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Assess the likely importance of factors that may limit the success of 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 factors that may limit the success of 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 factors that may limit the success of 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’s expansion overseas
Answer
Pure Gym faces several limitations when considering expansion into emerging markets. Key factors include:
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Market Appropriateness: Evaluating each country's market potential is crucial. Factors such as disposable incomes, infrastructure, skills, and business practices can significantly impact viability.
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Cultural Differences: Preferences and cultural norms may vary, which can affect brand reception. For instance, Spanish may be necessary for marketing in Latin American countries, adding complexity to communication and branding efforts.
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Staffing Issues: Hiring qualified staff may pose challenges in different regions. Inadequate availability of skilled personnel can hinder operations and affect service standards.
Step 2
Operational Challenges in Emerging Markets
Answer
The operational challenges include:
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Cost and Investment: Initial investments may be high to set up facilities that meet the expectations of local consumers, possibly limiting profitability at the outset.
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Limited Workforce: The fitness sector might have a constraint on available experienced staff, particularly in areas where the fitness culture is not fully established.
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Political and Economic Stability: Countries like Nigeria may pose risks due to their political instability, which could deter investment.
Step 3
Counterbalancing Advantages
Answer
Despite these challenges, there are potential counterbalances:
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Low-Cost Model Appeal: Pure Gym’s low-cost model, attracting members with affordable prices, could appeal to emerging market consumers who seek cheaper alternatives in fitness.
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Global Fitness Trends: The growing global interest in fitness could lead to more demand for gym memberships. Pure Gym could tap into this trend by establishing brand recognition as an affordable fitness option.
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Partnership Opportunities: Forming partnerships with local entities can help navigate cultural and operational challenges. Collaborating with established businesses in these markets could facilitate easier entry.
Step 4
Conclusion
Answer
In summary, while several limitations could hinder Pure Gym’s success in emerging markets, a strong market entry strategy emphasizing local partnerships and cultural sensitivity can mitigate these challenges. Moreover, the overall global trend towards fitness presents significant opportunities if approached with informed strategies.