Crunch Case Study - Recommendations

Crunch Case Study

Levine's entrepreneurial skills have been on the taste right from inception of 'Crunch'. The need for the shift in trend was always foreseen by Levine. The transition in business model, from ' women bring men' and 'group exercise model on aerobics' to foray into pure Gym business by acquisition and promoting the Gym with 'No Judgements' philosophy, has been very smooth. The innovation, that Gym was not a place only for either 'muscle building' or attaining 'Barbie' shape, made the users free from intimidation/embarrassment of not being in the best of physical shape. 'Crunch' became a place where one would not feel self-conscious or bother about others' thinking. It could position itself as an 'entertainment destination with a purpose' and differentiated itself from its competitors.

Further, Levine's business acumen could extend the visibility of 'Crunch' brand beyond the Gym locations through sports apparel from famous stores and increased its revenue too. The shift from pay-per-use to membership-based system helped the firm to generate revenue beforehand and help expansion at new locations loaded with equipments.

'Crunch' had been a company which emphasized 'learning by doing'. The approach succeeded for quite some time based on the extra-ordinary capabilities of Levine. This entailed involvement of Levine at all levels. Almost all executives relied on Levine for almost any issue that company faced. However, with the growth opportunities hovering around, 'Crunch' needs to take immediate steps.

SWOT analysis of the firm points out the following:

* While leadership of Levine is strength, his functioning style is inhibiting the growth of second line. The President hired from outside could not fit because of the informal reporting culture. A new organizational structure with clear roles, may be with the help of a consultant, needs to be put in place.

* The acquisition of SportsLife does not appear to be a fit case for reasons given below:

 The suburban profile of SportsLife used to have flavor for sports facilities around Gyms, not a culture in Crunch. The demographic setup of members being older in SportsLife, perhaps the centrality of business model is not the Gym. This reflects in the 30% retention rate.

 Crunch may have to tweak its irreverent environment to a formal one, a cultural shift that may not be welcomed by the current workforce of Crunch.

 Standard billing practice of Crunch may not find takers leading to further turnover.

 Despite generating $17 mio revenue, SportsLife is in red, most likely due to non-recovery