1. 0 Introduction Strategic Management focuses on the long-term scope and direction of the organization which enables it to achieve advantages through matching resources to the changing environment to meet the need of the market and fulfill stakeholder’s expectations. The following is a strategic analysis of Manchester United, a member of the Barclay’s Premier league in the 2009 – 10 football season. This analysis is divided into three parts, namely; Market environment Analysis, Football Club Strategic Analysis and Strategic fit analysis. Table of Contents Chapter Topic Page 1 Introduction I 2. 0 Market Environment Analysis 1 2. 1
The Barclay’s Primer League 1 2. 2 PESTEL Analysis 2-3 2. 3 Porter’s Five Forces Model 3 – 4 2. 4 Critical Success Factors 5 2. 5 Summary of Opportunities and threats. 6 3. 0 Football Club Strategic Analysis 7 3. 1 The Club: Manchester United 7 3. 2 The Value Chain 7 – 9 3. 3 The value network 9 3. 4 Manchester United’s Resource Analysis 10 – 11 3. 5 Manchester United’s financial position 11 – 12 3. 6 Strategic Capabilities: 3. 6. 1Threshold capabilities 3. 6. 2 Unique Resources 3. 6. 3 Core Competencies 12 12 12 . 7 Summary of Manchester United’s strengths and weaknesses. 13 4. 0 Strategies Fit Analysis Strategic Management Strategic Management focuses on the long-term scope and direction of the organization which enables it to achieve advantages through matching resources to the changing environment to meet the need of the market and fulfil stakeholder’s expectations. The following is a strategic analysis of Manchester United, a member of the Barclay’s Premier league in the 2009- 10 football season. This analysis is divided into three parts, namely; 1- Market environment Analysis, 2- Football Club Strategic Analysis and 3- Strategic fit analysis.
INTRODUCTION- The Barclays Premier League The Premier League started on the 15th August 1992 after it was established as a limited company, it comprises 20 clubs. It is the world’s most popular football league and the most lucrative, being able to attract the most talented players from around the globe. Increased revenue has enabled the English clubs to compete globally with respect to transfer fees and wages which has resulted in some of the best overseas players participating in the Barclays Premier League.
When Burnley was promoted in 2009 to the total number of football clubs to have played in the Premier League rose to 43. There were only 11 non-British or Irish footballers in the Premier League in 1992, five years later in 2007 the number of overseas players had increased to over 250. Overseas players, as well as managers have contributed to the development of the British game. When Burnley was promoted in 2009 to the total number of football clubs to have played in the Premier League rose to 43. The Barclay’s took up sponsorship of the league in 2004 and the league as first called the Barclay’s Premiership, later from 2007 until 2010 the league is called the Barclay’s Premier League. 1. 1 Market Environment Analysis Conditions in the market environment that Manchester United Occupies will be analysed using the following; PESTEL analysis, Porter, BCG Matrix, Porter’s Five Forces and Critical Success Factors. PESTEL Analysis PESTLE analysis is concerned with the Political, Economic, and Social, Technological, Environmental and Legal issues that influences the possible success or failure of particular strategies.
Identifying these factors will help to analyse the external environment in which the business operates. Political The Political climate is very stable. The Federation of International Football Association (FIFA) is the main governing body for football associations worldwide and protects local football associations from political interference. The Barclay’s Premier League and other football leagues, although governed by their own rules must therefore be complaint to the standards and regulations set by FIFA.
Economic While most economies have been experiencing decline in some sectors, Football continues to be one of the world’s most popular sports and generates significant revenues for countries, football associations, leagues, clubs and players across the globe. The Barclay’s Premier League is the world’s most watched league and the most lucrative, the most talented players from across the globe participates in this league. Social Sport is a major unifying factor locally, regionally and globally.
The Barclay’s Primer League provides entertainment to millions of fans while bringing together top players from different countries to play side by side and compete against others. Football provides career opportunities for players and breaks down barriers of race, social status and nationality thus allowing them to realise their dreams. Furthermore many young men see football players as role models and are inspired by their achievement to achieve greatness in sport and many other areas. Technological Improvements in technology have revolutionized the way football is viewed allowing for immediate replays and slow motion viewing.
Additionally scores can now be sent directly to mobile phones allowing fans to keep track of their favourite team’s success during the season. Environmental Issues such as proper disposal of garbage during and after matches are of key importance as being seen as a major source of pollution is likely to result in negative publicity. The noise levels at matches must also be considered. Legal Local employment laws in different countries will impact upon the club’s ability to obtain overseas player’s and should be critically examined similarly, immigration laws would affect the issuance of work permits to foreign players.
Government regulations to protect fans from fights and football hooliganism must be considered. Porter’s Five Forces Model The Five Forces Model developed by Michael Porter has proven to be a useful tool for analysing the market environment. These competitive forces are: the threat of new entrants into an industry, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and the extent of rivalry among competitors in an industry. The threat of new entrants
The threat of new entrants describes the possibility that the profits of established firms may be eroded by the entry of new competitors in the market. Threat of entry is dependent on barriers to entry in the industry such as high capital requirements and product differentiation exists. Starting a professional football league requires a large financial investment to compete. Additionally, the strong brand image of the existing football leagues and customer loyalty proves to be another barrier, as entrants would have to invest large sums of money in order to overcome this.
The bargaining power of buyers Buyers may pose threats an industry by forcing prices down, bargaining for more services and playing competitors against each other thus negatively affecting industry profitability. The buyer group is powerful if the service being purchased is standardized. Fans may switch from the BPL to view other leagues. The bargaining power of suppliers Suppliers can exercise bargaining power over companys in an industry by threatening price increases or reduce the quality of products and services.
Where the supplier’s services are important to the success of matches and the league suppliers will have significant power. The threat of substitutes Industries producing products and services that offer similar benefit are a source of competition and limit the potential returns of an industry. Substitutes such as cricket, other sports and different forms of entertainment limits the price of match tickets and other commodities thus negatively affecting profitability. The intensity of rivalry among competitors
Competitive rivalry describes competition between firms with similar products and services aimed at the same target market. The degree of competitive rivalry in an industry will be high if there is a slow growth rate in the industry which could turn competition into a fight for market share as each league seeks to expand their sales. Rivalry among competitors will be affected by the size of firms in the industry, where competing firms are similar in size intense competition may result when one competitor seeks to become the most dominant. CRITICAL SUCCESS FACTORS
Critical success factors refer to those product features that are of particular value to a group of consumers. These qualities differentiate the Barclay’s Premire League from other leagues and hence the organization must excel in these areas to outperform its competitors. These areas include: Branding, Customer Service, Superior Intellectual Capital, Excitement and Entertainment. Branding Barclay’s Primer League has a very strong brand image, the league is synonymous with highly skilled footballers playing very competitive matches and providing entertainment of the highest quality to millions of fans.
Customer Service The Barclay’s Premier League can boast of the best customer service in the market. Providing fans with the opportunity to purchase tickets online, as well as the opportunity to get scores sent to their mobile phones. Superior Intellectual Capital BPL is the most well organized and best managed football league in the world. The leucerative nature of the football has made it possible to employ some of the world’s brightest and most successful managers, who not only have management knowledge and qualifications but also years of experience in the industry.
Excitement and Entertainment The best and most skilled footballers are sourced from across the globe, thus ensuring that matches played are of the highest quality. 2. 1 Football Club Strategic Analysis Manchester United Manchester United is the most successful team in the history of the Premier League, having captured 11 titles and since the Premier League was launched in 1992 the club have never finished below third. Manchester United aims to be the most successful football club in the world, which is reflected in the club’s culture of achieving success at all levels.
The club always play to win and initiatives are implemented to ensure the provision of excellent customer service, such initiatives include; their commitment to provide value for money in all areas of business, to achieve the highest level of service and to treat all fans of customers with due respect and curteosy and respond to feedback received from them. The value chain and Resource audit will be used to analyse Manchester United’s resource Capability. The Value Chain Johnson et. al. 008 states that the value chain describes the categories of activities within and around an organization which create a product or service. It involves five generic categories of primary activities and supporting activities separated into four generic categories. Primary Activities Inbound logistics Inbound logistics is concerned with receiving, storing, receiving, and distributing inputs into the product or service. Operations Operations comprise all activities associated with transforming inputs into the final product.
Outbound logistics Activities associated with outbound logistics are associated with the collection, storage and distribution of products and services to customers. Marketing and Sales Marketing and sales activities are related to the purchasing of products and services by end users and the inducements utilized to encourage purchases. These include; advertising, promotion and pricing and sales. Service Service include all actions concerned with the provision of service to enhance the value of a product or service.
Manchester United’s use of the internet to obtain and respond to feedback from customers and fans and their superb customer service is essential to providing added value to their services. Supporting activities Procurement Procurement describes the function of acquiring inputs used in the firm’s value chain, and do not refer to the purchased inputs such as land and buildings among others. Technology Development Every value activity involves the use of technology, the club uses a range of technologies including the technology used to ensure that match fixtures, pdated scores and other information is available online. The value network The value network can be described as the set of interorganizational links and relationships that are required to create a product or service, it comprises the supplier value chain, channel value chain and the customer value chain. Since the club cannot undertake all activities from design to the final service to customers, some activities must be outsourced. It is important for the club to identify which activities are centrally important to its strategic capabilities and those that should be outsourced.
Effective management of linkages and relationships in the value network would result in improved value for customers. Profit pools which describe different profit levels at different parts of the value network must also be given careful consideration. Manchester United must identify the areas of greatest profit potential and determine weather the club can successfully carry out the activities given its resource capabilities. Human Resource Management Human Resource Management comprises of those activities involved in the recruitment, hiring, training, managing, development, and compensation of personnel throughout the organization.
Infrastructure Infrastructure comprises numerous activities, including formal systems of planning, finance, quality control, legal and government affairs, quality management and information systems. Infrastructure is a unique support activity as it usually supports the entire value chain as opposed to individual activities. This infrastructure provides a powerful source of competitive advantage for Manchester United. Legal services, for example ensures that the club’s intellectual property is protected through patents, trademarks and copyright.
Manchester United’s resources will be examined by doing an internal analysis of phenomena within the club, tangible resources, intangible resources and organizational capabilities will be examined. Tangible resources This comprises of all assets that are easily identifiable and include the club’s physical and financial assets that are used to create value for its customers and provide quality service. Manchester United’s financial assets include; the club’s cash account, their capacity to raise equity, and borrowing capacity and other assets as identified in the club’s financial statements in appendix 1.
The Old Trafford stadium represents a physical asset, while the club’s patents, copyrights and trademarks are technological resources. Organizational resources include the club’s strategic planning process and their employee development, evaluation and reward systems. Intangible resources These resources are far more difficult to identify than tangible resources. These resources are usually embedded in unique routines and practices that have accumulated over time.
The club’s human resources such as the experience and capability of employees, the skills of manager Sir Alex Ferguson and the effectiveness of work teams. Innovation resources such as technical expertise and ideas as well as reputation resources which include brand name and reputation with customers such as providing value for money and the highest levels of service are all examples of Manchester United’s reputation resources. The club’s culture of success and always playing to win is an important reputation resource that provides a source of competitive advantage for the club.
Organizational Capabilities Organizational capabilities are competencies or skills that company uses to transform inputs into outputs, they refer to the firm’s capacity to combine both tangible and intangible resources over time and using organizational processes to bring about a desired end. Manchester United’s superb customer service, innovativeness of services, ability to hire, motivate and retain human capital and commitment to superior quality have been crucial to the club’s success in the industry. Strategic Capabilities
Strategic capability refers to the resources and competencies of the organization that is necessary to ensure survival and prosperity. It is underpinned by the organization’s resources and the skills and ability with which these resources are deployed effectively throughout the firm’s activities and processes. In assessing Manchester United’s strategic capabilities it is important to differentiate resources and competencies that are at the threshold level from those which contribute to the achievement of competitive advantage and strategic superior performance. Threshold capabilities
According to Johnson et. al. 2008 threshold capabilities are those capabilities which are needed for the firm to meet the necessary requirements to compete in a given market. These may be threshold resources which are required to meet minimum customer requirements , Manchester United’s sophisticated IT infrastructure represents a threshold resource. The club’s ability to effectively use this infrastructure to ensure the required level of customer service is a threshold competency. Successfully identifying and managing threshold capabilities presents major challenges to the club.
Changing levels of threshold capability is likely to result from competitor’s actions as such continuous review and upgrade of IT infrastructure is crucial to the club’s survival. Unique Resources Unique resources refer to those resources that critically underpin competitive advantage and cannot be easily copied or obtained by rivals. Manchester United’s strong, long- established brand image synonymous with excellent quality is a unique resource that the club possesses and underpins their competitive advantage as it cannot be easily copied by other clubs. Core Competencies
The skills and resources by which resources are deployed through a firm’s activities and processes in order to obtain competitive advantage in ways that competitors can copy or obtain. Manchester united may be able to achieve competitive advantage based on their powerful brand and by providing excellent customer service through obtaining feedback from and building relationships with customers and fans. Strategis Fit Analysis The market environment analysis and the football club’s strategic analysis will be used to evaluate the strategic fit of Manchester united and highlight strength and weaknesses.
Strategic fit implies the change or use of the firm’s strategic capabilities in order to take advantage of the opportunities within the eternal environment. Manchester united can achieve strategic success by taking the following actions. Firstly, the club can capitilize on the global coverage that football enjoys and invest more in advertising and promotion to further enhance their brand and achieve greater customer loyalty and increased market share. This would fuel demand for their products such as merchandise and other commodities across the world.
The high demand for tickets to the club matches at Old Trafford may be of greatest benefit to the club if Manchester United will build a larger stadium. Thus enabling more supporters to attend the games, since tickets to attend such matches are sold out expanding the stadium would significantly increase sales revenue from match tickets and hence profitability. The Barclay’s Primeir league is the best well organized football league in the world, the club’s success at the league having won ten titles further reinforces their commitment to becoming the most successful club in the world.
Market research as well as research and development into new products and services would enable the club to offer a diversified portfolio and to expand into new markets. The rigid management structure at Manchester United may make it difficult for them to be innovative and take advantage of opportunities. The club’s inability to motivate players is of major concern as it caused them to lose the best player in the world.