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Assess the likely importance of these factors to Pure Gym's expansion into emerging markets, such as those in Asia, South America or Africa. - Edexcel - A-Level Business - Question 2 - 2017 - Paper 3
Question 2
Assess the likely importance of these factors to Pure Gym's expansion into emerging markets, such as those in Asia, South America or Africa.
Worked Solution & Example Answer:Assess the likely importance of these factors to Pure Gym's expansion into emerging markets, such as those in Asia, South America or Africa. - Edexcel - A-Level Business - Question 2 - 2017 - Paper 3
Step 1
Limitations to Pure Gym expanding overseas/offshoring
Answer
Pure Gym's expansion into new markets is likely limited by several factors, including the appropriateness of each country as a market. Key considerations are the level of disposable income, infrastructure, skills availability, and local consumer behavior. For instance, since Pure Gym operates on a low-cost model with monthly charges around £25, it may face challenges in appealing to markets where citizens have lower disposable income, affecting membership uptake compared to more established brands like Virgin Active.
Furthermore, cultural differences and local preferences might complicate branding and promotion efforts. Members often prefer familiar workout environments with established cultural norms. In many South American countries, for example, language barriers may pose challenges in marketing and member interactions, which could limit effectiveness.
Operational difficulties could also arise, including the availability of trained staff and the costs associated with establishing operations in these new territories.
Step 2
Potential counterbalance
Answer
Despite these limitations, there are beneficial strategies that Pure Gym could explore. A joint venture with a local fitness company in markets like Peru might facilitate initial entry by leveraging local knowledge of consumer preferences and operational challenges. This could help mitigate barriers linked to cultural differences, ensuring that fitness offerings are suitably tailored.
Furthermore, the flexibility of staffing, with staff roles being potentially limited to two employees initially, might assist in managing operational costs while still providing personal training services, which are globally recognized.
Step 3
Possible judgement
Answer
Ultimately, the fitness industry operates under globally recognized standards. While there may be cultural and regional variations in preferences, the core offerings—like free weights and general gym amenities—tend to be consistent. Therefore, it is likely that by aligning their strategies with local expectations, Pure Gym could minimize constraints and achieve successful market penetration in emerging economies.