- Power of the suppliers
- Similar inputs
In the fitness and gym industry, the required inputs for production are similar. In this case, several persons are capable of supplying the required inputs to the owners of the gym and fitness firms. This reduces the bargaining power of the suppliers and is a short-term benefit to the industry. If the suppliers hoard the inputs then the industry might suffer since the bargaining power of the suppliers rises (Srivastava and Verma, 112)
- Many suppliers
The gym and fitness is a fast growing industry with several requirements. It has a wide range of suppliers who are also many in numbers. Due to this, the suppliers have to maintain good qualities and standardized suppliers to their customers. This is advantageous to the industry since quality is assured. The other advantage associated with the many suppliers is reliability. When one supplier is unavailable, there are always options from other suppliers who stock the same goods. In North America, for example, the suppliers have formed an association called the Fitness Industry Suppliers Association, which helps its members meet the needs of their clients.
- Low cost of switching to other suppliers
The gym and fitness industry has an ease in switching suppliers. When a specific supplier seizes to be reliable, the costs of terminating the services of that specific supplier and switching to other suppliers are effective. This reduces the bargaining power of the suppliers to the advantage of the industry (Rimmington and Williams, 45). The suppliers have to keep up with the requirements of their customers else the customer might take the advantage and switch to another supplier they consider reliable and effective.
- Power of the customers
- Buyer information
The clients of the gym and fitness industry have the relevant information with regard to the quality of services they expect from the providers. When customers are well equipped with information, the industry has to offer the exact services that best meet the needs of the clients. This has a short-term negative effect to the industry, but after a period of adjustment, it serves as positive function to the industry.
- Price sensitivity
The clients to the fitness industry in the United States are price conscious. Any slight increment in the prices of the services that they receive from this industry would always lead to a negative effect on the performance of the businesses (Porter, 48-70). More clients would also be willing to acquire these services only at relatively lower prices that best fit into their expenses budget. This serves as both advantageous and disadvantageous to the industry. When there is inflation, the business might be forced to raise their prices that might limit their profits since only a section of their clients would still use these services. However, when they lower their prices, the turnover of the clients would increase thereby increasing profits
- Buyer volume
The clients to this industry are very many since it offers its services to all individuals of the society for several purposes. People of different ages, ranging from young to old attend fitness and gym clubs. The industry also offers its services to sports people, individuals with personal interest or people who just want to keep fit, for example, a person may require these services to maintain body weight or size while another may have intentions of either increasing or reducing the same (Barringer and Ireland, 201). The large number of buyers has a positive impact on the industry.
- Government policy
The fitness and gym industry is a luxury industry. Therefore, the government policies regulating the entry in this industry sometimes scare away potential entrepreneurs. Due to these strict policies, the threat of new individual venturing into the industry is greatly reduced giving advantage to the firms that are already providing services in the industry. The government policies also to some effect help in eliminating the firms that do not conform to the rules and regulations that govern behavior and operation from the industry (Dalton and Best, 79).
- Capital requirements
Entry into the gym and fitness industry requires high amounts of capital. The equipment required for starting up a gym and fitness firm are expensive to procure. Some potential investors might lack the required capital or might be afraid of risking so much capital in a new line of business that they have not before tried. They might fear that in the event that the business fails to pick up then they might lose a lot in terms of capital. To the firms that are offering services in this industry, this is an advantage to them since the scared potential entrepreneurs, who might offer them competition are eliminated by the fear of high initial capital. These capital requirements funds for purchasing exercise equipment, and software.
- Switching costs
These are costs involved in switching from one industry to another. The gym and fitness industry has inputs that are used for special purposes (Dyck and Neubert, 43). If the entrepreneurs in this industry would wish to switch to other industries, it would imply that it has to incur all the costs required to start up the new business and its former equipments, which commanded high capitals to procure, would go to waste. Some industries are interrelated and switching from one industry to another does not mean a completely new idea. This usually bars investors from venturing into the fitness industry.
- Threats of substitutes
People have procured software programs that they can use for the same purposes that the gyms provide. Suppliers also sell the gym equipment to individuals not necessarily to operate a gymnasium, but even those who would wish to install them in their residence (Kumar, 101). These people can use the software from the comfort of their homes without having to attend a gymnasium. Other people would also adopt other methods of keeping fit without having to go to the gym. These serve as threats to the industry. The YMCA and weight watchers are also possible substitutes to the industry that have equal impact as the aforementioned (Rajagopal, 20-60).
- Industry rivalry
Industry rivalry occurs due to the following reasons in the fitness and gym industry
- There are a number of firms competing for the same clients and resources required in production and service delivery. Struggle for market leadership always comes in to place where these several firms have averagely equal market share (Taylor and Doherty, 203).
- The clients in the industry can easily switch from one firm to another that best suits their interests. This brings about the struggle for these clients.
- Even though the initial capital required to venture into the industry is high, the other costs associated with production are low (Lori, 10). This therefore causes rivalry in the industry.
- Different firms in the industry have different cultures and philosophies. This usually implies the diversity in their goals, which in turn triggers rivalry.
- In the industry, there are community owned firms and private owned firms. The community owned firms charge relatively lower rates compared to the private owned ones. Due to this, the private owned firms do not have good business relationships with the community owned ones (Plunkett, 121).
Work Cited:
Srivastava R. and Verma S. Strategic Management: Concepts, Skills and Practices. New Delhi: PHI Learning Pvt. Ltd. 2013. Print.
Rimmington M. and Williams C. Entrepreneurship in the Hospitality, Tourism and Leisure Industries. London: Routledge. 2012. Print.
Porter E. Competitive Advantage: Creating and Sustaining Superior Performance. 1230 Avenue of the Americas: Simon and Schuster. 2008. Print.
Barringer B. and Ireland D. Entrepreneurship: Successfully Launching New Ventures Global Edition. Upper Saddle River: Pearson Education, Limited. 2012. Print.
Dalton C. and Best N. Integrated Management 2008, Page 5. Oxford: Butterworth-Heinemann. 2008. Print.
Dyck B. and Neubert J. Management: Current Practices and New Directions. Stamford, Connecticut: Cengage Learning. 2008. Print.
Kumar V. 101 Design Methods: A Structured Approach for Driving Innovation in Your Organization. Hoboken, New Jersey: John Wiley & Sons. 2012. Print
Rajagopal. Darwinian Fitness in the Global Marketplace: Analysing the Competition. Basingstoke: Palgrave Macmillan. 2012 . Print
Taylor T. and Doherty A. Managing People in Sport Organizations. London: Routledge. 2012. Print.
Lori K. Sport Business Management. Burlington, Massachusetts: Jones & Bartlett Learning. 2010. Print
Plunkett F. 121 Plunkett's Fitness Industry Almanac (E-Book): Health Care Industry Market Research, Statistics, Trends and Leading Companies. 4102 Bellaire Blvd Houston: Plunkett Research Limited. 2013. Print.
