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Ur Umuc Stage 1

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  • September 15, 2013
  • 614 Words
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The UR UMUC Healthy Fitness Center was founded in 1980, by Tom Ellington, a UMUC Business Management graduate and retired US Marine. The UR UMUC Healthy is quickly becoming stagnant with a 30-year-old business model and outdated equipment. Newly arriving competition, in the form of Gold’s Gym, threatens to diminish the business by opening up an establishment a few blocks away. The purpose of this paper is to analyze the business environment using Michael Porter’s Five Forces model and develop a process for improvement. The Five Forces Model was developed by Harvard Business School professor, Michael Porter. They explain pressures that could negatively impact business growth and inhibit potential sales, this model recognizes that: knowledgeable customers can shape the competitive landscape and drive down prices. Suppliers with unique products or services can exert control over the market by driving up prices for goods. Competitors work constantly to steal customers and market share. If too many new entrants are attracted to lucrative markets, they will eventually decrease profitability of other firms within that market. Substitute products exist outside the normal parameters of a service such as substituting automobile travel for airlines. When applying buyer power to the UR UMUC Healthy it can be observed that customers have a substantial amount bargaining power for driving down prices, this negatively impacts business. There is no lack of suppliers within the fitness industry so this is not likely to depress profits or affect the overall business strategy. Threat of substitute services is a negative force within this market, and is raising due to popular workout DVDs such as P90X and videogames like the Wii. Barriers for entry into the fitness center business are relatively low, thus threats from new entrants is constant and can have a damaging impact. Rivalry can be healthy for both businesses and consumers alike; it spurs innovation and drives down...