BALLY TOTAL FITNESS
BALLY TOTAL FITNESS
GROUP 2
PRESENTATION
BALLY TOTTAL FITNESS CLUB
• INITIALLY A GAMBLING EQUIPMENT COMPANY, BALLY TOTAL
FITNESS HAS GROWN TO BECOME A LEADING FIRM IN THE
U.S. HEALTH CLUB INDUSTRY. IT HAS GROWN ITS REVENUE
OVER THE YEARS TO $954 MILLION IN 2003.
• BALLY STARTED ITS ROOTS IN THE HEALTH AND TENNIS
CORPORATION BY BUYING AILING GYMS IN 1962 AND LATER
IN 1990’S DIVERSIFIED AND RECHRISTENED TO BALLY
ENTERTAINMENT
IS THE HEALTH CLUB INDUSTRY STRUCTURALLY ATTRACTIVE OR UNATTRACTIVE?
PORTER FIVE FORCES ANALYSIS OF THE INDUSTRY
BARRIER TO ENTRY
• CAPITAL INTENSIVE
• BRAND LOYALTY
• MODERATE
BARGAINING POWER OF
SUPPLIER
• EQUIPMENT SPECIFICITY
• FEW SUPPLIERS
• PUSH VOLUME DISCOUNT
WITH
• LIFETIME OF EQUIPMENT
• HIGH
RIVALRY
• OFFER SAME SERVICE
• PRODUCT
DIFFERENCIATION
• MARKET
SEGMENTATION
• HIGH
THREATS OF SUBSTUTUTE
• NOT FOR PROFIT CENTRES
• HOME BASED CENTRES
• PERSONAL TRAINERS
• HIGH
BARGAINING POWER OF BUYERS
• GROWING MARKET
• LARGE NO OF CUSTOMERS
• FEW PLAYERS
• ALTERNATIVE PRODUCTS
• HIGH
KEY SUCCESS FACTOR IN THE INDUSTRY
•
•
•
•
•
•
•
•
STRONG BRAND NAMES
EXCELLENT CUSTOMER SERVICE
PROXIMITY OF CLUBS TO CUSTOMERS
ATTRACTIVE/ FLEXIBLE FEES
FACILITIES AND PHYSICAL AMBIENCE
PERSUASIVE AND CONVINCING SALES PITCH
SKILLED AND MOTIVATED EMPLOYEES
DIVERSIFIED PACKAGES AND SERVICES
IS ACCOUNTING ADJUSTMENT A ONE TIME ISSUE
THE ACCOUNTING ADJUSTMENT IS A ONE TIME ISSUE. THE
COMPANY WAS INITIALLY USING ACCRUAL ADJUSTMENT BUT
CHANGED TO CASH BASIS ACCOUNTING
EVALUATION OF BALLY’S STRATEGIC POSITIONING
STRENGHTS
• BRAND NAME
• TOTAL FITNESS PACKAGE
• NEW EXPERIENCED CEO
• ADS RECONSTRUCTION
• LARGE NUMBER OF CLUBS AND
INTERNATIONAL LOCATIONS
• PUBLIC TRADED CLUB
WEAKNESS
• HIGH OVERHEAD (TOO MANY STAFF)
• HIGHLY LEVERAGED
• ACCOUNT MALPRACTICES
• REDUCTION IN SHARE PRICE
• DISCONTENTION OF PATRONS
• 3-YEARS BINDING CONTRACT
OPPORTUNITIES
• CHANGE IN DEMOGRAPHY
• EMPHASIS ON PAY AS YOU GO
• SALES OF BRANDED PRODUCTS ONLINE
• GROWING MARKET
GROUP 2
PRESENTATION
BALLY TOTTAL FITNESS CLUB
• INITIALLY A GAMBLING EQUIPMENT COMPANY, BALLY TOTAL
FITNESS HAS GROWN TO BECOME A LEADING FIRM IN THE
U.S. HEALTH CLUB INDUSTRY. IT HAS GROWN ITS REVENUE
OVER THE YEARS TO $954 MILLION IN 2003.
• BALLY STARTED ITS ROOTS IN THE HEALTH AND TENNIS
CORPORATION BY BUYING AILING GYMS IN 1962 AND LATER
IN 1990’S DIVERSIFIED AND RECHRISTENED TO BALLY
ENTERTAINMENT
IS THE HEALTH CLUB INDUSTRY STRUCTURALLY ATTRACTIVE OR UNATTRACTIVE?
PORTER FIVE FORCES ANALYSIS OF THE INDUSTRY
BARRIER TO ENTRY
• CAPITAL INTENSIVE
• BRAND LOYALTY
• MODERATE
BARGAINING POWER OF
SUPPLIER
• EQUIPMENT SPECIFICITY
• FEW SUPPLIERS
• PUSH VOLUME DISCOUNT
WITH
• LIFETIME OF EQUIPMENT
• HIGH
RIVALRY
• OFFER SAME SERVICE
• PRODUCT
DIFFERENCIATION
• MARKET
SEGMENTATION
• HIGH
THREATS OF SUBSTUTUTE
• NOT FOR PROFIT CENTRES
• HOME BASED CENTRES
• PERSONAL TRAINERS
• HIGH
BARGAINING POWER OF BUYERS
• GROWING MARKET
• LARGE NO OF CUSTOMERS
• FEW PLAYERS
• ALTERNATIVE PRODUCTS
• HIGH
KEY SUCCESS FACTOR IN THE INDUSTRY
•
•
•
•
•
•
•
•
STRONG BRAND NAMES
EXCELLENT CUSTOMER SERVICE
PROXIMITY OF CLUBS TO CUSTOMERS
ATTRACTIVE/ FLEXIBLE FEES
FACILITIES AND PHYSICAL AMBIENCE
PERSUASIVE AND CONVINCING SALES PITCH
SKILLED AND MOTIVATED EMPLOYEES
DIVERSIFIED PACKAGES AND SERVICES
IS ACCOUNTING ADJUSTMENT A ONE TIME ISSUE
THE ACCOUNTING ADJUSTMENT IS A ONE TIME ISSUE. THE
COMPANY WAS INITIALLY USING ACCRUAL ADJUSTMENT BUT
CHANGED TO CASH BASIS ACCOUNTING
EVALUATION OF BALLY’S STRATEGIC POSITIONING
STRENGHTS
• BRAND NAME
• TOTAL FITNESS PACKAGE
• NEW EXPERIENCED CEO
• ADS RECONSTRUCTION
• LARGE NUMBER OF CLUBS AND
INTERNATIONAL LOCATIONS
• PUBLIC TRADED CLUB
WEAKNESS
• HIGH OVERHEAD (TOO MANY STAFF)
• HIGHLY LEVERAGED
• ACCOUNT MALPRACTICES
• REDUCTION IN SHARE PRICE
• DISCONTENTION OF PATRONS
• 3-YEARS BINDING CONTRACT
OPPORTUNITIES
• CHANGE IN DEMOGRAPHY
• EMPHASIS ON PAY AS YOU GO
• SALES OF BRANDED PRODUCTS ONLINE
• GROWING MARKET