David Lloyd Leisure Essay Example

classes, and new pursuits, such as spinning and Plilates.

David Lloyd employees 4,500 specialists, including over 350 fitness instructors and 200 coaches, as well as beauty therapists and nutritionists. David Lloyd Leisure health and fitness expertise is also unparalleled.

Given the breadth of its operations, it is unsurprising that, at 100,000sq ft, a typical David Lloyd Leisure club dwarfs its competitors. The model is flexible and the company is successfully developing smaller 35,000 sq. ft clubs in urban areas, which act as satellites for the larger clubs. (www.davidlloydleisure.co.uk)

David Lloyd Leisure is already enjoying a considerable competitive edge, both in size and geographical spread of its clubs. This leisure company is in the enviable position of being the UK's best-known health and leisure club brand. (According to an Omnibus report commissioned at the end of 2000.)

According to a recent report published form David Lloyd Leisure, they can be confident in its continued attractiveness of existing members. Not only do more people choose David Lloyd Leisure clubs; they also tend to stay with them.

Ever striving for higher levels of performance, it operates the industry's most comprehensive study into customer satisfaction, with the views that 36,000 members canvassed every year.

However, as with any organisation, David Lloyd Leisure is constantly affected and has to be aware of the environmental factors that face them on a daily basis.

David Lloyd Leisure has to continually keep up to date with the changing factors that affect the demand for leisure. Income, disposable income, comparative quality and population are all things, which need to be monitored and considered.

It is not just the demand however. The supply of leisure is just as important. Factors such as, prices

of other goods supplied, changes in production costs, technical improvements and taxes and subsidies, are all vital factors.

The aim for any business is that demand and supply meet, in order to produce equilibrium. This is much harder than it sounds, and often companies never reach this. If however, they do, then their place in the market will be of considerable strength, often putting them in the leading few; at which point they can strive to become a monopoly and dominate the market.

I have chosen to look at the environmental changes affecting David Lloyd Leisure in conjunction with 'Porter's Five Forces.'

Firstly there is the Business Environment, in which the context of an organisation will operate. Organisations will attempt to fit their environment, to avoid strategic drift.

It is not just environmental changes in the UK, which affect leisure. The tragic events of September 11th in the US, had a major environmental shift on leisure and indeed on David Lloyd.

Whitbread disclosed that it had to put four of its high street restaurant brands up for sale and will cut 300 jobs in its Marriot hotels division. David Lloyd Leisure has also become a home for housing some small clubs in these hotels, and with job cuts, these divisions will be affected.

The job losses came largely as a result of the 25% slump in sales in London following the events of September 11th.

Paul Bean, Whitbread director for Scotland, said that up to 20 people in middle management in Scotland would be affected, 5 of which would be from the leisure sectors.

However, over the past year David Lloyd Leisure has increased like-for-like sales by 18% and generated an extra 24%

of operating profits.

So even though this clearly very strong organisation has fallen and risen again very quickly, it also shows the importance of watching the business environment changes exceptionally closely, and how other countries can also have a major affect on the UK.

Another environmental factor, is the constant threat of new entrants into the market place. It only takes someone with a new idea, customer demand and the funds behind him or her, for a new entrant to make a massive impact on the leisure industry. David Lloyd Leisure did just that.

However there are three areas which affect the threat of new entrants. Firstly the Power of Suppliers. The increased power of a supplier is likely to prove lower margins, and can be overcome by becoming your own supplier. Secondly there is the Power of Consumers; again increased power of a consumer is likely to prove lower margins.

Thirdly the Threat of Substitutes; More substitutes mean less business for an organisation, consumer sovereignty and externalities. (Tribe 1997) David Lloyd must keep up and be aware of these three areas, in order for them to continue to flourish and dominate the health and fitness side of the leisure market.

An issue, which should also be discussed, is primarily concerned with the role of the state and the Free Market. Market intervention is a continual debate, as to whether the government should interfere with the operation of market economies. Many argue that they should not, as the only leisure organisation that the government fund is public libraries. Everything else is privately owned, and therefore many suggest, should be of now concern to the government. There are also many advantages

to having a free market. The benefits include economic efficiency, allocative efficiency, consumer sovereignty and economic growth.

David Lloyd Leisure has written several reports, which have analysed their organisations competitive environment. They have also utilised strategic group analysis to identify competitive groupings. By doing this they have identified their strengths and weaknesses within the market place and have acted accordingly. (For example, putting David Lloyd Leisure as the name for health suites in a popular and competitive hotel group.)

The Competitive Environment that an organisation faces is important, as it is concerned with the immediate context of a firm - who they do business with and with whom they operate. Even a business with a very strong position in the market, such as David Lloyd Leisure, still has to be aware of competition. It is not until a company becomes a complete monopoly that they can relax about other organisations.

The Hilton family originally established the 'Hilton' hotels. Since then it has continued to become a strong force in the leisure market, being in close rilvary with the Marriot group. However the Hilton hotels have spent a great deal of money over recent years in the leisure and health side of their business. Every hotel now has a health suite, referred to as 'Living Well.' This has proved to be a great success for customers as well as the members of these suites. Their profits have reflected this, with a growth of about 5%. (www.Hiltonhotels.co.uk)

Marriott Hotel division was aware that their main competitor was beginning to dominate the market. Due to the respected and some may say fashionable name of David Lloyd Leisure, they have teamed up together.

Starting with the largest, and over time catering for all of the hotels, David Lloyd health and fitness clubs will now be a feature of the Marriott Hotels. Whitbread believe that this will be a fantastic move for the company, and will increase the number of club membership on a wide scale.

Competition within the market is one of the most important factors of business development and growth. It is something, which must be watched very closely, as new ideas are arising all the time, many of which can put other organisations in a very poor financial situation.

Customers want the most for the money, and will go where the best facilities are. Therefore Whitbread, one may believe have made a very good move in this incidence.

Especially as the leisure industry is so volatile, it is vital and expectant that rilvary will occur. Of course all leisure companies are going to try and compete to be at the top of the market with the highest proportion of clientel and producing the highest profits each year, just as any business in the market place does.

However with similar ideas and focuses, being set above the rest is very difficult to achieve. David Lloyd are aware that at the present moment, they seem to be achieving this hot spot. However according to Whitbread, they are also fully aware of how easily this could be taken away. They know they need to stay ahead of the market and make themselves different form the rest.

David Lloyd Leisure has employed a large marketing team, who works in close conjunction with the finance department. Together they come up with new and individual ideas, with

finance plans, so that they can continue to grow, attract high consumer demand, and achieve large profits.

As with any business, 'keeping ahead of the game' is most important. Even if you are in a strong market position such as David Lloyd leisure, problems can still occur.

Environmental factors, such as the ones that have been discussed highlight the difficulties that businesses face. Of course, high profits are the ultimate aim; but it is also vital to follow the guidelines, and have the reputation for being the best because of customer care, not just making the most money.

David Lloyd Leisure has proved to be the UK's biggest and most successful sports, health and fitness club brand; and it is committed to sustaining and developing its market power. As long as this continues to be the case, one could quite easily believe the Whitbread will have possibly bought the most successful and powerful leisure club that the UK have ever seen, or will see for some time in the future.