to Mathooko and Ogutu (2015), there are two structural factors which can influence Industry rivalry. These factors include; the profile of existing companies (including the number of competing organizations) and the industry context (involves the political, economic and technological variables).

References

Greenfield, J. R. F., Almond, M., Clarke, G. P., & Edwards, K. L. (2015). Factors affecting school physical education provision in England: a cross-sectional analysis. Journal of Public Health, 38(2), 316-322.

Jaradath, S., Almomani, S., & Batanineh, M. (2013). The Impact of Porter Model’s Five Competence Powers on Selecting Business Strategy. Interdisciplinary Journal Of Contemporary Research In Business, 5(3), 457-470.

Mathooko, F. M., & Ogutu, M. (2015). Porter’s five competitive forces framework and other factors that influence the choice of response strategies adopted by public universities in Kenya. International Journal of Educational Management, 29(3), 334-354.

Planet Fitness. (2011). Planet Fitness marketing plan. University of Wisconsin, Oshkosh. Retrieved from: https://amberbemis.files.wordpress.com/2011/04/business371-marketingplan.pdf

Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 78-93.

Sassatelli, R. (2010). Fitness Culture.Gyms and the Commercialisation of Discipline and Fun. New York: Palgrave Macmillan.