a) Strategic Advantages of Acquiring East Legon Executive Fitness Club:

1. Market Expansion and Accessibility:
   • One of Azugu’s strategic aims is to make gyms more accessible to people and to open more gyms across Ghana. Acquiring East Legon Executive Fitness Club will help fulfill this aim by providing an established location with a loyal customer base. This acquisition allows Azugu to rapidly expand its market presence without the time and resources required for organic growth.
2. Synergies and Cost Savings:
   • The acquisition could lead to synergies where Azugu and East Legon Executive Fitness Club reduce their aggregated costs by operating together as one bigger organization. For example, they may benefit from bulk buying discounts or obtain more favorable financing deals. Sharing expertise and resources could also lead to more efficient operations.
3. Cost-Effective Acquisition:
   • The East Legon Executive Fitness Club is available at a seemingly low price, which presents a cost-effective opportunity for Azugu to grow its business. Acquiring an established business at a lower price could provide Azugu with a faster return on investment compared to building new gyms from scratch.

Strategic Challenges of Acquiring East Legon Executive Fitness Club:

1. Cultural Integration and Fit:
   • The East Legon Executive Fitness Club operates as a luxury gym with a different business model compared to Azugu’s affordable and accessible gyms. Integrating this different culture into Azugu’s existing operations could be challenging, particularly in aligning the business models and customer expectations.
2. Employee Retention Concerns:
   • There is a risk that staff from East Legon Executive Fitness Club may leave due to fears of job security and changes in the gym’s operational model. This could result in a loss of experienced employees, which may negatively impact the quality of service and customer satisfaction.
3. Equipment Modernization Costs:
   • The fitness equipment at East Legon Executive Fitness Club is outdated by Azugu’s standards. The cost of upgrading the equipment to meet Azugu’s standards may be substantial, potentially reducing the overall financial benefits of the acquisition.

(3 points for advantages @ 2 marks each = 6 marks; 3 points for challenges @ 2 marks each = 6 marks)

b) Ways to Ensure Staff Retention, Motivation, and Loyalty:

1. Clear Communication and Reassurance:
   • Azugu should communicate clearly and regularly with East Legon Executive Fitness Club staff to reassure them about their job security and the company’s plans for the gym. Face-to-face meetings and consistent messaging can help alleviate fears and build trust.
2. Involve Staff in the Transition Process:
   • Engaging staff in the transition process by involving them in decision-making and seeking their input can make them feel valued and part of the new organization. This involvement can help maintain morale and reduce resistance to change.
3. Offer Incentives and Retention Packages:
   • Azugu could offer incentives or retention packages to key staff members to encourage them to stay with the company during and after the acquisition. These incentives could include bonuses, improved benefits, or career development opportunities.
4. Align Organizational Cultures:
   • Azugu should take steps to align the organizational cultures of the two gyms by integrating the best practices from both. Providing training and team-building activities can help blend the cultures and create a unified workforce.