Case Study: Gli Sport Real Estate
This case study will explore the development of an Australian Real Estate Investment Trust (A-REIT) focusing on multipurpose through the utilisation of its core competencies in construction expertise and operation business model. The business will be called “Gli Sport” which maximises financial returns on owned commercial space through “modeled” standard operations and innovative designs of multipurpose sporting facilities. Gli Sport will operate out of owned premises to secure asset protection and risk management (Nourse & Roulac, 1993; Samson, 2018).
The problem faced by Gli Sport is the current market perception of squash. Historically, squash enjoyed high levels of participation which, over a period of time, has declined due to a demographic shift in perception of the sport. Rekindling the interest and participation of the sport requires an overhaul of squash facilities with new building and operation innovations. The revised facilities will not be limited to squash but other sports and allied services.
Gli Sport’s operational model competes in the sport and recreation sector; its key product services are time-efficient multiple sports/exercise offerings, social engagement, encompassing, a sense of belonging in one facility (DSR, 2019). Its innovative construction methods optimise creative designs with removable walls which allow for multi-use sporting venues. The combination of the operational business model and innovative construction methods allows them an advantage to capitalise in the sports marketplace and optimise floor space for greater returns on investment (Porter & Stern, 2001).
Gli Sport’s operational business model serves customers wanting time-efficient sport/training, alongside social engagement (Pretty, Bishop, Fisher & Sonn, 2007). Operationally we target three key areas;
- Sport-specific strength and conditioning.
- Time-efficient sports.
- Social engagement/sense of belonging.
These three integral components enable the delivery of this customer service core capability to meet customer needs (Magretta, 2011).
Contents of document:
Section A: SWOT analysis on Gli Sport.
Section B: Gli Sport’s two core competencies.
- Operational business model.
- Sport-specific strength and endurance conditioning
- Social engagement and sense of belonging.
- Time-efficient exercise/sports
- Innovative construction.
Section C: Business differential strategy in Real Estate.
Section D: Management.
Section E: Conclusion and Evaluation.
Section A: Gli Sports SWOT analysis (Dyson, 2004).
Strengths
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Weakness
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Opportunities
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Threats
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Section B: Gli Sport core capabilities
- Operating business model. The operational model is broken down into three integral components which form one core capability.
- Sport-specific strength and endurance conditioning
Specific sports conditioning explicitly targets strength and endurance athletes, which include a variety of sports such as AFL, netball, basketball, tennis, golf, and squash. In 2018 of the sports identified to grow revenues globally (Dellea, 2018), seven out of the ten sports were within the unique category of strength/endurance sports. Presently, this market is inadequately serviced, partially due to gyms’ operational business models not being structured to offer the specialised services needed, and from the limited available qualified instructors (The Telegraph, 2019).
The selection and development of staff are crucial and will be from athletes who have current or past successful sporting backgrounds and completed a Certificate IV in Strength and Conditioning (Wright, Dunford & Snell, 2001). They will also have not previously worked for other employers in strength and conditioning. This process of selection allows us to train staff using Gli Sport methods without interference, ensuring standards are met so we continue to add value to customers through staff (Mindtools, 2019; MMU, 2019; Wang, Jaw, Tsai, 2012).
Building, maintaining, and nurturing the knowledge base effectively are critical to remaining competitive (Leonard, 1995). Staff and management will meet regularly on new training methodologies to ensure clarity of methods. Each team member will need to complete a minimum of one session per week in the gym themselves outside their instruction classes and will be rewarded for meeting standards through sponsorship, which may include equipment or sporting fees paid (Root, 2001).
To enhance Gli’s reputation for quality customer care and specific sports outcomes, it will use quality sports-specific training techniques. Sports-specific training not only enhances performance but limits injuries (Gambetta, 2007).
Ergonomic aspirations for Gli will be met through the innovative use of space. The use of compound and agility-based exercises allows for economic implementation, due to the limited use of large equipment (Barney, 1986; Choi, 2019). Sessions will be intense and time-efficient (Coyle, 2005), enabling the ability to use space effectively, which meets the strategic plan of maximising space in a commercial environment for a higher return.
- Social engagement and sense of belonging.
With the increase of consumer behaviour in the use of gaming sports and technology/smartphones, consumers are losing the social engagement and sense of belonging that sporting clubs can deliver (Dellea, 2018; DSR, 2019). Alongside this sociological phenomenon, society’s hunger for entertainment is evident in the rise of Netflix and Stan, but this is to the detriment of society (Shah, Schmierbach, Hawkins, Espino & Donavan, 2002).
To meet this significant customer need, the creation of an environment/atmosphere that is socially engaging, community-focused, and provides a sense of belonging, begins in the design of the facility (Prahalad & Hamel, 1990). Gli designs will be creative to encourage positivity and deliver entertainment through sports played.
The recruitment and development of staff are also an integral component and begin at the recruitment stage (Wang, Jaw, Tsai, 2012). Staff will be sourced from a sporting background and possess the necessary personal traits needed to deliver this environment (Harrison Assessments, 2019; Wright, Dunford & Snell, 2001). Regular meetings will occur to ensure standards are maintained. In addition, ongoing discussions regarding how to counsel customers to cause disharmony and negatively affect the environment.
Maintaining this environment will necessarily come from both facility and staff. Gli maintains staff’s high-quality customer service by providing weekly meetings and an intrinsic positive approach in motivating staff, by helping them enjoy their work and giving them a sense of accomplishment in their role (Deci & Ryan, 2010), alongside this is the approach to the maintenance standards of the facility; they include cleanliness throughout, with critical attention to toilets and showers (ALM, 2015). Per Porter (1985) business needs attributes that many people view in the industry as important (UOC, 2019), Gli achieves this through maintaining cleaning standards throughout the facility.
By creating an engaging positive atmosphere through design and staff, together with wholesome entertainment through sports, Gli Sport can service a variety of markets in one facility thus meeting the strategic aim of maximising commercial space for greater return through customers wanting to “play, stay and spend”.
- Time-efficient exercise/sports
Today’s society is time-focused, so the need for time-efficient training/sports is crucial (The Economist, 2019). Sport/exercise at Gli is all time-efficient, as they can be completed within one hour which is in contrast to cricket which takes considerably more time, with the ability to attract a variety of sports and markets due to the flexible use of the space (Prahalad & Hamel, 1990). Sports played may have altered rules which will improve time efficiency and perhaps enhance team play. Sports included and not limited to are squash, netball, basketball, soccer, and table tennis.
The combination of time-efficient sports and positive team environments attracts customers looking for team sports in a social and positive environment that is time-efficient without external bureaucracy/politics which occur in a substantial amount of external sports (Lang, 2017).
Gli Sport will utilise innovative computer software systems, which will encourage social interaction. Gli will develop sports with alternate rules for time efficiency, but also meet customer needs of social interaction and engagement. By providing innovative software and time-efficient sports it motivates customers for greater use and recognition (Bartholomew, Ntoumanis & gersen-Ntoumani, 2009).
Maintaining the customer base is critical. The format/rules will change regularly, so players do not become disinterested. Different leagues will be formed to stimulate players’ interests. Condensed seasons will be formed, for example; six-week competitions, an eight-week winter competition, and a four-week summer competition. Shorter leagues encourage players’ motivation, inspiration, and support participation (Duda, 2005).
This form of healthy competition encourages player interaction and allows customers to stay motivated. This provides repeat customers and positive feedback which meets the strategic vision of maximising commercial space for greater returns.
- Innovative construction
Innovative Construction is critical for the success of the Gli Sport operational model, as it enables them to meet strategic vision to maximise floor area on a commercial property (Bullen & Rockart, 1981). Sporting facilities today, need to incorporate innovative, flexible use, with a variety of offerings to stay relevant (Soh, 2019). With superior construction knowledge in innovative multipurpose sports facilities, it allows us to construct, utilise and provide an atmosphere for social interaction and belonging through our methods (Holmstrom & Tirole, 1989).
The development of Gli’s innovative construction process includes the use of removable walls. These innovative walls are made from the fibre-resin board, which runs on a solid metal structure for easy movability (ASB, 2019). Walls can be opened by the press of a button which activates the primary control. By creating the ability to move these walls a greater space is easily attained, which creates the opportunity for utilisation while maintaining the integrity of playability of the courts (Chelladurai & Chang, 2000).
Whilst most fibre-resin board comes from the United States of America, it can be sourced from numerous suppliers. Due to this being a niche market in Australia, Gli Sport has the buying power to ensure our pricing stays stable and doesn’t affect profit margins (Leavy, 1994).
Gli Sport also has its unique timber sprung floor construction method providing installation efficiencies and is more cost-effective than other sprung floors in the market (Marino, 1996; Schoemaker, 1992). This unique flooring system encourages more clientele. The cushioning of the rubber aids in the prevention of injury. This is particularly evident with netball players who play mostly on hard services (Orthop, 2016).
Limiting reactive maintenance comes from the design and products used (Covaris, 2019). The fibreboard utilised for the removable walls comes with a guaranteed unique high quality. They are easier to clean, reduce painting costs as compared to conventual squash courts. The innovative internal design will be developed, prioritising the creation of an inviting atmosphere, which encourages customers to play and stay.
Innovative construction methods are critical for the success of Gli (Bullen & Rockart, 1981). To remain innovative, it is needed to stay agile and focus on new product development (Kokemuller, 2019). Innovative methods are an essential consideration to ensure maximum return on investment. Interactive glazed walls and floors on the sports courts provide a modern customer experience and a seamless transition of courts. Glass floors will be line-marked in-situ, reducing timber flooring use and re-marking (ASB, 2019).
Section C: Business differential strategy in Real Estate
Gli Sport utilises its key resource assets of land, capital, construction, and labour (Mahoney & Pandian, 1992). Through these resources, the differential strategy is to optimise commercial and industrial real estate returns through innovative construction, unique atmosphere, and multi-use sporting activities that give a superior return on commercial space and investment (Opentextbc, 2019). We also have other key resources in entrepreneurship, management, and expertise that enables us to deliver through core competencies (Wiklund & Shepherd, 2003).
Commercial and industrial real estate returns are set to tighten over the coming decade, as bond rates continue an upward trend (Jordan, 2018). Retail spending has dramatically declined due to the increase in spending online, and this trend is making it increasingly tough for retailers in the once considered safe commercial real estate markets (Conisbee, 2019).
Due to the volatility in the equity markets, investors switched to office and industrial real estate, steering away from residential and commercial, but this transition delivers high growth but lower earnings (Berry, 2019). Gli Sport Australian Real Estate Investment Trust delivers not only growth in commercial and industrial real estate, but also higher earnings due to owning and operating its own business and assets.
The ability to utilise spaces innovatively to meet customer needs allows access to a variety of markets. Gli will deliver a variety of offerings for sports, exercise, allied health, including yoga, Pilates, and events. This real estate value proposition can be used in inner-city corporate buildings and large commercial precincts giving Gli strategic differential due to the ability to meet customer and market needs, according to demand and real estate availability whilst attracting profitable returns on investment (Murray, 1988).
The communal space atmosphere provides customer and societal needs by providing time-efficient exercise/sport, social engagement, and a sense of belonging which sport and exercise bring (DSR, 2019). Additionally, Gli offers a simple organisational structure with the manager of the facility overseeing staff (Quain, 2019). The simple organisational structure allows us to have positive lines of communication between staff and customers.
Currently, an innovative construction that allows for multi-use of sports with a unique and inviting atmosphere that encourages social engagement is not a market service in Australia. The barriers for competitors are strong and durable due to having the core real estate, construction, and operational capacities. This enables Gli the ability to preserve its position and market share and take advantage over competitors (Porter, 2008).
Being the first mover in Australia for this strategic resource by maximising space through flexible sporting orientations and owning the core real estate assets gives us a dominant advantage (Lieberman & Montgomery, 1998). With the research and development already completed, limiting risk, Gli Sport has a strong and durable advantage regarding supplying the Australian market (Porter, 1989).
Section D: Management
Gli Sport has the Management capabilities and access to a pool of talent in all core capabilities (Foss, 2000). This, with the ability to access quality raw materials and products, enables them to maintain market share (Foss, Lando & Thomsen, 2000). This continuing access to the talent, materials, and ownership of the core assets allows them to be agile internally to meet future customer demands (Prahalad & Hamel, 1997).
The innovative construction methods will be a sustained approach so we are always at the forefront of innovation in multipurpose facilities, making it difficult to imitate due to access to quality materials and being a leader in innovation (Kak & Sushil, 2002). The creative and functional designs allow for social engagement and the nurturing of a positive social atmosphere whilst also reducing future maintenance costs (Boreham, 2018).
The implementation, of the strategic plan, is critical for Gli Sport, the plan will be discussed with staff once per month so they have a clear understanding of the vision so delivery of customer value and performance goals are constantly met (Jooste & Fourie, 2009).
Section E: Conclusion and Evaluation on the value of core capabilities for organisations more widely
The value in core competencies within an organisation is that it allows the organisation to deliver value to its customers. Identifying, developing, and investing internally in key internal core capabilities enables an organisation to add this value (Basu, 2019). If the core capability is difficult to emulate or copy, it also gives the organisation a distinct competitive advantage.
If an organisation can provide innovative products, quality services and remain flexible to stay competitive it gives the organisation an advantage (Grant, 1991).
Essentially, managers need to drive core capabilities for the organisation to reach its full potential and remain profitable.
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