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

Business

Ysidro Vasquez

Argosy University

Capstone

September 26, 2018

Executive Summary

This report basically focuses on Planet Fitness. Planet Fitness is an American business organization that offers a wide range of fitness programs. This report looks at the company's external environment and various factors that affect its operations. It is realized that the ability of a business organization to effectively operate depends on a number of factors that exist in its business environment. This report is attention to the external environment by looking at the various factors and forces that Planet Fitness needs to pay attention to in order to operate effectively.

The report starts by looking at the company's value position. This is a statement that a business organization uses to make a summary of why a consumer should buy its products or services. It is used to convince potential customers. The value position of Planet Fitness is based on the idea that the company provides high-quality services to its clients at affordable rates. The report also looks at the market position of Planet Fitness. This basically refers to the perception that a customer has of a given brand or product as compared to its competitors. Planet Fitness has a strong market position given the fact that it operates across the United States. Consumers believe that the company provides them with the best fitness services.

Lastly, the report focuses on the external environment by looking at the five forces as well as the strategic issues that the company should address. One of the forces that exist in the external environment is the threat of new competition. In the modern society, there is an increased need for fitness. For this reason, many businesses are coming up to offer the same services. This implies that there is a great chance of competition. This creates a strategic issue that the company needs to address. One of the issues is concerned with increasing the number of outlets to make sure that it penetrates the market even more.

Table of Contents

1.0 Introduction …………………………………………………………………… 4

1.1 Value Proposition…………..…………………………………………… 4

1.2 Market Position………………………………………………………… 5

1.3 Competitive Advantage………………………………………………… 5

2.0 External Environmental Scan…………………………………………………… 6

2.1 Assessment of the External Factors (Five Forces)…………………….. 6

2.1.1 The Threat of New Competition……………………………. 6

2.1.2 The Threat of Substitute Services…………………………… 7

2.1.3 The Bargaining Power of Customers……………………….. 7

2.1.4 The Bargaining Power Suppliers…………………………… 7

2.1.5 Industry Rivalry……………………………………………. 8

3.0 Strategic Issues………………………………………………………………… 8

3.1 Value Proposition……………………………………………………… 8

3.2 Diversification of Services…………………………………………….. 8

3.3 Quality of Products and Services………………………………………. 9

3.4 Customer Satisfaction…………………………………………………….. 9

3.5 Market Penetration………………………………………………………… 9

4.0 Summary………………………………………………………………………….. 9

5.0 References………………………………………………………………………… 10

1.0 INTRODUCTION

Planet Fitness is a business organization that basically offers fitness services. It is an American based organization that are reported to have more than 1500 locations across the country (Planet Fitness, 2011). This is a business organization that saw the opportunity in the market and established itself to serve the demand. Despite the challenges that exist in the fitness industry, Planet Fitness has ensured that it does whatever it takes to make sure that it provides the best services to its customers. It should be kept in mind that the chances of a business to survive in a competitive environment depends on the quality of its products and services. For this reason, the management team of Planet Fitness has ensured that the company provides the best services for the interest of attracting and retaining customers. Since its inception in 1992, Planet Fitness has remained at the forefront as a result of the high-quality services that it offers.

1.1 Value Proposition

A value proposition is basically a statement that clearly identifies what a business or its brand will offer to the market. When a business is established in the market, it usually looks forward to providing specific products or services. It is not necessary for a customer to visit a business to know the specific products offered, they can get this through the value proposition of such a business. The value proposition for Planet Fitness is "Welcome to Planet Fitness. Home of judgment-free zone." This is a unique value proposition that differentiates Planet Fitness from the rest of the fitness centers and gyms. Basically, it is a promise that each member or customer will work at their own pace to achieve their own results. It is an assurance that nobody will push a customer to the limits. In other words, customers would feel safe and at home because each will be working at their own rate.

1.2 Market Position

In the business environment, a market position basically refers to the perception that the customers have about a given brand that they consume. Considering the relevance of customers to a business, what they have to say about it significantly affects the company. It is, therefore, important for businesses to focus on quality so that they can create a positive perception of themselves. Given the services offered by Planet Fitness, the company has managed to create a positive market position. The company offers high-quality services to its customers at affordable rates. There is also a flexible program that fits the needs of each customer. This makes the customers feel safe and comfortable thereby speaking positively about the company and its products.

1.3 Competitive Advantage

As the name suggests, this an advantage that a business has over others that operate in a similar environment to it. For the interest of being competitive, it is necessary for an organization to come up with a strategy that will enable it to stay ahead of its competitors for its own benefit. The greatest competitive advantage for Planet Fitness is its high-quality services, low rates and a flexible fitness program for its customers. The company ensures that it offers the best services to its customers. This makes them feel the value of their money. Unlike other gyms, Planet Fitness allows each customer to work at their own pace without having to be judged or being pushed to achieve more than what they can. This makes the customers feel more comfortable at Planet Fitness as compared to other fitness centers. This is a great competitive advantage that available in the company to attract and retain many customers.

2.0 EXTERNAL ENVIRONMENTAL SCAN

The external environment is an environment that exists outside a business organization. This is an environment that a business organization cannot single-handedly control (Craig & Campbell, 2012). However, an organization can adjust its strategies to make sure that they adapt to the changes in the external environment. To effectively survive in the external environment, it is important for a business to conduct an external environmental analysis so as to understand the various factors that affect its operations. As a result, necessary adjustments and modifications can be made to the company's strategies so that it can fit into the external environment.

2.1 Current Environment

Currently, Planet Fitness operates in an environment that is affected by many factors. The company is affected by technological factors. Given the fact that fitness centers and need to utilize technology, there has been an increase in technologically advanced equipment that is used in such businesses. This affects Planet Fitness in the sense that it has to make decisions of acquiring the latest equipment that will enable its customers to exercise effectively. The company is also affected by the political factors because it is the political class that makes the rules and regulations that govern businesses which operate in different areas.

2.1 Assessment of the External Factors (Five Forces)

2.1.1 The Threat of New Competition

Planet Fitness is threatened by new competition because new businesses are entering the industry. This implies that the company is at risk of losing part of its market to its competitor. It is, therefore, necessary for the company to increase its competitive advantage so as to stay relevant.

2.1.2 The Threat of Substitute Services

This is a threat from different businesses that offer similar services but in a different way. This force is usually relevant when the substitutes our cost-effective. However, Planet Fitness uses its low pricing strategy to keep substitutes away. For this reason, the company has managed to effectively take care of this force. Businesses whose prices are higher than average and the ones that are usually threatened by substitutes. Given the fact that Planet Fitness has fair prices, it does not have to worry about the threat of substitute products and services.

2.1.3 The Bargaining Power of Customers

The bargaining power of customers increases with competition (Porter, 2008). When there are many businesses offering similar products, the customers will have an option to choose from others. Since Planet Fitness understands that customers can decide to purchase from competitors, the company has decided to deal with this first by offering unique services which competitors do not have. For instance, the company has created a very comfortable environment for all customers to exercise at their own pace. This is a strategy that has effectively dealt with the bargaining power of customers.

2.1.4 The Bargaining Power Suppliers

Suppliers are the organizations or individuals that avail the different materials that businesses use to provide the products and services to their customers (Jaradath, Almomani & Batanineh, 2013). When there is an increase in demand, the bargaining power of suppliers also increases. Given the rise in the number of fitness centers in the United States, the suppliers have a strong beginning power because they can drive up the prices. Planet Fitness seeks to deal with this force by creating positive relationships with its suppliers as well as engaging in effective supplier management.

2.1.5 Industry Rivalry

This refers to the rivalry between existing companies. Basically, it is the competition that exists within an industry between already established businesses. Industry rivalry is a strong external force that should never be ignored. Intensive competition can make a business irrelevant because it can lose all its customers. As stated earlier, there is increasing competition due to the increase in the demand for fitness services. This implies that Planet Fitness faces stiff opposition and rivalry from other players in the market. This is a real threat because, if not addressed in the right manner, the company is at risk of running out of business due to intensive competition.

3.0 STRATEGIC ISSUES

3.1 Value Proposition

A value proposition is a powerful tool in marketing. It can enable a company to attract and retain customers because it summarizes what the company is all about (Fernando, 2011). In the case of Planet Fitness, the company's value proposition is a strategic issue that should be focused on. It is important for the company to make the value proposition easier to understand. As it is now, an average potential consumer might not clearly understand what it is all about.

3.2 Diversification of Services

As aforementioned, the company focuses on a range of fitness programs such as dancing, yoga, and aerobics among others. Despite this, it is important for the business to diversify its range of product to boost its competitive advantage. That is stiff competition in the market and only diversification can solve this problem.

3.3 Quality of Products and Services

Due to the steadily increasing competition in the fitness industry, Planet Fitness needs to focus on improving the quality of its products and services even further. This will give the company an added advantage and reason as to why customers should consume its products and not those of competitors.

3.4 Customer Satisfaction

Customer satisfaction is also an issue of concern for Planet Fitness. Despite the quality of its products, the company's needs to provide completely personalized programs that fit the specific needs of individual customers.

3.5 Market Penetration

Despite its 1,500 locations across the United States, Planet Fitness needs to penetrate more in the market. This is a strategic issue because it can assist the company to increase its market share.

4.0 Summary

The business environment is dynamic and is intensely affected by different factors. Regardless of the industry in which a business operates, it is necessary to pay attention to the factors in the external environment. It is recommended for businesses to understand the external environment and to effectively adjust their strategies to fit in (Jaradath, Almomani & Batanineh, 2013).

5.0 References

Craig, T. & Campbell, D. (2012). Organizations and the Business Environment. London: Routledge.

Fernando, A. (2011). Business Environment. London: Pearson Education.

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.

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.