Airheads Business Analysis Essay

34233 Words Feb 5th, 2013 137 Pages
Strategic Analysis Project
Airheads Trampoline Arena

26th July 2012

Table of contents

Executive Summary 7

EXTERNAL ANALYSIS
Introduction 9
Family Entertainment Center Industry 9
Market Size 9
Sales Growth 10
Stages of Industry Life Cycle 11
Trend 12
Key Competitors 12
Pest Analysis 13
Exhibit 1: Factors of the PEST Analysis 14
Political and Legal Factors 14
Economic Factors 16
Socio-Cultural Factors 20
Technological Factors 21
PEST Analysis Conclusion 22
Porter’s Five Forces 24
Threat of New Entrants 24
Exhibit 2: Barriers to Entry Checklist 24
New Entrants Conclusion
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Therefore, the company began the process of trying to further increase repeat business and develop brand loyalty. The owners felt this strategy would secure funding that could be used for their plans to expand the business by increasing the number of locations.

An external analysis, which consisted of a Porter’s Five Forces and a PEST analysis, revealed opportunities and threats within Airheads’ industry environment. The FEC industry has been shown to be declining. This decline can be partially attributed to the growing threat of home consoles as a substitute and an overall lack of technological innovations. However, opportunity lies in a rise in consumer spending and personal disposable income. The chances of customers spending money to entertain their families increase as firms provide safe and convenient locations that have diverse offerings. Furthermore, establishing customer loyalty plays a pertinent role in determining continued success.

The internal analysis indicated the strengths and weaknesses that Airheads possesses and how well its resources and capabilities are being utilized. Financially, the company is more profitable on average than the industry, despite having a decrease in revenues. However, its working capital decreased significantly from 2010 to 2011, and its labor expense as a percentage of sales grew during that time frame. Airheads’ focus on safety, via its protective gear and

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