PESTEL analysis looks at the likely change in political, economic, socio- cultural and technology factors and seeks to predict the extent to which change is likely to occur and its possible consequences for the organisation. (Britton, Worthington. 2006)
The affects that the economy as a whole can have on the leisure industry and all the firms operating within the leisure industry can be substantial, so it’s vital that we fully understand and identify the factors that can have an influence on the organisation and the industry it functions in. By doing a PESTEL analysis this can help give a firm an advantage and a outlook on what could happen in the future both good and bad, although it isn’t a precise predictor of things to come it is a great tool to use within any business. This involves visiting technique, services and products that are not within the norm and help get a foot in front of competitors and help increase customers. A big question surrounding this is ‘what should my company invest in?’ to find the question the best route to finding the best solution is produce a PESTEL analysis.
Summary.
External analysis is a very useful tool although economics foresee that firms within the leisure industry can make little changes to their outcome of their actions if they change their investment strategy, but not every business outcomes are the same as they tend to differ a lot. What is the reason for such different patterns in result? Each business operates in different environments, what might apply to one business may not apply to another. To establish the environment factors the forces have been split up into five macro environments and how each force give advantage and disadvantage to the business.
Negative influence:
- Declining of amount of funding available from the government.
- Planning permission for improvements to be rejected in regards to environment preservation.
- An increase in interest rates on lending, such as loans and mortgages.
- A decline in the economy.
Positive influences:
- The fast progression of technology helping bring down the cost of operation and giving a competitive advantage.
- Peoples increase in positive attitude towards getting more health and fit.
- The change for life campaign put in place to get people more active and eating healthier.
- A growth in the economy, making more jobs which equals more spending.
2.4 Summary.
External analysis is a very useful tool although economics foresee that firms within the leisure industry can make little changes to their outcome of their actions if they change their investment strategy, but not every business outcomes are the same as they tend to differ a lot. What is the reason for such different patterns in result? Each business operates in different environments, what might apply to one business may not apply to another. To establish the environment factors the forces have been split up into five macro environments and how each force give advantage and disadvantage to the business.
2.4.1 Negative influence:
- Declining of amount of funding available from the government.
- Planning permission for improvements to be rejected in regards to environment preservation.
- An increase in interest rates on lending, such as loans and mortgages.
- A decline in the economy.
2.4.2 Positive influences:
- The fast progression of technology helping bring down the cost of operation and giving a competitive advantage.
- Peoples increase in positive attitude towards getting more health and fit.
- The change for life campaign put in place to get people more active and eating healthier.
- A growth in the economy, making more jobs which equals more spending.
3.2 Industry analysis.
3.2.1 industry definition.
An industry can be defines as ‘ a group of companies that would find it easy to switch their production facilities to manufacture each other’s product’ (Williamson 2004). Or the definition of a industry membership is ‘ a group of firms who have similar strategic approaches and operates in a similar ways are said to comprise a strategic group’ (Williamson. 2004).
It is very vital that when defining the industry that it’s the right one, as the results from the report will lie heavily on the fact that the definition can determine the effect. Also the action that is taken in regards to the findings.
3.2.2 the nature of the environment.
The strategic proposal is classed as guess work, there’s no way to be certain that the outcome of the findings are going to match up with the actual outcome. So an easy way to grasp this is to be aware of the nature of the environment, in which the firm operate in. to help strategic analysis it is easier to break down the factors within the environment, this helps get a better understanding and help locate the most helpful evaluation process and solution. The three conditions in which to break up the firms are:
-
Simple and static environment- this model aids as a great prediction tool and it indicates that the best way in which to predict the future is to take a look at the past environment.
-
Dynamic environment- this indicates that the environment is always changing and quickly at that. This makes predicting the outcome and foreseeing the future very difficult, this is due to the many forces influence the industry form an environment perspective and how these forces are always changing. Best tool to use for this condition is the various driving forces model, which uses the best and worst case scenario of actual things that could happen within the industry.
-
Complex environment- The best way to understand the environment of the industry if its complex is to divide all departments up and get each of these to focus on the environment there in and how it’s affecting their department. The aim of the game is to cut the complexity levels and focus on the main issues at question and attempt to help build the relationship among them.
3.3 Porters forces.
porters model (1980) says that the structure of an industry and the ability of firms in that industry to act strategically dependent upon the relevant strengths of five forces: current competition, potential competition, the treat of substitute products, the power of buyers and the power of suppliers (Britton & Worthington. 2004).
3.3.1 threat of new entrants.
The threat of new entrants is balanced by the barriers that must be overcome to gain a foothold in the industry(Porter. 1997)
- Lower cost input (e.g. labour, equipment), due to the current economy status. Thus making it easier financially to enter the industry.
- A high demand for fitness classes due to the increase in positive behaviour towards getting fit and being healthy.
- The cost to set up would be very high, making it harder to start up.
3.3.2 The treat of substitution.
A threat of substitution exists when a products is substituted for other products within the industry (Porter. 1997)
- Although businesses can offer the same product and services within the industry, they can’t off the same low prices and service as Carlton forum.
- In connection with local schools, which help bring in business.
- Offers products and services for the community not a profit made business.
3.3.3 The power of buyers.
- Has no moving cost to move to another facility.
- With the economy condition and access to the internet people have access to compare price.
- Private companies can off price match and promotions more easily the Carlton forum.
3.3.4 The power of suppliers.
The factors that influence buyers power are similar of those that influence supplier powers, they just act in the opposite direction. (Williamson et al. 2004)
- Plenty of suppliers due to the current economic condition.
- Suppliers will do what is needed to secure the deal, thus giving no power over customers.
- There are many substitutes for equipment.
- 3.3.5 the current competition.
- JJB has recently opened within the geographical location of Carlton forum, also redhill leisure centres is close by.
- Competitors putting on promotions to direct business from surrounding businesses and bringing them to their facility.
- A lot of time and paperwork goes into putting on promotions or price changes and this takes time away from other important roles, also the notion to put on promotion or price change and be rejected.
3.4 Carlton forums industry.
When trying to identify what industry the business of interest is in the most helpful way to determine this is to identify what sort of people us the business, what benefits it provides, the business’s values and what products and services the business provides. Carlton forum has all kinds of people in its establishment, they are just members of the public. The value of the business it to provide upstanding service and value for money, it’s there to serve the community. It provides people with recreational activities and sporting activities, whether it’s in participation or non-participation. This helps to come to the conclusion that it’s a public run sports facility. Industrial classification is a way of organising all the economy’s business and activities, this is normally recognised by the kind of product or service it provides. Carlton forum falls under the category of tertiary section service industry. This is because Carlton forum offer activities, service and knowledge to help improve, better and sustain themselves.. Carlton forum focus is on the interaction within the community and serving their needs rather hen producing a product and handing it to them. The phrase service economy relates to a model that sees the economy’s activities as a service. Carlton forum provides a service, they sell intangible benefits, this puts them right in the tertiary sector as this category is responsible for the delivery of service. Which operates within the public sector, which states that leisure service and firms management were instructed to put on activities and programs which helps with the demand for leisure involvement. By doing this they obtain the satisfaction that they have achieved the two main aims: The complete satisfaction that the needs of the customer is met and the help with the businesses objections by obtaining customers satisfaction and raising awareness.
The sport industry is defined as ‘ business involved both directly and indirectly in the provision, delivery and service of sport, casual and organised through participation and spectating which contributes to physical and mental health wellbeing’
4.1 internal analyses
Internal analysis is an important way of access the business as a whole, this helps locate every aspect of the business weakness and strengths.
Internal analysis is concerned with providing management with a detailed understanding of the business, how effective its current strategies are and how effectively it has deployed its resources in support of its strategies (Campbell, et al. 2002)
4.2 life cycle.
a common way of looking at a product and the organisation that produces the product it is through the use of the ‘life cycle model’, where the position in its life cycle will have implications for industrial structure, market structure and for the strategic choices which will confront the organisation in that industry .(Britton & Worthington. 2004).
Copyright © 2011 Ron Ratliff, CPA
= Carlton Forum position on the life cycle graph.
Carlton forums life cycle is at decline, and requires a leader that has fighting quality that will help renew and develop the business.
- The current condition of the economy and society has cut funding, shown declining in customers activity and put resources and budgets to a stretch.
- The threat of other business operating in the radius of Carlton forum shows customers going elsewhere.
- There are a lot of resource that need attention and improving but don’t have the money to put into these.
4.3 Mckinsey’s 7 S’s.
Welge (1987) has expressed that the long term success of a company depends directly on the effective use of the 7 S’s.
4.3.1 Strategy.
Carlton forum wants to have an upstanding establishment that helps best suit the needs of the community. Its plan is to maximise income which enables them to make the centre at its best, improving the facilities and put the business back into the growth. Its aim is also to increases young people’s participation, increase the community’s participation and develop the sports club structure to improve the facilities.
4.3.2 structure.
Carlton forum is divided into. 6 management staff, 8 leisure attendants and 3 fitness advisors. Although momentarily they have two crèche staff but they are soon to be redundant. The structural aim is to be effective within the area to maximise customer satisfaction and attendance. The structure of Carlton forum of Carlton forum is functional this is due to the way in which the business is divided into different departments each dealing with their own division such as, finance, staff, sales, promotion etc. Although Carlton forum is a functional structure it comes under the multidivisional structure also as Gedling borough is multidivisional and carton forum is a part of this. The structure doesn’t allow for change as the business best operates like this, this helps enable good communication paths.
4.3.3 Systems
Carlton forum runs everything on computer systems, they mainly use clarity live, this software enables fast flexible and reliable. This helps to optimise Carlton forums intangible resources and help inform both customers and staff of important information, and resources to run the business efficiently. Its used for:
- Point of service.
- Online booking and sales.
- Membership.
- Returns.
- Promotion.
- Returns.
- Digital receipts.
- Transactions.
- Management of price rate.
- Finance.
- Activities.
- Events.
- Attendance.
- Payroll.
- Accounting.
- Personnel.
- Reporting.
- Alerts.
- Transactions.
- Activity history.
- Storage of data.
- Organisation of the centre.
The reviews for this system is very good and proves to be a very good tool for the business and organisation within the leisure industry. Although it has a system to run everything on it don’t have its own direct website, it currently operates within Gedling borough’s website.
4.3.4 Skills.
Each member of the staff have an unique skill and strength set to that person that help with the needs of customers, their enquiries and possible research to satisfy the needs of the community, all staff are fully qualified and experienced with regular training to keep them at their best. They have a sports development team to help improve their coaching abilities the help within:
- Coach education courses.
- Provide access to coach scholarship.
- Help with support and monitoring of coaches whilst coaching to ensure they are performing at their best.
All members of staff work in conjunction with each other to ensure the best quality of service for the community.
4.3.5 Staff.
Carlton forum specialise in sports development for the community, a lot of money and effort going into ensuring the staff have correct training to maximise performance ability. The staff consists of:
-General manager.
-Operational manager.
-Assistant manager x3.
-Duty manager.
- Leisure attendants.
- Receptionists.
- Fitness advisor.
- Coaches.
- Fitness advisor.
- Sports massager.
Although there are a lot of staff members the leisure centres would benefit greatly of they were to possible hire a part time nutritionist and personal trainer, this would prove to make membership more appealing. Although the fitness advisors help with this it would be better if they were specialist in the field. Also a lack of volunteering staff available.
4.3.6 Style- leadership.
Carlton forum leadership style seems to be somewhat effective, but on a level of 1 to ten (1 being the lowest and 10 being the highest.) of appropriateness for leadership style is 5. This is due to the fact the manager feels that there is no need to raise his voice or get angry at staff and is pretty laid back. To be a successful manager there needs to be strict authority in place. His style is do your best, But for a business to thrive it must ensure people are performing at the business requirements to meet the needs od said business. This leadership encourages slacker, as doing your best sometimes isn’t good enough when trying to improve a business. To get the business out of decline and fight their way up the leader needs to be more aggressive, so the leadership style isn’t appropriate for what the business needs. The leadership style needs to be that of a turnaround artist to fight to get the business out of decline.
The leadership is Delegate (free reign) which is defined as ‘this style, the leader allows the employees to make the decisions. However, the leader is still responsible for the decisions that are made. This is used when employees are able to analyse the situation and determine what needs to be done and how to do it. You cannot do everything! You must set priorities and delegate certain tasks.’ (Tannenbaum & Schmidt.1973)
4.3.7 Shared values.
Carlton forum core values are to service the community and raise awareness and participation. These values are very strong as they are to ensure the satisfaction of the community rather than trying to raise profits. These are the values in which the business is built on, which provides the best service for value for customers to satisfy their needs.
4.4 Resources and capabilities.
Resources are defined as ‘the tangible and intangible assets a firm uses to choose and implement its strategies. (Peng. 2008)
4.5 Stake holders.
All organisations have stakeholders, there are individuals and or groups who are affected by or affect the performance of the organisation in which they have an interest.(Britton &Worthington. 2004)
Organisations which decide to acquirer corporate status in order to raise funds for expansion (or for other purpose) become owned by their shareholders, who may be the original owners or may be individual and intuitional investors holding equity predominantly as an investment and with little, if any, long term commitment to the organisation they own (Britton & Worthington. 2004)
Although some stakeholders may seem to be shareholders the only real owner is notts county council, they own the organisation. As this is a public run organisation and ruins on a non-profit basics.
4.5.1 Customers.
They hold a lot of power and interest due to the fact they keep the business going, without the customers there no business.
4.5.2 Schools.
They have high somewhat medium power due to the fact that the school and Carlton forum are owned by notts county council. The school children use the facility thus providing Carlton forum with grants to help support the children’s in participation in sporting activities. The interest is high due to the fact it keeps the children fit and provides a fun and exciting way to get children fit.
4.5.3 Gedling Borough.
Carlton forum operates within Gedling borough so they hold a lot of power and say into how the organisations is run. The interest is also high as Gedling borough pride themselves on reputation thus wanting Carlton forum to uphold that reputation.
4.5.4 Notts county council.
Nott’s county council are the owners of the business thus giving them complete power and interest.
4.5.5 Staff.
They have very little power due to the fact they may help run the business but if they was to leave the business they can be replaced. Although they do provide the business with the necessary tools to progress. The only time they have power is when they come together as one, the frontline staff hold a lot of owner though due to the fact they are the face of the business. Their interest is high though as the success of the business depends on them keeping their jobs which brings in their pay.
4.5.6 People living in the area.
These people hold high interest due to the fact that Carlton forum operates within their community, thus wanting to be able to have the best facilities within there are that provides upstanding service to fur fill their needs. Their power is the same as people living within a 5 mile radius are more likely to visit the facility oppose to those living outside the 5 mile radius. So they provide the business with custom.
4.5.7 Tax payers.
Their interest is somewhat medium as there taxes help run Carlton forum, a lot of people don’t know what their taxes pay for thus not showing much of an interest. Their power is high as without taxes it would make funding impossible.
4.5.8 Government.
They have full control over public run facilities, both financial and management. They decide funding legislations, rules and codes on which they have to obey by. There interest is somewhat high as they care a lot about public run facilities but cannot so much interest in all of the centres in the country.
5.1 SWOT analysis.
5.2 SWOT summary.
It is widely accepted that corporate performance is influences by a combination of internal and external factors. These factors can be characterised as the organisation internal ‘strengths’ and ‘weakness’ and its external ‘opportunities’ and ‘threats’. (Britton & Worthington. 2004)
When referring to swot there are many factors influencing the business and the industry in which the business operates under.
Carlton forum present some strengths that help the business and help it to differential its self-form others, but not in a big significant way. A big help to Carlton forum is memberships, these are a great strength as they bring in the most money within the business around £250,000 a year and is up by 12.65%. A great way to ensure payment of memberships are direct debits, this is a great strength as even when people don’t attend the centre they are still making payment, thus guarantee that Carlton forum a regular income of revenue. A great use of the space that’s available at Carlton forum is children’s parties, with the growing trend of parent having parties outside the home it’s a great way of making money with the space that’s available. The greatest loss that present itself as a weakness is the outdoor pitch, it has a 50% loss due to the fact it needs resurfacing which cost £200,000. This is a major loss for Carlton forum as it’s a big part of the facilities. Also there are many other repairs that need doing such as:
- Air handling units
- Heat reclaim kits.
- Changing rooms.
- Bikes in spinning studio.
These can present as a big problem as the can me financially consuming. The crèche is also a great weakness as this space could be used for something to bring in more money thus the reason it’s under weakness and opportunities. One of the good use for the space is after school clubs, with the rise in trends for women to having a career this opens the opportunity to meet the needs of the demand. There’s an opportunity to provide an internship program to help save money on hiring staff. This all could be put on Carlton’s forums own website, instead of sharing with all the other facilities.
The biggest threat that present itself is the funding cuts, this has had a great impact on the business and its progression with the risk of losing customers to JJB very high as a result. JJB has opened recently which with no cost to move facilities is a great threat.
5.4 Key issues.
The key issues that need to be addressed by Carlton forum are:
- The weather pitch as this can help bring in many possibilities and with possibilities comes money, and with a 50% loss because
- The crèche needs to be addressed not only is it presenting itself as a weakness it also makes as a great opportunity to bring in more revenue especially with funding cuts, repairs and the outdoor pitch at a 50%. This can help bring Carlton forum out of decline and help them back on the track of growth.
- Funding cuts are a major issue with every business operating within the public sector, it has affected a lot of aspect of Carlton forum with redundancy and repairs that need to be done, which isn’t possible. This treat is a big problem, although they can’t address this directly they needs to be some changes to ensure that this don’t put the business out of business.
- The opportunity to have their own website is an opportunity that can’t be missed as this can help better inform potential customers. It could provide activities list for activities only at Carlton forum, provide pictures of the facilities. Also could put customers testimonial to prove quality of service. This has presented itself to be a great weakness and a great opportunity.
- A big threat that needs to be addressed is the leadership style, to ensure that the business doesn’t carry on decline the leadership style needs to change. This is due to the nature of the business, it needs a fight someone who can take charge and lead.
- With the recent opening of JJB it has seen a 50% loss in customers, the promotional paperwork policies needs to change as this won’t cut it to keep up with businesses in the area that put on promotions or price changes.
5.5 conclusion
There are many gaps within the business that once filled can help the progression of Carlton forum. With the key issues identified this can in turn help the business in locating the problems and turn the business around and help build a great reputation for Gedling borough and the community, which in turn will help Carlton forum to provide upstanding service and experience.
