Case Study Analysis: The Flip Factory Inc. (Flip Factory) Success Story

Critical Issues

Flip Factory Inc. is the brainchild of Darlene Traviss who sought to present a new approach to the fitness business. The facility’s primary focus was ensuring that it introduced a wide range of activities to toddlers, the youth and adults alike without any party feeling left out. Transferring the facility from the inner city church hall in which it was housed and into an industrial park in Calgary contributed to the evolution that was soon witnessed. Traviss now had a unique opportunity to develop and transform a facility to cater for the high numbers of individuals showing interest in gymnastics across Canada. Nonetheless, it is worth acknowledging that Flip Factory Inc. is grappling with a number of critical challenges that need to be addressed promptly to secure its position in a competitive market. Chief among the concerns raised are;

  1. How to deal with a competitive market environment, especially when more than 12 gymnastic clubs have recently been registered to operate in Calgary.
  2. How to diversify the activities carried out by the coaches to keep them involved in the program while utilizing their extensive expertise.
  3. How to make Flip Factory Inc. self-sufficient which would ultimately contribute to the company’s long-term development goals.
  4. How to approach the impending lease expiration and whether or not he should continue with her $10,000 a month facility.

Situation Analysis

Flip Factory Inc.’s meteoric rise has been largely attributed to its founder, Darlene Traviss and her passion for physical fitness. As an avid gymnast, she was prepared to dedicate her life to making her dream a reality while reaching thousands of Canadians living in remote areas. The essence of providing these facilities is to ensure that individuals take part in quality programs using state of the art facilities while being instructed by experts with a proven track record. Moreover, the facility seeks to make these programs accessible to all its members without placing any restrictions on persons based on their body type or fitness level. It was this particular approach that has largely been hailed as the reason its past successes since regular individuals experienced a sense of appreciation. The firm’s expansion as a business meant that its part-time staff had to be supplemented to ensure that members received quality services as expected. A large majority of its members are quite appreciative of this approach and have even claimed that it’s part of the reason why they have always decided to stick by the facility. Similarly, Traviss has made it her life’s work to ensure that every single individual is treated with respect while developing interpersonal relationships with regular clients. The facility ends up being a second home for its members, which would, later on, go a long way in making certain that it would reap these cumulative benefits.  The most recent move from the inner-city church hall to an industrial park in Calgary has also been cited as a reason for the success experienced by the firm. An expansion of facility meant that the Flip Factory Inc. could now accommodate more members with an opportunity to experience an assortment of activities. The firm boasts of an impressive 1,500 as the number for its on-site weekly attendance1. It is, however, important to acknowledge that these developments have taken place at a time when the company has been grappling with the best way to deal with its growing staff, finances and a possible expansion.

Decision Criteria

Flip Factory Inc. is at a critical point in its development and subsequent morphing into a household name. Any decision made during this stage will ultimately have a massive impact on its standing in the market and whether or not it survives the changes that characterize its environment. It is therefore crucial that all decisions be made after a thorough assessment of all variables present in the case and the overall benefit that they would have on the firm. Flip Factory Inc. needs to quickly figure out how to raise money for contingency purposes which is why all decisions need to focus on improving its revenue base. An increase in profits would mean that the company would have sufficient funds to take care of its operational needs. It’s most recent success is a precursor to its spread and permeation across Canada, bringing their services closer to those requiring them. It is therefore noteworthy to point out that decisions made should take into account the vibrant clientele that is closely attached to the brand in an effort to ensure that that they are also taken into account. Such a move would go on to assure the chief executive of the unfailing loyalty that they would enjoy from these individuals, in addition to experiencing a steady rise in their numbers. The following is a list of viable options that Flip Factory Inc. can explore to aid it in improving its position:

  • Develop a sustainable strategy where the firm carries operates within its means.
  • Maintain the prevailing quality levels while ensuring that staff members in the facility seek to develop a rapport with the existing members.
  • Carrying out a rigorous marketing campaign that aims to attract more members to the facility while still retaining existing members.
  • Keeping the highly skilled coaches completely occupied with a series of technical exercise programs to ensure that they make good use of their expertise.
  • Carrying out a cost-benefit analysis to determine whether the company would be better off purchasing property to house their facility or depending on their leased industrial complex.

Option Analysis

Option 1: Creating new Challenges for the Coaching Staff

One of the distinctive features of Flip Factory Inc. is in the individuals that are included as part of its coaching staff.  To make certain that only the crème de la crème was hired, the company undertook an intensive search for the best individuals to fill these positions. Moreover, it was also keen on establishing its global footprint and the main reason why persons outside of Canada were invited to apply for these jobs. Nevertheless, this high-level of expertise is bound to become the company’s Achilles heel. Coaches and trainers of such a high caliber present an existential challenge since they will be instructing individuals with low fitness levels. It is therefore quite likely that their drive and momentum may be soon depleted since they may feel that they are not unleashing their full potential. The easiest way to deal with this problem would be to introduce new challenges for the coaching staff, thus enabling them to retain an energetic team capable of serving their clientele.

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Option 2: Expanding the Business to a New Location

Over the past five years, Flip Factory Inc. has developed from its initial start-up status to a world-renowned brand that commands respect in a competitive market.   The company’s break came as a result of the great move that had been made from the inner-city church to a new location at the industrial park. A majority of the loyal members preferred this new location as it was easily accessible from their neighborhoods, making it quite easy for them to attend their sessions regularly. The inner-city environment had presented a wide range of operational complexities for the firm. Firstly, the hall was also used by other societies which meant that the equipment had to be disassembled after every session. Staff members would often have a difficult time with the equipment that ate at their precious time. The new location at the industrial park had ample space (6,000 square feet) that could handle an exponential increase in members2. It was for this same reason that the facility has experienced an increase in revenue from $ 185, 750 to $786, 503 in a span of three years3. Expanding the facility is a viable option that may soon enable it to set up shop in new locations while expanding its profit margin in the process. Additionally, existing members can be advised to visit these new locations and invite others who would like to have a similar experience.

Option 3: Conducting an Aggressive Marketing Campaign

            For the longest time, Flip Factory Inc. had reigned supreme in its class. The company owes its success to the revolutionary business model developed by Traviss. The general idea was to open a fitness center that provided professional coaching to ordinary individuals. It was not long before throngs of fitness enthusiast from all walks of life became regulars at the center. The center had to transform its entire staffing capacity to deal with the masses that now made it a ritual to attend sessions in the area. A consequence of this success has been the mushrooming of other fitness centers seeking to ape this novel business model. Altadore Gymnastics Club, Breathe Parkour, Calgary Gymnastics Center, Gymboree and Gymnastics Gym Club are all competing with Flip Factory Inc. for clients within Calgary4. A marketing campaign would go a long way in encouraging undecided subscribers to join Flip Factory Inc. and achieve their fitness goals. A paradigm shift involving the use of social media is one way in which the company can make good its efforts while spreading its influence in online platforms. Facebook, Twitter, WhatsApp, and Instagram are just but a few examples of platforms where information about the facility can be disseminated to a larger audience. This can be done by creating a marketing department dedicated solely to coordinating such efforts. Select models and start gymnasts are an invaluable asset that can be put to use during this campaign.

Option 4: Buying Property Instead of Leasing

One of the hardest decisions that the company has to make is in deciding whether to renew their lease at the industrial park or going ahead and making appropriate plans to purchase property to house the facility. These concerns have been brought forth due to the high cost of the present day location and how it would turn out being an expensive venture in the long run. The company has to part with an equivalent of $10,000 every month, which does not include other expenses that may be incurred during the course of the month. Purchasing a piece of property has been viewed as a feasible option that can aid the company saves a substantial amount of money.

Recommendations

Flip Factory Inc. should proceed with the fourth option since more benefits would accrue from applying this strategy in comparison to those mentioned earlier.  The company is walking a tightrope with regard to its position in the competitive fitness market and has to institute major shifts in operation if it is to remain at the top.   Altadore Gymnastics Club, Breathe Parkour, Calgary Gymnastics Center, Gymboree and Gymnastics Gym Club are all steady working towards dethroning Flip Factory Inc. hence the need for urgency. A feasible option, in this case, is to ensure that the company’s kitty is always full to enable it to cater to its expenses while providing exceptional services to the clients. Over the past three years, expenses by fitness center have shot from a previous $97,250 to $767,953 5. This is a dangerous trend that is capable of bankrupting the facility in the near future. A precautionary measure would therefore be to cut the money spent on the lease by purchasing property to house the facility. It is evident that a large chunk of the revenue made ends up being spent to pay for location and in making routine renovations.  Putting a lid on this behavior is an important step towards independence and ensuring that money is saved for use in the near future. Purchasing property would be the best option for Flip Factory Inc. since it will be the first step that will set other plans in motion. Revenue saved would be put into development projects with the aim of expanding the business and opening new facilities in Canada and around the world.

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