Cases study, Bally total fitness, coffee industry, competitors strategic, strategic groups
The case is about Bally Total Fitness, an American Fitness Club chain created in 1962 by Dave Wildman. From a modest, single club, Bally Total Fitness had grown to become the « largest and only nationwide commercial operator of fitness centres » with over 360 outlets in the United States.
However over the last decades, the firm had to face several problems including the collapse of Bally's stock price, the intensification of competition or the investigation into accounting procedures opened by the U.S. Securities and Exchange Commission opened an investigation into accounting procedures.
[...] V14) Weather issue in producer countries: environmental issues are highly important for the coffee industry. Bad or excellent weather conditions can dramatically decrease or improve the sales realized in this industry. V15) Domestic economic situation really influences how much people consume coffee beans. For example, economic crisis will certainly reduce the consumption of coffee. On the contrary, it might be possible that the industry of coffee flourishes during a time of prosperity. V16) Demographic issues also have a direct impact. [...]
[...] If a producer country closes its borders, it will impact negatively coffee exportation. V10: New substitution products. The development of new substitution product such as tea could lower the number of consumers and lower sales. V11: International Coffee Agreement. A new agreement may create a framework and define new objective for producers and importers. V12: Politic in a producing or importing country. A political crisis could lead to a closed-border policy or the destruction of plantations. Conversely, an agricultural policy could improve coffee plantation. [...]
[...] Coffee price is set in Commodity Exchanges: the New York stock Exchange treats principally about Arabica coffee and London Stock Exchange treats Robusta. Producers and importers Brazil is the most important producer, followed by Vietnam. World production of coffee in 2014-2015 is provisionally estimated at 141,4 million bags (one bag corresponds to 60kg) a decline of compared to 2013-2014 production. Consumption of coffee is principally important in Europe and in the United States, which are the first importers in the world. [...]
[...] However this scenario is unlikely to happen as the trend is global warming and exhaustion of resources. Implementation of a new coffee specialized advertising campaign: we can imagine that a new set of regulations are created in order to regulate the advertising process in the coffee industry. Such regulations could be launched by government institutes such as the Health Ministry, with the goal to reduce the coffee consumption for its citizen. This leads us to two likely scenarios. Firstly the creation a legal note included in all coffee ads could be used, indicating what the recommended-coffee-consumption is. [...]
[...] The development of a new technology to harvest coffee would lead to increase yields and enhance the cost/benefit ratio for the firm. V6: Health regulation on caffeine. Caffeine is a stimulant and if some regulation increase or decrease on the level authorized in food it will have an impact on coffee bean's demand from companies. V7: New innovative coffee machine. New technologies can change consumer habits and coffee companies have to adapt their offer to these new habits (capsules for example). V8: Taxes on coffee. [...]
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