Contextual Factors Of Beauty And Fitness Centre - Myassignmenthelp.Com

Question: Discuss about the Contextual Factors Of Beauty And Fitness Centre. Answer: Introduction Contextual Factors are those factors which affect organisations differently based on their characteristics. Globalisation has been changing the way countries do business since many years. Australia joined the wave of globalisation in 80s until then Australia was practising mercantilism. But mercantilism gave rise to unemployment and high inflation, it was then that Australia opened its doors for global companies. This report will discuss about impact of globalisation on service industry in Australia and how as a contextual factor does globalisation affect the business strategy of a beauty and fitness business in Australia. As awareness of benefits of maintaining a healthy lifestyle is increasing, Beauty and wellness industry has become popular choice for investment by entrepreneurs. Fitness industry includes everything from gyms and spas to beauty salons and male grooming(Business Franchise, 2014). Beauty and wellness Industry in Australia Wellness market of Australia has attracted lot of investment recently and has attracted lot of innovations. In 2014, IBISworld report stated that in next five years Australian fitness industrys revenues are expected to reach $ 3.4 Billion which includes personal training and weight Loss services(Business Franchise, 2014). Fitness and beauty industry has also seen a surge in employment, 25% increase in fitness instructors and 25% increase in beauty therapists since 2011(Australian, 2017). Internal Organisational Factors Internal business environment comprises of factors which are within the control of company and which impact the strategy it follows for success(Pestle Analysis, 2015). Following are some internal Factors and their effects on business: Well Trained Staff: Labour in this industry is the major determinant of cost. Labour comprises of personal trainers, instructors, customer service executives and marketing professionals. Beauty and fitness businesses are heavily reliant on labour which is the main reason of growing trend of unstaffed gym. These gyms operate 24 hours and saves wages as well. Well trained staff is key driver of a gyms success as demand for personal trainer is also on a high(Fitness Australia, 2016). Technologically Advanced Equipment: Its important to keep the latest training equipment. Although innovation in this industry is limited as exercises like cardio and weights generally are done by tried and tested methods. Innovations are limited to CrossFit equipment only. Location: Areas wide outdoor spaces and pleasant weather see lower demand for gym facilities on the other hand more commercial regions tend to use private fitness facilities more. Hence, fitness centres are mostly located in metropolitan areas and suburban shopping areas. So the location of Beauty and fitness centre plays important role in determining its success. External Organisational Factors External factors are those which affect the functioning of an organisation and are not in control of organisation(Root, 2018). Following are some external factors which effect businesses: Customers: Baby Boomers have started to retire now. This generation will now look for health and fitness services. Medical professionals are also referring their patients to health and fitness centres to treat and prevent chronic conditions. Government is also focusing on preventing health as a result of which there is increased interest in fitness programs at workplace, community setting and school. Increased obesity in Australia has also played an important role in promotion of fitness businesses(Whytcross, 2014). Political and economic environment: Economic slowdown of 2008-09 had affected the industry revenues. State government initiatives in schools, community centres and workplace are creating awareness health and benefits of attending gym. Policy decisions such as health fund rebates and FBT tax exemptions for businesses that provide subsidised fitness for employees will help fitness centres in getting more membership. Fitness industry in comparatively less regulated the new Australian Consumer Law covers issues memberships, making misleading communications and marinating consumers confidentiality. Competition: Online services weight management sites and nutrition guides are posing increasing competition to fitness clubs. Availability of beauty products from all over the world on online shopping portals is enabling buyers to perform beauty treatments at ease of their homes. As fitness industry largely serves the needs of locals extent to which they face international competition is limited to international franchise. Technological advancements: A lot of technological innovations are happening in the field of beauty and fitness like the bands which monitor daily calories expenditure, food intake and sleep patterns, workout DVDs etc. In order to maintain its customer base fitness companies will have to stay updated technologically because members are now more interested in benefits and results they can get by spending less. Business Idea This beauty and fitness centre will offer services of a gym, yoga centre, beauty and skin clinic, slimming centre and ayurvedic massage centre under one roof. This centre will be first set up in Sydney and subsequently in other parts of country like Canberra, Perth, Brisbane and Melbourne. Globalization Globalisation is integration of economic activities due to increased integration of human society around the world(Mussa, 2003). Economic globalisation means exchange of goods and services from across the border, foreign investments, reduction in tariffs and relaxation in trade barriers and spread of knowledge and technology across geographical borders(Samimi Jenatabadi, 2014). Australia opened its markets for global trade in middle of 1980s and since then it has seen considerable growth in service industry. Service sector in Australia offers some of the highest salaries and contributes up to 50% in GDP. Challenges of globalisation Competitive Pricing: With presence of international fitness brands it will be very difficult for start-ups to sustain without offering competitive prices and discount offers. There is a growing trend of offering huge discounts on gym memberships in order to attract more customers. In order to maintain a competitive edge over MNCs it is important for start-ups to build their expertise and market their products well. No Industry assistance: Beauty and Fitness Industry does not have any protection or assistance from any kind of body. Although some local council also run fitness centres but they are also for profit entities. Competition: Since Australia is an open economy entry of international brands in beauty and fitness industry is also an obvious phenomenon. International Competition especially from Korean beauty products and international gym chains like Curves and Golds Gym pose a major threat to start-ups in this industry. They have the advantage of innovative and advanced equipment and internationally trained man-power. Internet: Online weight management programs have emerged and are giving competition to fitness clubs and availability of international beauty products on online stores at affordable prices has encouraged consumers to have beauty treatments at home. Benefits of globalisation Hollywood and beauty standards: Globalisation has standardized how people idealize beauty and fitness(Johansson Andreasson, 2014). Hollywood and some other international consumer culture have homogenised the way people perceive beauty and physical appearances(Jones, 2011). In addition to this, TV shows like The Biggest Loser have also contributed in growing awareness towards fitness. These trends have also created a new customer segment as males are increasingly getting conscious about their appearances. Social Media: More brands are now using social media to target the internet generation and to generate online leads. Presence on Social media also plays important role in giving worldwide recognition to a business. Increase in international travel and tourism has also increased mobility of customers, which means if they identify a brand from internet they will look for it and associate with it in other countries as well(Queensland Government, 2016). Franchise option with international brands: Many international beauty and fitness clubs like Curves and Golds Gym try to enter new markets through offering franchise. For start-ups struggling to build their customer base option of taking up a franchisee of international brand is a very profitable option(Business Franchise Australia New Zealand , 2008). Conclusion Contextual factors have different impacts on different industries. For fitness and beauty industry impact of globalisation is moderate but it is rapidly growing with growing awareness among consumers and influence of international cultures. For a start-up to survive in this industry it is very important to be technologically updated with innovative and advanced equipment. Growth of 24 hours gym is an innovative idea for tapping the corporate professionals, who do not find time to go to gym, and it also saves a lot of costs because it is mainly unstaffed. Franchising an existing multinational Beauty or fitness chain is also a benefit of globalisation it gives start-ups with much needed credibility but it requires a lot of investment. It can be concluded that globalisation has brought opportunities as well as threats for a start-up in fitness industry, but by developing effective strategies they can achieve tremendous growth in this industry. Bibliography Australian, T. W. (2017). Census 2016 reveals huge surge in fitness, beauty, barista jobs while manufacturing work falls 24pc. Retrieved January 6, 2018, from thewest.com.au: https://thewest.com.au/business/economy/census-2016-reveals-huge-surge-in-fitness-beauty-barista-jobs-while-manufacturing-work-falls-24pc-ng-b88636861z Business Franchise. (2014). A HEALTHY BOTTOM LINE. 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