Term Paper: Gold's Gym Fitness Industry

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Gold's Gym

This report is an industry profile on Gold's Gym. The report will cover the company from four perspectives: Gold's industry's historical development, Gold's competitive structure, a general environment analysis and the global nature of the industry.

Gold's Gym International has been considered one of the global leaders in the fitness industry for nearly forty years. The company and industry have become more on the road to licensing agents or franchisers as opposed to weight liting conglomerates. "The Gold's Gym franchise program has been designed to give top gym operators and entrepreneurs around the world the opportunity to benefit by representing the Gold's Gym brand and becoming part of the strongest network in the $13 billion fitness industry." (Gold's Gym International, 2004)

Fitness Industry History

Throughout world history, military conflicts have had major impacts on the state of fitness. The Second World War and its aftermath in the United States would be no different. Essentially, the modern fitness movement evolved out of the influence of World War II and subsequent development of the Cold War." (Dalleck & Kravitz, 2004) on a global scale, the health and fitness industry today has many large international players such as Gold's Gym, Bally's Fitness, Worlds Gym and Powerhouse Gym. But this is only the tip of the iceberg.

In almost every nation of the world, fitness takes on a local feel in the sense that what has driven the specific nation in regard to health and fitness, survival and sport will inherently dictate what the fitness industry represents. In other words, in the Asian nations, martial arts may dictate the types of fitness organizations that will be successful and in the Middle East and Europe, group sports such as soccer may dictate the type of fitness program that excels.

Obviously each region will have some factors that push one type of exercise over another. The United States is a major influence as well as the nation's wealth provides excess capitol for individuals to have the free time and money to seek exercise as a leisure activity. "As we enter the 21st century, one of the greatest accomplishments to be celebrated is the continuous pursuit of fitness since the beginning of man's existence. Throughout prehistoric time, man's quest for fitness has been driven by a desire to survive through hunting and gathering. Today, though no longer driven by subsistence requirements, fitness remains paramount to health and well-being." (Dalleck & Kravitz, 2004)

Over the past thirty years, the fitness industry has had one leader and that has been the Gold's Gym. Gold's Gym as an organization has understood the market ever since it was created around 1965. Even with the highly competitive nature of the industry, they have been able to expand to six hundred fifty locations all around the world. As an organization, they have always been an industry leader in regard to innovation and offer the best and most modern state-of-the-art fitness and strength training equipment for both use and sale.

The industry has had to constantly reinvent itself to keep up with the changing economic and social changes throughout the world. For example, in the United States, women were becoming a main customer based in the industry so facilities had to adopt new family based offerings. Gold's gym offers such amenities as child care, rehab, massage, physical therapy, sauna, steam room, Pilates, aerobics classes, yoga, free weights, and more in their effort to encompass the various needs of the consumer.

Today, the industry has been reducing its size by new mergers and acquisitions. "Gold's Gym, headquartered in Venice, California, is the most recognized fitness chain, as well as the leading franchisor of gyms, in the world. Gold's Gym was acquired in a transaction led by Brockway Moran & Partners, and one of the leading franchisees of Gold's Gym, in August 1999." (PR Newswire "Gold's Gym International to Be Acquired by TRT Holdings; Brockway Moran & Partners Signs Definitive Agreement to Sell Most Recognized Name in Fitness." 2004)

The acquisition has been the industry trend. The mergers and acquisitions in the industry allow the fitness organizations to transform themselves and also reinvent the marketing strategy. For example, Gold's Gym is now seen was seen as an entrepreneurial start up even after thirty nine years of business. Today the company can be recognized as a professional, well managed global corporation.

Competitive structure

The health and fitness industry has both direct and indirect competition. Fro a direct standpoint, the health and fitness industry is highly competitive. In an ever growing race of name recognition and location expansion, Gold's Gym is the market leader. "Gold's Gym is the largest fitness industry chain in the world. We are recognized for our passion, unique heritage, experience and reputation as the authority in fitness." (Gold's Gym International, 2004)

Gyms such as Gold's Gym, Bally's Fitness, Worlds Gym and Powerhouse Gym all have a mission to inspire their members and to provide the finest equipment and fitness knowledge available. But the bottom line is memberships asn sales. These organizations work hard to develop new locations through franchising and other investment concepts.

One area in the fitness industry that has greatly improved the competitive nature of each organization is the investment in highly technologically advanced computer systems and software. "Implementing a new computing infrastructure would, in some ways, be easy because Gold's had next to no legacy it infrastructure to contend with. Even in 1999, many franchises were run like mom-and-pop shops, with no centralized it system a surprising 30% still running DOS." (Citrix Systems, 2003)

These new implementations of modernized computing systems will enable Gold's Gym to communicate with every franchise and/or potential franchisee anywhere in the world. But all of the major chains have or will be adding or upgrading their computing, Internet and email capabilities as the technology becomes more affordable.

From an indirect perspective, the fitness industry is in competition with companies that own, operate, or engage in amusement; attractions; recreation; entertainment facilities, exhibitions, and products; eateries; lodging; and gaming. This also includes companies that own and operate professional sports teams and organizations; golf courses and golfing centers; motor racetracks; exercise and fitness facilities; dance schools and studios; and other related sports activities. Of course the real competition is from the local area companies that own, operate, or manage public gyms, workout centers, dance studios, and weight lifting facilities.

Environmental analysis

The United States has been once again adding to the existing national debt. Corporate America has also been moving a large number of jobs out of the high rent district within the United States to the emerging markets and cheaper labor abroad. All of this is relevant to the fitness industry. As the United States economy goes, so goes the fitness industry. The hierarchy of needs is a major influence on consumers' needs and desires in regard to purchasing health equipment or a membership at a local club if the person can not pay the rent because he just lost a job. The United States is the largest consumer of leisure fitness equipment so the American economy must be robust in order for fitness industry growth.

Health Insurance has become a big part of the modern day fitness experience. In the United States there have been efforts to reduce illness by the insurance industry in order to reduce overhead. As the industry continues to expand throughout new developing nations, this insurance industry trend may become more than just a United States scenario.

Other governmental organizations also influence the industry. "Veterans Advantage Inc., a nationwide membership program providing new service benefits for U.S. Veterans, National Guard, Reservists, active duty military and their families, announced a new benefit for its enrolled members to get up to 60% OFF their monthly fitness club dues at over 1,500 clubs nationwide." (PR Newswire, "Veterans Advantage Delivers Up to 60% Off Fitness Club Dues for Its Members Nationwide; GlobalFit Honors Those Who Served, and Their Families, With Special Fitness Benefit at Bally's Total Fitness, Select Gold's Gym, and World Gym, Others," 2004)

The economy may drive membership per say but the industry has been making money on franchising. "Although only eight percent of businesses are franchises, these operations represent 40% of all U.S. sales. According to market research, consumers prefer nationally recognized names 2:1 over similar entities. Not only is advertising easier and more cost-effective by aligning with a world-recognized brand, the profitability of your operation should also benefit. (Gold's Gym International, 2004) There are still plenty of franchisees in the world willing to take the risk of buying Gold's Gym. "According to the U.S. Department of Commerce, 90% of franchised operations are still operating after ten years, whereas 82% of independent businesses fail. This statistic solidifies the fact that aligning with a recognized leader increases the probability of success." (Gold's Gym International, 2004) the company has the advantage of instant brand awareness, historical success, and other benefits such as its consitent award winning marketing and advertising programs. The comptetion is lagging… [END OF PREVIEW]

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