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CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
16-14
2. Passport Membership: access to all clubs, all
the time for $69-99/month.
a. Corporate and group prices: $65/month
d. Environmental impacts play a big role in membership rates
and club functionality.
i. Recession
1. Low membership rates, as disposable income
used for fitness.
ii. Hurricanes
5. Human Resources Management (HRM)
a. N/A—nothing about HR or hiring practices in the case.
6. Information Systems (IS)
a. TSI IS strategy is not implicitly mentioned; however,
through various statistics stated throughout the case, it
is clear there are IS processes in place to track
performance, sales, and member retention (S).
c. Customer relationship management: the case implies there
must be some sort of CRM software since they are able to
reach out to former members via their call centers (S).
d. Trends from analysis
i. Large group and corporate members accounted for 18
percent of TSI’s sales by end of 2013, representing
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
16-15
1. Indicates most sales are still performed
through face-to-face channels or call centers.
iii. 16 percent of members held Gold membership.
iv. 80 percent of new TSI customers chose the commit
option.
e. IS does not provide TSI with a competitive advantage
since they do not add additional value to their
customers. Their primary focus is using marketing and
sales tactics to promote their product and services.
D. Summary of Internal Factors—see IFAS table Exhibit 2
Their core competencies are their membership services and
5. Analysis of Strategic Factors (SWOT)
A. See SFAS table Exhibit 3
B. Review of Mission and objectives
i. Mission: develop and run the premier health club in each
of the metropolitan regions served.
ii. Objectives
a. Derive profits from operations.
b. Increase growth in locations and memberships.
c. Enhance market share within metropolitan regions.
C. Are they appropriate in light of key strategic factors and
D. Should the mission/objectives be changed? How? With a growing
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
innovation, and tailored offerings to satisfy the growing and
ever-changing consumer base.
6. Strategic Alternatives and Recommended Strategy
Strategic Alternatives
1. Current Objectives
a. Profits are currently maximized within current
2. Alternative Strategies
a. Cost Leadership—not currently employed
1. Pros:
2. Cons:
a. Would cheapen brand.
b. Without an equivalent bump in sales,
would reduce revenue.
b.Differentiation—part of current strategy
1. Pros:
a. Product seen as better than most
2.Cons:
a. Might incur additional costs to allow
for additional access.
c. Stability—somewhat employed
7. Implementation
A) A program should be developed to purchase gyms in other areas,
such as Chicago, and rebrand them as Town Sports Gyms. This will
reduce overhead start-up costs and get existing clientele.
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
16-17
1) The operations team and finance team should work together to
make sure that the right gyms are purchased at the right
price.
2) Same as above, the operations and finance teams working
together.
B) This type of program is financially feasible. Pro forma budgets
8. Evaluation and Control
A. Yes, exhibits 2-4 imply TSI performance can be tracked by project
or function.
a. Membership types
B. N/A.—case does not imply timeliness of information, but most, if
not all, major companies can report out on performance on a
month-to-month basis at a minimum.
C. Reward Systems
1) Sales Consultants: incentive based commission.
i. Supports strategic objective of increasing sales and growth
3) Corrective action—not mentioned in case.
Exhibit 1 EFAS
Key External
Factor
Weight
Rating
Weighted
Score
Comments
Opportunities
Growing
Industry
.1
5
0.5
TSI has been
good at
adapting
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
Technological
Advances in
Equipment &
Connectivity
.1
3
0.3
Dvd, online
programs,
custom
tailored
programs,
connectivity
UXF zones.
Increasing
Number of
Health
Campaigns
from
Corporations
and
Political
Figures
.15
4
0.6
Acquired/managed
corporate gyms.
Threats
Speed of
Technologica
l Change
.05
2
0.1
Equipment
expensive
and updates
to allow for
important
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
16-19
maintain
high capital
expenses.
Highly
Diversified
Competitive
.15
5
0.75
TSI
acquiring
fitness
Consumer/
Buyer Power
.2
5
1
TSI
launching
BFX studios
to meet
consumer
TOTALS
1
4.15
Exhibit 2 IFAS
Key
Internal
Factor
Weight
Rati
ng
Weight
ed
Score
Comments
Strengths
Local
Advertising
0.2
5
1
They use
local
advertis
ing
campaign
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
teams.
Operations
0
3
0
Clusteri
ng
allows
Executive
Board
0.05
2
0.1
The
Executiv
e Board
is
experien
ced and
diverse.
Membership
Services
0.15
4
0.6
They
offer a
lot of
services
: pools,
personal
Finance
0.1
1
0.1
They
have
fairly
consiste
nt and
reliable
revenues
from
year–to–
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
16-21
year.
Weaknesses
Start Up
Costs
0.05
4
0.2
Start up
costs
are high
for
Clustering
0.15
5
0.75
The
clusteri
ng
approach
was
shown to
be a
weakness
, as
multiple
location
s are
vulnerab
le to
natural
disaster
s like
Hurrican
e Sandy
(which
caused
regional
closures
).
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
Membership
Attrition
0.2
1
0.2
With
high
competit
ion,
it’s
hard to
keep
members—
a
problem
every
company
in the
industry
faces.
Social
Media
Marketing
0
2
0
TSI
knows
they
have a
low
presence
on
TOTALS
1
3.25
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
16-23
Exhibit 3 SFAS
Key
Strategic
Factors
Weight
Weighted
Score
Medium
Comments
Duration
Membership
Services
.1
0.5
x
Supported
by variety
in gyms
from b-ball
courts, to
pools, and
new UXF
zones,
Clustering
.15
0.6
x
Acquired/ma
naged
corporate
gyms and
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
allowing
them to
speak
directly to
consumer
base.
Growing
Industr
y
.1
0.3
x
More diets,
exercise
programs,
and gyms
becoming
part of
daily life
in country
where
obesity is
a big
issue,
Highly
Diversi
fied
Competi
.15
0.75
x
Many
competitors
entering
with
CASE 16
TOWN SPORTS INTERNATIONAL HOLDINGS, INC: UNSQUASHABLE
16-25
consumer
demand for
smaller,
personalize
d
experience—
will need
to stay on
top of
these
trends to
ensure
competitive
.
TOTALS
1
4.35
Work Cited
