Business Organisations and Environments in Global Context : Assignment

Business Organisations and
Environments in a Global
Context

Table of Contents
INTRODUCTION...........................................................................................................................1
Background Information The GYM Company...........................................................................1
Background Information on the Business Environment ............................................................2
Analysis of the Business Scenario .............................................................................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business organisation refers to a group of people who meet and work together in order to
pursue a single commercial goal. The gym is south African company established 1999. The
company have its business in around 247 places in all over the world. The company wants to
expand its business in Mexico. This study will cover a detailed information about the business
structure of the company including its financial structure, its legal structure and structure
regarding its international operations. The study will also cover basic information about basic
environmental information of The Gym. The study will analyse company's opportunities with the
help of analytical approach in detail.
Background Information The GYM Company
The GYM Company has been established in 1997 in south Africa. The legal structure of The
GYM company is formed as it is 100% owned & operated company. The company represents
“Health Club” facilities which endeavour to provide personal services with world class facilities,
unbelievably at affordable price. There are no fashion parades just excellent facilities they
providing & The GYM company focuses on its results & services by giving friendly
environment.
At the time of joining their personal trainers will instruct with a quick start assessment which
includes diet chart, health program, eating plans as well as taking their clients through ensuring
them to get fruitful results. The GYMS are open 7 days a week for their client's
convenience(Shank. and Lyberger, 2014).
The GYM company categorised membership of their clients by issuing White Card, Black Card,
Platinum card, Which includes various facilities such as full access to all GYM, no time
restrictions, fixed price, freeze upto 3 months, transferable to another person, guest privileges,
free membership vouchers for friends & family members.
Services Providing By The GYM company- Cardio and Dance classes
 *Aqua Aerobics are very easy on the joints & suitable for every age group.
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 * Zumba feature exotic rhythms & high energy international beats.
 *African Dance is an intense cardiovascular workout on an urban vibe.
 *Rebounding is an extraordinary, easy to follow, all fitness level.
 *Step into Action to lose Wight & improve cardiovascular fitness(Gray, 2015).
Analysis the size of The GYM company in Global Market Position:
The GYM company existing in terms of generating revenue, the fitness industry growth rate is
2.6% globally. The Global fitness & Health club industry generates more than 80 billion U.S.
dollars in revenue per year. According to the latest IHRSA reports The GYM company estimated
12.5 billion in every year. & it owns 137 GYMS countrywide till Jan 5, 2017 and growing
enormously. The GYM company has the largest chain across the county and also expanding its
branches in Mexico. There are 2.4 million people affiliated to a GYM club(Authority, 2016).
Overview of current international Operations:
There are several fitness trends that have been consistent over functional training, a shift towards
holistic wellness. However, there are digital trends being followed by the GYM company with
the up-gradation of new technology & demographic changes on the basis of demand of fitness
services. The GYM Company taking advantage by improving internet connectivity & streaming
capabilities.
Background Information on the Business Environment
Business environment refers to the factors that having influence over the business scenario of
The Gym. Business environment includes both internal and external factors that have effect over
the business. If a company wants to expand its business globally, company needs to analyse all
the factors which will have its effect in its global bushiness environment. For the purpose of
analysing business environment in global context, PESTLE analysis of the company;s business
environment can be analysed(Tsitskari, 2017).
PESTLE analysis of The Gym is as under:
 Political factors: political factors do not have major effect over Gym companies. But as
The Gym wants to expand its business globally, political factors of countries will affect
the company majorly at certain level. Being a global company, The Gym has to expose
itself to different country's political environment as well as political system risk. The
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global success of company depends upon how effectively company deals with the
country's political factors. In order to analyse the political factors,
Political stability of activities related to sports. Legal framework of the
Mexico(Fukuda, 2018). Intellectual property rights taxation Favourable trading partners of the
company, Anti trust laws of Mexico. Etc. Relation of the country to which the company mainly
belongs with the country in which the company wants to expand. In this case relation of south
Africa with Mexico needs to be determined by The Gym. In case, there is a change in political
leaders which are not in favour of the business or its policies, it will imact the running of
business majorly. As if the company need to survive in the market, it will have to change its
policies according to the instructions of political leaders.
 Economic factors: Economic factors refers to mixture of both macro and micro
environmental factors. Macro environmental factors are beyond the control of business.
Whereas, on the other hand, micro environmental factors are within the control of The
Gym. Inflation rate, foreign direct investment strategies, interest rates are examples of
macro environmental factors as these can not be controlled by the business organistion.
And, company's strategies for competitors, fitness of people are micro environmental
factors of The Gym. The economic system of all the countries in which The Gym has its
business operations and also of those in which the company wants to expand. Innervation
of government in the gym market ad its related services Quality provided by the other
gym or sporting activity centres to the customers of the country. Skill of competitors.
Inflation rate Interest of customers in sporting activities, etc. in case inflation rate is high
in the country, the purchasing power will automatically reduce which will lead to
reduction of interest of the consumer towards gymming activities which will result a loss
to the company in new market.
 Social factors: culture of society shows whether the population of country will take
interest in service provided by the company or not. Before taking decision of expansion
of the business in any country, company should first analyse whether the company have
scope to expand its business in that company or not. As The Gym wants to expand its
business in Mexico, company should understand needs, demands and interest of the
company first. Demographic condition of the Mexico(García-Fernández, 2018). Interest
of population in sporting activities. Skill level of population of the country. Culture of
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Mexico. Educational standard of country Health consciousness of the population, etc.
skilled people are more health conscious. In case, the Mexican population is not much
health conscious, The Gym need to make its strategies accordingly so that first health
consciousness of the company can enhance to attract the population towards the company
and enhance the profitability.
 Technological factors: technology is one of the fastest moving industry in all over the
world. For the purpose of expanding its business in global market, company needs to
compete with global technological growth. Impact of technology on the service offered
by The Gym. Recent technological changes in Mexico. The Latest gym products used by
other sporting companies of Mexico, etc. if the Meixan competitors have latest
equipments in their centre, first The Gym need to make more innovation in the
organisation than only its competitors will attract towards the company. This factor can
become a strength for the company if it is analysed effectively or in case of insufficient
data or wrong analysis, it may become a threat for the company.
 Environment factors: environmental standards having influence over different markets
are different for all kinds of industries. Environmental factors have direct impact over the
profitability and market growth of the company. Environmental factors are different in
all the countries. Even a country can be different environmental factors in different states.
Weather of the country. Laws of the country related to pollution control. Population's
interest towards sporting and gym activities. Rules relating to service sectors of the
Mexico, etc. less interested population will lead to failure of The Gym in Mexica as it
won't grab maximum market share. Whereas, interested population towards sporting
activities will enhance the profitability of the company.
 Legal factors : All the countries have their own legal framework, rules and regulations.
All the laws are being framed for the purpose of protecting its population as well as the
industries working in the country. For the purpose of expansion of the company globally,
a company must analyse all the laws having effect on the company's course of action of
all the company in which the company has its business. In case, company wants to
expand its business in Mexico, Consumer protection law of the Mexico. Competition
laws of the country. Laws related to intellectual properties like copyright, patent etc.
Health and safety laws of Mexico. Employment law of the country, etc. after analysing
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all the above stated laws, company will be able to analyse all the factors of business
environment in global context in order to expand its business in Mexico. The Gym should
take any decision related to its global business only after analysing all the factors
effecting its global business for the purpose of effective decision making. In case, The
Gym do not take care about any health care rules and started providing services against it,
it will lead to charge penalty against the company.
Analysis of the Business Scenario
For analysing business scenario the company, The Gym can take help of many analytical
approaches like Porter's 5 forces modal approach, SWOT analytical approach, porter's 5 forces
approach etc.
analysis of some approaches in order to analyse opportunities for the company are as under:-
Porter's 5 forces modal
For analysing opportunities and threats of the company, Porter's 5 forces modal can be termed as
the best analytical approach as this approach makes the company all the positive and negative
aspects of the company which have indirect or direct impact over the normal course of business
of the company. Porter's 5 forces modal says that company should analyse all the options of
expansion and growth for the company widely and broadly. The Gym can apply different
approaches and strategies for different market of various countries as per their factors effecting
the business.
 Supplier's power: a study of how suppliers can increase or decrease the proce of product
includes analysis of study, market development, product development, market
development and diversification. In order to expand the business into Mexico, The Gym
needs to analyse its supplier's power in detail so that the company make its pricing
strategies accordingly.
 Buyer's power: it shows the power of customers to reduce the price of product. In order
to expand business of The Gym in Mexico, the company can adopt a strategy to provide
some unique services in Mexico so that this power of buyers can be reduced. Or can also
decide to provide some extra services to population of Mexico along with the existing
ones. For the purpose of deciding list of services provided by the company in Mexico
first company should analyse interest of the population of Mexico also their
consciousness about their health. The Gym also need to analyse what kind of gym
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services are mostly preferable by the population and quality of service provided by the
competitors of Mexico in order to grab maximum share of market and increase its
profitability.
 Threats of substitution: substitution's threat is one of the major threat to the company. Is
being used by the company when the company wants to expand its business in existing
market with its new products and services, it can make itself enable to prevent from the
substitutions by attracting maximum customers towards the company's services. As The
Gym wants to expand its business in new market, this strategy is to be used more
carefully by the company. Because unless the company will provide same services with
less price or some unique services at effective price, the consumers won't attract towards
the company or stick to the company's services.
 Competitive rivalry: This can be used by the company when it wants to expand its
business in new market with existing products. The Gym wants to expand its business in
Mexico, therefore, it can use this strategy for the expansion. In this, company needs to
analyse its competitor's power in the Mexican market so that The Gym can bring such
kind of unique services to the market to reduce the powers of the competitors. And have
maximum amount of market through its effective strategies. in order to taking expansion
decisions effectively. The company also should analyse all the factors which can have
effect over competitors in the normal course of business of the companylike their pricing
strategies, advertising strategies, etc.
 Threats of new entry: this threat is the most risky threat of Porter's 5 forces modal. As it
provides the company to introduce new product or services in the market in order to
prevent itself from the new entries. More profitable market attracts more new entries in
the market which reduces the market share and profitability. The Gym must do a deep
analysis of the market, amount of new entries in the market, profitability of the market
etc. Specially, as The Gym wants to expand its business in Mexico. All the new entries
will be its competitors. If the company also wants to introduce new gym service in
Mexican market, the company must deeply and widely analyse all the factors that have
influence over the gym industries of Mexico like, how frequently new entries come to the
market, what strategies can be framed in order to prevent its business from the new entry
by maintaining its loyal customers with the company by providing them best services.
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If The Gym analyses the market while using Porter's 5 forces modal approach the company will
enable to have a deep analysis of all the important factors of the business market and also know
the new opportunities and threats for the company in new market and existing market as well.
Impact on decision making
porter's 5 forces is majorly used by the companies which wants to analyse the opportunities and
threats in the market in following maner:
 It involves determination of strength like reducing buyer's power, having great influence
over pricing policies, etc. of The Gym in order to get new ideas and plans for the purpose
of expansion and maintenance of the existing business. Having a well trained staff, up to
date equipments, involvement of exercise science while giving the training to its
customers, a good communication with the customers, etc. are some positive impact of
porter's 5 forces modal on The Gym(American College of Sports Medicine, 2018).
 Analysing the threats is very important for any organisation in order to increase its values
and removing ineffective areas of the organisation. Giving less attention to the customers
or not providing proper services to the customers as per their needs and demands from
the gym service provider. In case, The Gym founds any threats like substitution's threat,
y\threat of new entry, etc., it must take a quick action for reducing the threats.
 Identifying the opportunities for the business is must if the company wants to expand its
business. Opportunities can be identified by The Gym by examining its existing
customers and knowing their new demands from the company, examining the
competitors strategies and analysing whether there is any chance of improving its existing
services, etc. also the company can analyse new markets in order to expand its business
in new market.
In this way company can analyse strengths and weaknesses along with its opportunities and
threats in order to have success in the business expansion globally.
CONCLUSION
From the above study it has been concluded that the company has a good position in the market.
The company wants to expand its business in new market of Mexico. For this purpose, company
has made deep analysis of all the factors which have influencing effect over the business of The
Gym. Before taking decisions regarding expansion of the business of company in new market,
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the company has analysed many strategies like market development, market diversification,
study, etc. company has also analysed all the strengths, weaknesses, opportunities and threats for
analysing its own business and enhancing its business effectively. In this way company has
maintained its existing business and has made effective strategies in order to expand its business
in Mexico.
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REFERENCES
Books and journal
Shank, M.D. and Lyberger, M.R., 2014. Sports marketing: A strategic perspective. Routledge.
Gray. and et.al., 2015. The role of equipment, the physical environment and training practices in
customer safety within fitness facilities: The perspectives of fitness industry
employees. Journal of Fitness Research. 4(2). p.26.
Tsitskari, E. and et.al., 2017. Employers’ expectations of the employability skills needed in the
sport and recreation environment. Journal of hospitality, leisure, sport & tourism
education. 20. pp.1-9.
Fukuda, R., 2018. Building Organizational Fitness: Management Methodology for
Transformation and Strategic Advantage. Routledge.
Authority, S.Q., 2016. National Certificate in Sport and Fitness at SCQF level 4.
García-Fernández, J. and et.al., 2018. The effects of service convenience and perceived quality
on perceived value, satisfaction and loyalty in low-cost fitness centers. Sport
Management Review. 21(3). pp.250-262.
American College of Sports Medicine, 2018. ACSM's health/fitness facility standards and
guidelines. Human Kinetics.
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