Management in sport industry - Essay Example

Management in sport industry Introduction The modern sports industry is complex in nature. With respect to other industries, the management in sport industry is quite different. The sport industry is improving for over 150 years and it is still continuously growing1. Sports management is known as an area of education as well as business. The administration in sports is directly influenced by new perception of management. In sports management business, the method for success is to create authority and make decision with possible involvement of all members in the organization. The authority of organization is significant instead of control of individual person2. Structure Sports Structure in the USA In the period of 1800s, the aristocratic sports had emerged in the USA for developing sports alongside the ‘English Club’ approach but were unsuccessful. During 19th century, the rich elite clubs were developed but were unable to establish their position in the USA sports culture unlike clubs in England and Europe. In the year 1871, a group was developed for specialized baseball players named ‘National Association of Professional Baseball Players’ and ripped the traditional club system. The body was then renamed to ‘National League of Professional Baseball Players’ by William Hulbert in the year 1876. His strong leadership and administration was known as the base for major improvement in the sport management. The success of the league was to start up the professional league of present times. However, every professional sport does not follow the league structure. For example, sports such as golf and tennis have unique organizational structure1. As the sports industry has changed, it has started to take the shape of business similar to other industries. A successful sports manager must possess the knowledge of sport as well as business. In sports industry, there are three kinds of structure which are sports club, tournament and league. The constant expansion in the sport industry and the significance of sponsors has given rise to the academic area in sports management. Several schools and academies that provide sports course have evolved rapidly in the United States. According to report of ‘North American Society of Sport Management’ (NASPE) there are almost 300 sports programs in the USA provided in sports academies1. According to the research of National Sporting Goods Association (NSGA), the expenditure on sports equipment in the year 2005 was almost 50.3 billion USD. The expenditure on sports wears and shoes accounted for almost 10.9 billion USD and 15.7 billion USD respectively in the year 2005. The following table shows the consumer spending on sports in 20053. Source: 3 Structure of IMG Academies IMG Academies is a profit making sports institution that provides several sporting programs as well as academic learning to students. From elementary level to post graduation level IMG Academy provides several training programs, campaigns, education and coaching to students. The sports structure of IMG Academy includes 13 divisions which are: Source: 4 The institution has appropriate management structure for students. For less obsessive students, it offers an energetic atmosphere. For adults, it provides various creative and pleasurable options to make them more dynamic. Wide ranges of programs can help students to find appropriate time and duration of a program. Strategy and Strategic Alliances Every organization which is related with sports develops strategy. The strategy can be planned or emergent. Planned strategies are anticipated courses of activities and emergent strategies are those strategies which are not essentially anticipated. In sports, business strategy can be developed in two levels, one is corporate level and another one is business level depending on the structure of organization. The following figure shows the relationship between strategy and structure. Source: 5 Corporate Level Strategy Corporate level strategy is based on complete organization. It is the final outcome of business level assessment. Corporate strategy can be of four kinds. Growth Strategy: This is the most preferred strategy for sports companies as every organization desires to expand business. The growth of sports business can be achieved by two ways, one is diversification and another one is acquisition. The diversification strategy helps an organization to expand the business as well as increase the risk. On the other hand, acquisition can be accomplished by following horizontal or vertical acquisition strategies. Horizontal acquisition is to add another division in the usual business by acquiring a competitor company within similar business operation. And, vertical acquisition takes place when any sports organization purchases the distributors or suppliers. It is more beneficial as it can provide supreme control over products of the organization. Stability Strategy: The stability strategy in sports organizations includes raising the cash flow from the business entity by extracting the assets and directing to the fields such as maintenance, research and advertising. Defensive Strategy: Defensive strategy is at times expressed as ‘decline strategy’. An organization employs this strategy when the demand of products or services of a particular sports organization starts to decline. Sports organizations attempt to resurrect the condition and revive. Combination Strategy: Combination strategy is the most renowned strategy in sports industry. In this strategy, an organization attempts to grow certain divisions of their business and simultaneously decline the contribution in other fields. Sports companies can use several strategies for business expansion. It can be accomplished by merger, conquest and joint venture. Business Level Strategy Business level strategy focuses on competing within specific business. In sports business, every division frames its own strategy. The following picture demonstrates the connection between the corporate level and the business level strategy. Source: 5 Business level strategy is applied for accomplishing competitive advantage for any service. According to Porter, an organization can select three business level strategies which are: Cost Leadership: Sports associations can implement this strategy to reduce the price of their products or services and win the rivalry against other competitors. In this strategy, an organization does not focus on new innovation rather it chases the market trend and provides products according to consumers’ demand. Differentiation: In the differentiation technique, sports companies try to differentiate their products or services to become exclusive than other competitors. In this way, companies can impose extra cost for their exclusive products or services. Focus: At times, sports companies direct its concentration towards the demand of any specific market and after that follow the cost leadership or differentiation strategy according to the selected market demand. IMG Academies Strategy In the corporate level, IMG Academy had followed the growth strategy by a series of acquisitions. IMG Academy is a part of International Management Group (IMG). Its main businesses are sports and media. In the year 2007, IMG had acquired Nunet, a media operator which operates almost 200 channels in 20 countries across America, Europe and Africa. The acquisition has helped IMG to get technological support and expand ranges of products. It was a great strategic move of IMG which led the company to improve the service6. In the year 2007, November, IMG had taken over the ‘HOST Communication Inc.’, which is a national organizer of sports marketing, relationship administration and media services. This was another growth strategy for IMG to expand the sports business in college and further expand the abilities as a successful sports management business enterprise7. In the year 2010, IMG had acquired ISP Sports, which operates athletic programs within college. IMG had responded to the change and expansion of sports industry and accordingly made their strategic moves. It has successfully positioned itself in the international marketplace. At present, it possesses multimedia authority in multiple schools and colleges8. In the business level, IMG Academies formulate strategy for each division. At the outset, IMG only focused on certain sports that include Soccer, Tennis, Golf, Football, Basketball and Baseball. In the year 2010, IMG had expanded its business to add more divisions in the sports field, which includes Madden Football, Lacrosse and Softball9. Strategic Alliance Strategic alliance in sports industry can be in form of mutual cooperation, business relationship and joint venture. It is actually developing partnership between two organizations to take advantage of any opportunity or minimize risk in business environment. Strategic alliance is made on the basis of organizational culture and mutual trust5. Strategic Alliance of IMG Academies IMG had made several strategic alliances for business purposes in the form of joint venture to enter in the rising market. For example, in the Indian market, IMG Academics had made joint venture with one of the most leading companies, Reliance Industries and formed IMG Reliance for improving sports business and media presence. IMG Reliance had independently made partnership for 15 years with All India Football Federation (AIFF) which is a central division in Indian football. This business partnership helps to reorganize, renovate, develop, popularize and promote soccer in India to the professional degree. This strategic alliance helped IMG to get every commercial authority to use the soccer assets of AIFF such as media authority, sponsorship, licensing, franchise and advertising permission10. To enter in the sports market of China, IMG had made joint venture with CCTV and formed CCTV–IMG. This partnership helps the company to expand and encourage sports in China11. In the year 2010, IMG had entered Brazilian sports market by establishing partnership with EBX Group and formed IMGX. The reason for this partnership is to take the advantage of Brazil’s rapid financial growth. The intention of IMG through this partnership is to encourage education, create job opportunity and develop a sense of worth among the citizens of Brazil. The joint business enterprise has initiated sports occasions and develops sports academy12. Environment There are multiple environmental aspects that have manipulated the method of function in sports organizations, which are, globalization, government strategy, professionalization and technology improvements. Globalization: Globalization has brought several advantages to the sports. People across countries are now participating in sports and organizations are using sports as a medium that breaks the conventional barrier of gender, geography and demography or religion13. Globalization is the key aspect for modifying the traditional viewpoint of sport. The increased incorporation of global economy has facilitated better communication among manufacturers and customers with better velocity and diversity, and sports is one of the divisions that have successfully taken the advantages. Elite sports occasions such as rugby, football, basketball, tennis and golf are enjoying the exceptional coverage. Sports supporters can enjoy games through television, internet or radio, and know about the progress of their preferable teams through magazine, or newspaper or mobile services. The sports environment has become congregated and organizations strive to take advantage of the niche demand of sports. Government Strategy: Government views sports as a medium of patriotism, financial development, and social development. Government can regulate strategy to control the actions of sports organizations. Many governments support the sports organizations to help in building athletes for state and international level. They support sports organizations to organize major sporting events, assist the development of infrastructure and in return governments seek to influence sports in the region and increase quality athletes for competition. Government controls the actions of sports enterprises by licensing, regulation, taxation, in the fields such as industrial relation and corporate governance. Professionalization: For over 30 years, the sports environment has faced the changes because of professionalization of sports. As the international sports industry increases, the numbers of people whose profession depend on sports have also increased rapidly. Thus, the number of sports management programs and courses are increased and is offered in various institutions. Besides other fields, sports have become an area of career development. Many organizations provide job for coaches, agents and sports managers who perform tasks with lawyer, government strategy consultant, project manager, market investigator, media experts, and volunteers14. Technology Improvement: Improvement in technology has also changed the sports environment. The modernized telecommunication, IT, sports site, advanced sports equipments have changed the function of sports managers and strategies of organizations. The introduction of IT and other associated technologies have major influence on sports environment. The technological progression is increasing day-by-day and will certainly impact on future functions of sports organizations. The technology has made the tasks of sports managers quite easy and has improved the administration of sports as well as other fields. The advantage of technology in sports sector is great with respect to vast data management, record keeping, and other features of sports management. The advent of internet and its potential has blessed the sports industry with more global coverage. Sports organizations can easily advertise their products and services by developing attractive websites. The facilities for training has also enhanced because of internet. It provides an opportunity for an individual to apply for any sports training over internet. In reality, organizations have taken the advantages of development in IT and technology and it is changing the environment of sports and its direction15. Environment in IMG Academies IMG performs with government bodies, NGOs, educational establishments and commercial foundations. IMG has broad knowledge in working with government and assisting on high profile tasks as the sports environment persists to move to a knowledge oriented economy. IMG Academies is expanding the sponsorship range. The activities of IMG comprises of leadership, managing brand image, media allocation, event development, education and CSR. It has work relationship with several governmental bodies such as United States Institute of Peace (USIP), United Nations and American Council for Renewable Energy (ACORE) among others16. With respect to technology, IMG offers room technology for students. It provides wireless network and internet access to people. The portal of IMG allows pupil to access syllabus and particular course assignment. The portal helps IMG Academies to observe as well as manage learning system. The environment of IMG Academies is advanced where teaching is more comfortable. IMG also provides employment opportunities for several divisions of the organization such as marketing advisor, transportation manager, teacher and coordinator17. Culture Culture in sports organization can be explained as in-depth principle, ethics and assumption that are shared by people inside organization. Culture can form the individuality and behavior standard of a group. It provides insight into the internal functioning and principle of any division and provides behavior regulations for employees. A positive organizational culture is related with better employee arrangement, which results in increased organizational effectiveness. Culture can amplify harmony about strategic direction, increased employee performance, and enhanced employee loyalty. Organizational culture is the key to increase loyalty, efficiency and profitability. Culture in sports organizations is vital for organizations’ success and existence. The potential to form new organizational structure to develop strong organizational culture is essential to stay competitive in this unstable business environment. In order to accomplish success in sports business, it is vital to perform culture development activities18. Culture of IMG Academies The culture of IMG reflects the worth of the organization and that of communication. IMG focuses on allocating the right person in each position to promote ingenuity and better work morals. IMG constantly improves the talents of employees by training, culture and prospects. It provides environment for students where they can dream bigger. The culture of IMG is made on the basis of a positive atmosphere which is conformable for students. It inspires people to be energized and liberally express themselves. The passion and enthusiasm is always acknowledged in IMG and every person in organization can enjoy the satisfaction and feel proud of being a part of organization. The spirit of improvement is saturated throughout the culture of IMG. IMG Academies creates a strong student and teacher relationship which is the foundation for communication and sharing. The organization successfully balances the education with sports and prepares students for next level. Students at IMG Academy can take benefit of every supplementary activity. IMG Academy successfully encourages the leadership, self confidence, commitment and teamwork among students. IMG culture also teaches the students about the importance of keeping the earth clean and preserve green revolution. IMG inspires discipline among students by maintaining proper dress code and participating in special occasions and activities. IMG Academies’ culture generates a sense of honesty and reliability and can be capable to turn a boy into a man. It generates an eagerness for success by providing a better environment. IMG Academies has on-campus medicine clinic, laundry system, private storeroom and mail delivery, in room technology, good transportation system, and good supervision which provides a positive organizational culture9. Conclusion The sports business is directly affected by the organizational structure, strategy & strategic alliance, change in environment, and organizational culture. IMG Academies have been able to successfully differentiate its business and has increased the value. It has good knowledge in formulating strategy and has taken appropriate steps to expand its business. It has strong organizational culture and has successfully developed strategic alliances with several organizations for reaping the benefits of market. With respect to sport and education, IMG Academies has good brand image and it is continuously maintaining the brand image through proper management and branding. References Elsevier. No Date. “The Sport Management Environment”. “Sport Management: Principles and Applications”. http://v5.books.elsevier.com/bookscat/samples/9780750666763/9780750666763.PDF Humphreys, B. 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