The Impact That Olympic Games Could Have on City Council - Assignment Example

? The impact that the Olympic Games could have on Bedford Council and what the Council will need to do in preparation for the Games Table of contents Executive Summary 3 1. Introduction 3 2. Background 4 3. The impact that the 2012 Olympic Games could have on Bedford City Council – role of the Council and initiatives required 6 3.1 Business environment 6 3.1.1 External Macro-environment – PESTLE analysis 6 3.1.2 External Micro-environment – Porter’s Five Forces model 10 3.1.3 Internal & External environment - SWOT analysis 11 3.2 Human resources 12 3.3 Marketing 12 4. Conclusion 13 5. Recommendations 14 References 15 Appendix 18 Executive Summary Olympic Games are traditionally considered as a means for promoting piece within the international community. However, through the years, the Games have been related to various economic benefits. It seems that certain cities are more prepared than others in order to respond to the needs of such activities. The terms set by the planners of these events are usually similar; marketing is considered as an important factor for the success of such events due to its role in identifying the funds required for the development of these projects but also in promoting the business, cultural and social life of cities hosting the particular events. The 2012 Olympic Games are expected to result to important benefits for London and its surrounding area; Bedford will be also benefited by the particular event but the benefits will be rather long term; the dependency of these benefits on the strategic plans on which the specific event is based cannot be ignored. 1. Introduction Hosting the Olympic Games is considered as a great opportunity for cities worldwide. Usually, the specific event results to significant benefits for the city involved – referring to the city that hosts the Games. However, Olympic Games have been also related to certain drawbacks – for instance the Vancouver Winter Olympic Games which were characterized by the damages caused by riots or the Atlanta Olympic Games during which the explosion of a bomb caused the death of 2 people and the injuring of hundreds, as analysed below. For London, the 2012 Olympic Games are considered as a major challenge. The city has to face the significant social turbulences as reflected in the damages caused by riots across Britain the last 5 days. Moreover, the City has to resolve the following problem: will the benefits of the Games be above their drawbacks/ disadvantages? Moreover, will these benefits disadvantages be equally distributed among the regions surrounding London – where certain of these Games’ events will take place? Current paper focuses on the impact of 2012 Olympic Games on Bedford City Council; the benefits and the disadvantages of the Games for the specific area are estimated – using relevant literature and findings from primary research (statistics and figures related to past Olympic Games). Also, another issue is explored: which would be the preparation that Bedford City Council would have to do for hosting the Olympic Games? Emphasis is given on the following three sectors, as they are influenced by the Olympic Games: business environment, human resources and marketing. The practices used in cities that hosted the Olympic Games in the past are used as the basis for developing a framework of activities/ plans which would be appropriate for Bedford City Council so that the above city to be appropriately prepared for the particular event. The literature published in the particular field has been combined with the statistics released in regard to past Olympic Games but also in regard to London as a host city for the 2012 Olympic Games. It is revealed that Bedford City Council is partially prepared for participating in the Olympic Games 2012 – as a city hosting one or more activities of the specific event. 2. Background Olympic Games have been traditionally considered as a major cultural event, leading to the improvement of relationships among nations. Because of this fact, the Games are often used for causing political crises commonly through violent events: for example, the explosion of a bomb in Atlanta in July 1996 during ‘a concert in the Centennial Olympic Park’ (BBC News 1996). The value of the Games in regard to the cultural and economic development of the countries/ cities hosting the specific events cannot be ignored. In Atlanta, the Olympic Games attracted the attention of an extremely high number of people – the number of tickets sold for the various events of the Games has been estimated to 9 million (Torpy 2010). The benefits of the Games for Atlanta could be summarized to the following ones: publicity for the City, the development of stadiums and parks and the increase of employment across the City (Torpy 2010). Most of these benefits exist up today, showing the potential role of the Games in the improvement of a region’s cultural and economic life. The benefits of the Games for cities internationally are likely to be differentiated being depended on the local ethics and culture but also on the structure of the local business network. The practices used for responding to the needs of the Games are not identical worldwide. For example, in Vancouver Winter Olympic Games in 2010, the failure of the local authorities to control the process – meaning the preparation and the development of the Games – led to a series of failures, such as the traffic problems and the increase of the event’s cost for up to ? 2.4bn (Wilson et al. 2010). However, Olympic Games are also related to significant economic benefits – as in the case of Atlanta and of Sydney where the funds invested by the private sector on construction projects because of the Olympics reached the $1,248.9m (Table 1, Appendix). Those organising and monitoring the preparation of the London Olympics 2012 should take into consideration the above facts; the specific event has many chances to succeed. However, the risks are many. The event should be carefully designed and controlled in order to minimize the risk for severe failures and increase the benefits for local communities. For Bedford City Council, the Olympics of 2012 would result a series of benefits regarding the local business, marketing and human resources. This target would be achieved under certain terms, as explained below. 3. The impact that the 2012 Olympic Games could have on Bedford City Council – role of the Council and initiatives required The 2012 Olympic Games in London could affect many aspects of social and economic life in Bedford. The city’s business environment and employment would be strongly benefited by the specific event. However, the level of the benefits achieved would be depended on the appropriateness of the marketing strategies used. In other words, business activities, employment and marketing in Bedford – as related to the Olympic Games – should be aligned with the needs of the event taking into consideration the resources available. 3.1 Business environment 3.1.1 External Macro-environment – PESTLE analysis The impact of the 2012 Olympic Games on business environment in Bedford would be made clear by referring to the macro-environment in which the specific event will take place – referring to the region’s macro-environment as being similar with the micro-environment of other cities across UK participating in the Olympic Games. In the context of the PESTLE analysis, the macro-environment in which the Olympic Games are going to take place could be analysed as follows: a) Political: traditionally, the political environment in Britain is stable; monarchy is the basis of the country’s system of governance but its role is rather formal – i.e. without the power to intervene in critical governmental initiatives; the government has the responsibility and the power to face all critical issues of the state proposing solutions in emergent problems. Currently, no sign for change in the country’s system of governance exists. The development of Olympic Games in London in 2012 would not be threatened by a potential change in the British politics; current political structure and framework are expected to last for quite a long, b) Economic; the status of the British economy is not satisfactory – if taking into consideration the level of the country’s debt. However, no severe threat seems to exist regarding the 2012 Olympic Games; the projects related to the above event are in progress and the infrastructure required for the Games (stadiums, parks and so on) will be ready on time; the potential increase of the budget of these projects – referring to their completion – is a problem common for Olympic Games – for example, in Vancouver the budget for the development of the Winter Olympic Games of 2010 was increased by ? 2.4bn, a fact that revealed the inability of the local authorities to monitor the relevant projects (Wilson et al. 2010); from another point of view, in Atlanta, the Olympic Games resulted to ‘a $ 5 billion economic impact’ (Lohr 2011), meaning the increase in profits for the products/ services used in the development of the event but also the profits from the use of these products for achieving various social, economic and even personal issues (Lohr 2011). At this point, the following issue should be taken into consideration: c) Social; normally, Britain is a country with no particular social conflicts or turbulences; in the past, the disputes between employers and employees were the most common form of social conflict in Britain; however, a few days ago, another aspect of social conflict appeared in Britain: the protests for the lack of equality in regard to social and personal rights. These protests have been also related to the financial crisis and the decrease of employment rate in Britain – a phenomenon common worldwide. The success of the 2012 Olympic Games in London would be potentially threatened by these social conflicts and protests unless the crisis is effectively managed; the potential expansion of social conflicts because of the 2012 Olympic Games should be also taken into consideration – for example, the case of Vancouver where the Winter Olympic Games of 2010 established the following ‘custom’: the damages on public and private property as a way for showing the opposition to the results of athletic events (Wilson et al. 2010, The Star, 2011), d) technological; technology has been crucial for the success of complex events, such as the Olympic Games. In fact, in events of this size, the ability of the local authorities to provide the necessary technology for the development of the relevant projects is of critical importance for the events’ success; e) Legal; Britain is a country based on the common law framework; the rules governing the various processes of the Games’ are based on the sports law as developed by international organizations, such as the International Olympic Committee (IOC). This means that local laws are applied only at the level that the international laws related to the particular field are not appropriate for resolving a dispute – this fact should not be considered as a limitation of the power of the national law; Olympic Games cannot be considered as a local event; rather it is an event directly related to the international community and for this reason the rules of this event should be primarily based on the international law – the national law would be applicable in cases that a dispute/ problem is not directly related to the Games – as an athletic event – but rather to a common social behaviour, for instance the damages caused by an athlete who is drunk would be rather judged in regard primarily to the local rules – the rules of the Olympic Games would be also applied but just as for the punishment of the person involved as an athlete, for example, prohibition of the athlete to participate in such Games for up to a specific period of time, f) Environmental; Olympic Games are likely to impact the environment. During the Games the number of people visiting an area – where Olympic sports are taken place – is usually high, a fact that leads to another problem: how the environment would be protected by human activities that cause severe environmental damages. In Britain, sustainability is highly promoted in daily human activities, including business and sports. Authorities in Bedford would have to take appropriate measures – in addition to the existing ones – ensuring that the local environment would not be adversely affected by the Olympic Games – referring to the activities/ parts of the Games in which Bedford will be asked to participate, mainly accommodation. 3.1.2 External Micro-environment – Porter’s Five Forces model The Porter’s Five Forces model is based on the following idea: in the context of the global market, each business has to face five forces: a) customers/ buyers, b) suppliers, c) substitute products, d) new entries and e) competition within the industry. The parts of the model are clear in the Graph 1 – Appendix. When referring to the 2012 Olympic Games, the above model would be used for showing the forces that Bedford city – and each of the cities participating in the specific event – would have to face: a) visitors of the games; the local community would be appropriately prepared in terms of infrastructure for responding to the needs of the Games’ visitors (accommodation, transportation and so on), b) the suppliers of the Games would have a crucial role in the success of the particular event; in case that suppliers would increase the prices of their products/ services, then the budget of the Games would be significantly increased, a fact that would negatively affect the city hosting the Games (as in the case of Vancouver, Wilson et al. 2010), c) substitute products; Olympic Games are unique sports events. The use of products of low quality in the particular events would possibly threaten the success of the Games; such practice would be avoided even if the cost of the relevant projects would be decreased, d) new entries; the countries participated in the Olympic Games are of a particular number; in Beijing the participant countries were estimated to 204 – approximately 200 countries, at an average level are likely to participate in the particular event. The above countries represent the whole international community, leading to the assumption that no new entries are expected to appear in Olympic Games; so the relevant threat, as derived from the Porter’s Five Forces Model is extinguished; e) competition within the industry; because of their benefits for the hosting cities, the Olympic Games are likely to cause increased competition each time that the city which will host the next Olympic Games is to be identified. This trend is positive, since it enforces the quality in regard to the products/ services involved in the particular event. 3.1.3 Internal & External environment - SWOT analysis Using the SWOT analysis framework, the impact of 2012 Olympics on Bedford could be analysed as follows: a) Strengths: benefits from the increase of employment, benefits from the improvement of the area – in terms of infrastructure, benefits from the improvement of the city’s image worldwide (increase of tourism, increase of value of property and so on), b) Weaknesses: lack of cooperation between authorities can set the success of the Games in risk (Hack 2010); the benefits from the Olympics may appear with delay (Jones 2011), c) Opportunities: the benefits from the 2012 Olympic Games may last for a long time (Greater London Authority 2011); the case of Atlanta and its long-term benefits from the Olympic Games proves the above fact (Feddersen et al. 2010, City Data, 2009); Bedford city has many prospects to achieve a long term growth due to the city’s existing infrastructure but also the effective cooperation among authorities (Bedford Borough Council 2011); through the Olympics, the potentials of Bedford Borough Council to improve its existing infrastructure and become an important tourism destination would be increased; d) Threats: currently, the social environment in Britain is characterized by strong conflicts which are difficult to be controlled; also, competition in the specific sector – Olympic Games – seems to be continuously increased; it will be difficult for other British cities to place a bid for the specific event – taking into consideration the country’s economic and social challenges. 3.2 Human resources Under normal economic and social conditions Olympic Games are likely to boost employment in the cities involved. In London, the 2012 Olympic Games have resulted to the creation of 10,000 jobs in the construction industry – not mentioning the job positions created in other industries related to the specific event (TNT Jobs 2011). The increase of job positions because of the projects developed in the context of Olympic Games is not always beneficial for the cities involved; in the case of London it has been proved that the 10,000 job positions in the construction industry (as related to the Olympic Games) have been covered mostly by foreigners (Bentham 2009). 3.3 Marketing The success of Olympic Games has been related to the ability of marketers promoted the particular event to attract the attention of consumers worldwide. The above assumption is based on the following fact: today the Olympic Games are likely to be used as a key event for the increase of power of brands; sponsors tend to offer the funds necessary for the development of the Olympic events under the terms that the promotion of their brands to the public will be successful (Lopes et al. 2010). The promotion of brands through Olympic events – and other sports events – is often non justifiable, because there it no link between the brand advertised and the event to which the brand is associated, a practice known as ambush marketing (Lopes et al. 2010). The above practice is often difficult to be controlled by authorities and the managers/ administrators of Olympic Games. From another point of view, the use of appropriate marketing strategies in the context of Olympic Games would lead to the improvement of a city’s image as a global tourism destination – as in the case of Barcelona which become an important tourism destination mostly after hosting the Olympic Games in the summer of 1992 (Duran 2002). It should be noted that the revenues from Olympic Marketing are distributed by IOC as follows: a) the most important share of these revenues is given to NGOs, b) IOC holds just a limited part of these revenues (see Graph 2), aiming to promote sponsorship and cooperation for the further growth of the Games. At the same time, the list of sponsors of Olympic Games seems to be standardized (see Graph 3, Appendix). The chances of other firms to participate in the particular event are limited under the pressure of major financial interests. 4. Conclusion The impact of Olympic Games on cities worldwide is not standardized; in certain cases, Olympic Games have led to severe economic and social problems – as the case of Vancouver Winter Olympic Games 2011 – while in other cases have helped towards the transformation/ improvement of the local community, as the case of Atlanta and the Singapore Youth Olympic Games. Moreover, under certain terms, the benefits of the Olympic Games may delay to appear (Jones 2011), or they can be even differentiated among the cities/ participants, in the context described above. In the case of the 2012 Olympic Games in London, the increased needs of the projects involved have led to the assumption that the success of the event – in terms of its realization – may be in risk due to the lack of adequate cooperation between authorities and individuals for developing the various phases of the projects involved (Hack 2010). On the other hand, if appropriately managed, the funds invested on the preparation of a city for hosting the Olympic Games can lead to a continuous economic growth – as in the case of Beijing where Olympic Games resulted to a 2.5% annual growth of the economy (Business Today 2010). 5. Recommendations For Bedford Borough Council the 2012 Olympic Games are a major chance for achieving a long terms growth. This target would be feasible under certain terms: a) marketing used by businesses across the city should focus on the promotion of Olympic Games – as a major athletic event – and not so much on other athletic events otherwise the popularity of Olympic Games across the city would be threatened (Toohey 2007), b) emphasis should be made not only on the promotion of the economic aspects of the Games but also on their cultural aspects (Yuhua et al. 2008, Great Britain/ Parliament 2009), c) all projects and activities related to the Games would be continuously monitored as of their performance; because of the complexity and the volume of the tasks involved, these projects could be easily delayed setting the participation of the city’s in the Olympic Games’ activities in risk (National Audit Office 2008), d) the funds invested on the Olympic Games – related project should be checked as of their level; often the projects developed because of Olympic Games are more than required, a fact that results to the loss of funds spent on non-necessary tasks and projects (Preuss 2004), e) the participation of citizens in the Games – related initiatives would be strongly promoted by the local media – referring to Bedford City – trying to ensure equality in access to the relevant job positions. References BBC News (1996) 1996: Bomb rocks Atlanta Olympics. Online, available from Bedford Borough Council (2011) Online, available from < http://www.bedford.gov.uk/> Bentham, M. (2009). Influx of 10,000 foreign workers for Olympic jobs. London Evening Standard. Online, available from < http://www.thisislondon.co.uk/standard/article-23657158-influx-of-10000-foreign-workers-for-olympic-jobs.do> Business Today (2010) Post-Olympics Beijing. Online, available from < http://www.businesstoday.org/magazine/temporarily-cancelled-running-bull/post-olympics-beijing> City Data (2009). Atlanta: Economy. Online, available from < http://www.city-data.com/us-cities/The-South/Atlanta-Economy.html> Duran, P. (2002). The impact of the Olympic Games on Tourism. Online, available from < http://olympicstudies.uab.es/pdf/wp083_eng.pdf> Feddersen, A., Maennig, W. (2010). Mega-events and sectoral employment: The case of the 1996 Olympic Games. University of Hamburg, Faculty Economics and Social sciences. Online, available from < http://www.hced.uni-hamburg.de/WorkingPapers/HCED-035.pdf> Great Britain: Parliament: House of Commons (2009). Potential Benefits of the 2012 Olympics and Paralympics for Wales: Eighth Report of Session 2008-09; Report, Together with Formal Minutes, Oral and Written Evidence. London: The Stationery Office Greater London Authority (2011) Lasting benefits from the London 2012 Olympics. London Government – portal. Online, available from Hack, C. (2010). WALTHAM FOREST: Fears raised over benefits of Olympic Games. The Guardian. Online, available from International Olympic Committee (2008). Olympic Marketing Fact File. Online, available from < http://multimedia.olympic.org/pdf/en_report_344.pdf> Jones, C. (2011). Lord Coe: Wales will see 'real benefits' from London 2012 Olympic Games. Wales Online. Online, available from LinkedIn (2011) Statistics about employees at Singapore Youth Olympics Games OC. Online, available from < http://www.linkedin.com/company/singapore-youth-olympics-games-oc/statistics> Lohr, K. (2011) The Economic Legacy Of Atlanta's Olympic Games. NPR. Online, available from London Organising Committee of the Olympic Games and Paralympic Games Limited (LOCOG) (2011). Employment and Skills Update. Online, available from < http://www.london2012.com/documents/oda-publications/jobs-skills-futures/jsfapril11-final-stats-only-.pdf> Lopes, T., Lima, E. (2010) Ambush Marketing In Times Of World Cup And Olympic Games. IP Frontline. Online, available from < http://www.ipfrontline.com/depts/article.aspx?id=24693&deptid=3> National Audit Office (2008). Preparing for sporting success at the London 2012 Olympic and Paralympic Games and beyond. London: The Stationery Office New South Wales Treasury (1997). The Economic Impact of the Sydney Olympic Games. Office of Financial Management. Online, available from < http://www.treasury.nsw.gov.au/__data/assets/pdf_file/0020/6644/TRP97-10_The_Economic_Impact_of_the_Sydney_Olympic_Games.pdf> Nivola, P. (1997). Comparative disadvantages?: social regulations and the global economy. Washington: Brookings Institution Press Preuss, H. (2004). The economics of staging the Olympics: a comparison of the Games, 1972-2008. Cheltenham: Edward Elgar Publishing Preuss, H. (2002). Economic Dimension of the Olympic Games. Centre d’ Estudis Olimpics. Online, available from < http://olympicstudies.uab.es/lec/pdf/preuss.pdf> The Star (2011) ‘Criminals and anarchists difficult to stop:’ Vancouver police chief. Online, available from < http://www.thestar.com/sports/hockey/article/1009755--criminals-and-anarchists-difficult-to-stop-vancouver-police-chief> TNT Jobs (2011) Olympic Games Job Boost. Online, available from Toohey, K. (2007). The Olympic games: a social science perspective. Oxfordshire: CABI Torpy, B. (2010). Legacy of the Olympic Games in Atlanta endures. Atlanta News. Online, available from Wilson, N., Kelly, T. (2010) The Olympics omen: Riots, traffic chaos and ?2.4bn overspend... are the Vancouver Winter Games a portent for London 2012. The Daily Mail. Online, available from < http://www.dailymail.co.uk/news/article-1251291/Fears-London-2012-Olympics-Vancouvers-winter-games-blighted-problems.html> Yuhua, F., Smarandache, F., Christianto, V. (2008). Cultural Advantages in China / Tale of Six Cities. Champaign: American Research Press Appendix Graph 1 – Porter’s Five Forces Model (Source: http://www.google.gr/imgres?q=porter%27s+five+forces+model&hl=el&sa=X&tbm=isch&prmd=ivnsb&tbnid=ZyOrVkrTzW1KyM:&imgrefurl=http://www.investopedia.com/features/industryhandbook/porter.asp&docid=Vuk3ezbSAHVWNM&w=435&h=415&ei=3clCTsvgBsrs-gbpgvGmCQ&zoom=1&iact=rc&dur=493&page=1&tbnh=143&tbnw=150&start=0&ndsp=12&ved=1t:429,r:10,s:0&tx=92&ty=58&biw=984&bih=614) Graph 2 – Olympic Marketing revenue distribution by IOC (Source: IOC 2008, p.5) Graph 3 – Top sponsors of Olympic Games (Source: IOC 2008, p.13) Table 1 – Funds spent by the private sector on construction projects in Sydney in the context of the Olympics (Source: New South Wales Treasury 1997, p.25) Read More