GNC Holdings, Inc. Essay Sample

10 October 2017

GNC was founded by David Shakarian in 1960s. and specialized in yoghurt and other healthy nutrient such as honey. grains. and “healthy sandwiches” . Due to increasing demand. GNC expanded shops throughout the United States during the seventiess. However. the outgrowth of other rivals in the external environment and hapless direction internally lead to a hard period of clip for GNC during the 80s. After Jerry Horn took over as President and implemented major alterations in 1985. GNC had a fresh start and continued to turn. GNC is now the largest planetary forte retail merchant of nutritionary merchandises: vitamin. mineral. herb tea. and other forte addendums every bit good as athleticss nutrition. diet. and energy merchandises. Order victor:

GNC non merely provides top quality merchandises but besides provides the top quality in client service. GNC’s order victor is top quality. GNC provides superior degrees of public presentation in their merchandises by holding a “truth in labeling policy. ” High attending to research and new scientific find AIDSs in GNC’s rule of quality foremost. They are “constantly updating preparations to optimise quality. efficaciousness. and deliver of active ingredients” ( GNC Livewell ) . The GNC trade name goes through several cheques to guarantee quality including: natural stuffs proving. pureness proving. authority proving. merchandise freshness and bundle unity. merchandise traceability. and microbiology testing ( Quality you can swear ) .

Supply concatenation:

Recommendations:
1. Better real-time information about stuff demand and production agendas 2. Find ways to maintain drawing in possible new franchisees to sell the finished goods 3. Continued observation of franchise conformity with GNC’s policies

Competitive Precedences:
The Increase in internet concerns within the addendum industry has brought on typical competitory precedences. low monetary values. and many trade names with similar merchandises. SWOT analysis
Strengths| Weaknesses| Opportunitys| Threats|
1. Real-time 2. Piece-picking Method3. Order customization| higher monetary value than some competitors| a wider planetary range than US-based online companies because of nice trade name reputation| other competitors’ lower price|


Company Background
GNC began in 1935 as a little wellness nutrient shop called Lackzoom. which was located in Pittsburgh. Pennsylvania. It was founded by David Shakarian. and specialized in yoghurt and other healthy nutrient such as honey. grains. and “healthy sandwiches” . Within six months. Shakarian had made adequate money to open a 2nd location. but both shops were destroyed by a inundation in 1936.

Shakarian finally was able to reopen both locations. and within five old ages. had even expanded to six shops in the Pittsburgh part. During the sixtiess. the demand for natural nutrients and improved nutrition grew. and Shakarian met that demand by opening shops in other provinces. With these alterations came the new name of the concatenation: General Nutrition Center ( GNC ) .

The 1970s brought along farther demand for new “miracle products” which claimed to better head and organic structure. which fueled the company’s enlargement throughout the United States. Gross saless of the stores’ original offerings of wellness nutrients continued to turn. while vitamins and other addendums expanded to stand for about 50 per centum of the company’s gross revenues. General Nutrition Centers besides moved into shopping promenades. giving the company a progressive image. GNC’s enlargement was unhampered. thanks to the deficiency of direct rivals. The company besides sold via mail-order. The company was publicly-owned by this clip. but Shakarian controlled 80 per centum of the stock.

The 1980s were unkind for GNC: supermarkets and drug shops began to hone in on GNCs market by transporting an increasing sum of wellness nutrients. in response to turning consumer demand. every bit good as larger choices of vitamins. which cut down GNC’s net incomes from nonproprietary addendums. The company had besides been ill managed. over-expanding its merchandise line to transport excessively many goods which either sold ill or took gross revenues from other merchandises. and giving excessively much floor infinite to low-margin nutrient points. Some GNC shops were excessively close to one another. and poorly-performing shops were harming the overall underside line. The company was besides plagued by cases and ailments affecting anything from false claims about vitamins to financial improperness.

In 1985. Jerry Horn took over as President and implemented major alterations. He eliminated underperforming shops and set up a system to root out underachievers. He besides eliminated 30 per centum of GNC’s offerings and changed the layout and merchandise mix of shops to better entreaty to consumers. About all points were repackaged and new merchandises such as tegument and hair attention merchandises were introduced. The company began appealing more to body-builders and serious jocks with nonprescription weight-gain and energy addendums. Horn initiated communicating with the FDA and targeted new advertisement toward fitness-conscious consumers. He besides initiated a franchise plan. which increased gross revenues and encouraged company growing.

GNC continued to turn through the 1990s. adding over 2. 000 shops. The company besides experimented with new types of shops. such as the Live Well shops. which offered epicure wellness nutrient and upscale wellness and beauty merchandises. while partnering with outside houses to develop new wellness merchandises which it could sell entirely in GNC shops. GNC partnered with Rite Aid drug shops in 1999 to open GNC locations within Rite Aid shops and for GNC to fabricate a new line of vitamins and nutritionary addendums called PharmAssure which both Rite Aid and GNC would transport. and to fabricate Rite Aid’s private label vitamin line. The company besides abandoned its “wellness food market stores” ( Funding Universe ) .

GNC was acquired by Numico. a babe nutrient and clinical nutrition company. sold to Apollo Management in 2003. and purchased by Ontario Teachers’ Pension Plan and Ares Management in 2007. GNC went public at 16 dollars per portion. and trades on the NYSE as “GNC” . GNC operates 3. 046 company-owned shops in the United States. and has experienced 26 back-to-back quarters of positive domestic company-owned gross revenues growing. It holds 924 franchise locations and 1. 590 international franchise locations in 53 states. GNC offers over 1. 800 SKUs. including both third-party and proprietary merchandises.

Shakarian passed off in 1984. but GNC continues to spread out upon what he built. while keeping its initial roots in Pittsburgh ( the universe central office is merely two blocks from the original Lackzoom location ) . GNC is now the largest planetary forte retail merchant of nutritionary merchandises: vitamin. mineral. herb tea. and other forte addendums every bit good as athleticss nutrition. diet. and energy merchandises. Order Winner

GNC delivers both outstanding client service and merchandise quality. GNC is “one of the world’s largest companies devoted entirely to bettering the quality of lives: by supplying better nutritionary information. promoting healthy decision-making and finally. imparting a manus to healthier populating. From scientific research to fabrication and packaging procedures to the manner they interact with clients in the shops. GNC takes on each function with strict quality and client satisfaction in mind” ( Quality you can swear ) . Because of these factors. GNC’s order winner—what sets them apart from the competition—is top quality. GNC provides superior degrees of public presentation in their merchandises by holding a “truth in labeling policy. ” “The retail merchant sets the criterion in the nutritionary addendum industry by demanding truth in labeling. ingredient safety and merchandise potency” ( Licensing Health ) . All GNC merchandise labels comply with the Dietary Supplement Health and Education Act criterions along with supplying excess quality information the consumer will be able to utilize to do the most informed merchandise pick.

Every GNC label characteristics: Easy to read merchandise name. authority of merchandise. bringing type. information sing the ingredients in the preparation of the addendum. clear recommendation of usage. grounds claims about merchandise ingredients. allergen warnings. toll free client service figure. and day of the month vouching the contents are fresh and potent ( Quality you can swear ) . “Three in four consumers agree they trust GNC to supply the highest quality merchandises on the market. With 150 quality cheques. they guarantee the client is acquiring what they pay for” ( GNC Franchising ) . GNC besides ensures all their merchandises are packaged in safety sealed. tamping bar immune packaging in order to do the clients feel confident in buying their merchandises. It besides “helps vouch the addendums purchased are the freshest. safest and highest-quality addendums available” ( Quality you can swear ) .

High attending to research and new scientific find AIDSs in GNC’s rule of quality foremost. GNC spends 1000000s of dollars on research and development of new merchandises each twelvemonth ; even making some of their ain surveies on merchandise ingredients. The GNC trade name puts all their merchandises through clinical tests completed in reputable universities and research centres. This allows them to be up to day of the month on new information and clinical tests. Consequences from clinical surveies can play a valuable function in beef uping and formalizing the selling claims and efficaciousness of bing merchandises and ingredients. and they provide the footing for new. more effectual expression ( Quality you can swear ) . The research GNC conducts “follows Good Clinical Practice guidelines. and has been presented at national scientific conferences” ( GNC Livewell ) . GNC strives to convey new and improved evidence-based addendums into the market. GNC ensures their merchandises run into both domestic and international quality criterions.

They take great pride in the quality and fabrication process’ “GNC’s pioneering quality criterions were used as a paradigm for the development of the FDA’s current Good Fabrication Practices” ( GNC Livewell ) . Testing is non merely done on all natural stuffs but is besides done on concluding merchandises to guarantee top quality. GNC is go oning to bring forth their ain private-label top quality merchandises and addendums in their province of the art research and development installations. They are “constantly updating preparations to optimise quality. efficaciousness. and deliver of active ingredients” ( GNC Livewell ) . The GNC trade name goes through several cheques in guarantee quality including: natural stuffs proving. pureness proving. authority proving. merchandise freshness and bundle unity. merchandise traceability. and microbiology testing ( Quality you can swear ) .

Although the FDA does non modulate addendums. many of the GNC trade name label merchandises go through a series of trials to guarantee quality before they reach the customer’s manus. For illustration. GNC Triple Strength Fish Oil is tested by a private sector group of the FDA to vouch there is non any quicksilver or lead in their merchandises. ( Necessitate A SOURCE ) . GNC non merely provides the top quality in merchandises but besides provides the top quality in client service. “The company has earned a planetary repute for selling the highest-quality vitamin addendums and other wellness and natural nutrient merchandises. while supplying first-class client service and huge merchandise knowledge” ( GNC Bringing the Finest ) . All GNC franchise operators receive preparation in a three-part procedure. “The plan includes local in-store preparation. schoolroom preparation in Pittsburgh. and on-site support in the shop during the gap week” ( GNC franchising ) . Training is besides available to shops when new merchandises are developed. By maintaining the employees up to day of the month. GNC has the ability to urge and orient each customer’s order to exactly what they are looking for.

Competitive Precedences
GNC has overcome many of the challenges that face a distribution centre. The addition in Internet concerns in the addendum industry has brought on a distinguishable competitory precedence. low monetary value. and same merchandise. These Internet concerns are able to make this by extinguishing the jobber and purchasing heterosexual from the maker. It is disputing for GNC retail merchants to vie with these low monetary values. peculiarly since GNC’s merchandises are known for being more expensive than other options within the market. The inquiry is: How can GNC vie with these monetary values? A SWOT analysis is needed to find the obstructions that will originate. GNC applied this analysis. identified the menace of lower rival monetary values. and developed a scheme for: a supply concatenation which was more efficient. cost effectual. and had lower working capital. Additionally. GNC took advantage of the fact that they are a trade name name. with 1000s of retail shops worldwide. which gives GNC a wider planetary range than US-based on-line companies.

Using these schemes. GNC was able to non merely survive. but thrive. Numerous competitory precedences support GNC’s operations scheme and give them an advantage over the competition. GNC’s supply concatenation was a failing in the early 1990’s: it was non efficient at presenting goods to shops on clip. Lee Karayusuf ( GNC Senior Vice President of Distribution and Transportation at the clip ) said that “we have scalability issues with our DOS-based WMS. our mark carding is done with Excel spreadsheets and our labour direction and transit planning are done manually. This plan will assist us in all of these countries so we can break function our clients. ” In 2003. they implemented DigitaLogistix to cut down cost and working capital. The mark teasing system gave supervisors a elaborate expression at their sections. therefore extinguishing costs from operations.

Besides included in DigitaLogistix. is a computerized qui vive system that recognizes jobs in the logistics country of the warehouse. Last. the buying section has a real-time position on the stock list and what merchandises were received within the last hr. DigitaLogistix therefore assures that the merchandise is delivered on clip and rapidly. which ensures that the merchandises are available on shop shelves to carry through client demand ( mhlnew. com 2003 ) . In add-on to the DigitaLogistics plan. GNC executed a piece picking method to increase high degrees of truth and productiveness. Piece picking method is a “hands-free” attack that lets an operator control an overhead mechanical smuggler to choose specific points and sums in order to carry through orders. Once the merchandise is picked. the merchandise UPC is scanned. and set in the appropriate carton. for the appropriate shop client. After the merchandises are set in the carton. there is a computerized country that closes the boxes and labels the cartons with a shop designation figure. Then these finished cartons are set on a big takeout conveyer to the transportation section ( scdigest. com 2010 ) . The piece picking method and DigitaLogistix give such benefits as bringing velocity and on-time bringing with truth for retail shops and consumers.

Another order qualifier is that there are many merchandises available for a assortment of clients. which allows for order customization. For illustration. GNC has specific vitapacks for jocks. work forces and adult females over the age of 50. persons with bad articulations. and adult females sing climacteric. These vitapacks are tailored specifically to better the individual’s life manner by including certain vitamins. fish oils. exercise addendums etc. GNC besides enhances consumer experience by giving a assortment of merchandises through its retail shops and online shopping catalogue. Although GNC manufactures its ain addendums and many GNC merchandises are available. they besides house the merchandises of other addendum makers. These yearss. purchasers are a batch smarter. and do non like being limited to the merchandises of a individual company. GNC takes advantage of its assortment of offerings to maximise its net incomes. GNC’s Supply Chain

As antecedently discussed GNC’s operations direction scheme revolves around their fulfilling their order victor of supplying top quality merchandises. In order to see that their merchandises are of the highest quality and readily available to clients. GNC needs a strongly coordinated supply concatenation. To accomplish this coordination they place a strong accent on vertically integrated operations. By conveying more of their supply concatenation under their control. GNC is able to supervise quality more efficaciously. Another advantage of utilizing perpendicular integrating is that is enables the overall supply concatenation to be more antiphonal in nature. The ability to be extremely antiphonal to alterations in the industry or client demands provides more flexibleness with production ( GNC Holdings. Inc. ) .

The beginning of GNC’s supply concatenation starts with their natural stuff providers. The chief natural stuffs that they purchase include herbs. gelatin. minerals. and both natural and man-made vitamins. GNC has many sellers that they purchase from. and no individual provider accounted for more than 10 % of natural stuff purchases. From there GNC uses its ain distribution fleet of over 100 trucks to present these stuffs to fabricating installations.

GNC has two chief fabrication installations which are both in South Carolina: one in Greenville and the other in Anderson. For the most portion these installations are used to fabricate proprietary merchandises ( those owned by the GNC trade name ) . These workss and their associated processs are designed to bring forth a broad assortment of merchandises. in different batch sizes. Although there are many different merchandises being made there are still high degrees of quality control. After the fabrication processes. finished goods are shipped to and stored in three regional warehouses located in Leetsdale. Pennsylvania. Anderson. South Carolina. and Phoenix. Arizona.

Once the merchandises are complete the distribution channel splits into three different gross bring forthing sections. The first. and most profitable. section is retail. This section is comprised of two chief merchandising mediums. company shops and the web site. GNC had 3. 046 company-owned retail mercantile establishments as of yearend 2012. many of which are located in traditional or strip promenades. The web site is an extra beginning of retail gross. and offers many merchandises that are non offered in shops. increasing GNC’s merchandise mix. Another benefit of holding a retail web site is the ability to make clients where there are no shops nearby.

The following largest of GNC’s three gross bring forthing sections is their franchises. As of 2011. there are over 2. 500 franchise shops. with over 60 % of them runing internationally. GNC closely monitors these franchise locations to guarantee that they are in conformity with company policies. If non-compliance becomes a reoccurring issue. so they reserve the right to end the franchise understanding. This happened four times in 2011. and in each instance the franchise was converted into a company-owned shop ( GNC Holdings. Inc. ) .

The concluding gross section of GNC is the manufacturing/wholesale section. This section is involved in activities that include bring forthing merchandises for 3rd parties. and selling GNC proprietary merchandises as big sweeping purchases to other companies such as Rite Aid and drugstore. com. GNC has had a strategic confederation with Rite Aid since 1998 in which GNC basically puts a little franchise within their shops ( General Nutrition Companies. Inc. History ) .

The following tabular array lineations some of the cardinal differences between GNC’s 3 gross bring forthing sections: Section: | Number of GNC Employees: | 2011 Capital Expenditures ( $ ’s in 1000000s ) : | 2011- % of Entire Gross: | Retail| 11. 000| $ 29. 311| 73. 3 % |

Franchise| 40| $ 684| 16. 1 % |
Manufacturing/wholesale| 1. 550| $ 7. 534| 10. 6 % |
( GNC Holdings. Inc. )
Issues with GNC’s supply concatenation
One cardinal issue with GNC’s supply concatenation is their high grade of perpendicular integrating. While this is besides a beginning of competitory advantage. it is a hazard because if holds or jobs arise with their fabrication installations they are traveling to fight to run into merchandise demands from their retail shops and other clients. Happenings which could damage GNC’s fabrication efficiency include loss of production enfranchisements. natural catastrophes. and regulative issues including new demands or disobedience effects.



Another key job relates to GNC’s ability to obtain the necessary natural stuffs to bring forth their merchandises. Although. GNC is really vertically integrated along their supply concatenation they still purchase their natural stuffs from sellers. By non being extremely integrated with these sellers. GNC runs the hazard of non being able to buy in the event of natural stuff deficits. Due to the fact that they most probably will non prosecute farther perpendicular integrating by mining for their ain natural stuffs. GNC should seek other ways to go more incorporate with these sellers. Virtual integrating is a possibility here. as GNC could supply better real-time information about stuff demands and production agendas. This would give them a better opportunity of procuring scarce stuffs if deficits occur because the sellers will hold a better thought of how much of and when they will necessitate specific natural stuffs.

One concluding critical issue with GNC’s supply concatenation is their trust on franchised shops. As antecedently mentioned these franchises generate approximately 16 % of entire gross. so they are a big part of the concern and hence necessitate to be managed carefully. If GNC wants to go on to turn and spread out into new markets. they need to happen ways to maintain drawing in possible new franchisees. Besides. continued observation of franchise conformity with GNC’s policies is of import as good. Although they are non company-owned retail mercantile establishments franchises frequently appear no different. so if direction at one of these locations does a hapless occupation running the operation it could reflect ill on the whole GNC organisation. finally damaging their overall repute ( GNC Holdings. Inc. ) .

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