Management Case 5 Economic Developed Economies There Ongoing Threat Economic

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Hitt 13e Case Teaching Notes

Case 5: CrossFit at the Crossroads

Case Synopsis

Known for being brash and outspoken, Greg Glassman, founder and sole owner of CrossFit, Inc.,

is a self-made billionaire. Based on his unique fitness training philosophy, Glassman started the

company in 2000 and has created one of the fastest-growing, most successful fitness businesses

in the industry.

In addition to the revenues from affiliates’ fees, CrossFit, Inc., also earns income by providing

insurance to affiliates. These gyms require unique insurance policies generally not available

from more traditional insurance providers, so CrossFit’s RRG (Risk Retention Group) covers

CrossFit affiliates in a specialized way. A third revenue stream is the CrossFit Training

Certification Programs.

CrossFit devotees are known for their near-obsessive dedication to Glassman’s method of

fitness training, which has now become a sport in itself. Thanks to these CrossFit fans’ in-person

Learning Objectives

• Define strategic competitiveness, strategy, competitive advantage, above–average returns,

and the strategic management process. (Chapter 1)

• Describe vision and mission and discuss their value. (Chapter 1)

competencies. (Chapter 3)

• Explain the purpose of forming and implementing a business-level strategy. (Chapter 4)

• Describe business models and explain their relationship with business-level strategies.

(Chapter 4)

• Define competitors, competitive rivalry, competitive behavior, and competitive

• Define strategic leadership and describe top-level managers’ importance. (Chapter 12)

Strategic Issues and Suggested Discussion Questions & Answers

1. How would you describe CrossFit’s vision and mission? Explain how Glassman has

used—or has failed to use—vision, mission, and the other elements of the strategic

management process to create a successful business.

As the owner of a privately held company, Glassman is not under any obligation to disclose

For a company owner who admits to not having a business plan, Glassman has been extremely

successful at generating above-average returns in a competitive business. By observing some of

the more visible aspects of the business, students should be able to deduce some of his

strategies and tactics. For example, from the beginning, CrossFit’s creator pushed the firm’s

differentiation strategy by constantly touting how unorthodox, yet results-oriented, his

methodology is. Glassman clearly set out to build grassroots support for the CrossFit

methodology in order to gain recognition for the organization and its affiliates. His primary

2. Use the seven segments of the external environment to identify threats and

opportunities in CrossFit’s external environment. Which of these threats might cause

you the greatest concern if you were an affiliate owner?

Demographic: CrossFit’s data show that the methodology (or sport) appeals equally to men and

women, and other statistics show that there is a growing recognition among people, at least in

developed countries, of the need for formal exercise. In general, the demographic segment

shows opportunities for the brand.

Economic: In developed economies, there is an ongoing threat of an economic downturn, which

fitness industry, so a CrossFit affiliate owner should investigate this further. It is a potential

threat.

Sociocultural: This segment is closely tied to demographics. Generally speaking, high-intensity

Technological: In terms of technology-driven innovations in products, processes, or materials,

CrossFit would be unlikely to capitalize on these because the methodology is actually based on

a limited use of equipment. Thus, technology is neither a threat nor an opportunity. However,

in terms of innovative marketing, technology has and will continue to offer tremendous

opportunities for CrossFit affiliate owners.

Global: This segment is closely tied to the economic segment. CrossFit has easily expanded

globally due to numerous opportunities in many locations. For the most part, the same need for

3. Identify several of CrossFit’s key tangible and intangible resources. How have these

been used to create capabilities and core competencies?

CrossFit, Inc., is built on a network of affiliates. For a company of its value and annual revenues,

it has relatively few employees, no manufacturing facilities, and no product inventory. In terms

CrossFit has far more intangible resources. It was founded on an innovative concept for fitness

training, and the firm and its affiliates continue to enhance and improve upon it. Perhaps the

CrossFit has turned its capability for reputation-building into a core competency. The firm

continues to produce tons of related content—and encourages followers to produce their own

4. Imagine that you are considering opening your own gym, either as a CrossFit affiliate

or a franchise owner of one of the other competitor brands listed in the case. Your

neighborhood doesn’t currently have a gym, so the choice is yours. From a business

standpoint, which of these brands would you choose to go into business with and

why?

Students’ answers will vary, but they should be able to support their answers with logical

reasoning. Many students will pick CrossFit. Compared to competitors like LA Fitness, Planet

Fitness, and Anytime Fitness, CrossFit offers a much lower barrier to entry. The fees for an

Additional Resources

Mike Ozanian of Forbes profiled Greg Glassman, including some video clips, in February 2015:

Quartz contributor Marion Maneker offered his analysis of CrossFit’s business model and

strategy in July 2015:

CNBC also interviewed Greg Glassman in August 2016: