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MANAGEMENT SERIES


Cost leadership and


differentiation are two strategies to help gain a market advantage


clubs attempt to imitate and erode the advantage, correctly formulated strategy may prevent this. Certainly, the attempt to mimic low-cost provision resulted in failure for Dr Bedford’s client, while Bannatyne was also less than happy with the results of his attempt. Competitive advantage that supports


customers’ true value seeking (which might just as easily be a high-end, experiential, service-driven offering as a low price tag), that’s built on rare strategic capabilities, that’s diffi cult for competitors to replicate and that has no obvious substitutes is desirable. Many strategies can be used to try to


achieve competitive advantage. However, Michael Porter’s 1985 suggestions endure. In Competitive Advantage: Creating and Sustaining Superior Performance, he suggests organisations should select from cost leadership, differentiation and focus strategies. Firstly, cost leadership concerns the


health club minimising its own costs through effi ciencies in equipment, staffi ng and processes. This allows a lower price to be charged to customers while still offering an acceptable quality – a strategy that local authority leisure centres might have adopted prior to the arrival of the low-cost health club. Secondly, differentiation strategy


concerns – as the name suggests – making your health club different from other health clubs. Differentiation could be created in the elements of your offering most valued by customers: unique services, excellent quality, different customer experiences, continuous new innovations – or indeed many other dimensions in which differentiation may be achieved. Finally, focus strategies concern using


either cost leadership or differentiation, but targeting the health club’s efforts


towards meeting the needs of a very focused market segment. For example, specialist cycling microgym Psycle will, according to founder and CEO Colin Waggett, “feel nothing like a gym or your typical indoor cycling class”. As Algar observes in his 2014 report:


“What consumers really like about these concepts is that they are highly focused.”


Strategic implementation Once strategy is formulated, the organisation needs to be appropriately configured and resourced to implement the strategy. The old cliché that strategy failed because the implementation was poor does hold water. Four key areas are of relevance: organisational structure, organisational systems, being able to lead organisational change, and monitoring and controlling strategy. Organisational structure concerns


having the correct workforce confi guration to ensure facilitation of effective and effi cient communication, establishing clear roles, responsibilities and knowledge dissemination. The structure adopted needs to be fl exible enough to deliver the strategy. Organisational systems guide


various activities within the entity, to support the structure adopted. For example, planning systems (ie resource utilisation), cultural systems (ie behavioural requirements), performance and control systems (ie measurement of outputs), and market systems (ie procurement) are all fundamental to successful strategy implementation. Strategy also involves change, and


an organisation’s leadership needs to be able to diagnose the type of change required, be familiar with the environment within which the change takes place, understand the levers to help stimulate change, and be capable


58 Read Health Club Management online at healthclubmanagement.co.uk/digital


of leading strategic change programmes. No mean feat, but these are key areas worthy of serious consideration. Finally, to ensure strategy is


progressing suitably, monitoring and control needs to be ongoing. Monitoring is concerned with tracking key elements of the strategy, while control is taking action to correct variances as they arise. In their 2006 article, Using the


balanced scorecard as a strategic management system, Kaplan and Norton suggest that putting metrics in place to monitor a wide range of measures – fi nancial, customer, learning and growth and internal processes – can facilitate both monitoring and control. Each area is broken down into KPIs, with the aim being to close any fractures that may arise between strategy and action. This approach allows club managers to


monitor and control progress holistically, rather than focusing on narrow fi nancial measures alone.


Seek further knowledge Strategy and how it’s approached is a much-debated topic, and this article has proposed a single perspective. To address organisational requirements, I’d encourage multiple perspectives to help gain a richer understanding of strategy. In the health club sector, application of deliberate strategy processes as detailed in this article may be one such perspective – but certainly not the only perspective worthy of consideration. ●


Dr Michael Cassop-Thompson is a CIMSPA Fellow. He has worked in the education, leisure, sport and physical activity industry for more than 25 years. Twitter @drmct114 Email mct114@hotmail.com


March 2014 © Cybertrek 2014


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