Marc has opened a 24-Hour fitness center in a fast-growing city. Before purchasi
ID: 150298 • Letter: M
Question
Marc has opened a 24-Hour fitness center in a fast-growing city. Before purchasing the franchise and starting his new business, Marc looked at the one other fitness center currently operating in that area. In the same general area are video game rooms, fast food restaurants, a sports bar, a golf driving range, a sporting goods store, and a bowling alley. Marc believes that the one fitness center forms his competition.
Based on your reading of open systems and “Substitutes and Complements” in the text, do you agree with Marc or disagree? Why?
Explanation / Answer
Based on the definition of open systems, when a business regularly interacts with its environment, and exchanges and processes feedback, it is an open system organizational structure. I believe Marc is wrong in thinking that the other fitness center is his only competition. All of the surrounding businesses are the competition for different reasons. Definitely the other gym is his biggest and most direct competition but he can alter his prices or programs to increase his appeal over the other gym. The driving range, the sporting goods store and the bowling alley as other forms of direct competition as they can offer similar products or services. Golfing and bowling are other forms of exercise that a customer may choose to participate in. On the other hand, the sporting goods store may sell the exercise equipment that Marc’s gym has. A customer can choose to buy his own home gym instead of paying a membership fee. The fast food, bar and game room offer distractions and alternatives to going to the gym and are still a slight competition for Marc. While the sporting goods store is a substitute to the gym, it could also be a complement. A gym member may go to the sporting goods store to purchase workout clothes or other items to enhance their workout routine. But if Marc also had a shop in his gym, he would be competing with the store in that area as well.