Case Study BJs House of Fitness: A Business on the Rope

Case Study – BJ’s House of Fitness: A Business on the Ropes

Read the following case study and complete the assignment.

BJ’s House of Fitness is a gym owned and operated since 1991 by Barry J. Jerrod in a working-class area of Pittsburgh, PA. Barry grew up in Pittsburgh and worked in the steel industry. As a hobby, he participated in amateur bodybuilding competitions, gaining a small but devoted local following. In 1990, he set up weights and a stationary bike in his garage so neighborhood friends could work out. He charged 25¢ per day to work out and sold neon pink sleeveless T-shirts that read, “I Get Big at the Garage.” Word of Barry’s gym spread, and it quickly outgrew his garage. Barry opened BJ’s House of Fitness in a storefront on Cherry Street, his neighborhood’s retail district.

The gym is well-equipped with treadmills, ellipticals, weight machines, heavy bags, and free weights but lacks premium amenities like a sauna, juice bar, and towel service. There are no personal trainers. In 2002, Barry expanded to the adjacent retail space, knocking down a wall to double the gym’s size and add a studio space for exercise classes. His last price update was in 2011; it costs $35 per month to be a member. There is no joining fee and no annual contract. Barry’s members are mostly longtime residents of the neighborhood, and many are retirees.

Barry’s business is modestly successful, providing him a comfortable lifestyle without requiring significant marketing, strategic planning, or capital investment. He feels the success of his business relies on his strong values, mission, and vision.

BJ’s House of Fitness was founded on his values of fairness, hard work, and helping others, and those values are the reason Barry has always run slim margins to provide his clients with a low monthly membership cost without fees or penalties.

His mission is to share his lifelong love of fitness with members while maintaining a high level of personal customer service. He is at the gym seven days a week and employs a small staff— many of whom have worked there for more than 10 years.

Barry’s vision is to a provide members with a simple, no frills gym experience (what Barry calls, “the old school”) that maintains some of the neighborhood feel of the garage gym that started it all. BJ’s House of Fitness does not have a website. Instead, Barry shares his passion for fitness by working out at the gym daily and writing motivational quotes on the walls in chalk. Barry’s passion is infectious and is frequently cited by members as their favorite part of belonging to BJ’s.

The past year, however, has brought a series of disruptive challenges that threaten the survival of BJ’s House of Fitness.

Barry’s landlord doubled the rent on the gym’s location, citing higher city property taxes, national brands moving into the Cherry Street business district, and gentrification in the neighborhood.

A national chain of fitness centers, Pump It! Gyms®, have opened a location three blocks from BJ’s House of Fitness. Their equipment and facilities are brand new and state-of-the-art. Pump It! has blanketed the neighborhood in marketing and promotional offers. Pump It! memberships cost $55 with a $34.99 joining fee and an annual “service” fee of $18.99. Late payment or denied credit cards incur a $120 billing fee.

Barry’s new sign-ups have been flat. He notices most of the new members are drawn from the affluent young professionals moving to the neighborhood. Comments from the newer members have been mostly negative: he has received complaints about cleanliness, broken equipment, and a lack of exercise class options. Barry has lost approximately 50 percent of new members since the start of the year and his online rating has fallen from 4.5 to 2.5 stars.

Barry has verbally encouraged his staff to clean better and engage in proactive customer service. Requests to his staff have not been followed up with training, written performance goals, or performance-based bonuses. Staff have responded with increased absenteeism and low morale. One longtime employee recently quit, citing the lack of pay raise and a higher cost of living in the neighborhood.

It has not been all bad news for Barry. The biggest local paper featured a glowing profile of BJ’s House of Fitness, including a professionally shot photo spread. The photographer, a neighborhood resident, has approached Barry about using the photographs for promotional materials. The newspaper profile also attracted the attention of a local documentary filmmaker, who wants to make a short film about Barry’s life as a bodybuilder and the quirky regulars at the gym.

Recently, Barry was approached by another national gym chain, 4 Minute Fitness, about rebranding BJ’s House of Fitness as a 4 Minute Fitness franchise location. Barry would have to pay hefty franchise fees and give 50 percent of revenue to 4 Minute Fitness. In exchange, 4 Minute Fitness can connect Barry to business financing and centralized billing and scheduling software to streamline his operation.

Nationally, U.S. economic growth has slowed, but the $27.6 billion gym and health club sector has continued to grow. The newly released Pittsburgh City Economic Report notes continuing population growth of 1.5 percent, fueled by young, college-educated workers moving to the city for its rising tech sector and low cost of living.

With his reserve funds rapidly draining from the increased rent, Barry fears he may have to close BJ’s House of Fitness unless changes are made, and fast.

1

Assignment 3: BJ's House of Fitness: A Business on the Ropes

Due Week 9 and worth 170 points.

Introduction

You have been learning about all the different tools you have to meet challenges and to both  manage and  make changes to improve your business. Now it is time to put it all together and make a plan to save an organization!

For this assignment, read  Case Study – BJ’s House of Fitness: A Business on the Ropes.

BJ’s House of Fitness is struggling—and may be in a fight for its very survival. Think about the challenges and changes the business is facing. What does it need to do to become competitive? How would you turn challenges into opportunities? It is up to you to find solutions!

Instructions

You will be developing and formatting your paper for this assignment without a template.

Describe the challenges the organization is going through.

Explain why the challenges are occurring.

Explain the approach you would use to find a solution.

Assess the following organizational aspects (address some of these in your response):

a. What aspects of the business are working?

b. What’s not working?

c. What are the organization’s goals and priorities?

i. Are they still valid or do they need to change?

d. Evaluate staff performance.

i. Is each individual pulling their weight?

ii. Does Barry need to hire or reduce staff?

iii. Does he need to train or retrain employees?

e. Evaluate available resources (people, time, money).

i. Does Barry need to reallocate resources?

ii. If yes, how?

Identify who you would ask for advice on this process and explain why.

Identify the opportunities in this situation.

Assess the situation and recommend changes you want to make at the organization. Are they in line with the organization’s values, mission, and vision?

Save your document as  FirstInitial_LastName_JGR300_ A3.

Submit your assignment using the Week 9 assignment link in Blackboard.

Course Connections

While completing this activity, be sure to  connect your responses to the course content you have learned so far. You should use specific phrases, ideas, and quotes from the  Strayer Story videos, Coach's Huddle, weekly readings, and/or discussion questions to explain and support your thoughts.

Assignment Requirements

Formatting

The length of the paper should be 3–5 pages.

This course requires the use of  Strayer Writing Standards (SWS). Check with your professor for any additional instructions.

Resources

Use a  minimum of three sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your activity. For help with research, writing, and citation, access the  library or review  library guides.

Wait! Before you submit your activity to Blackboard, did you …

Review the scoring guide?

· The scoring guide will give you a clear understanding of the activity’s expectations.

Check your activity for grammatical errors?

Review your answers for clarity?

Reach out to your instructor if you have any questions?

Scoring Guide Assignment 3: BJ's House of Fitness: A Business on the Ropes

Percentage of Course Grade: 17%.

1