Gyms & Fitness Centres in the UK - Term Paper Example

Case study reviews Introduction The thesis is based on SWOT and PEST analysis of Dairy Crest Group plc, Fitness First Group Ltd and Oxford BioMedica Plc. This analysis helps to understand the current market positioning of these three companies and their future prospects. SWOT analysis is am important method to analyze the strength, weaknesses, opportunities and threats of any organisation (Verma, 2009). This analysis helps various organisations to understand their current positioning in the market (Böhm, 2009). PEST analysis helps to understand the effect of various macro-economic factors in the growth of the organisation (Miller, Vandome and McBrewster, 2011). Therefore, a compare and contrast approach has been followed to understand their future success. Dairy Crest Group Plc Dairy Crest Group Plc is one of the leading dairy products company in Europe. They are engaged in manufacturing, processing and distribution of milk and dairy related products. This company was established in the year of 1981 and it is headquartered in the United Kingdom. This group serves near about 35,000 foodservice customers such as hotels, schools, cafes, stores, convenience stores and hospitals. Their key brands include Frijj, Utterly Butterly, Cathedral city and Clover. The annual revenue of this company is approximately $2,184.2 million in the fiscal year ended 2013 (Dairy Crest, 2013). SWOT analysis Strength Wide range of well-known dairy products. Good relationship with their suppliers through Dairy Crest Direct (DCD). Liquid milk supply contract with Sainsbury’s, the third largest supermarket chain in Europe (Dairy Crest Group Plc, 2014). Weakness Near about $93.5 million dollars of long term debt. The company need to spend a large amount to neutralize the pension deficiency. Rise in supply chain cost in comparison to decrease in revenue (Dairy Crest Group Plc, 2014). Threats Joint collaboration of Robert Wiseman Dairies and Müller Company has increased the competition in the milk by-product market Organisations like Arla and Müller Wiseman Dairies are increasing the competition of the liquid milk market by their investment in new liquid processing and distribution facilities by (MarketLine, 2014a). Opportunities Rise in share price in last two years helps in gaining investors’ trust. Upcoming products and services are targeted to increase 10% of the sales. Acquisition of its milk operation by Müller UK & Ireland (Dairy Crest, 2012). PEST Analysis Economical Factor: The main financial risks of this Group are interest rate risk and price risk. The change in market interest rate can cause financial risk to the organisation because of their long-term debt obligation. Various non-milk commodities those are affecting the input price of this organisation are vegetable oil, electricity, diesel and gas. They are regularly reviewing the relevant commodity market and the levels of future cover (Vignali, Vrontis and Vignali, 1999). Political Factor: The challenges of trade regulation are increasing day by day. This situation is harming the farmers and dairy processors. Changes in trade policies can restrict their business with other countries. Dairy Crest Group has already invested in various trade operations outside the UK and they have started selling their product in those locations. There is a huge chance of getting affected by the trade policies and exchange rates of those locations. (Pattisson and Lindgreen, 2004). Social factors: Social awareness about the adverse effect of milk by-products is increasing. The usage of cheese and spreads is decreasing day by day. Demand of low fat and low cholesterol dairy products is rising. The increase in health awareness can move away potential customers of the company. Dairy Crest is focused on promoting health benefits of their products among the customers and generating healthy dairy products for them. Dairy Crest Group is also associated with the British Heart foundation. It helps them to create a healthy impression about their products among consumers. They are well known for organising ‘healthy-heart’ awareness events. (Dairy Crest, 2013). Technological factors: The milk production and processing system is highly dependent on latest information technology. Various innovative technological packages are introduced for milk production system. Failure of key information technology suppliers can cause production loss and it could adversely affect the financial benefit of any dairy company. The technological systems of Dairy Crest are regularly evaluated. Dairy Crest Group is always focused on how they can update technology to improve the standard of their operational performances (Dairy Crest Group Plc, 2014). Fitness First Group Ltd Fitness first is a privately owned company which is considered to be the largest healthcare and fitness club group in the world. The clubs of this company provide various facilities such as gym, spinning rooms, swimming pool area, beauty room, sun bed rooms, ladies only area, lounge area, steam room, weights area and saunas. Their spinning room offers bike-based aerobic workout and their swimming pool facility organizes aqua aerobics classes. Their beauty room facility provides skincare and beauty treatments. This company operates in more than 15 countries. They have more than 80 clubs in the UK. This company was established by Mike Balfour and Christopher Pearce in the year of 1993 (Fitness First Ltd., 2014b). SWOT analysis Strength Highly trained staffs are the main strength of the organisation. All the clubs of this organisation is equipped with latest machineries. Fitness First Clubs are present in the premium locations of a large number of countries. They are famous for providing a large verity of health and beauty care services (MarketLine, 2014b). Weakness Their clubs are not big enough to provide different sports activities such as tennis, golf and football. Monthly charges are very high for these clubs. Their membership contract is not flexible enough. Opportunities Scope of diversifying their services by including various sports clubs. They need to focus more on corporate health care tie ups corporate membership. Selling merchandise related to beauty and healthcare (AMC Creative, 2012). Threat Availability of budget gyms is the major threat for this company. Home fitness guides and machineries reduce the customer strength of the company. Economic crisis and unemployment is another cause of business loss for them (IBISWorld, 2014). PEST Analysis Economical factor: Economic recession and growth in unemployment is affecting the annual revenue of the organisation. People are preferring budget gyms than the premium health care centre. The premium fees structure is discouraging a large number of potential customers. The increasing rate of commodities such as electricity and food supplement is prohibiting the organisation from cost cutting (Fitness First Ltd., 2014a). Social and cultural factors: England is facing a rising rate of obesity due to their food habit. This factor influences them to seek the guidance of healthcare professionals to maintain their physical health. It is also raising the demand of well equipped gyms and healthcare centres. The easy availability of Fitness First centres is increasing the demand of this brand. The availability of well trained nutritionist helps the customers to reduce health related problems (IBISWorld, 2014). Political and Legal factors: Government is initiating free and subsidized admission in the healthcare clubs to promote the health awareness among people. This initiative is harming the profit of the company. They are trying to introduce budget plans for political reasons. This fitness institute is also supporting various political and legal initiatives such as smoking bans, promoting health and safety awareness (Fitness First Ltd., 2014a). Technological Factors: New technologies have a strong effect on the designing of gym and fitness centres. Advanced technology is helping various fitness centres to update their equipment as per the demand of the customers. Fitness First Ltd. is updating their healthcare and beauty care facilities with modern and sophisticated equipments. The advanced marketing technology is also helping them to largely promote their brand. Advertising in media and other promotional material helps them to reach to the potential customers (MarketLine, 2014b). Oxford BioMedica plc Oxford BioMedica Plc is a biopharmaceutical company headquartered in Oxford, UK. This organisation was established by Alan and Sue Kingsman in the year of 1995 (MarketLine, 2014c)Apart from Oxford it is also available in London and Beckenham. This organisation is specialized in developing novel gene-based therapeutic drugs which are being used in the treatment of neurodegenerative disease, cancer and other disorders with major clinical needs. The other technologies of this organisation include PrimeBoost technology and Anti-angiogenesis technology. The total employee size of this organisation is 106. The company revenue has shown a sharp decrease of 30.7% in comparison to the year of 2012. In the end of 2013 they have recorded revenue of approximately $8.4 million (MarketLine, 2014c). SWOT analysis Strength Leading drug manufacturer for the treatment of gene-based disorders and cancer. The company is committed to the research and development programs. The organisation has a number of successful patents in the market. The share price of this company has a strong establishment in the market (Oxford BioMedica, 2008). Weakness This organisation has a very low market cap. People still feel wary about investing in that sector. The company is running at a loss year after year. The company is relying on the therapeutic success of a number of products which have not reached the phase 3 trial status (MarketLine, 2014c). Opportunities This organisation is expecting to generate revenue in the near future with two very strong cancer products in the pipeline. Opportunity to develop marketing and customer exposure for their upcoming products (Oxford BioMedica, 2008). Opportunity to increase financing and profitability in the US to bring it in line with the UK operation. They can use the success of their clinical trials to attract funding for the company (Oxford BioMedica, 2013a). Threats Due to the low market cap and new product launches, the company is exposed to takeover by the larger bio-pharmaceutical companies. Their relationship with various investment communities is underdeveloped (MarketLine, 2014c). PEST Analysis Political and legal factors: Government and other investors are not willing to pay a satisfactory amount to the gene therapy products. Drug regulatory authorities are getting very strict about the efficacy standard of the newly innovated drugs. Delayed regulatory reviews of clinical trial applications can prolong the development timeline of the product. Drug regulatory boards can impose restrictions on the use of the products until they get all the required data for the approval (Oxford BioMedica, 2008). Technological Factors: The biochemical and pharmaceutical companies are adapting rapid technological changes which are improving the product of those organisations. These competitor products and technologies can reduce the demand of the products of Oxford BioMedica (MarketLine, 2014c). Economical factors: Fluctuating share prices are one of the major factors affecting the financial growth of various companies in the UK. The share prices of biotechnology companies are highly volatile. Oxford BioMedica’s share price may fall if the company’s operation and prospect shows below expected result. A huge section of patients are unable to avail the product due to the price. Economical slowdown has a long lasting effect on the profit of the organisation (Oxford BioMedica, 2013b). Social factors: Awareness about the gene-related disease and cancer treatment is very low in the society. Various NGOs and healthcare institutes are working on developing the awareness of cancer treatment. The company needs to invest in various programs and events to generate the awareness about the possible treatment of cancer. Tie-ups with various healthcare organisation and NGOs can help them to communicate with the potential customers and make them aware about their generic products and their efficacy (MarketLine, 2014c). Compare and contrast Approach Comparing and contrasting organisation and their business products helps in understanding the market position of any company (Rosenthal, and Rosnow, 1985). Comparison and contrasting approach is essential to understand the similarities and the differences of various organisations. This study provides a great help in understanding the future profitability of those organisations (Bovée, 2008). In this study, the compare and contrast approach is utilized to understand the future possibility of success for Dairy Crest Group, Fitness First and Oxford BioMedica. These three organisations are headquartered in the UK and they are one of the major players in their respective markets. All of these organisations have scattered their operation outside Europe. The operations of Dairy Crest Group outside UK are very limited. Their major products are not very well known outside few parts of Europe (Dairy Crest, 2012). Oxford BioMedica is concentrating in developing their business in the US as well. Their market capitalization in the US is very low till date (Oxford BioMedica, 2008). The fitness clubs of Fitness First Groups ltd. are scattered in more than 15 countries. Their Gyms, health care and beauty care operations are available in almost all the major countries. They are also investing near about 160 crores which will help them to open 30 new fitness clubs in India (MarketLine, 2014b). Dairy Crest Group is offering almost all the possible milk and milk bi-products. They have few very famous brands but they are not focusing on introducing any innovative products which is currently not available in the market ((MarketLine, 2014a). The product category of Oxford BioMedica is very limited. They are only focused in the area of gene-based drugs which covers only a small part of the pharmaceutical and biotechnological business (Oxford BioMedica, 2013a). In comparison to these two organisations, Fitness First covers a wide range of services in the field of healthcare and beauty care business. Their services involves fitness clubs such as bike aerobics and water aerobics, gyms, sports location such as swimming pools, beauty care professionals etc (MarketLine, 2014b). The recorded revenue of Dairy Crest group has shown only 1% increase in the last financial year. Their profit generation has decreased as the milk by-products of the competitor brands have accrued the market ((Dairy Crest Group Plc, 2014). Oxford BioMedica has faced 30.1% decrease in their revenue in the year 2013 (Oxford BioMedica, 2013b). The revenue of the rebranded clubs of Fitness First Group in Tottenham Court Road has increased by 20% in the last 5 months. Their revenue of South Kensington and Clapham Hill clubs are increased by 31% and 23% respectively (Fitness First Ltd., 2014a). Dairy Crest Group has a huge amount of long term debt and pension deficit. These will adversely affect their profit making in the next few years (Dairy Crest Group Plc, 2014). Oxford BioMedica is also running on loss for a very long time and they are facing a hard time to attract investment for their new ventures (MarketLine, 2014c). Health related awareness is one of the major factors to attract new customers. Dairy Crest has a huge customer base from a long time but the increasing awareness about the adverse effect of various milk by-products is affecting the customer loyalty (Dairy Crest Group Plc, 2014). The deficiency of public awareness about cancer treatments and gene-related disease are prohibiting the growth of Oxford BioMedica (MarketLine, 2014c). The inactive corporate life and obesity issue is generating the health awareness among the population of larger cities. This awareness is influencing people to join healthcare clubs and seek suggestion of nutritionist. This trend is playing as a positive catalyst for the growth of the business of Fitness First Group (MarketLine, 2014a). This comparison study has shown that Fitness First Group Ltd. is growing in terms of their revenue, innovative services and customer count. They are also providing services in a huge number of locations. As per the comparison of these three businesses it can be said that the health and beauty care business of Fitness First is likely to witness success in the near future. Conclusion In this study, the SWOT and PEST analysis of the three major companies have described their current positioning in the market in terms of their revenue growth, business opportunities, investor relation, customer satisfaction and availability in the market. The study has described the revenue deficit and loss of investors in terms of Dairy Crest Group and Oxford BioMedica. It also has described the growth and prosperity of Fitness First Plc. Therefore, this study has drawn a clear picture of future success in business ventures of Fitness First Gorup Ltd. in comparison to other two companies. Reference List AMC Creative, 2012. Fitness First – Wait watching campaign. [online] Available at [Accessed 24 December 2014]. Böhm, A., 2009. The SWOT analysis. Germany: GRIN Verlag. Bovée, C. L., 2008. Business communication today. New Delhi: Pearson Education India. Dairy Crest Group Plc, 2014. Dairy Crest Group annual report. [pdf] Dairy Crest Group. Available at [Accessed 24 December 2014]. Dairy Crest, 2012. 30 Financial risk management objectives and policies. [online] Available at [Accessed 24 December 2014]. Dairy Crest, 2013. Supplier corporate responsibility policy. [pdf] Dairy Crest Group Plc. Available at [Accessed 24 December 2014]. Fitness First Ltd., 2014a. Fitness First invests to go further for members. [online] Available at [Accessed 24 December 2014]. Fitness First Ltd., 2014b. who We Are: Our story. [online] Available at [Accessed 24 December 2014]. IBISWorld, 2014. Gyms & Fitness Centres in the UK: Market Research Report. [online] Available at [Accessed 24 December 2014]. MarketLine, 2014a. Company Profile: Dairy Crest Group plc. [pdf] MarketLine. Available at < file:///C:/Users/USER/Downloads/DCC347ED-567A-414F-823E-5FD3B0E61458%20(2).pdf> [Accessed 24 December 2014]. MarketLine, 2014b. Company Profile: Fitness First Ltd. [pdf] MarketLine. Available at [Accessed 24 December 2014]. MarketLine, 2014c. Company profile: Oxford BioMedica Plc. [pdf] MarketLine. Available at [Accessed 24 December 2014]. Miller, F. P., Vandome, A. F. and McBrewster, J., 2011. Pest analysis. Germany: VDM Publishing. Oxford BioMedica, 2008. Annual report & accounts 2008. [pdf] Oxford BioMedica Plc. 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