Business Strategy of Manchester United and Macpac - Assignment Example

MG3413- Business Strategy of the Name of the Concerned Professor November 26, 2009 MG3413- Business Strategy Assignment Part A Answer 1: The success story of Manchester United could be evaluated in the backdrop of an environment marked by sky-high business aspirations and aggressive marketing clouded by a polarized public opinion. The club has avid fans cherishing the club’s association with the glory of sports on the one side and a significant proportion of dedicated detractors who loath the club’s shift from being a prominent social and cultural organization to a corporate entity working on the principles of profitability. It was Louis Edwards’ son Martin Edwards, who initiated the task of metamorphosing the club into a corporate organization, by converting it into a listed company in 1991. With the evolution of the club into a global enterprise, a significant proportion of the authentic supporters of Manchester United felt alienated by this novel trend towards profit maximization and corporate sponsors. The bursting coffers of Manchester United started attracting hostile takeovers by early 2005. In particular, coveting aspirations of the American investor Malcolm Glazer, least interested in football, commensurately attracted the ire of the Shareholders United, a front of small shareholders owing a sincere allegiance to the club. An impressive number of supporters even managed to float a parallel club. Eventually, Glazer managed to have his way by purchasing a majority stake in the club. The British government preferred to leave the matter to the shareholders. In this altered scenario, Glazer came out with his aggressive corporate plans. In the meantime, the Shareholders United not only swelled in following, but also managed to garner free legal representation and popular financial and organizational support. Glazer attempted to dilute such opposition by dedicating some funds for the upkeep of sports and the sportsmen. By June 2005, United reverted to private ownership, courtesy the loans accrued and the support of old veterans. In the existing scenario, the club seems to be the cause of rift between its businesses minded owners and its dedicated fans and small shareholders. In the post Glazer scenario, the club has undoubtedly managed to do well, going by its augmenting fan following around the world, the generation of massive revenues, bee lining sponsors and lucrative merchandizing. Therefore, for the time, the things definitely stand to be propitious for United. However, considering the immense growth potential of football as an international sport, the owners may loose to the upcoming competition from other clubs, if they fail to strike the right balance between profit motives and the essential spirit of the sport represented by Shareholders United. To begin with, it was the support of the grassroots followers, which endowed Manchester United with its awesome image and brand appeal. Other competitor clubs like Chelsea and Real Madrid have already started taking advantage of the United’s alienation from its support base. The recent failure of Manchester United in European Competition is also largely attributable to its neglect of the quintessential ethos of football, as cherished by the masses or perhaps the actual customers. Words: 510 Answer 2: There is no denying the fact that Manchester United being a potent and reputed cultural, social, national and corporate entity had multiple stakeholders involved and interested in its takeover. Its goes without saying that a number of individuals and groups stood to be affected by the takeover of Manchester United, and had the potential to affect the takeover of this club. The stakeholder map represented by the Fig 1 does help the identification and positioning of the stakeholder groups involved in the takeover of Manchester Unit. Broadly speaking the stakeholder groups involved in the takeover could be classified into two categories that are internal stakeholders and external stakeholders. STAKEHOLDER MAP INTERNAL STAKEHOLDERS EXTERNAL STAKEHOLDERS EMPLOYEES SOCIETY GOVERNMENT SHAREHOLDERS MANAGEMENT MANCHESTER UNITED CREDITORS CUSTOMERS OWNERS COMPETITORS FIGURE 1 The internal stakeholders included: 1. Management- The old management stood to oppose the possible takeover by Glazer. Once the ownership of the club was wrested by Glazer, the managers like Sir Roy Gardner chose to resign, while others like Chief Executive David Gill and Sir Alex Ferguson sided with Glazer and helped him consolidate his control over United. 2. Owners- In a pre-takeover scenario, the clubs biggest shareholders that are J.P. McManus and John Magnier in a way represented the ownership of the club. The group represented by these individuals decided to sell their stocks to Glazer in March 2005. 3. Employees- The employees did not seem to play a crucial role in the takeover, though they certainly helped United in accruing a reputation that helped it emerge as a successful listed company, which attracted the hostile takeover bids. The external stakeholders included: 4. Shareholders- While the major shareholders divested their holdings to Glazer, the small shareholders organized themselves into Shareholders United that not only opposed the takeover of United by Glazer, but also professed to safeguard and represent the true social and cultural persona of Manchester United. In the years following the takeover, Shareholders United not only augmented its support base, but also managed to garner free legal representation and the support of corporate and organizational entities like Asda, Virgin Records, JJB Sports and FIFA. Shareholders United conclusively enjoyed an influence over the fans and supporters of United. 5. Creditors- The creditors spearheaded and represented by Malcolm Glazer constituted the main stakeholder group involved in the takeover of Manchester United. 6. Society- The social forces played a central and pivotal role in the takeover as United was deemed an important social and cultural phenomenon. 7. Government- The British Government also stood to be a main stakeholder. First, it blocked the plan involving the takeover of United by BSkyB. Later, it chose to be silent in the scenario managed by Glazer, leaving the decisive power to the shareholders. 8. Customers- The customers in a way helped invite the hostile takeovers, by helping United become a successful global enterprise. 9. Competitors- Rise of the competitors like Chelsea and Real Madrid certainly influenced the dynamics of takeover. Words: 500 Assignment Part B Answer 3: Macpac came into existence in 1973 as a one man led start-up focusing on manufacturing and selling specialist outdoor and sports equipment and packs. The ingenuity of Macpac consisted in coming out with an original idea. In the 70s, very few manufacturers dealt in the outdoor equipment and packs. In the next 7 years, Macpac consolidated its business amidst the select outdoor retailers. In 1980, Macpac merged with Wilderness Products, a move that not only brought new ideas and talent to the company in the guise of Geoff and Shelley, but also consolidated the position of Macpac as the sole provider of outdoor products in New Zealand. In 1980, Macpac started selling its products in Australia. During that time, McIntyre realized that Macpac needed to develop its own unique work culture to assure the company’s success in the local and international markets. This culture extended a sense of ownership to the staff and managed to overcome their initial hesitation to adopt new ways of doing things. This increased efficiency and skills and drastically reduced the cost of labour. With the passage of time, as McIntyre’s managerial and financial acumen enhanced, he succeeded in introducing a participative culture within the organization. In 1987, Macpac entered the European markets and broadened its brand appeal to appeal to the niche customers. In the early 90s, Macpac established a marketing team to consolidate its brand appeal accrued over the years. In the mean time, Macpac developed new accounting and computer systems and introduced total quality management systems, after taking a hint from the successful companies like Toyota, Nissan and Interlock. Macpac also encouraged a close cohesion between the management and the staff and discouraged hierarchy oriented systems. By 1995, the focus of performance reviews was shifted from individuals to teams, which bolstered ingenuity and initiative within the organization. In 1996, Macpac did away with agents in Australia and Europe and started selling its products directly to the retailers. All this while, Macpac considered shifting its manufacturing activities to Asia. However, poor quality standards in Asia left it committed to local manufacturing. A combination of such innovative ideas and the courage to make mistakes and to learn from them made Macpac a successful company by 2001. Macpac had to face many problems between 2001 and 2005. Post 9/11 scenario led to a marked plummeting in the sales of Macpac. Therefore, the company had to shift its focus from being a committed outdoor equipment manufacturer and seller, to take a broader perspective to focus on fashion. The altered scenario did not hamper the brand image of Macpac as being associated with high quality, yet the customers started vying for something less expensive and affordable. This translated into massive losses for Macpac. Eventually Macpac decided to shift its manufacturing activities to Asia to offer competitive prices to its customers. However, this failed to stimulate rapid growth in the presence of the competitors who had already adapted to the altering market trends, much before Macpac. This demise of New Zealand based manufacturing also took a heavy tool on Macpac’s culture of inclusiveness and profit sharing and shattered the family feeling within the organization. Words: 510 Answer 4: In the 90s, the focus of Macpac was to recruit and nurture employees that blended seamlessly with its organizational culture and priorities. However, with large scale lay offs in 2003, the company decided to revise its role allocation policy to depute its scarce staff to activities hitherto considered not so important, such as designing and logistics. With the shifting of manufacturing and warehousing operations to Asia, the company needed to develop a new business model. In the altered scenario, the exchange rate complications also posed many challenges. Macpac took care of these problems by hiring external consultants, shifting the onus for raw materials purchase to offshore manufacturers, adopting new budgeting strategies and revising its profit sharing oriented bonus structure. With the expansion of manufacturing and warehousing activities in Asia, logistics assumed heightened importance at Macpac. Care was taken to assure that sales trends and stock levels were methodically calibrated with each other. In addition, Macpac faced a new problem of coming out with apt assessment systems to evaluate the performance of its multiple suppliers. IT and computing certainly helped a lot in such a scenario. Managing multiple manufacturers located in China, Vietnam and Philippines was never so easy. While some manufacturers stood to be reliable as far as quality and efficiency was concerned, manufacturers placed in China required monitoring from New Zealand. Managing quality at its offshore manufacturing units always posed a grave challenge before Macpac. With overseas markets accounting for 65 percent of the sales, Macpac decided in favour of a New Zealand based sales team owing to its affinity to products and designing activities. Besides cost effective competitors and volatile apparel markets keeps Macpac perpetually on its toes. Macpac also decided in favour of being innovative with its designs and took pains to educate its consumers about its products to assure brand loyalty. The designing team was given a free hand and was continually encouraged to come out with novel range of products. The company also shifted its focus to marketing and appointed a brand manager. The challenge before Macpac was to tag its New Zealand heritage effectively with its range of outdoor equipment and products. A dire need was felt to also focus on less serious and more urbanized outdoors. However, the company succeeded in associating the rugged image of its New Zealand origins to its hardcore outdoor products, the new challenge was to associate the clean and green image of New Zealand with the products churned out for mass markets. The biggest challenge before Macpac is to assure that its new leadership not only stands to be conversant in strategic planning, but also has the intuitive wisdom that made Macpac a success over the years. The company intends to retain and preserve its quintessential values and ethics at any cost. Words: 500 Total Words: 2,000 References Johnson, Gerry., Scholes, Kevan & Whittington, Richard (2007). Exploring Corporate Strategy: Texts and Cases. 8th edition. New York: Financial Times/Prentice Hall. Read More