Bally Total Fitness Case Analysis

2361 WordsMay 1, 201210 Pages
1. Situation Bally Total Fitness is a public firm in the U.S. health club industry. Since 1962, the company had developed into a large and nationwide commercial operator of fitness centers in the Unite States. But with the increasingly fierce market competition and the internal management problems such as poor accounting standards, the stock price of the company collapsed. Some shareholders had lost faith in the company. A major shareholder of the company was urging the CEO to sell the company. So the company faced two alternatives, one alternative was to sell the company to meet the demand of shareholders; the other alternative was to strengthen its internal control system to remedy the management fault. In this way to restore the…show more content…
So in order to compete with other competitors in the market, companies should provide more diverse products to meet the customer needs. Second, the customers switching costs was small. Members were likely to drop out anytime they like or renew membership. According to statistics, about 30% of members dropped out after a year and 70% members renew their yearly subscription every year. Because of this situation, the competition between the exiting competitors had become more intense. As noted before, the company should provide diverse products and addition of new programs to get back members. Consumers are powerful in this industry. Because there were many clubs for consumers to chose. So the consumers would choose the club which meets their need such as low price, convenient location, and specific services and so on. Consumers were more like the payment style of “pay-as-you-go”. They did not want to bind themselves in a long-term contract but rather pay per visits. Consumers had more flexible choice in this way. So clubs did not make a lot of money from enrollment. They must think about how to improve the quality of services and provide diverse services to meet different needs from consumers. The consumers have power in the pay style, the price, and the service contents in this industry. These factors will greatly impact the development of Bally. Most of clubs bought equipment from a small number of well-known suppliers. So
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