Weight Watchers International Inc.: Strategic Analysis and Future Directions - Example

Weight Watchers International Inc. Strategic Analysis and future directions Introduction According to Weight Watchers International Inc. (2010), Weight Watchers International Inc. is the world’s leading organization that provides its clients with the most effective weight management services. It was the brainchild of Jean Nidetch and it was birthed in 1963 with the intention of uplifting the status of women in her neighbourhood through weight loss which would among other benefits boost their self-esteem and reduce the risk of weight related conditions. Jean Nidetch wanted to help women lose weight since obesity was a problem that had engulfed them for a long time. She employed the use of simple methods such as talk therapy, whereby she would hold sessions with a group of women in her home to discuss weight related issues. She also incorporated suitable food plans which they would follow in a bid to lose weight. Exercise was also epitome and so was a lifestyle change towards achieving a healthy weight and thus leading a more healthy and productive life. This company therefore started as a support group and eventually gained popularity and went ahead to form a network that touches up to thirty countries around the world. According to Weight Watchers (2010), up to 1.4 million members attend the weekly meetings that are held all over the world. Weight Watchers International was doing well over the years but 2009 saw to its decline as it did not appeal to the modern generations who considered it old fashioned. Prior to this, Weight Watchers International was a force to reckon with and had a large following that made it a multibillion dollar organisation. With the dwindling number of clients on their list and evidently a huge reduction in profits, Weight Watchers International embarked on a reinvention mission with the intention to redeem her lost glory (Shaver, 2005). Macro analysis Macro analysis or STEPLE includes the external factors that may affect a business’s productivity in one way or the other. Among these factors are the politics of the day, social, economic, environmental, legal and technological factors. External politics has not surfaced much in the running of the Weight Watchers International. The only politics that could have affected the running of this company in one way or another is internal. According to Brochstein (2009), the leadership at this company’s helms has changed hands since Jean’s reign and this has seen Heinz (HNZ) taking charge in 1978 and the Artal Group in 1999. This change of leadership comes with changes in the company’s running which involves both products and services. With this change of guard, it has moved from a service industry to a more complex one that includes products, all geared at countering the competition in the market. Social factors have also plagued the organization owing to crisis that has gripped its loyal clients. In a 2008 report by the company’s Chief Executive Officer and Director, David Kirchhoff, it was declared that the company’s sales had gone down, something he attributed to the Hurricane Katrina disaster and the 9/11 bombing attack in the US. Naturally, when people are faced with such calamities, they tend to get stressed over the issues and resign themselves to unhealthy lifestyles that include overindulgence mostly in food consumption. They therefore stop looking after themselves as they lose themselves to comfort eating. This impacts negatively on the products being sold by Weight Watchers International Inc since their market target is not interested. According to Kirchhoff, the sales took a dramatic nose dive out of these disasters. Economically, the world is undergoing a global recess that has reduced the profitability of many companies. Many have been forced to retrench their staff in an effort to downsize and thus cut costs to be able to remain afloat in this economic crisis. This has also impacted negatively on the production, advertising and marketing for Weight Watchers International Inc as the costs for running the organization have definitely increased. Weight Watchers International Inc. also continues to suffer from huge debts that they have accumulated over the years as well as from high borrowing costs. The company may still be safe from extinction but it is possible that its shareholders will have to bear the blunt. The company is therefore in dire need to restructure if it is to get back to its profitability, something that would not be practical right now owing to the fact that its wallet can not accommodate such moves. The company’s stock market value has decreased significantly leaving it with a weak capital structure that puts its net worth at a negative. According to Brochstein (2009), Weight Watchers International Inc’s liabilities stand at $481 million and her net worth at negative $194 million. This serves as a siren since if no immediate action is taken towards restrategizing to make it more profitable, then its future remains unstable. Environmental factors have also taken centre stage in the organisation’s camp as it battles the external factors that threaten to disrupt their commitment to helping people loose weight. The world has opened its doors to food abundance and many obesity cases are on the rise since people have unrestricted access to foods unlike the olden days when people ate when food was available. People have also become less and less active as comfort slips into their lives. People will step out of their houses into a car and drive to work. They will then take the lift to their office instead of taking the stairs and the same routine continues (Collins, 2007). People have again become too engrossed with their daily activities that they do not create time to eat right and exercise as regularly as they should. There is junk food readily available at the corner of every street and it always seems as the easier option. The only break people get from these activities is sitting in front of their television sets to catch up on the latest news or watch a movie. This has led to a massive number of obese people and thus increased health problems which require a drastic change in lifestyle according to Collins (2007). This has impacted negatively on Weight Watchers International Inc’s efforts to fight obesity. Technology has become an important tool for business in the 21st century, and Weight Watchers International Inc. has not been left out. It has a website known as the weightwatchers.com where it gives detailed information on how to manage weight. This makes the company’s products accessible to a larger market and indeed brings the company to peoples reach either at the office or at home. This move has also contributed much to the company’s marketing plan since the brand’s awareness has been increased (MSN Money, 2010). This site came to be in 2009 and presented internet users with two choices: Weight Watchers eTools and Weight Watchers Online. The two tools enabled the organisation to become a leading online weight management services provider. The company also took to television advertising which boosted their marketing and sales department considerably. The awareness campaign was all it needed to rank it higher and open up its doors to even more consumers around the world. Weight Watchers International Inc made another leap when they launched another internet based site for men looking at cutting down on their weight. This increased their market base and this prompted the company to provide more information on weight loss on these internet sites. They were thus able to provide their clients with online fitness videos, the weight watchers plan, weight loss tools, and a messaging board where users would post their comments, questions and recommendations (Gower, 2004). Weight Watchers International Inc also availed its clients with a list of recommended healthy foods, recipes, personal weight trackers and restaurant guides which met its clients needs as well as quenching their thirst on issues they required clarifications. In the long run, the company had achieved its objective of providing their information on weight loss to a larger audience and venture into territories where they had not set up office (Weight Watchers International, Inc. 2010). The organisation has not been immune to legal issues the most prominent one being against a Jenny Craig Inc. which took up a false campaign against the giant company. This company embarks on a mission to compare and contrast its products with those of Weight watchers thereby attempting to mislead the consumer. This misleading information has been declared blatant and the CEO, Mr. Kirchhoff has assured his clients of continued quality services and products despite the negative publicity posed by their competitor (Weight watchers International, Inc. 2010). Industry Analysis Weight Watchers International Inc. is a company that was set up with the idea of helping people loose weight. Over the years, obesity has been a demon that most of the civilised world has been fighting with little success. The number of people with weight related issues has sky rocketed and this is a great threat to their wellbeing owing to the major health risks presented by obesity. The organisation’s approach was spot on in the early years of its launch since there was less competition in the industry then and people were very receptive to the idea. This is the major reason why it was high roller among other giant industries of the time and the fact that it was deeply entrenched made its chances for survival even higher, something that attributed to her humongous profits (Weight Watchers International Inc, 2010). The factors that made Weight Watchers International Inc. successful included its appeal occasioned by the fact that it started as a women’s support group. This created trust in the people and the weight loss endeavours were also in sync with many people. It was the only one in this sector and the originality of this idea plus the well choreographed benefits of weight loss that were passed to the numbers made it stand out. The other thing that made weight watchers a success was the fact that obesity had already taken root in many homesteads of the world (Nidetch Et al. 1979). This broadened their market since their products were on high demand to meet the soaring needs of the people. However with changing times, competition has gripped the market and monopoly is now a thing of the past. There have been new entrants in the market and the Weight Watchers International has been forced to make changes to her operational plan in an attempt to stay afloat. The profitability was also not spared since competition meant that there were other entrants who offered better prices or even better products and this impacted negatively on the company (Nidetch Et al. 1979). Some of the factors that led to the decline of Weight Watchers’ profits also included fad diets which appealed more to the new generations thus decreasing their market base. Another factor that led to its declined profits was a decline in their sales due to ineffective advertising and marketing strategies which definitely called for reinvention. With time, there was a great need to modify their products and services in an effort to boost their relevance in the market that was succumbing to rivalry from other companies trading in their line (Business Wire, 2007). To generate a modern appeal and woe the new generation, Weight Watchers had to become more creative with their products and ensure that they were more effective to wad off the suffocating competition they faced according to Schrange (2003). Failure to do so, the weight watchers company would be faced with impairment which would be detrimental to their existence. Other issues such as buyer power and substitutability were also major concerns for the Weight Watchers International Inc. supplier power also had to come under scrutiny as they had to conform to the changing market trends or risk loosing out in the lucrative industry. New entrants in the industry were a threat that the company faced after many years of a monopoly that it had created. Rival companies such as Jenny Craig, Life Time Fitness, Slim Fast, NutriSystem, eDiets and Town Sports among others made a debut in the market threatening, thus prompting Weight Watchers to up their game or lose out. However, Weight Watchers is a veteran company having been in existence since 1968 and this makes it stand the test of time. This is due to the fact that it has already made a name for itself and people trust it out of its satisfactory results. This therefore makes the threat of new companies low in the sense that it will take them time to cultivate loyalty and trust in the consumers (Business Wire, 2007). Buyer power has been another factor that has impacted on the industry analysis since when buyers are offered a variety; they are exposed to choice which may prompt different companies to adjust their prices to beat the competition. The methods adopted by the weight watchers towards weight loss are more on behavioural change than in dieting pills. Some consumers may view exercise and diet as hard work and therefore opt for the easy pill that promises them of weight loss. However, these pills come with their side effects and sometimes it is so expensive to experiment. This prompts weight watchers consumers to stick with them out of the positive results they have achieved in the past (PR Newswire, 2006). The Weight Watchers needs not worry about the suppliers bargaining power since it is the suppliers that look for them. They need the company to endorse their products and so this company ends up making more money from the suppliers. These are thereby the many reasons why Weight Watchers International Inc had to restrategise in order to fit in the 21st century while at the same time retaining its original mission and vision on weight loss and related matters. This was however a contentious issue as to whether the company would be able to stand the absolute test of time which was remaining true to self while embracing the inevitable change (Eisner, 2009). Internal analysis According to Rynecki et al. (2004), an internal analysis encompasses a company’s resources that are necessary for the evaluation of the strategies to be put in place in order to redeem it. It also involves the company’s capabilities to create value thus becoming more profitable. Depending on the company’s assets, it becomes easier to evaluate its potential to rise to greater heights in the context of advancing the skills available and developing it to a desired level that will allow it to contest in an equal or higher competition presented by its rivals in the industry. Weight Watchers International Inc. is rich in terms of physical resources as well as services, products, technology and information wise. These assets give this company the potential to redeem itself to glory and reclaim its stand as the leading company in the world in matters of weight management. The business model for the company has worked exceptionally well owing to its low expenditure as compared to other companies. Weight Watchers International gets its revenue from the fees paid by members who attend its meetings which are called on a weekly basis. This has taken the burden off the managements shoulder and this ha translated into high profits. Another source of revenue for this company has been proceeds got from the sale of its products and services which include cookbooks and bars. Other sources of revenue have been the online sites which have generated many visitors to the websites seeking to know more about their products as well as from internet subscriptions. The company has also got revenue from licences in instances where their logo has been used in products that are affiliated to them. They have also got revenue from the franchises they have given out to various organisations around the world that pay a total of 10% in royalty fees (Shaver, 2005). The driving force for this company is picking on a near perfect business model that is bound to be in business for along time. People will have to overeat at a point according to McQuilling (USB, 2010) and they will need to loose this weight they have gained. There is also a wide picture that does its rounds in the world depicting a certain body size as the ideal and teenagers will definitely follow their schedules to fit in that picture flame. All in all, obesity comes with its limitations which no one would love to live with and this is another reason to lose weight. It is attributed to be one of the leading causes of premature deaths around the world owing to heart defects, diabetes and depression among other conditions. Weight Watchers’ presence in over 30 countries of the world shows its expansive wealth and the ability to employ effective strategies which will translate into profits. The weight watchers company also boasts of a strong online presence that assures it of growing numbers of online traffic to its site which is a plus for any enterprise. The organisation has a wealthy reputation owing to the fact it has been in the industry for many years now and thus has managed to gain the clients’ trust. Being the first weight loss company ever and having created a solid foundation as a support group, this company has the potential to flourish and rise above the competition from emerging companies. The flexibility of this company has also contributed to its growth by holding meetings anywhere thus making it convenient for many members. The workplace has not been left out of thanks to its ‘Weight Watchers at Work Program’ which caters for a large number of the corporate world conveniently. The weight watchers International inc. is a respected brand and more of a household name and this makes it sell. The methods this company recommends in the weight loss process are friendly and innovative and this has also kept it going. Innovative marketing has helped further in repackaging the company into what is appealing to the 21st century and this has improved much on its efficacy. New products have also been launched and this ensures that the customers are kept hooked on the new innovations which give them more value. The company has also embarked on a worthy project of increasing its data base through embracing technology and widening its advertisement scope to reach a broader market. The weight watchers international inc. has been proved to be credible and effective by their loyal customers who have passed this to their families and friends. The methods it recommends on weight loss are effective and safe and this has reflected positively on its growing numbers of clients. The company has also taken time to dispel myths around the meetings like in a case where one woman likened it to Alcoholic Anonymous which she said bothered her is she was to announce her weight to the crowd (Weight Watchers Inc, 2007). Strategic issues for Weight Watchers International Inc. In its quest to grow, the weight watchers international inc. has not been short of challenges. The main issue that the company faced was competition from other weight management companies such as Jenny Craig, NutriSystem, eDiets, Lifetime Fitness Inc. and Slim Fast among others. Since initially its weight loss methods were more focused on lifestyle change, its clients became experimental with the slimming and weight loss pills supplied by other weight management companies. They argued that lifestyle change was sometimes a lot of hard work and the results were not felt fast enough (Business Wire, 2007). Weight Watchers did not have much choice and had to conform or risk losing to their rivals. That is why they came up with a more flexible program that was known as the “1, 2, 3 Success” program which offered its clients a variety of healthy foods. To ensure that the weight loss idea was not thrown out of the window, they ensured that their consumers did not exceed the recommended consumption which would throw them back to weight gain. This plan worked wonderfully well and this saw an increase of the number of members around the world and the profits went up as well. Their idea of hiring Sarah Ferguson (former Duchess of York) as its spokesperson also attributed to the company’s return to profitability. Another strategy issue that gripped this world giant was a law suit that was filed against it in 1993 by the Federal Trade Commission who cited the company’s advertisements as misleading. This negative publicity threatened the company’s stability and though the suit was settled later with the company being given a clean bill of health, the damage had already been done and its membership dropped by 20%. In an effort to get back on its feet and woe back its consumers, the weight watchers bettered their approach and came up with more strategic measures. These measure included rebates from insurance companies for the weight watchers members as well as the introduction of a male focused diet plan since men had been sidelined all along by the diet companies. This strategy worked well for this company and the profits skyrocketed once more since their market base increased and it also managed to win its clients’ confidence once more (Reference for Business, 2010). Future directions for the Weight Watchers International Inc. From the study and research I have carried out on Weight Watchers International, it is much evident that it is the world’s most trusted weight management company. This has been attributed to its being the first one ever in this industry and growing through the years maintaining its mission and vision without loosing its identity. It is a brand name that is well respected and widely recognised thanks to its efforts to remain relevant in an industry that is very dynamic. For the company to keep growing, it is important to ensure that it appeals to the young generation as well who also have weight issues. For instance, out of ten school-going children in the United Kingdom three are obese. Looking at the weight watchers initial set up, it catered strictly for older women only. Opening it up to accommodate the younger generations is therefore vital as it will also broaden their target market. Ensuring that they set up office in other countries of the world is also recommended. Currently, this company is in 30 countries and spreading further would translate to more profits for the company and in the process be able to help many people out there who are struggling with obesity. Diversification of the business is another recommendation which may include healthcare for its members. This way, the business will have a longer life due to variety and in future the business will sure be more successful. Having new managers on board is also a great idea as they are bound to inject new ideas and innovations into the company. Looking at Weight Watchers, the change of guard in its helms has taken the company to greater heights and opened it up to more skilled people who have definitely given it a new lease of life. Its business strategy is definitely one of the best as it has allowed for flexibility thus opening it up to many people around the world. Over the years, the weight watchers company has found itself in the hands of a highly dedicated management and staff and clearly Jean Nidetch legacy has lived through. The Weight Watchers Company has taken upon itself to diversify in order to have an edge in the market and this has worked tremendously well (Shavers, 2005). The inclusion of men in their diet programs has been one strategy that has given it an international gender sensitive appeal not forgetting its decision to open a camp for obese children where they would be taken through the weight loss programs during their summer holidays (Reference for business, 2010). These are some of the incentives that have made this company’s strategies effective. Another strategy that has scored for this company is its insistence on a change of lifestyle as a way of weight management. According to Sunoo (1997), a change in lifestyle has helped much and the use of medications that never fail to come with their limitations has been curbed. Lifestyle changes such as inclusion of exercise and a healthy diet is definitely side effects free and this is a plus for the weight watchers international inc. the company’s CEO, Mr. Kirchhoff feels that his company is succeeding in “teaching people how to fish” and this is a huge step in making people take responsibility of their own well being through change of behaviour. Through all its programs, the weight watchers international inc. has encouraged its consumers to consume diets that are low in fat and with high fibre content. This company does not go for fads and this makes it an all time company since the same old trusted brands and methods remain in place. This way, it has managed to retain a name as the company with the most effective and credible weight management solutions (Choe, 2010). For the weight watchers to embrace technology is a plus and an incentive that should continue. ECommerce has taken the world by storm and it is important to stay linked with the growing world of technology. Through the internet, this company will be better placed to acquire new markets even Inc countries where they have not set up office. They will also be able to respond promptly to their consumers concerns and provide a friendly interface that will keep them in contact with them. This way, business ties will become more pronounced and profits will be boosted considerably (Schrange, 2003). For the Weight Watchers International Inc. to put up a call centre is pure genius and they show their customers that they care and they are indeed reachable. This has given the company a face and this is something that must continue. There is nothing as satisfying as speaking to a customer care representative who sorts out all your concerns across distances. This way, the clients feel connected and safe to use the products knowing that if they have any issues the professionals are just a phone call away. Weight Watchers’ meetings with their members which happen weekly are another appealing part of this company. Many companies fail in the sense that they do not create time to link up with their clients and discuss their concerns. These in-person meetings build confidence in the consumers and the company is able to take care of them better in terms of products and services. Other incentives that give this company an edge include its innovative programs such as the Turn Around, the Weight Watchers at Work, the Monthly Pass and the Weight Watchers for Men. This way, the company has been able to incorporate everyone in their plan and this has left them with satisfied customers of all age and gender. It would also be recommendable for the weight watchers company to remain true to their goals without loosing to the upcoming weight loss trends that are being embraced by other weight management companies. This is however quite a task and we can all hope that they will be able to continue innovating new products and services without losing their international appeal. References Eisner, A. (2009). Weight Watchers International. Pace University. Weight Watchers International Inc. (2010). Company overview. Brochstein, A. (2009). Weight watchers international: Time for the company to go on a debt diet? Weight watchers research dept. (2010). Creating a healthy weight environment. Weight Watchers Australia and New Zealand. PR Newswire. (2010). United business media. Weight watchers sue Jenny Craig over advertising. (Online) http://www.prnewswire.com/news-releases/weight-watchers-sues-jenny-craig-over-deceptive-advertising-82058572.html (Accessed 28th June 2010.) Reference of Business. (2010). Weight Watchers International Inc.Encyclopaedia of Business, 2nd Ed. Weight watchers international inc. Form 10-K, Annual Report. MSN Money. Weight Watchers International Inc. Business Wire. (2007). BullMarket.com offers investment opinions on companies in the weight loss and fitness industries. Weight Watchers Inc. (2007). Event brief of Q2 2007. Earnings conference call – Final. Fair disclosure wire. (Quarterly earnings reports). Nidetch. J. Et al. (1979). The story of Weight Watchers. Penguine Group, 1979. Schrange, M. (2003). The weight of Innovation. Technology Review. February 2003, P. 21. Choe. (2010). Weight Watchers attractive figures. Sunoo, B. (1997). Changing behaviour at weight watchers. Workforce. Pp. 27-29. Gower, T. (2004). Medicine: Healthy Man: Exercise without dieting – It’s a losing battle; guys tend to hit the gym to lose excess pounds, even though cutting calories may be the more efficient way. Los Angeles Times (Home Edition). p. F3. Hogan, M. (2006). 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