Students: Damir Ramljak, Martina Mlinac, Martina Major, Ljiljana Vekic and Andrej Matijasevic

Course: APPLIED ENTERPRENEURSHIP AND LEADERSHIP

Case #1: Maria's Fitness Club Decisions

Contents
Do You think Maria has a good oppurtunity for success if she proceeds with the venture? Why? .............. 3 What do You think is "the need" that exists for people to join fitness clubs? .............................................. 3 What concerns do you have for her success? ................................................................................................ 3 What would you guesstimate to be the total revenue market for non institutional fitness clubs in Zagreb? 4 What is her potential market share in years 1, and 3 in Zagreb) ................................................................... 5 What would you suggest Maria do next? Why? ........................................................................................... 5 If she decided to go global after 3 years where would you suggest she start and why? ............................... 6

According to analysis, opening fitness centers in Croatia should be a great investment for Mary,
although a variety of other aggravating circumstances doesnt allow jumping to conclusions. First of all there are major differences in Croatian market in comparison to Canadian market, which is open for investment and has a good business climate, but also the larger number of people with the habit of exercise. If we suppose that among all people trend will raise, the difference would still be significantly in a population of older people who are much poorer in Croatia. Maybe the biggest difference is in the fact that mostly younger people and students go to fitness clubs while middle age working people do not go to fitness clubs as much.

Personal fitness has become the call for the day. In today's world, where people are becoming
busy with the work load, it is very essential to maintain health so that person can lead a healthy normal life. With intake of fast and convenient foods, stress, lack of sleep, it's taking a toll on the health of the individual. Diabetes, obesity, arteriosclerosis, arthritis, osteoporosis and metabolic syndrome are some of the disorders that can affect the lifestyle. is always suggested to do exercises regularly so that it enhances the well being of the individual. But this is not possible especially at home as certain exercises need to be done according to specific technique in order to achieve positive results. Some of key needs for people to join fitness are health, staying fit, new friendships and also some material things as good equipment, educated trainers and similar.

GDP per person is lower in Croatia and people arent used to travel, weather is work on the
other side of a city or a gym. If she wants to open a fitness centre in Zagreb she will have to get very detailed market research, because people here arent having among priorities their own health and exercise. Price and location near their homes are also key things. Upside is that people in Croatia are following trends which is the most obvious with big growth of popularity like Zumba or MMA sports. In the next table you can see SWOT analysis which shows strengths, weaknesses, opportunities and threats that indicates her to do something creative not just opening one more fitness club in Zagreb. It also shows a real market situation in fitness field.

STRENGTHS
New trend Money saving Large financial strength of the owner Accessibility Professional sports management A large number of equipments

WEAKNESSES
First business venture Not enough media representation Small number of clients Commercial prime rate (lending)

OPPORTUNITIES
Developing fitness club in famous brand Expanding the capacity of the device in an existing fitness club Opening of new fitness clubs

THREATS
A large number of competitors Theft of ideas by competitors

With given data, we are assuming that total revenue market for non-institutional fitness
clubs in Zagreb would be 31,514,519.95 dollars. Data is calculated according to given appendix 1.

1-Demographics Population (nearest 000) Age distribution: 0-14 15-64 65+ Median age Croatia 4,456,000 14.6 68 17.4 41.8 -0.11% Canada 34,568,000 15.5 67.7 16.8 42.7 0.77%

Population growth rate 2-Economy GDP/per capita (in dollars) GDP growth Major trade partners(export)

$18,100 -2.0% Italy 14,9% Bosnia 13,2% Germany 10,6% 9.50%

$43,400 1.8% USA 74,5% China 4,3% UK 4,1% 3.00%

Commercial prime rate (lending) 3-Canadian fitness club (non institutional) data: Number of non-institution fitness establishments Number of enterprises Members Members growth rate Revenue Payroll&benefits 4

5300 4890 4,520,000 2.20% $ 2,38 billion $ 0,75 billion

Full time employees Part time employees Membership renewals 4-Croatia fitness club (non institutional) data: Number of non-institution fitness establishments Number of enterprises Members

3200 2100 75%

285 263 242,995

Members growth rate Revenue Revenue in Zagreb Payroll&benefits Full time employees Part time employees Membership renewals Maria's fitness Number of enterprises Members Members growth rate Revenue from 1 member Revenue 1 enterprise Revenue total market Total revenue in Zagreb Market share Market share in Zagreb 1st year 1 924 0% $527 $486,498 $127,948,951 $31,514,520.07 0.38% 1.54% 2th year 1 924 0.00% $527 $486,531 $127,948,951 $31,514,520.07 0.38% 1.54%

0% $127,948,951.48 $31,514,520.07 $40,320,047.74 172 113

3th year 1 926 0.20% $527 $487,504 $127,948,951 $31,514,520.07 0.38% 1.55%

By referring to the table above you can see that potential market share in year one would be 1.54% and in
a third year would be 1.55%. That provides us important insight into how much of the total potential market our client Maria might capture. Members would not grow in second year of business and we assume that the number of members would be 924. Members growth rate would not rise in first or second year, but we assume that increase will come in third. In third year it should be 926 members in Maria's fitness club.

She is coming to market with a new product which is discovered in Russia and has excellent
results. It is still not discovered in Croatia, and with good business plan (marketing actions, finding a perfect location, hiring professional staff) she can succeed in Zagreb. But it will not be such a landslide because of already existing fitness clubs which have tradition and their loyal customers.

With her investments she can start that trend in Zagreb but not as a startup company. There are some other ways she can start her business across Croatia and make it popular. With making a program and presenting it to the biggest Croatian firms as a "reward" to their employees she can start a new trend in Zagreb which is oriented to the people that are not using any kind of fitness exercising. Companies as Agrokor or Atlantic have total revenue that is big enough to make that kind of offer to their employees. That is potential win-win situation because of great opportunity for Mary at one side, and making a positive working environment for the company on the other side. We all know that motivation in a working place is really important. That is the main reason for good or bad working results which are important for the whole company profit. The companies all over the world realized that awarding employees from all departments in one firm, affects employees in a way for the better working environment and improving business.

If she decides to go global after three years it would be much easier to approach to companies
through their franchises in Croatia. By that time companies should have results of Maria's training methods and what influence they have on a employees. If Maria will work with the companies abroad then she doesn't have to worry about marketing, renting a space and location so much. Investment in this situation would minimum. Unless she creates some kind of different new product or service what would give her advantage on a market. In conclusion Maria needs a business plan with all income and expenses for the planned business calculated in detail. She needs also to calculate necessary financial resources to start a business which will be on a basis of additional fitness market research in Croatia and then she can make a decision about starting work.