SWOT Analysis of Bally Total Fitness Corporation

With the emergence of health and fitness clubs in California in the 1960s and ever-growing demand on the same, presently, health and fitness inevitably became a lucrative business venture in the United States (Hill & Jones, 2010). Health surveys and reports in 2004 indicated that over two-thirds of the adult population in the United States was overweight increasing the demand for health and fitness services. Alongside health and exercising corporation such as the Young Men’s Christian Association (YMCA), one of the first fitness clubs, Bally Total Fitness ventured into the business in 1962 (Hill & Jones, 2010). In 2004, it was the leading health and fitness firm in the history of health club industry in the United States operating more than 360 clubs nationwide with revenues of over $954 million. It has over 3.6 registered members across the globe. This paper assesses the strength, weakness, opportunities, and threats (SWOT) of Bally Total Fitness. Strength and weakness focus on the internal factors while opportunities and threats empathize on the macro environment.

Strengths

A long history in the health and fitness club industry sets it apart from other clubs; it operates clubs all over the United States giving them an advantage over other clubs. It already had an excellent and reputable service record. Bally had firmly established itself, by 2004 it had established many clubs in 29 states in the USA hence enjoyed a broad range of geographic distribution and markets (Hill & Jones, 2010).

The club had developed exceptionally unique and a wide variety of products many nutritional products. The products include energy drinks, protein powders, vitamins and snack bars taken to supplement exercise and fitness activities. Diversification of products to not only including fitness and exercising activities but as well other products; by 2004 the club owned over 7000 drug stores and groceries that sold Bally-branded products (weighting gloves, stationary bikes, treadmills and jump ropes among others) (Hill & Jones, 2010).

The steady, able and visionary leadership of CEO Lee Hillman who handed over to Paul Taback after his retirement in 2002 were crucial for Bally’s evolution and revolution.

The pricing strategy increased member retention rates. New Members paid 36-month liability enrollment and monthly fees upfront then later enjoyed reduced fees of up to $12 thus encouraging enrollment and retention of members. Operated the largest and well-furnished clubs of over 30,000 square-foot with quality exercise equipment, stretch areas and free weights as well as swimming pool, which many clubs lacked (Hill & Jones, 2010).

Weakness

Debts are the most significant business liability; this was a threat to Bally considering it had accumulated debts notes worth over $300 million, which were due 2007 from its expansion pursuit (Hill & Jones, 2010). Increased customers dissatisfaction rates over unauthorized charging of credit cards, harassment of members, deceptive and fraudulent means to collecting fees, and dishonorable cancelation of requests. Mismanagement of customers due to poor public relation and customer services leading to a lawsuit in 1994 where Bally paid $120,000 civil penalties among other cases.

Opportunities

Increasing demand for health and fitness services where over two-thirds of the U.S.’ adult population was presumed to be overweight with above one third being rendered clinically obese hence room for expansions and growth. The inherent desire of the American society to maintain health and fitness where over two-thirds were enrolled in health clubs and over 17 percent were hardcore fitness participants; this offers an opportunity of tapping into the already available markets (Hill & Jones, 2010). Due to varied fitness and exercising preferences among the target market, the club had an option to diversify its gym activities, equipment and materials increasing the market scope.

Merger and amalgamation of small clubs were advantageous; in 1998 Bally acquired Gym and Gorilla Sports offered no-frill gyms targeting serious fitness enthusiasts. The health and fitness clubs demand escalated from general to specific needs hence segmentation of markets based on demographic factors (women, men, children, youth, elderly among others) as well as fitness stats (beginners, serious buffs, and athletes).
Pay-as-you-go pricing was posited to be advantages as customers were not necessarily to registered members of the clubs in order exercises; this increased the margin of customers allowing higher returns and opportunities for membership subscriptions (Hill & Jones, 2010). Use of technology such as big data analytics and social media as opposed to the eternal surveys has the potential of enabling the company to tap into the growing population of Millennials that prefer smart and digital technologies.

Threats

Intensified competition from large clubs such as YMCA and 24 Hours Fitness as well as other local and regional based competitors such as All American Fitness Centers, Inc. based in Oklahoma and Town Sports that operated more than 130 region clubs in New York City and beyond (Hill & Jones, 2010). New Entrants into the market with visionary strategies characterized with reduced prices, smart health and exercise technologies, and use of social media is a challenge if the country does not embrace change and critically understand the market trends.

Conclusion

Bally Total Fitness has a long history and reputation in the health club industry; in its activities and operations, it has registered tremendous success as well as faced considerable challenges. Nonetheless, despite the challenges and threats, it has a potential of met and outpace its objectives and reinstate its status it had by in the 1990s.

References

Hill, C. W., & Jones, G. R. (2010). In Strategic management cases: An integrated approach (pp. C27-C39). Mason, OH: South-Western/Cengage Learning.