EXTERNAL ANALYSIS OF THE FITNESS INDUSTRY

This paper will outline the external analysis of the gym industry in Australia to a strategic plan designed for Mini Australia in order to establish chain of gyms in Australia. Two different analytic models will be used in this paper. First, PEST model and Porters five force analysis model.

PEST Analysis Political environment: This part focus on analyzing regulation and policy that operates in the gym
industry but also level of government assistance and grants offered in this industry.

Opportunities
The level of regulation in this industry is light and the trend in steady. Need to comply only with health and safety rules, Fair trading regulation, have public liability insurance and personal indemnity insurance and trainers need to be qualified certificate III or IV in fitness. (Source IBIS World) Government assistance is low; there are only initial facilities in accessing government facilities, but trend in ascending as more government grants will be allocated for this industry. Number of government grants are 8.8% of industry revenue but will increase. (Source IBIS World)

Threats
Introduction of carbon tax or other tax laws is considered a threat because gyms expenses will increase.

Economic factor Opportunities

Industry growth (2.8 bn industry, 4.2% annual growth, profit 150.4m. In 2010-2011 profits are expected to rebound by approximately 8.5% as consumer confidence strengthens and allowing gym industry to raise their premium once more(Source: IBIS World, p4)

Threats
Lower per capital disposal income levels will result in a weaker demand , less money to spend (Source: IBIS World, p6) Higher interest rate- Decrease the demand because people have Less money to spend (Source:

Social environment: This part of the report will analyse social factors in order to present facts about social
component of the future clients of Mini gyms. The age / sex group most likely to participate in aerobics/fitness was females aged 15-34 years (21%) followed by females aged 35-54 years (17%) and males aged 15-34 years (13%). (Source abs.gov.au)

Opportunities
Healthy lifestyle -Interest in exercise and fitness as a means to better health will also increase. This means is more likely to join a gym to keep fit.(IBIS World) Increase obesity rate: In 2004-05, 62% of men were overweight or obese compared with 45% of women We can make special programs at gym for losing weight. (Source abs.gov.au)

Threats
Ageing population- Younger generation do not have the money to afford gym.

Technological environment Opportunities New technological advances: These help us have better and more personalised products for our customers. Energy saving products: Having equipment that will be spending less electricity is an advantage as we will be saving money in electricity bills in the long run. (The Green Microgym, 2010) Threats Expensive Costs: As we have to import the equipment the costs are high to bring to Australia. (Resource Fitness, 2010)

Porters' Five Forces Model

Substitutes products: Medium-High
Growing number of alternatives for people: seek for personal trainers, wii, tennis or other sports (IBIS World)

Bargain power of buyers: Medium-High

Because of competitive environment buyers could negotiate the price

Porters five forces Model

Threats of new entrants: High Increasing

Barriers to entry high and increasing, company size has competitive advantage (IBIS World)

Bargain power of suppliers: High

Few suppliers, technological equipment need to be imported, suppliers dictate the price

Rivalry among competing firm: High and In Rising competition because 6.5%
industry growth (IBIS World)

Strategic recommendation: In our strategic recommendation the key factor that we will consider are the high level of competition, the level of technological development and

References Resource Fitness 2010, Electricity Producing Cardio Equipment with plugOutt Technology, viewed 26 March 2011, <http://www.resourcefitness.net/details/>. The Green Microgym 2010, Our Green Advantage, viewed 26 March 2011, <http://thegreenmicrogym.com/our-green-advantage/>.

www.abs.com.gov.au http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/4719.0Media%20Release1200405?opendocument&tabname=Summary&prodno=4719.0&issue=2004-05&num=&view=