Organizational Impact: For-Profits vs. Nonprofits

Innovation in business entails the improvement and the betterment of the already existing product or services rather than the widely held notion of coming up with new products. Strategic management is responsible for steering a company’s innovation and ensuring a company moves in the desired direction, is competitive and remains ahead of its competitors. Good strategic management profits a company and in the process expands immensely while poor strategic management leads to heavy debts eventually to bankruptcy or loss-making. For innovation to be successful there must be a high level of discipline with the right tools being applied, and there exist good governance and rules. Innovations also involve prior research of the market place with experiments being a key factor. Collaborations and sharing can also lead to more innovations and development (Stamm, 2003).

In the health club industry, innovation has transformed the industry to become very attractive, efficient, competitive and very lucrative. The fitness companies can be divided into two: for-profit companies like 24-Hour Fitness and non-profit like YMCA. They can further be divided according to the type of ownership like owner-operated health clubs and franchised clubs. Owner-operated health clubs are like Bally Total Fitness while franchised clubs are like Gold’s Gym. Competition has made these clubs to come up with diverse strategies and innovations to attract more members and retain them. Innovations between the-for profit and non-profit have contrasted over the years.

Young Men’s Christian Association is the largest non-profit fitness organization in the world with branches all over the world. The organization was started in the late, 19th century and has a formidable long sports tradition, various innovations in sports and inventions have been made in the organization. Sports like basketball and volleyball were invented and innovations made here. In the modern world, the organization has made various strategic management adjustments in a bid to remain competitive. Although it is a non-profit organization, for a person to be enrolled as a member, one has to pay the enrollment fee and monthly subscription fee. This enables the company to have funds for the effective running of the organization. The reliance on members for funds rather than sponsors has made the organization to be self-reliant and cannot collapse easily unlike when a sponsor decides to withdraw. Using the members’ contribution, the organization has been able to purchase modern exercise equipment enabling it to remain very competitive.

To diversify the organization the management and the membership enrollment fees strategy have been left to each branch. This has enabled the company to have Sub-autonomous branches. In turn, the management is based on the area of operation making it very flexible and efficient. Most of the workforce is from volunteers. The volunteers have helped the company in cost-cutting and have a wide range of diverse professionals to draw and rely on. Since it is a non-profit organization, its revenues are not taxed. The company is a communally owned organization and it is the highest profit earner. Its strategies and innovations have enabled it to survive and thrive for over a hundred years.

The for-profit companies like Bally Total Fitness have devised various strategies to compete with other organizations. Bally has employed skilled staff in management, to come up with the appropriate methods expanding. The management of the company has in turn resulted in purchasing of an established gym. Membership subscription has also been made very attractive. To attract more customers the company has diversified the fitness industry by incorporating other fitness activities like massage, group exercise, and personal trainers and providing a menu to its customer for the appropriate foods to consume. The company has also developed and manufactured its own supplements for people to use in a bid to avoid foods with higher fat content.

The company’s expansive initiatives did make it fall into financial crisis in 2004 due to its accrued debts. The lack of an elaborate communication network also saw its personnel resigning abruptly consequently throwing the company into disarray. The 2004 financial reports were delayed because its auditors resigned suddenly, without substantial reasons.

24-Hour Fitness, another health club has expanded organically and by acquisition always aiming to be the leading in the market. The company has emphasized its target group to be those who already do not belong to any fitness center. Unlike the rest, this health club has used different formats for its facilities catering to the different population needs and markets. Instead of a fixed subscription method like other companies, this company has set its membership fee depending on the location. 24 hours electronically deduced dues from members have also been introduced. (Well & Raabe, 2004)

To become even more competitive, the company has turned to Information and Technology. It has developed software programs, which include thousands of individualized, personal training, and enabling people to use them in their homes. The strategies employed by this company enabled it to become the most competitive and profit-making in the fitness industry. It has also expanded extensively registering millions of patrons. The competition in the fitness industry has led to more innovations and consequently better services.

Reference List

Stamm, B. (2003). Managing, Innovation, Design and Creativity. West Sussex: London: John Wiley & Sons Ltd.

Wells, R., & Raabe, E. (2004). Strategic Management: an integrated approach. Boston: Harvard Business School Publishing.

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