1. INTRODUCTION FOR THE CASE

2. CREST (SAMPLE BASED ON THE CASE)

A. Competitive

B. Regulatory

C. Economic

D. SocioCultural

E. Technological Environment

3. PORTER'S 5(SAMPLE BASED ON THE CASE)

A. BargainingPower ofSuppliers

B. BargainingPower ofCustomers

C. Threat ofNew Entrants toIndustry

D. Threat ofSubstitute Products

PELETON CASE STUDY

PelotoninteractiveInc.:connectingtofitnessathome

Following the May 24th 2021 announcement that polytone interactive Inc.(palitan) intentedtwobuiltitsfirstUSfactoryinvestorswereanalyzingthelongtermimplicationsforpalletandfinancial performance. the new factory in Ohio would be in addition to the companyinvestments in it's manufacturing facility in Taiwan and purchase fitness equipmentmanufacturerPrecorincorporated(Precor).

At the time of the announcement of the new factory in Ohio, also referred two as pelotonoutput park, polytone's chief executive officer and co-founder jaune fully s said" while we willcontinue to invest in our Asian manufacturing footprint as well as our existing facilities in theUS.viaourprecorsites,thenewpolotanoutputparkgivesusamassivestrategiclevertomakesurewe have capacity, quality and economies of scale in our bike and tread product lines tosupport ourcontinuedgrowth foryearsand years tocome.

FITNESSREVOLUTION/INDUSTRY

Spurredbypublichealthinitiativethathighlightedtheroleofexerciseinpreventingdiabetes,obesity and other health issues, The US business market proposed from 2016 to 2021.increasinglyactivebabyboomersandbumpinpercapitadisposableincomeduringthattimealso contributed to the industry growth. easy access to smaller gyms with fewer amenitiesbolstered niche establishment and attracted budget conscious consumers. the number ofpeoplewhopurchasedgymmembershipshad increased264.2millionby2,019.

despite the industry success the COVID-19 pandemic hit the fitness industry hard. some gymswereforcedintobankruptcy:Gold'sGymInternationalInc.filledforbankruptcyinmay2020:24hour fitness USA Inc., in June 2020 And town sports international holdings Ink., in September2020. despite the bankruptcies and a decline in revenue of 13.2 percent in 2020 alone, industryrevenuegrewto232.5billionoverthefiveyearstwo2020.thenumberoffitnessestablishmentstoodat106,213locationsby2020.whileUSstateshadeasedpandemicrelatedrestrictionsbythesummerof2020theindustrywasuncertainaboutwhethergymmemberswouldreturn.

TheUnitedstatesdominatedtheglobalfitnessmarketin2018.theyasmarketstoodat37billion,TheUnitedKingdomat6.3billion,andCanadaat3.5billion(seeexhibit1).

Globally, the physical activity market which include mindful movement ( focusing attention onthebodyAndybreathingduringexercises),sportsandactiverecreation,technology,equipmentandsupplies,apparelandfootwear,wasforecastedtoachieveatleasta5%annualgrowthfrom828billionin2019to21.1trillion by 2023(see exhibit2).

INTERACTIVEFITNESSMARKET

Afocusonfitnessandhealthlifestyles,combinedcombinedwiththeglobalpandemicandworkfrom home requirements sparked the growth of at home workouts and the evolution ofinteractive devices that replicated the gym experience. the traditional gym was facing a host ofa new competitors offering interactive, at home fitness options as well as the revival of somemoreestablishedbrands.

thesizeoftheglobalonline/virtualfitnessmarketwasestimatedatnearly6billionin2019thisgrowto approximately8billionin2020.

NEWCOMPETITORS

EchelonfitnessmultimediaLLC

the privately owned Echelon fitness multimedia LLC(Echelon) Offered a range of connectedexerciseplatforms,includingbikesthecompanyprovideslivestreamedandondimaondfitnessclassesthroughitsFitPassprogram.pricelowerthanpeloton,Echelonproductswerecarriedbyretailerssuchas Walmart, Best Buy,Amazon and Costco.

Tonal

alsoprivatlyownedbytonalcombineddigitalwaitwithartificialintelligencetothereplicatetheweighttrainingexperience.inMarch2021Tonalreceived250millioninannualfundingbringingthe value of the business to 1.6 billion. the company also announced nationwide partnershipwith Nordstrom inc., across 40 locations and saw a 700% year over year increase in sales in2020. however it's popularity brought supply chain and logistics issues prompting its chiefexecutive officer Aly orady to announce in a video interview that the company had make redundantsupplysystem tomeet deliverygoals.

OTHERCOMPETITORS

mirrorfitness

mirrorfitness(mirror)launcheditsinteractivereflectivedisplayin2016andwaspurchasedbuylululemon athletica Inc. in 2020. mirrors full length reflective display was chosen as one of thebest inventions of 2018 by Time magazine. the platform streamed live and on dim and workedout classes costing $39 a month(customers has to purchase 12 months subscriptions). a morepersonalizedtraining sessioncost$40.

TempoInteractiveInc

tempointeractiveInc(tempo)wasaconnectedhomegymthatprovideinstantfeedbackonauser's form for a $39 a month, tempo subscribers had access to live and on demand strengthtraining,includinghighintensityintervaltraining(HIIT),mobility,cardio,andrecoveryclasses.

OLDCONVERTS

NordicTrack

NordicTrackbeganin1975withtheNordictrackskierandquicklygrewtoencompassdozensofmodels. in the late 1990s NordicTrack expanded its fitness brand to include treadmills, includetrainers,strengthmachines,stationarybikes,steppers,andapparel.NordicTrackwaspurchasedin 1998 by iFIThealth and fitness Inc., formally known as ICON health and fitness, the world'slargestmanufacturerofexerciseequipment.it'sinteractivefitnessstreamingplatform,iFITwasavailableonNordicTracktreadmills,inclinetrainers,RoWERS,cyclesandstrengthproducts.iFIThealthandfitnessInc.wasvaluedat7billionandplannedaninitialpublicofferingforfall2021.

bowflex

Popular in the 1990s, bowflex owned by publicly traded Nautilus Inc., Introduced an indoorcycling bike in October 2019. the model featured a low costs connected experience with thetrainer-ledworkoutsandentertainmentoptions.membershipwas199.99dollarsannuallyor

29.99dollarsmonthly.allthecompanyproductwereproducedbythirdpartymanufacturerslocatedprimarilyinAsia(seeexhibit3).

PELOTON:GROWTH

PELOTONessentially created anewcategory of fitness in 2014 when it combined exercisefitnesstrackingandentertainmentonitsnewbike.anditspopularitywasoverwhelming.in2017 Noah wintroub,a vice chair of JP Morgan Chase Co. Describe polotan as the apple offitness. Bloomberg columnist Kyle stock described palatyn as follows "peloton is as much amediacompanyorasoftwareplayas itisagymorequipmentmaker".

palatinessalesgrowthduringthepandemicin2020andearly2021leadtogreatersuccessanda loyal following. the company reported revenue of $758 million at the end of 2020 and 232%increasefromthesame.Thepreviousyear(sheexhibits5).Palatyn'sstockalsoincreasedidyouringthattimebymorethan400%.annualrevenuehadincreased100%eachyearfrom2015to2020.

thecompany'sexpansioncontinuedintothethirdquarteroffiscalyear(FY)2021.totalrevenueincreased141%from524.6milliontwomorethan1.26billionwithrevenuefromconnected fitnessproductsaccountingformorethan1.02billion.revenuefromsubscriptionsincreased239millionfrom98.2million. total fitness subscriptions reached 2.08 million with an average net monthly connected fittnesschurn off 0.31%. in the third quarter of FY20 21, connected fitness subscriptions workout grow239%tomorethan149.5million,withanaverageof26monthlyworkoutspairsubscription(seeexhibit 6).

Brad Olson, chief membership officer, commented on the benefit brought about for pelotonfromthepandemic"wecertainlywanttheworldtogetbacktonormal,justlikeeveryoneelse"hesaid"wedobelievethatthepandemichascompelledconsumerstoreevaluatetheirfitnessroutines, and many have discovered that the best most connected workout can actually beexperienced athome.

julai 2020 data from peloton showed it's US total addressable market continuing to expand.palatyn total addressable market was described as households "that may or may not beinterested in purchasing A peloton product today but could be interested in the future. themarketcomprisedanestimate75millionofatotaldemographicof95millionhouseholdsaged18 to 70 with $50,000 or more and household income(see exhibit 7). the 25 to 34 age groupwhat isthecompany's fastestgrowingmarket(see exhibit8).

peloton had also solved one of the biggest downsides of working out at home by creating adeepandloyalcommunity.inaninterviewwithbusinessinsiderJasonKelly,theauthorofsweetequity, explained "they(palatyn) have managed to use technology to create a sense ofcommunity, so people feel like they are part of something, they get both the convenience andsocialaspect."

VERTICALINTEGRATION

Though palatyn sales soared during the pandemic and market do graphics looked solid for itsfuture, the company could not keep up with demand and experienced long delays in deiliveryand frustrated customers. as a result palatyn made a series of the strategic moves to shortingdeleysandtoachieveitsgoalofbeingthescale,cost,qualityandspeedtomarketleaderintheconnected fitness market. palatyn viewed it's vertical integration and direct to consumercapabilitiesasacompetitive advantage.

ininSeptember2020bellatininvestedinautomationandaddedcapacityit'sShineJiproductionfactoryinTaiwan,expandingto1.5millionunit..InDecember2020,pelitonannouncedIplantoincreaseitstwoyearoldplano,Texas,campusbymorethan9000squaremeters(100,000 square f feet). to allow Anne expansion to member support, sales field operations andcoorporate functions. in its December 2020 quarterly report, palatyn announced "significantadditionalinvestmentsinthenearterm"toshortendelaysdespitetherepercussionsofficeforitsneartermprofitability.inaFebruary2021blogpost,foleywrote,"effectiveimmediately,weare investing over 100 million to help expedit the movement of bikes and treads globally inorder to meet our deilivery commitments, on average in the coming months, we will beincurring a transportation and delivery costs that is over 10 times our usual cost per bike andtread, includinginmanycases shippingthembyairinsteadofbysea. palatyncontinuedtobuilditsUSmanufacturingbase,announcinginDecember2020thatitwastoacquireUSbasedprecor,oneofthelargestglobalcommercialfitnessequipmentprovidersina transaction valued at $420 million. precor markets include commercial clubs and facilities andthe verticals of hospitality multifamily housing corporate and education. the deal wascompleted in April 2021 and enabled bellatin to establish its US manufacturing capacity, boostresearch and development capabilities and accelerate it's penetrations of the commercialmarketing. withtheprecor'saddedmanufacturingcapacityofapproximately58,000squaremeter(625,000square's feet) palatyn plan to produce connected fitness products in the United state by yearend 2021. Palatyn's supply issues however would be addressed in the short term by supplychaininvestmentwithitsthirdpartymanufacturersandTaiwan facilities. finally in may 2021, peloton announced its plans to build its first U S factory in Ohio at anestimatedcostof400millionproductionsofthepeletonbike,bike+,andbulletandtreadwereplanned for the facility starting in 2023. with the addition of the Ohio factory qualiton wouldownorleasemorethan139,000squaremeter(1.5millionsquarefeet)offmanufacturingspaceintheUnitedstatesincludingtheprecorfacilitiesinNorthCarolinaandWashingtonstate.

CONCLUSION

Militants goal of becoming the scale, cost and speed to market leader in connected fittnessmarketdroveitssupplychaindecisions.butcouldn'tmaintainaleadershippositiononmultiplefronts or was the organization vulnerable in a high competitive market Ann would pelotonsplans to build its own fitness equipment in Ohio help or hinder its ability to fulfill its goal ofmarketleadership?