Corporate Strategy

Executive summary

This report identifies and critically identifies the internal and external operating environments of the health club chain, Fitness First. The investigation will draw upon the organisations strengths, weaknesses, opportunities and threats. This report will look at the key importance strategy plays within organisations and identifies the distinct role internal and external factors have played in the Global success of Fitness First, a company officially recognised as the largest health club chain in the world (The Guardian, 2010.)

Contents

Introduction (150)

This evaluation of Fitness First’s internal and external environments measures the strengths, weaknesses, opportunities and threats (SWOT) of the organisation’s operating environments drawing on a range of professional and academic resources.

Fitness First itself was established in 1993 and by 2005 had established itself as the world’s leading health and fitness chain.  The organisation has 540 fitness clubs worldwide (160 of which are in the UK) and boasts over 1.4million members. This has been achieved as a result of over 20,000 committed employees, well structured marketing strategies and most importantly quality strategic management systems (Fitness First, 2010)

Lynch (2006) defines corporate strategy as being concerned with the overall purpose and scope of the business to meet stakeholder expectations. Johnson & Scholes (1999) go on to suggest that strategic decisions are likely to be concerned with or affect the long term direction of an organisation. This is evident within Fitness First’s most recent plans to float the franchise on the Asian market in an attempt to boycott recent depreciations within the company and enhance its global value on a longer term basis. This decision is in line with Grant’s (2003) view that successful organisations should be concerned with matching their resources and capabilities to their opportunities.

Section 1

 Internal Analysis

Internal analysis to be an essential factor within business, the examination of a firm’s portfolio of resources will show the bundles of heterogeneous resources and capabilities managers within these environments have created (Hitt et al., 2009, Thompson & Martin (2005) and Lynch (2006). By analysing a firms internal organisation, a clear understanding of the functions of what it ‘can do’ i.e. resources, capabilities, core competences and competitive advantage as well as what it ‘might do’ i.e. a function of opportunities and threats to the external environment, can be established (Hitt et al., 2009 & Evans, 2003)

Internal resources are more important than external factors, however they must be rare, hard to imitate and not easily substitutable (David 2007), this is a particularly narrow viewpoint point as internal factors are greatly impacted by external factors, Hunger & Wheelen (2000) back this stating that scanning and analysing external environments for opportunities & threats is no longer enough to provide organisations with a competitive advantage. Therefore it is clear strategic managers must also look within the corporation itself, to identify the internal strategic factors.

Resource Audit

A resource is not in itself helpful, unless it is given a direct/indirect purpose. An Audit of resources aids the manager in establishing what these resources are and have to effectively implement them within an organisation to achieve strategic advantage within the specific industry; this is also known as a core competence. backs this stating a resource audit highlights the range of resources available to a company within areas such as human, physical, operational, financial and intangible (Yilmaz, 2009). A resource Audit has been conducted for Fitness First (Appendix 1) adapted from Evans et al, (2003) who claims it to provide a comprehensive review of the organisation.

Evaluation of core competences -

Core competencies are defined to be capabilities that serve as a source of competitive advantage for firms over their rivals, as well as providing value and uniqueness to the customer (Hitt et al., 2005, Lewis, 2002) defines core competences as being valuable, rare, costly to imitate and non substitutable (Appendix 3). Mckinsey & Co identify that organisations should aim to use only three or four competencies around their strategic actions as any more could actually hinder the firm’s ability to develop a focus and fully exploit its market.

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Physical resources 

Physical resources are the tangible resources that are man made through learned abilities and skill. Johnson et al (2008) defines these as the machines, buildings or the production capacity of the organisation. Although all organisational resources are important, the efficient utilization of physical resources is widely acknowledged to be a primary factor for developing an organisation (Durai, 2010). Fitness First boast an excessive range of resources (Appendix 2.2) achieving them by providing enough facilities and aesthetically pleasing environments to cater for their 1.6 million members and triumphing over competing health clubs such as Esporta and Bannatynes (The Guardian, ...

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