Making Decisions for Strategic Advantage - Assignment Example

1. Using not more than 2500 words, explain the contributions of key authors in TWO (out of three) of the precise topic areas noted below. In each case demonstrate a critical appreciation of the author’s analysis. • Kirzner’s (1997) conception of entrepreneurship in the conduct of new strategies • Zimbalist’s (2003) explanation of different owner motivations of sports teams. • Sheehan’s (2010) conception of a corporate-guided market. Table of contents Introduction Zimbalist argued that the objective of members of sports teams is essential because of the influence it has on the behavior of the team members and the performance of the league. Practically, the objective of the team owners differs depending on the nation, league and the team. Further, the objective of the team members is significantly affected by the relation of the team to additional assets of the team owner. Consequently, Zimbalist presents that there is no league, which has all the members with equal motivations as well as objectives; therefore, the generalization that leagues can have members with similar motivations and objectives is inconsistent and imperfect.i On the other hand, a corporate-guided market is a form of a dominant market through which abundance is achieved. Through corporate guided markets, aggregate spending is also conducted. In order to understand how this market works, it is crucial to put into consideration how corporations succeed at providing a new market for a branded product. Discussion Zimbalist’s Explanation of Different Owner Motivations of Sports Teams Concept of Competitive Balance and Different Owner Motivations Zimbalist illustrates various concepts that motivate team owners in their business. First, he states that the team owners are not primarily motivated by the quest to make profits. Certain team owners are motivated by the social prestige so that they seek to be associated and identified with well-liked and successful sports team. Media publicity accounts for the reasons the team owners are motivated to invest in sport teams.ii Even though profit making is part of the business objectives, it does not count as the leading motivation behind such kind of businesses. The push for power, aspiration for prestige, predisposition to team identification and associated feeling of team loyalty drive and motivate the team owners to invest in league business. In addition, the other motivational reasons for team owners that equate to social prestige include personal fulfillment and enjoyment, commitment to professional sports and satisfaction found in sports.iii Second, a part of the team owners is motivated by the pursuit of profits in sports business. Team owners may be motivated to invest in teams for nonprofit making reasons, making such team owners to be perceived as philanthropists. In contrast, some team owners are primarily motivated to achieve profits out of their investments in the teams. The behaviors revealed by the team owners in pricing regulations and the player salaries demonstrate that profit maximization also accounts for team owner motivations in sport teams. Nevertheless, the ownership motivation involving profit maximization has various inconclusive dimensions to support the hypothesis.iv Third, team ownership is motivated by the need for successful business tycoons to advertise the business products and seek approval of the community in the business they operate. The sports teams are used by these businesspersons to commercialize their ventures in sports sphere.v Furthermore, Zimbalist asserts that team ownership is motivated by the need to publicize business ventures and seek refuge in the federal tax legislation’s development.vi The ownership of teams offers business tycoons tax sheltering opportunities unavailable to other types of ventures. Generally, the various concepts of team ownership motivations discussed above critically imply that the motives and objectives behind team ownership may shift with time, specifically when the values of authorization hit high. The different motivation concepts also advance the notion that the ownership motivations and objectives of teams within a particular league may differ.vii Zimbalist proposed that no leagues exist with the team owners possessing similar objectives and motivations; thus, such generalizations were defective. Alternatively, he argued that the motivation and objective of team ownership depend on the effects of the extra assets that the team owners possess.viii The team behaviors and league performance are potentially influenced by the team owners’ objectives. Team owners motivated by profit maximization are, for instance, more inclined to invest in the success of the team up to the profit making levels. In contrast, the team owners motivated by maximizing wins invest further than the point where additional wins generate the invested costs.ix The marginal revenue required to recruit talent may vary in league teams, resulting in competitive imbalance. This may be because fans in various locations may have the capacity to acquire expensive tickets to witness the winning teams besides certain areas reporting loyal fans who, irrespective of the team’s outcome – either a win or a loss, are not influenced in their ticket payments.x Moreover, competitive imbalance may be created through the establishment of free agency in which the players have the freedom to choose their preferred teams, accepting less pay to be in the team. This practice has effects on the marginal cost of acquiring talent in certain teams, translating into competitive imbalance in the sports league.xi The motivations for team owners in a particular league may differ so that certain team owners are motivated by the desire to maximize their wins whereas others are motivated by the desire to maximize profits. This aspect creates a competitive imbalance in the league competition among the teams. In order to achieve a greater and enhanced competitive balance in such leagues, the team owners of small teams should maximize the wins, although the owners of the large teams maximize on the profits.xii Zimbalist asserts that sports league with team owners motivated by the pursuit of making profits has the potential to maintain some level of competitive balance; thus, they are more contained in their spending. Leagues in which team owners are motivated by the need to maximize on utility may prioritize winning at the expense of success. Consequently, such teams may spend more on the market of players, rendering some teams dominant.xiii The success policy to encourage competitive balance in a particular league may be affected by both the utility maximizing teams and the profit maximizing. The utility maximizing owners may spend their revenues on developing their teams and engaging in collective selling, thus, translating in league balance.xiv The profit motivated owners may hinder competitive balance within the league through pegging the shared revenues on the home team’s quality. Revenue sharing, if appropriately used, may encourage competitive balance in leagues. On the other hand, the team owners motivated by making profits resist competitive balance in leagues through raising the value of players in the labor market to considerably higher values than the smaller teams in the league.xv The competitive imbalance that exists among the league teams is significantly triggered by the differences existing in the local markets of the teams. As a result, team revenues within the league are uneven, and increases eventually affect the performance of the teams. The payrolls of teams have a considerable effect on their performance such that large teams have the capacity to inflate the price of good players in the labor market to hinder the lower teams from recruiting them.xvi The team owners motivated by winning may resist interventions to create an enhanced team balance by declining to engage collectively in selling the revenue generating schemes within the league. These large teams will, in turn, benefit by getting large revenues from the schemes at the expense of the small teams. This results in competitive imbalance because of the increased inequality in the payroll spending across the league teams.xvii Sheehan’s (2010) conception of a corporate-guided market The branded product In the corporate guided market, a corporation designs a product that possesses distinctive features in which the intention is to sell the product to a number of customers referred to as target consumers. In designing a product that is tangible, the focus is usually on tactility, color, movement, size, and style.xviii On the other hand, the focus on intangible products is usually on attractive features that are service-based, such as the content of the product. The packaging of the product is also encompassed in the design of the product. Sheehan’s views on product packaging were the basis of Estee Lauder’s product called Beautiful. This is a perfume which packaging had a design that was meant to invoke the impression of a precious product. Sheehan (2008) indicates that once the corporation’s brand managers are contented with the design of the product, they create an output capacity that is able to introduce the product to the targeted market. The capacity limit that is planned often exceeds the expectations that the corporation has with regard to the demand of the product. The spare capacity is important in allowing the corporation to be flexible in responding in case the demand of the product is unusually high. In the light of this, Estee Lauder had a sufficient capacity that was necessary for the production of the Beautiful product. Some of the important pre-requisites for a corporate-guided market are good design, a brand image that is attractive and a productive capacity. The institution and the brand managers engage in an aggressive campaign meant to create demand for the branded product. Efforts are expended in amplifying spending drivers and reducing the constraints that may impend spending. The managers of the brand are also involved in engaging active persuaders in designing and communicating messages that are consistent with the brand image. Moreover, brand managers are responsible for renting a space in the mass media that necessitates the dissemination of messages concerning the branded product.xix Estee Lauder spent millions of dollars in launching the publicity of the Beautiful product. The corporate-guided market, which is usually formulated for branded products, is the main market in the abundance system. The starting point in the analysis of corporate guided market is the supply side.xx A corporation usually decides on the product that is to be supplied for sale. Through marketing, the corporation designs the product in an attractive way so that it attracts the attention of many buyers. The corporation also gives the product a brand name, which not only makes the product saleable but also attracts numerous buyers.xxi In a corporate guided market, the corporation also makes decisions concerning the product’s packaging.xxii The logo, symbol and the trademark of the product are also of major importance. Moreover, the corporation decides on how the product is distributed to customers through the different stores that exist in the market place. In addition, in a corporate-guided market, a corporation is in constant consideration of the possibility of the product being revamped and redesigned with the intent of being in line with changes in the consumer culture. The demand side of a corporation in a corporate guided market is involved in ratcheting up sales of the branded products.xxiii The corporation that works with the marketing institution considers the ways that are necessary in amplifying the product’s spending drivers and ways that are necessary in relaxing the constraints that impend such spending. A corporation usually works with the active persuaders in producing commercial messages for the particular products in which the major focus is making a decision concerning the brand image that is to be associated with the product that is branded by the corporation. In the light of this, the corporation that is working with the persuaders designs content of the commercial messages concerning the product. One of the major elements of a market that is corporate-guided is the environment in which the branded product is sold. This location is usually referred to as the market place, which is usually the location whereby the efforts of those concerned with the provision of saleable products and those seeking to increase the demand for the product merge. Moreover, the market place is usually the location whereby the corporations interact with the shared goal of stimulating spending from buyers. According to Sheehan (2008), the market place is the venue in which all levels of persuasion reach their peak. This is because the market-place environment is usually guided by the corporate hand. The corporation offers sales for a range of products that are under a specific brand name. This ensures that the market boundaries for a particular product are often influenced by the markets of similar brand products that the corporation usually provides. The products that are supplied under similar brand name are referred to as complementary products.xxiv Rivalry Rivals are very instrumental in conditioning the power of a single corporation in a corporate-guided market. The rival corporations, which work with or within the marketing institution, seek to offer guidance to the buyers, which often converge to more purchases.xxv The rival corporations achieve this feat by offering an avalanche of branded products that possess brand images that are differentiated. These images justify the proposed prices. During this rivalry, every corporation in its product class seeks to outmaneuver its rival and usually responds to the efforts by other rivals to outmaneuver it. Moreover, entrepreneur rivals often design new products, which are associated with brand images that are meant to bring a significant transformation to the market and offering guidance to the consumers about emerging spending patterns. Rivalry leads to the creation of new products and the emergence of new markets. Sheehan indicates that rivalry conditions the power of any given corporation in a corporate guided market. These rivals often guide the buyers towards more purchases. Rivals succeed in guiding buyers towards more purchases by offering branded products that possess differentiated images as a justification for a change in prices.xxvi In the 1980s, the cosmetics sector had many corporate giants in which Estee Lauder’s Beautiful direct competition with the rivals helped in achieving a high end at the market. This form of rivalry indicates that the market boundaries for branded products are usually porous. This results from the actions of rival corporations, which operate via their own markets for branded products. Rival markets are often two-sided, in which the demand for the product is guided by the corporation but not controlled. In this case, the determinants of demand in the market are usually multi-faceted and highly complex.xxviiIn corporate-guided markets, the buyers are not manipulated. Informed buyers often enjoy sovereignty in choice making. Furthermore, the buyers are able to reject or accept the corporate persuasion according to their wish. Conclusion The team owners in sports leagues are motivated to maximize on the international long-term returns, which are different from the annual operating profits of the teams. The majority of team owners are motivated by both utility and profit maximization. In addition, various team owners prioritize their objectives differently. It is through a corporate-guided market whereby abundance is achieved. Through corporate guided markets, aggregate spending is also conducted. This paper has highlighted the dynamics of a corporate-guided market whereby the branded product and rivalry of the involved corporations is of great importance. Endnotes Read More