Case assignment instructions caseanalysis(10)a case study

Case Assignment Instructions
CaseAnalysis(10%):
A case study analysis requires you to investigate a business
problem, examine the alternative solutions, and propose the
most effective solution using supporting evidence.
Case 1: This case illustrates the development of a new business
model in a relatively mature industry-the fitness center
business- and the challenges and payoffs associated with it. The
case explores the challenges of the SMARTFIT expansion in
Brazil and Latin America.
Students need to buy the case from Harvard Business Publishing
through following link:
https://hbsp.harvard.edu/product/BL0007-PDF-
ENG?Ntt=SMARTFIT&itemFindingMethod=Search
Each student will submit a written case analysis (The Domestic
and Foreign Expansion of SMARTFIT) , which will constitute
10% of your final grade. You need to submit a five-pages essay
(maximum 1500 words body) answering assigned questions,
which offers a thorough rationale of your recommended
approach to addressing the case issue(s).
How to analyze a case:
Before you begin writing, follow these guidelines to help you
prepare and understand the case study:
· Read and Examine the Case Thoroughly
· Take notes, highlight relevant facts, underline key problems.
· Consider the question(s) at the end of the case. Record all
information pertinent to these in the form of case notes.
· Decide which principles, theories, or models (usually part of

the assignment) best
apply to the observed facts of the case to prepare your answers.
· Develop your solution in consideration of the principles,
theories, or models that
· you have selected.
· The assigned questions may require you to consider alternative
solutions.
Choose the best solution. Remember the importance of
justifying your choices based on valid evidence.
How to draft the case:
Once you have read the case carefully and gathered the required
in information, your case analysis report should usually include:
Introduction
Identify the key problems and issues in the case study.
Formulate and include a thesis statement, summarizing the
outcome of your analysis in 1–2 sentences.
Background
Set the scene: background information, relevant facts, and the
most important issues.
Demonstrate that you have researched the problems in this case
study.
Evaluation of the Case
Outline the various pieces of the case study that you are
focusing on.
Evaluate these pieces by discussing what is working and what is
not working.
State why these parts of the case study are or are not working
well.
Proposed
Solution

/Changes
Provide specific and realistic solution(s) or changes needed.
Explain why this solution was selected.
Support this solution with concrete evidence, such as:
Concepts from class (text readings, discussions, lectures)
Outside research, theories, Scientific Models
Personal experience (anecdotes)
Recommendations
Determine and discuss specific strategies for accomplishing the
proposed solution.
If applicable, recommend further action to resolve some of the
issues.
What should be done and who should do it?
After you have composed the first draft of your case study
analysis, read through for potential inconsistencies in content or
structure.
Barack Obama’s Race Speech at the
Constitution Center
Transcript | National Constitution Center, March 18, 2008
"We the people, in order to form a more perfect union."

Two hundred and twenty one years ago, in a hall that still stands
across the street, a group of
men gathered and, with these simple words, launched America's
improbable experiment in
democracy. Farmers and scholars; statesmen and patriots who
had traveled across an ocean to
escape tyranny and persecution finally made real their
declaration of independence at a
Philadelphia convention that lasted through the spring of 1787.
The document they produced was eventually signed but
ultimately unfinished. It was stained by
this nation's original sin of slavery, a question that divided the
colonies and brought the
convention to a stalemate until the founders chose to allow the
slave trade to continue for at
least twenty more years, and to leave any final resolution to
future generations.
Of course, the answer to the slavery question was already
embedded within our Constitution - a
Constitution that had at is very core the ideal of equal
citizenship under the law; a Constitution
that promised its people liberty, and justice, and a union that
could be and should be perfected

over time.
And yet words on a parchment would not be enough to deliver
slaves from bondage, or provide
men and women of every color and creed their full rights and
obligations as citizens of the
United States. What would be needed were Americans in
successive generations who were
willing to do their part - through protests and struggle, on the
streets and in the courts, through a
civil war and civil disobedience and always at great risk - to
narrow that gap between the
promise of our ideals and the reality of their time. (96.5)
This was one of the tasks we set forth at the beginning of this
campaign - to continue the long
march of those who came before us, a march for a more just,
more equal, more free, more
caring and more prosperous America. I chose to run for the
presidency at this moment in history
because I believe deeply that we cannot solve the challenges of
our time unless we solve them
together - unless we perfect our union by understanding that we
may have different stories, but
we hold common hopes; that we may not look the same and we

may not have come from the
same place, but we all want to move in the same direction -
towards a better future for of
children and our grandchildren. (134)
This belief comes from my unyielding faith in the decency and
generosity of the American
people. But it also comes from my own story. (187.2)
I am the son of a black man from Kenya and a white woman
from Kansas. I was raised with the
help of a white grandfather who survived a Depression to serve
in Patton's Army during World
War II and a white grandmother who worked on a bomber
assembly line at Fort Leavenworth
while he was overseas. I've gone to some of the best schools in
America and lived in one of the
world's poorest nations. I am married to a black American who
carries within her the blood of
slaves and slave-owners - an inheritance we pass on to our two
precious daughters. I have
brothers, sisters, nieces, nephews, uncles and cousins, of every

race and every hue, scattered
across three continents, and for as long as I live, I will never
forget that in no other country on
Earth is my story even possible. (199)
It's a story that hasn't made me the most conventional candidate.
But it is a story that has
seared into my genetic makeup the idea that this nation is more
than the sum of its parts - that
out of many, we are truly one. (252.5)
Throughout the first year of this campaign, against all
predictions to the contrary, we saw how
hungry the American people were for this message of unity.
Despite the temptation to view my
candidacy through a purely racial lens, we won commanding
victories in states with some of the
whitest populations in the country. In South Carolina, where the
Confederate Flag still flies, we
built a powerful coalition of African Americans and white
Americans. (272)
This is not to say that race has not been an issue in the
campaign. At various stages in the
campaign, some commentators have deemed me either "too

black" or "not black enough." We
saw racial tensions bubble to the surface during the week before
the South Carolina primary.
The press has scoured every exit poll for the latest evidence of
racial polarization, not just in
terms of white and black, but black and brown as well. (304)
And yet, it has only been in the last couple of weeks that the
discussion of race in this campaign
has taken a particularly divisive turn. (332.8)
On one end of the spectrum, we've heard the implication that
my candidacy is somehow an
exercise in affirmative action; that it's based solely on the
desire of wide-eyed liberals to
purchase racial reconciliation on the cheap. On the other end,
we've heard my former pastor,
Reverend Jeremiah Wright, use incendiary language to express
views that have the potential
not only to widen the racial divide, but views that denigrate
both the greatness and the
goodness of our nation; that rightly offend white and black
alike. (343.5)
I have already condemned, in unequivocal terms, the statements

of Reverend Wright that have
caused such controversy. For some, nagging questions remain.
Did I know him to be an
occasionally fierce critic of American domestic and foreign
policy? Of course. Did I ever hear
him make remarks that could be considered controversial while
I sat in church? Yes. Did I
strongly disagree with many of his political views? Absolutely -
just as I'm sure many of you
have heard remarks from your pastors, priests, or rabbis with
which you strongly disagreed.
(380.9)
But the remarks that have caused this recent firestorm weren't
simply controversial. They
weren't simply a religious leader's effort to speak out against
perceived injustice. Instead, they
expressed a profoundly distorted view of this country - a view
that sees white racism as
endemic, and that elevates what is wrong with America above
all that we know is right with
America; a view that sees the conflicts in the Middle East as
rooted primarily in the actions of
stalwart allies like Israel, instead of emanating from the
perverse and hateful ideologies of

radical Islam. (425.2)
As such, Reverend Wright's comments were not only wrong but
divisive, divisive at a time when
we need unity; racially charged at a time when we need to come
together to solve a set of
monumental problems - two wars, a terrorist threat, a falling
economy, a chronic health care
crisis and potentially devastating climate change; problems that
are neither black or white or
Latino or Asian, but rather problems that confront us all.
(465.4)
Given my background, my politics, and my professed values and
ideals, there will no doubt be
those for whom my statements of condemnation are not enough.
Why associate myself with
Reverend Wright in the first place, they may ask? Why not join
another church? And I confess
that if all that I knew of Reverend Wright were the snippets of
those sermons that have run in an
endless loop on the television and You Tube, or if Trinity

United Church of Christ conformed to
the caricatures being peddled by some commentators, there is no
doubt that I would react in
much the same way (502.1)
But the truth is, that isn't all that I know of the man. The man I
met more than twenty years ago
is a man who helped introduce me to my Christian faith, a man
who spoke to me about our
obligations to love one another; to care for the sick and lift up
the poor. He is a man who served
his country as a U.S. Marine; who has studied and lectured at
some of the finest universities
and seminaries in the country, and who for over thirty years led
a church that serves the
community by doing God's work here on Earth - by housing the
homeless, ministering to the
needy, providing day care services and scholarships and prison
ministries, and reaching out to
those suffering from HIV/AIDS. (546.9)
In my first book, Dreams From My Father, I described the
experience of my first service at
Trinity: (593.3)

"People began to shout, to rise from their seats and clap and cry
out, a forceful wind carrying
the reverend's voice up into the rafters....And in that single note
- hope! - I heard something
else; at the foot of that cross, inside the thousands of churches
across the city, I imagined the
stories of ordinary black people merging with the stories of
David and Goliath, Moses and
Pharaoh, the Christians in the lion's den, Ezekiel's field of dry
bones. Those stories - of survival,
and freedom, and hope - became our story, my story; the blood
that had spilled was our blood,
the tears our tears; until this black church, on this bright day,
seemed once more a vessel
carrying the story of a people into future generations and into a
larger world. Our trials and
triumphs became at once unique and universal, black and more
than black; in chronicling our
journey, the stories and songs gave us a means to reclaim
memories that we didn't need to feel
shame about...memories that all people might study and cherish
- and with which we could start
to rebuild." (602.6)
That has been my experience at Trinity. Like other

predominantly black churches across the
country, Trinity embodies the black community in its entirety -
the doctor and the welfare mom,
the model student and the former gang-banger. Like other black
churches, Trinity's services are
full of raucous laughter and sometimes bawdy humor. They are
full of dancing, clapping,
screaming and shouting that may seem jarring to the untrained
ear. The church contains in full
the kindness and cruelty, the fierce intelligence and the
shocking ignorance, the struggles and
successes, the love and yes, the bitterness and bias that make up
the black experience in
America. (691)
And this helps explain, perhaps, my relationship with Reverend
Wright. As imperfect as he may
be, he has been like family to me. He strengthened my faith,
officiated my wedding, and
baptized my children. Not once in my conversations with him
have I heard him talk about any
ethnic group in derogatory terms, or treat whites with whom he
interacted with anything but

courtesy and respect. He contains within him the contradictions
- the good and the bad - of the
community that he has served diligently for so many
years.(743.7)
I can no more disown him than I can disown the black
community. I can no more disown him
than I can my white grandmother - a woman who helped raise
me, a woman who sacrificed
again and again for me, a woman who loves me as much as she
loves anything in this world,
but a woman who once confessed her fear of black men who
passed by her on the street, and
who on more than one occasion has uttered racial or ethnic
stereotypes that made me cringe.
(787.4)
These people are a part of me. And they are a part of America,
this country that I love. (821.2)
Some will see this as an attempt to justify or excuse comments
that are simply inexcusable. I
can assure you it is not. I suppose the politically safe thing
would be to move on from this

episode and just hope that it fades into the woodwork. We can
dismiss Reverend Wright as a
crank or a demagogue, just as some have dismissed Geraldine
Ferraro, in the aftermath of her
recent statements, as harboring some deep-seated racial bias.
(830.5)
But race is an issue that I believe this nation cannot afford to
ignore right now. We would be
making the same mistake that Reverend Wright made in his
offending sermons about America -
to simplify and stereotype and amplify the negative to the point
that it distorts reality. (860)
The fact is that the comments that have been made and the
issues that have surfaced over the
last few weeks reflect the complexities of race in this country
that we've never really worked
through - a part of our union that we have yet to perfect. And if
we walk away now, if we simply
retreat into our respective corners, we will never be able to
come together and solve challenges
like health care, or education, or the need to find good jobs for
every American. (881)

Understanding this reality requires a reminder of how we
arrived at this point. As William
Faulkner once wrote, "The past isn't dead and buried. In fact, it
isn't even past." We do not need
to recite here the history of racial injustice in this country. But
we do need to remind ourselves
that so many of the disparities that exist in the African-
American community today can be
directly traced to inequalities passed on from an earlier
generation that suffered under the brutal
legacy of slavery and Jim Crow.(914.3)
Segregated schools were, and are, inferior schools; we still
haven't fixed them, fifty years after
Brown v. Board of Education, and the inferior education they
provided, then and now, helps
explain the pervasive achievement gap between today's black
and white students.(973)
Legalized discrimination - where blacks were prevented, often
through violence, from owning
property, or loans were not granted to African-American
business owners, or black homeowners
could not access FHA mortgages, or blacks were excluded from
unions, or the police force, or

fire departments - meant that black families could not amass
any meaningful wealth to bequeath
to future generations. That history helps explain the wealth and
income gap between black and
white, and the concentrated pockets of poverty that persists in
so many of today's urban and
rural communities. (1001)
A lack of economic opportunity among black men, and the
shame and frustration that came
from not being able to provide for one's family, contributed to
the erosion of black families - a
problem that welfare policies for many years may have
worsened. And the lack of basic services
in so many urban black neighborhoods - parks for kids to play
in, police walking the beat,
regular garbage pick-up and building code enforcement - all
helped create a cycle of violence,
blight and neglect that continue to haunt us. (1040)
This is the reality in which Reverend Wright and other African-
Americans of his generation grew

up. They came of age in the late fifties and early sixties, a time
when segregation was still the
law of the land and opportunity was systematically constricted.
What's remarkable is not how
many failed in the face of discrimination, but rather how many
men and women overcame the
odds; how many were able to make a way out of no way for
those like me who would come after
them. (1076.8)
But for all those who scratched and clawed their way to get a
piece of the American Dream,
there were many who didn't make it - those who were ultimately
defeated, in one way or
another, by discrimination. That legacy of defeat was passed on
to future generations - those
young men and increasingly young women who we see standing
on street corners or
languishing in our prisons, without hope or prospects for the
future. Even for those blacks who
did make it, questions of race, and racism, continue to define
their worldview in fundamental
ways. For the men and women of Reverend Wright's generation,
the memories of humiliation
and doubt and fear have not gone away; nor has the anger and

the bitterness of those years.
That anger may not get expressed in public, in front of white
co-workers or white friends. But it
does find voice in the barbershop or around the kitchen table.
At times, that anger is exploited
by politicians, to gin up votes along racial lines, or to make up
for a politician's own failings.
(1109.4)
And occasionally it finds voice in the church on Sunday
morning, in the pulpit and in the pews.
The fact that so many people are surprised to hear that anger in
some of Reverend Wright's
sermons simply reminds us of the old truism that the most
segregated hour in American life
occurs on Sunday morning. That anger is not always productive;
indeed, all too often it distracts
attention from solving real problems; it keeps us from squarely
facing our own complicity in our
condition, and prevents the African-American community from
forging the alliances it needs to
bring about real change. But the anger is real; it is powerful;
and to simply wish it away, to
condemn it without understanding its roots, only serves to
widen the chasm of misunderstanding

that exists between the races.(1183.5)
In fact, a similar anger exists within segments of the white
community. Most working- and
middle-class white Americans don't feel that they have been
particularly privileged by their race.
Their experience is the immigrant experience - as far as they're
concerned, no one's handed
them anything, they've built it from scratch. They've worked
hard all their lives, many times only
to see their jobs shipped overseas or their pension dumped after
a lifetime of labor. They are
anxious about their futures, and feel their dreams slipping away;
in an era of stagnant wages
and global competition, opportunity comes to be seen as a zero
sum game, in which your
dreams come at my expense. So when they are told to bus their
children to a school across
town; when they hear that an African American is getting an
advantage in landing a good job or
a spot in a good college because of an injustice that they
themselves never committed; when
they're told that their fears about crime in urban neighborhoods
are somehow prejudiced,
resentment builds over time. (1254.6)

Like the anger within the black community, these resentments
aren't always expressed in polite
company. But they have helped shape the political landscape for
at least a generation. Anger
over welfare and affirmative action helped forge the Reagan
Coalition. Politicians routinely
exploited fears of crime for their own electoral ends. Talk show
hosts and conservative
commentators built entire careers unmasking bogus claims of
racism while dismissing legitimate
discussions of racial injustice and inequality as mere political
correctness or reverse
racism.(1324.5)
Just as black anger often proved counterproductive, so have
these white resentments distracted
attention from the real culprits of the middle class squeeze - a
corporate culture rife with inside
dealing, questionable accounting practices, and short-term
greed; a Washington dominated by
lobbyists and special interests; economic policies that favor the

few over the many. And yet, to
wish away the resentments of white Americans, to label them as
misguided or even racist,
without recognizing they are grounded in legitimate concerns -
this too widens the racial divide,
and blocks the path to understanding. (1375)
This is where we are right now. It's a racial stalemate we've
been stuck in for years. Contrary to
the claims of some of my critics, black and white, I have never
been so naïve as to believe that
we can get beyond our racial divisions in a single election
cycle, or with a single candidacy -
particularly a candidacy as imperfect as my own. (1420)
But I have asserted a firm conviction - a conviction rooted in
my faith in God and my faith in the
American people - that working together we can move beyond
some of our old racial wounds,
and that in fact we have no choice is we are to continue on the
path of a more perfect union.
(1454)
For the African-American community, that path means
embracing the burdens of our past

without becoming victims of our past. It means continuing to
insist on a full measure of justice in
every aspect of American life. But it also means binding our
particular grievances - for better
health care, and better schools, and better jobs - to the larger
aspirations of all Americans -- the
white woman struggling to break the glass ceiling, the white
man whose been laid off, the
immigrant trying to feed his family. And it means taking full
responsibility for own lives - by
demanding more from our fathers, and spending more time with
our children, and reading to
them, and teaching them that while they may face challenges
and discrimination in their own
lives, they must never succumb to despair or cynicism; they
must always believe that they can
write their own destiny.(1477.2)
Ironically, this quintessentially American - and yes,
conservative - notion of self-help found
frequent expression in Reverend Wright's sermons. But what my
former pastor too often failed
to understand is that embarking on a program of self-help also
requires a belief that society can
change. (1548.5)

The profound mistake of Reverend Wright's sermons is not that
he spoke about racism in our
society. It's that he spoke as if our society was static; as if no
progress has been made; as if this
country - a country that has made it possible for one of his own
members to run for the highest
office in the land and build a coalition of white and black;
Latino and Asian, rich and poor, young
and old -- is still irrevocably bound to a tragic past. But what
we know -- what we have seen - is
that America can change. That is true genius of this nation.
What we have already achieved
gives us hope - the audacity to hope - for what we can and must
achieve tomorrow. (1571.5)
In the white community, the path to a more perfect union means
acknowledging that what ails
the African-American community does not just exist in the
minds of black people; that the legacy
of discrimination - and current incidents of discrimination,
while less overt than in the past - are

real and must be addressed. Not just with words, but with deeds
- by investing in our schools
and our communities; by enforcing our civil rights laws and
ensuring fairness in our criminal
justice system; by providing this generation with ladders of
opportunity that were unavailable for
previous generations. It requires all Americans to realize that
your dreams do not have to come
at the expense of my dreams; that investing in the health,
welfare, and education of black and
brown and white children will ultimately help all of America
prosper. (1637)
In the end, then, what is called for is nothing more, and nothing
less, than what all the world's
great religions demand - that we do unto others as we would
have them do unto us. Let us be
our brother's keeper, Scripture tells us. Let us be our sister's
keeper. Let us find that common
stake we all have in one another, and let our politics reflect that
spirit as well. (1707)
For we have a choice in this country. We can accept a politics
that breeds division, and conflict,
and cynicism. We can tackle race only as spectacle - as we did

in the OJ trial - or in the wake of
tragedy, as we did in the aftermath of Katrina - or as fodder for
the nightly news. We can play
Reverend Wright's sermons on every channel, every day and
talk about them from now until the
election, and make the only question in this campaign whether
or not the American people think
that I somehow believe or sympathize with his most offensive
words. We can pounce on some
gaffe by a Hillary supporter as evidence that she's playing the
race card, or we can speculate on
whether white men will all flock to John McCain in the general
election regardless of his
policies.(1738)
We can do that.(1791)
But if we do, I can tell you that in the next election, we'll be
talking about some other distraction.
And then another one. And then another one. And nothing will
change. (1793)
That is one option. Or, at this moment, in this election, we can
come together and say, "Not this
time." This time we want to talk about the crumbling schools

that are stealing the future of black
children and white children and Asian children and Hispanic
children and Native American
children. This time we want to reject the cynicism that tells us
that these kids can't learn; that
those kids who don't look like us are somebody else's problem.
The children of America are not
those kids, they are our kids, and we will not let them fall
behind in a 21st century economy. Not
this time. (1819)
This time we want to talk about how the lines in the Emergency
Room are filled with whites and
blacks and Hispanics who do not have health care; who don't
have the power on their own to
overcome the special interests in Washington, but who can take
them on if we do it together.
(1866)
This time we want to talk about the shuttered mills that once
provided a decent life for men and
women of every race, and the homes for sale that once belonged
to Americans from every
religion, every region, every walk of life. This time we want to
talk about the fact that the real

problem is not that someone who doesn't look like you might
take your job; it's that the
corporation you work for will ship it overseas for nothing more
than a profit. (1883)
This time we want to talk about the men and women of every
color and creed who serve
together, and fight together, and bleed together under the same
proud flag. We want to talk
about how to bring them home from a war that never should've
been authorized and never
should've been waged, and we want to talk about how we'll
show our patriotism by caring for
them, and their families, and giving them the benefits they have
earned. (1914)
I would not be running for President if I didn't believe with all
my heart that this is what the vast
majority of Americans want for this country. This union may
never be perfect, but generation
after generation has shown that it can always be perfected. And
today, whenever I find myself

feeling doubtful or cynical about this possibility, what gives me
the most hope is the next
generation - the young people whose attitudes and beliefs and
openness to change have
already made history in this election. (
There is one story in particularly that I'd like to leave you with
today - a story I told when I had
the great honor of speaking on Dr. King's birthday at his home
church, Ebenezer Baptist, in
Atlanta.
There is a young, twenty-three year old white woman named
Ashley Baia who organized for our
campaign in Florence, South Carolina. She had been working to
organize a mostly African-
American community since the beginning of this campaign, and
one day she was at a
roundtable discussion where everyone went around telli ng their
story and why they were there.
And Ashley said that when she was nine years old, her mother
got cancer. And because she
had to miss days of work, she was let go and lost her health
care. They had to file for

bankruptcy, and that's when Ashley decided that she had to do
something to help her mom.
She knew that food was one of their most expensive costs, and
so Ashley convinced her mother
that what she really liked and really wanted to eat more than
anything else was mustard and
relish sandwiches. Because that was the cheapest way to eat.
She did this for a year until her mom got better, and she told
everyone at the roundtable that the
reason she joined our campaign was so that she could help the
millions of other children in the
country who want and need to help their parents too.
Now Ashley might have made a different choice. Perhaps
somebody told her along the way that
the source of her mother's problems were blacks who were on
welfare and too lazy to work, or
Hispanics who were coming into the country illegally. But she
didn't. She sought out allies in her
fight against injustice.
Anyway, Ashley finishes her story and then goes around the
room and asks everyone else why

they're supporting the campaign. They all have different stories
and reasons. Many bring up a
specific issue. And finally they come to this elderly black man
who's been sitting there quietly
the entire time. And Ashley asks him why he's there. And he
does not bring up a specific issue.
He does not say health care or the economy. He does not say
education or the war. He does
not say that he was there because of Barack Obama. He simply
says to everyone in the room, "I
am here because of Ashley."
"I'm here because of Ashley." By itself, that single moment of
recognition between that young
white girl and that old black man is not enough. It is not enough
to give health care to the sick,
or jobs to the jobless, or education to our children.
But it is where we start. It is where our union grows stronger.
And as so many generations have
come to realize over the course of the two-hundred and twenty
one years since a band of
patriots signed that document in Philadelphia, that is where the

perfection begins.
ISSN: 2470-7899
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Case: BL0007
Versi0n: 26/12/2018
Case
The Domestic and
Foreign Expansion of
SMART FIT

Challenges to the
Sustainability of an Innovative
Model in the Fitness Industry
After experiences in managing a clothing business and a family-
run sugar mill, Edgard Corona
(hereinafter “Corona”) had a skiing accident that wound up
changing his life. He founded Smart
Fit – a fitness center based on a value-oriented model that has
achieved remarkable growth in a
short period. By the end of 2017, the company, established in
Brazil in 2009, had more than 1.5
million members in six Latin American markets and ranked as
the absolute industry leader in the
continent and the fourth largest gym chain in the world. Smart
Fit’s mission was to provide ever-
yone with access to high-level physical activity – “to
democratize high-end fitness”. Consequent-
ly, since the model seemed easy to copy,Smart Fit management
decided to develop a package of
This case was prepared by Professor Jorge Carneiro from
Fundacao Gertulio Vargas Escola de Administracao de
Empresas de
Sao Paulo and Raffaela Sauerbronn, Angela Pontes, Vagner

Andrade and Danielle Paoliello from Pontifícia Universidade
Ca-
tólica do Rio de Janeiro – IAG Business School. This case is
presented by BALAS and was the best case in the BALAS’s
conference 2017.
Teaching cases are developed solely as the basis for class
discussion and are not intended to serve as endorsements,
sources of primary data, or
illustrations of effective or ineffective management. To order
copies or request permission to reproduce materials, contact
[email protected]
gmail.com.
Copyright © 2020 The Business Association of Latin American
Studies - BALAS. No part of this publication may be
reproduced, sto-
red in a retrieval system, used in a spreadsheet, or transmitted
in any form or by any means --electronic, mechanical,
photocopying, recording,
or otherwise-- without the permission of the copyright holder.
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This document is authorized for educator review use only by
Vahideh Baradaran-Rafiee, University Canada West until Dec
2021. Copying or posting is an infringement of copyright.
[email protected] or 617.783.7860
https://gmail.com
p. 2
Case: BL0007

customer features and to expand rapidly. In addition, Smart Fit
faced new competing business
models, for example, a new smartphone platform that gave users
entry to clubs located in Latin
America, Europe and United States. Corona feared that intense
and rapid expansion might risk
customer satisfaction. Indeed, overseas expansion strained the
company’s financial and mana-
gerial resources. However, the question remained: Should Smart
Fit devote continued efforts to
sustain its high-growth path in Brazil and abroad?
1. PUMPING UP HIS OWN WAY
Sao Paulo, Monday, 8:00 a.m. Corona began his day by visiting
recently opened Smart Fit fit-
ness centers in various Sao Paulo neighborhoods. His long

professional history, however, had not
always been related to the fitness business.
Corona’s first job was in a material analysis laboratory, as a
chemical engineer. For him, what
was important about being a chemical engineer was dealing with
transformations. “People pic-
ked elements and transformed them into other elements. I took
petroleum and transformed its
derivatives into plastic. I took sugarcane and produced sugar
and ethanol.” However, that job
did not engage him enough for time to pursue it as a career. “I
wasn’t very happy in that kind of
work, so I decided to sell my car (so I didn’t need to depend on
my father) and to enter the clo-
thing business with two friends,” he contended.
The three partners opened two clothes stores in Sao Paulo, both
of them in well-known shopping
malls. This was Corona’s first experience in leading a business
focused on customer service. In
the 1980s, he left this business to manage his family’s sugar
mill. He proudly stated,
“That was the first journey of my life – leaving my partners and

the stores to run my fa-
mily’s sugar mill in the countryside of Sao Paulo. I learned how
to plant, harvest, trans-
port, and mill sugar. I learned to produce steam and electric
energy, sugar, ethanol, and
to sell these products in the market. I stayed there for 16 years,
and the business grew.
I learned a lot from that experience!”
By 1995, the mill was the third largest in Brazil’s sugar and
ethanol industry. Nonetheless, the
family’s third generation joined the business and subsequently
some conflicts arose, exacerbated
by the financial crises that Brazil was going through. Although
Corona may have aspired to beco-
me the CEO of the family business someday, his plans were
frustrated when the company board
decided to professionalize the management strucuture, driving
the family to relinquish control.
Corona decided to leave the company. “I am too hot-headed a
horse to sit and fight for power,” he
grumbled (Soares, 2016). He used that moment of change to
take some time off to recover from
the preceding years’ pressures.

So, Corona, who had been a top water polo athlete (back in the
70s), went skiing in order to re-
lax. After a few days, he had an accident and injured his knee.
During the surgery recovery, he
decided to revive his hobby in the form of an entrepreneurial
venture and thus entered the fit-
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Case: BL0007
ness business. He took an old swimming school project, drafted
with some friends at the beach,
and established, in 1996, his first health club: Bio Ritmo
(meaning Bio Rhythm). However, he
was careful to point out that, “if you have a hobby, be careful
about turning it into a business –

you might come to hate your hobby.”
The business model was to offer water activities, but gradually
Corona transformed it into a
broader fitness center. He remembered that, in the beginning, he
paid the price for inexperience:
“It was all so wrong that there weren’t even individual showers
in the men’s bathroom.”
Before entering the fitness industry, Corona had almost gone
out of business several times and
had overcome many obstacles. In 1997, low membership drained
the company’s cash and for-
ced the founder to borrow BR$ 50,000 (approximately US$
50,000 at the exchange rate then)
to put up seven billboards around Sao Paulo. He was desperate,
but the strategy worked and the
company started to grow. Then, in 2007, the business faced
another blow, when a glitch in ma-
nagement software almost sank the company.
While running the business and restructuring it with the support
of consultants, Corona noticed
that the location of a fitness center made a significant
difference in the success or failure of this

kind of business venture and was more important than the
efforts in structural or service im-
provements. This belief led him to envision the possibility of
opening a fitness club on Avenida
Paulista, the financial district of Sao Paulo. Adopting an open
floor plan with high-end concept
and focusing on ambiance and on a wide range of gym facilities,
the Bio Ritmo chain targeted
high-income clienteles. This new concept quickly became a
success and this was a turning point
in the company’s history.
Customer satisfaction was their focus not only to attract but
also to retain customers, as Corona
liked to explain:
“Before, instructors would run physical evaluations that were a
study on how to mis-
treat customers at the first opportunity. They would take a
woman, who was overwei-
ght, and ask her to take off her shirt, and she would be left with
only her bra and shorts
on… it was terrorism, no… torture…, to pinch, pinch 25 times.
That wasn’t enough:
they would ask her to flex her arm, and her stomach, and then

tell her she was fat and
out of shape.”
It was necessary to change the customer perception from day
one. Bio Ritmo units offered a broad
portfolio of group classes, specialized training, and the most
modern equipment in the fitness
industry. The business would expand quickly and, as of mid-
2017, had 29 fitness centers spread
out across Brazil.
Corona, age 60, has always exercised regularly. He described
himself as a restless mind: “I am
always looking for new opportunities and am willing to start
over. I always think that what I am
doing is not enough.”
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Case: BL0007

2. FROM HIGH END TO VALUE-PRICED
In 2009, Corona noticed that the Sao Paulo market had become
saturated with luxury fitness
clubs and that 70% of their members were only interested in
“pumping iron” and cardio exerci-
ses to burn calories using equipment such as bikes and
treadmills. People did not want to pay for
other activities and equipment that they did not use. “In the US,
the classes are separated from
the fitness clubs. You have yoga and Pilates studios in the city,
but not within the club, so they
are cheaper,” he said (Carvalho, 2014).
As a result, Corona identified a business opportunity inspired
by the innovative “low cost, low

price” model from the USA and parts of Europe. He thus
decided to invest in the affordable heal-
th-club market (which generally had lower fixed costs and lower
unit margins) in order to attract
a large number of customers and ensure profitability. At that
time, the market for value-priced
health clubs in Brazil was underexploited and potential
competitors were only neighborhood
clubs with limited resources and simple decor and equipment.
Thus, Corona devised the Smart
Fit model. That same year, Corona launched four Smart Fit
centers in Sao Paulo, emphasizing
the unique advantages of the experience and providing a
superior price-benefit ratio for mem-
bers. While Bio Ritmo and other high-end brands, such as
Bodytech and Cia Athletica, had plans
starting at around US$ 100 per month, Smart Fit offered plans
from around US$ 15. These cen-
ters had good infrastructure and equipment, as well as
contemporary architecture and decor, in
upscale Sao Paulo neighborhoods, which up until then were
dominated by more expensive fitness
centers, including Bio Ritmo itself.
Smart Fit’s mission was to democratize physical activity,

reaching the most diverse target au-
dience and making the habit of exercising as easy as possible, in
order for customers to develop
an active and healthier lifestyle. All of this was offered through
an intelligent model that com-
bined high-end equipment (of the same caliber as that found in
the Bio Ritmo clubs), extended
operation hours, 7-days a week service, and affordable prices.
In fact, this mix of sophisticated
gear and modern decor (see Figures 1 through 4) coupled with
lower prices attracted a large
number of customers. The lower fixed costs were a function of
the need for fewer employees,
the use of automated processes (e.g., web-based registration of
new members), and no extra
activities (i.e., no yoga classes or martial arts classes).
Although there were comments in the
market that, if Smart Fit proved successful, it would cannibalize
customers away from Bio Rit-
mo, Corona, with his blunt style, said, “If someone is going to
kick my a[...], let it be me my-
self” (Soares, 2016).
In 2010, with 10 newly-opened clubs and seven new locations
under construction, Corona ran

out of money. He sold almost all of his possessions in order to
continue the expansion, but it was
not enough: “I sold [part of my own] real estate, I sold
everything, but I had no more credit and
it was impossible to keep opening clubs.”
At that moment, the investment fund Patria arrived with the
necessary fuel for the business, and
they established a partnership that made it possible to overcome
the monetary obstacle. Patria in-
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Case: BL0007
jected financial resources and technology and became a 50%
partner of the Bio Ritmo group (Car-
valho, 2014), and in particular in the expansion of the Smart Fit
business. This infusion of capital

accelerated the expansion process and enabled the company to
implement a winning marketing
strategy. Although Patria, as a private equity fund, played a key
role in developing and carrying
out corporate strategy, the partnership required alignment
between the partners with regard to
the decision-making process, otherwise it could generate a
managerial problem. (Later, in 2016,
GIC, a Singaporean sovereign wealth fund, bought a minority
stake in the company, by acquiring
shares of the founder, cf. Valor, 2016.)
After enjoying success for some time, Corona reached a point
where he could no longer sustain
the heavy work load. That was when he experienced the
“metanoia” (i.e. a change of thought and
direction) – a process that sought to create “more humane”
leaders and companies with a “pur-
pose.” Corona found that his company, which was at that time
already the largest fitness chain in
Latin America, could only continue to build a path of successful
growth if he managed to stimu-
late “chemistry” among people. Corona said, “[…] one of the
company’s skills is its adaptability:
to be able to make a mistake and quickly correct and implement

[a solution], because the world
runs 24 hours a day.”
3. CONSUMER BEHAVIOR IN THE FITNESS
INDUSTRY
By any measure, modern lifestyles have led people to be pressed
for time, stressed out and over-
ly sedentary. But awareness for the need to cultivate overall
well-being have stimulated people
to engage in physical exercise. Yet, even though people may
have access to information and be
aware of the dangers of an unhealthy lifestyle, a large
proportion of the population has tended
not to practice physical activities. It has been common for
people to prioritize work, study and
family to the detriment of health. But when they become sick or
need to engage in some kind of
aerobic activity, like climbing stairs or walking for an extended
period, they have tended to feel
the need to be fit and have a good diet.
According to IHRSA (2017), an international association that
brings together representatives from
gyms, spas, sports centers and equipment manufacturers

commented that in 2017 Brazil had a
population of approximately 208.7 million (IBGE, 2017), but
thatonly around 9.6 million were
members of health clubs. This was less than 5% of the
population,while in the USA the penetra-
tion rate was 14%, and in New York alone it reached 33%
(Carvalho, 2014).
The reasons that prompted an individual to frequent a health
club could be the search for a be-
tter quality of life, longevity, satisfaction, pleasure or physical
beauty (Liz et al., 2010). “Vanity
has always been a characteristic of Brazilians, and not without
reason. The country is one of the
largest beauty markets in the world, ranking first in plastic
surgery and perfumes, second in hair
care, and third in cosmetics. But body worship doesn’t stop
there: In the last few years, Brazil has
also been attracting attention because of the growth in
businesses focused on fitness” (Luders,
2016).The average length of time a person spent time at the club
was between 60 to 90 minutes,
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Case: BL0007

with an average frequency of three times a week. In general, the
club tended to be selected based
on location (Saba, 2001). Another important aspect to consider
was the influence of peer groups;
additionally, many preferred working out together with co-
workers during lunch or with family.
Being a member of the fitness world in many cases became a
lifestyle – of habits involving sports,
socialization, participation in events outside the clubs (such as
marathons, tours, tournaments,
festivals, parties, and trips), sharing information, and
participation in social networks.
Fitness aficionados have driven the globalized market by
acquiring clothes, shoes, healthy food,
nutritional supplements, wearable healthcare gadgets, etc. The

offer of products and services to
meet this demand has also been extensive, ranging from
nutritional and orthomolecular moni-
toring to aesthetic treatments for both men and women.
4. THE BRAZILIAN FITNESS MARKET
IHRSA (2017) asserted that, in 2016, there were 200,000 health
clubs in the world with 162
million members; in 18 Latin American countries, 20 million
people had memberships in over
65,000 health clubs.
Brazil had 34,500 health clubs with 9.6 million members and
was the country with the second
highest number of health clubs (after only the USA), the fourth
in number of health club mem-
bers and the tenth in terms of revenues, worth US$ 2.1 billion
(IHRSA, 2017). The report also
highlighted that the 10 countries with the highest revenues
accounted for 71% of total industry
revenues. USA ranked first (see Tables 1 through 4).
According to Fitness Brasil (a firm specialized in training and
networking related to the fitness

industry), (i) the total revenue of the fitness industry in Brazil
grew from US$ 1.1 billion in 2009
to US$ 2.4 billion in 2015, which represented 44% of the total
industry revenue in Latin Ameri-
ca; (ii) the number of health clubs jumped from 14,000 to
almost 32,000 in the same period (i.e.,
66% of health clubs in Latin America); and (iii) membership
rose from 4.4 million to 8.0 million,
accounting for 59% of the total membership in the continent
(Fitness Brasil, 2016).
Health clubs could range, from high to low cost, be unisex or
single-sex, be family-oriented, you-
th-oriented, among other focuses. This diversity sought to cater
to different demographic target
customers, who could vary in terms of their preferences, values,
culture and social groups, so-
cial class, lifestyle, gender, age, needs and expectations. Most
health club members were from
the lower-middle and working classes, who have turned to paid
physical exercise as a result of
economic and social gains (a few years ago) in Brazil. This has
led to significant changes in the
diversity of sports practiced, which commonly include soccer,
wrestling, swimming, water aero-

bics, dance, martial arts, spinning, and indoor rowing (Arruda,
2015).
The luxury segment, targeting high-income customers, consisted
of high-end and full-service clubs
that focused on quality, exclusivity, tradition and personalized
service. Bio Ritmo was born as a
sophisticated alternative to bodybuilding gyms. Its first unit
outlined the features that would be
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Case: BL0007
its competitive advantage, namely: the environment designed
especially for the practice of phy-

sical activity, modern equipment and with qualified instructors.
In order to emphasize additional
qualities that would set it apart from its competitors, a
renowned architect was invited to design
the Bio Ritmo units, which featured sophisticated lighting and
scenography. Always in search of
innovation, Bio Ritmo introduced the micro-gym concept —
several gyms inside one — with high
intensity workouts lasting up to 60 minutes. They offered five
different types of workout: Race
Bootcamp, Burn HIIT Zone, Squad Functional Area, Torq Cycle
Experience, and Skill Mill. In
terms of those attributes, Bio Ritmo’s competitors were
Bodytech, Cia Athletica, Reebok Sports
Club, Studio Velocity and Les Cinq Gym.
Unlike Bio Ritmo, Smart Fit was in the budget segment, and its
obvious competitors were com-
panies offering weightlifting and aerobic exercising at
competitive prices, located in various ci-
ties and neighborhoods. These included small and traditional
fitness centers, as well as chains
such as Curves and Contours, which offered 30 minute exercise
programs tailored specifically to
women. In 2010, the Bodytech group, one of two largest groups

in Latin America’s fitness sector,
launched “Formula” gym center, in response to the great
demand for services that valued qua-
lity of life and at the same time offered a good price-benefit
balance. Formula offered high-end
equipment, a wide variety of classes and qualified
professionals; which meant competition in the
Smart Fit segment.
Leonardo Cirino, Chief Marketing Officer (CMO) of the Bio
Ritmo group in Brazil, said that less
than 3% of the population attended health clubs, and concluded
that the potential market was
excellent. This view was also shared by the IHRSA (2016),
which stated that such opportunities
were particularly attractive in emerging markets such as Asia
and Latin America.
In recent years, the Brazilian economy has suffered one of the
worst recessions in its history, with
gross domestic product declining for two consecutive years
(2015 and 2016). The uncertain po-
litical scenario in Brazil negatively affected the economy and
the country faced high unemploy-
ment rate, high (though declining) interest rate, and currency

devaluation against the US dollar
(see Table 5).
The financial health of the Smart Fit’s business depended on the
company’s ability to continuously
attract new customers as well as keep current ones. The
slowdown in economic activity in Brazil
led to a sharp drop in consumption patterns, increase in
household indebtedness, unemployment
and reduction in the supply of credit. Corona reckoned that the
relatively low fee of the Smart
Fit model attracted customers, but he acknowledged that paying
for gym services was somewhat
superfluous and that economic crises and associated
unemployment posed risks to the business.
5. SMART FIT POSITIONING AND OPERATIONAL
MODEL
Although the Bio Ritmo and Smart Fit clubs belonged to the
same business group and had sy-
nergies in support areas such as technology, legal counseling
and procurement, the two brands
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Case: BL0007
operated with distinct structures and teams because their
positioning and focus had, since its in-
ception, always been very different.
The business model adopted by Smart Fit was based on a value-
price concept, which offered
consumers a leaner, practical and less complex service. The lean
cost structure (see Tables 6 to
8) allowed Smart Fit to charge relatively low prices and present
a good value-for-money offer,
thus attracting client segments that were more price-sensitive

and willing to accept less-complex
services. However, Smart Fit managed to distinguish itself from
its competitors by offering a hi-
gh-end structure (see Figures 3 and 4), in contrast to the bare-
bones health club models usually
seen in the USA for this category.
According to Smart Fit’s founder, the greatest operational
difference was in terms of the com-
pany’s management engagement, which focused on an organic
model and a strong corporate cul-
ture (which valued innovation, non-conformism, and learning)
that made it possible to respond
to new demands with speed and flexibility. Thus, the adoption
of a simplified and horizontal ma-
nagement model, which provided meaning and empowerment to
teams, with decision-making
coming from the base (Corona, 2014), represented a key
competitive advantage for the company.
Every morning, the teams had a quick meeting and, according to
Corona, by lunch time all the
staff knew what was said. “The bosses do not come to the
meeting and say what will be done. They
ask everyone’s opinion about how to solve the problems and
then the whole team works on the

solution together,” he said. Smart Fit teams won bonuses linked
to customer satisfaction. Corona
explained that “satisfaction is a long-term result; if you only tie
bonuses to the immediate results,
there are people who will turn off the lights to save money.”
Consumers usually looked for a gym close to their home or
work. To meet customer expecta-
tions, Smart Fit developed a life style ecosystem, where the
person exercised in a pleasurable
way and could enjoy good equipment, architecture, illumination,
sound, air conditioning, cus-
tomer service, and locker rooms. Meeting (or even exceeding)
customers’ expectations was very
important to Smart Fit. The company ran a satisfaction survey
based on the Net Promoted Score
(NPS) methodology, which helped management to build a
nationwide ranking of units. In addi-
tion, Corona made it clear that the experience at each new
Smart Fit center should be superior
to that available in previous fitness centers. A 2015 study by O
Globo newspaper in partnership
with TroianoBranding found that Smart Fit was the fitness
brand most-admired by cariocas (Rio
de Janeiro residents) (Globo, 2016).

Focusing on people interested only in individual physical
activities and who did not want to pay
for a complete health-club structure, Smart Fit offered packages
with just cross-training, tread-
mills, ergonometric bicycles, or weight-lifting. With the slogan
“Smart Fit - the intelligent gym,”
they became the largest health club in Latin America, operating
in six countries. As of 2017, Smart
Fit had 296 outlets (Table 9) and more than 1.5 members; in
Brazil, they had little more than one
million members, of which 724 thousand in their wholly-owned
units in the country. The clubs
offered bodybuilding and weight training to members (minimum
age 14), with experienced ins-
tructors able to offer guidance and training in a safe,
autonomous and comfortable environment.
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Case: BL0007

Members shared a vast array of equipment on a first-come-first-
served basis, without fixed sche-
dules. There were no personal trainers, but rather a small
number of “shared” trainers. Business
hours varied somewhat from one club to another, but the clubs
were usually open Monday to Fri-
day from 6:00 am to 11:00 pm, and on weekends and holidays
with reduced hours.
The company had two kinds of plans, Smart and Black. A Smart
plan member must pay a sign-up
fee and could access one club; there was no cancellation
penalty. The Black plan allowed members
to use any Smart Fit center in Latin America and included
massage chairs and five invitations per
month to bring friends. Although there was no sign-up fee, the
membership was based on a mi-
nimum of a one-year commitment. While Bio Ritmo and other

luxury brands such as Bodytech
and Cia Athletica had plans starting at around US$ 100 per
month, Smart Fit entered the mar-
ket with plans starting at US$ 15, depending on the location and
plan. The sign-up process was
very simple and could be done either at a club or over the
internet. Filling out a form with basic
information and choosing a payment method (either debit or
credit card) and payment date (the
5th, 10th, or 20th of the month) were the only information
required. There was no cancellation
fee, just the annual maintenance fee. Smart Fit’s revenue model
depended highly on recurring
payments. These long-term arrangements reduced churn and
defaults, making it possible to ope-
rate with more aggressive prices.
On their first day at a facility, a new member would look for an
instructor (wearing a yellow shirt)
to set up a program based on their objectives – for …

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