Singapore Formula One Grand Prix Management Concept - Case Study Example

Executive summary Event management concept has been stretched far beyond its earlier contours to include a variety of spheres. Sports tourism management is just one of the outcomes and is basically determined by both its exotic nature and strategic policy choices available to the sports tourism manager. Singapore Formula One Grand Prix 2009 is characterized by a degree of strategic corporate significance and cultural dimensions. The management perspectives expressed in this paper have been weighed and sifted in accordance with the most recent literature available on the subject. Strategic management perspectives that run through a haze of corporate and organizational assumptions and goals have been invariably influenced by the relative importance of dynamic event-oriented outcomes including those related to the benchmarking organizational efforts. This report essentially identifies and addresses a few major event management theories along with a singular effort at building up a contingency tourism management model based on Singapore Formula One Grand Prix – 2009. Introduction Singapore Formula One Grand Prix - 2009 is one of the most important sporting events in the annual sports calendar of the world. The event to be held this year on 27 September would cover a distance of 308.950 km with 61 laps. Previous spectator statistics are a sure indicator of the event’s stupendous success this year as well. Already the heat of interest generated by the forthcoming mega event has filled up the air in Singapore. The record crowds and the significance of the event require a deep analytical study to assess the impact of it on foreign tourist arrivals in Singapore during the period up to the run up. A comprehensive delineation of the micro and macro level parameters of the event would be feasible here. At the micro level there is a series of constituent activities such as service provision and preparation by hoteliers and restaurateurs. At the macro level there is yet another set of activities including the changes and modifications to existing infrastructures and the organizing of the event through to the end. Event management industry is necessarily entwined here with the event to such an extent that all consequential and subsequent strategic decision choices available down the line from the consultant to the manager are determined by the very structural dimensions and contingency imperatives (Goldblatt, 2001). While many stakeholders – internal and external – would show an equally great amount of interest in the successful outcome of the event, there can still be countervailing interests that seek to prevail over the rest. The degree of influence that each stakeholder group has on the eventual outcome of the event is determined by a number of endogenous and exogenous factors such as the nature of the industry, demand and supply variables, duration of the event and a host of individual organizational goals. The industry perspective analysis takes up a very important place here due to the fact that the sport tourism management industry in general and the event management industry in particular conjointly produce organizational outcomes that are basically amenable to classical theoretical interpretations. Singapore Formula One Grand Prix – 2009 is a wholly service-based event that generates a very significant amount of sales in volumes and kind to foreigners. The Chinese and Hong Kong factors cannot be ruled out in the final equation. From flight booking to hotel accommodation and from internal transport to banking, insurance, communication and financial services, the services industry carries a lot of weight. In this context the organising committee of the Singapore Formula One Grand Prix – 2009 has to place more emphasis on the management of the sport atmosphere associated with the event and successfully design, plan and implement such activities as essential to accomplish its mandate. The strategic competitive and operational environments include such parameters as strategic consumer/market/product orientation approaches adopted by the industry at large and the firm in particular. While the organizing committee has a still broader role play to enact in the backdrop of the unfolding event, strategic choices available to it are limited by the very nature of the event. Thus in the process there is always the possibility of recurring gaps in the service provision and delivery schedules due to lapses in design, planning and implementation. With a broader typology of spectators thronging the venue, the success of the event is more likely to be determined by convergence or/and divergence in variables such as service quality, prices, industry capacity, supply chain and internal value chain management and a host of other factors. As a matter of fact, the organizing committee ought to have a facultative authority in directing and implementing the relevant strategic policy to achieve predefined goals. 1. Analysis The analysis of Singapore Formula One Grand Prix - 2009 and its impact on sport tourism flow management into Singapore would be based on the following lines. (a). Industry or macro level analysis (b). Firm or micro level analysis 1. 1. Industry or macro level analysis 1.1. A. PESTEL analysis Industry specific factors that have to be considered in order to determine the industry level impact on outcomes resulting from sport tourism management associated with a mega event like Singapore Formula One Grand Prix – 2009, are many and varied. In the process a PESTEL analysis would be more appropriate for there is much greater emphasis being placed on the external macro environment to understand the broader strategic and operational implications arising from an otherwise inconsequential event. Strategic competitive, marketing and operational industry level implications include the following. Sport tourism management sphere is invariably influenced by the very nature of the policy environment and policy choice constraints, including resource gaps. Strategic competitive environment as impacted on by PESTEL. Strategic operational environment as impacted on by PESTEL. The industry level quality policy and quality standards. Regulatory environment as distinct from PESTEL analysis. The cultural dimension and its impact on a broader typological spectrum of foreign tourists. Singapore’s reputation as a culturally diverse and tolerant society would have a still greater impact on the potential foreign tourist’s decision to visit or not. Broader national level implications such as those associated with Singapore’s image as a banking and financial hub in the region. This is all the more important in the light of what seems to be the ever increasing psychological appeal of Singapore as a sport plus service entrepot. Singapore Formula One Grand Prix – 2009 assumes such a very significant strategic dimension in the eyes of the average sportsperson, either local or foreign. Though its appeal to the average foreign sport tourist is limited basically to the one in the region itself, there is also a wider segment of sportspersons from other continents coming into Singapore to watch the event annually. The event organizers have been faced with many difficult decisions that stare in the eye when choices are limited. Singapore sport tourism management sector in general and the event management industry in particular have experienced a sea change in respect of quality and sales in the recent past. This change is particularly attributable to the Singapore Formula One Grand Prix event. The impact of PESTEL on this event and the related outcomes has to be analyzed with specific reference to a series of variables such as how the industry as a whole responds to these external influences while its structure is subject to such intense pressure and transformation (Weed, 2007). Strategic policy choices at the industry level in the foreign tourism and event management sector have been studied at various levels, including contingency model building level. Particularly in Singapore the Formula One Grand Prix event assumes a very important place due to its wider impact on the industry as whole. While the firm as the individual decision making unit would act in its own corporate interest, the industry cannot afford to procrastinate or mismanage its resources. The resource constraint imposes some limits on the industry to act in conformance with some globally acknowledged principles. However there is very little or no compulsion on the industry as a whole to respond to the changing global environment of competition either. In other words in Singapore organizers of the Singapore Formula One Grand Prix – 2009 have not been under pressure to consider the strategic competitive environment from a global perspective. 1.1.A.i. Political analysis Political and economic influences, on the industry in general and the firm in particular, act in a manner to bring about qualitative changes though such changes often are limited to strategic policy decisions. Within the foreign tourism and event management sphere in Singapore with specific reference to Singapore Formula One Grand Prix – 2009, there is a very significant amount of critical assessment to be made about the industry level corporate outcomes. With a freely floated currency that goes in tandem with the US dollar, there is very little that the Singapore government would be able to do in order to influence macroeconomic outcomes associated with the event. Thus with a scenario of freely determined demand and supply, the industry would almost come to terms with its reality. For example exchange rates as they are right now without government intervention, would attract no more than the potential hardcore formula one spectator (Morgan and Pritchard, 2000). The industry so far has been able to do very little in attracting those fence-sitters. In other words the very competitive environment has been sullied by external influences except for individual efforts being made by firms in offering attractive value-for-money service packages to potential visitors. 1.1.A.ii. Economic analysis Just as much as the industry structure is to blame for this shortcoming, there is also a negative aspect associated with the economic environment. Global downturn would only exacerbate the outcome. Assuming that the industry would bounce back with some new strategies to attract the fence-sitters to the venue, the outcome would be impressively positive. Industry standards of service quality management and structural overhauling would be more feasible in this context though the five sets of requirements incorporated in the ISO 9001 2008 Standard would be a very difficult effort for the industry in Singapore, unless some drastic changes are introduced. A Gap Analysis to determine where the whole industry is lacking with reference to the above Standard would require a huge effort. Above all compliance efforts would engender a lot of new investment in quality management. 1.1.A.iii. Social analysis Singapore is a city state where the average foreign visitor would be able to walk to the venue of the race in 8 minutes from the hotel where he/she stays. In between a lot of distractions cannot be packed into. But nevertheless distractions improve service quality because the average visitor regards such distractions to be exotic. The longer the visitor stays the greater the success because spill-over benefits of a longer stay are many on the economy (Hudson, 2002). Spill over benefits associated with cultural distractions are many. 1.1.A.iv. Technological analysis Technological influences too have their impact on the industry at external level. Singapore Formula One Grand Prix – 2009 is all about racing technology. Renault, Toyota, Nissan, BMW, Mazda and a lot of others take part in these Grand Prix events. Of course it’s well known that some of them are technology leaders in their respective areas of specialty while in formula one technology, they have been fighting at shoulder-to-shoulder level (www.logasiamag.com). It’s unlikely that some big formula one teams come with the latest technology to a competition venue though they might as well bring some innovative techniques to exert pressure on their rivals. 1.1.A.v. Environmental and legal/regulatory analysis Above all regulatory or legal environment has acted as one of the most influential forces in bringing about the current changes in Singapore. 2008 race was the first to be held there and that too was under floodlights in a street circuit near Marina Bay. All regulatory and legal hassles were overcome successfully by organizers to convince the government of the extremely positive outcomes associated with Formula One races. Yet there much to be desired in respect of the impact on the industry because regulatory mechanisms often act as negative forces on the subsequent developments (Wiener, 2007). Overall the industry or macro level analysis focuses on the industry infrastructure and structural dynamism to engender systematic and constant growth of the industry over the years to come. 2009 race is the second one to be held in Singapore. Such huge projects necessitate national level efforts including organizational capabilities to face resource rationalization choices, i.e. how best to utilize a given amount of resources to maximize the benefits. Capacity utilization is another such effort. The existing capacity in the Marina Bay area is no doubt limited by the space constraints. If a premium were set on noise and air pollution, there would be little positive outcome to be mentioned though. Much less attention has been paid to this aspect of the whole project so far. At national level overall macroeconomic and cultural policy level shifts are less obvious right now. Positive correlations between national policy formulation and growth strategies have not been made clear except in relation to fostering a sport tourism and event management policy. Event management perspectives have to be delineated against the backdrop of an evolving policy formulation process. This industry perspective demands a broader well defined set of rules. On the aftermath of the 2008 race Singapore became a hotspot for the sport though its space limitations have had a negative consequence also. Street circuits serve a limited purpose in Formula One races, despite well intentioned efforts of authorities to promote the sport at an international level. 1. B. Firm or micro level analysis Strategic event management principles require the organization to put in place a number of initiatives such as design, planning and implementation strategies. The corporate environment demands attention be paid to such variables as internal quality management, Human Resource Management (HRM), internal value chain analysis, supply chain management, product portfolio development, product & marketing mix, market segmentation, event life cycle management, strategic product/customer/market orientation, a sound communication strategy and above all a competitor orientation strategy (Armstrong and Kotler, 2004). A perceptual mapping process to achieve corporate and organizational goals is nothing new in the individual firm’s own operational environment. Thus the current dichotomy between strategic competitive environment and strategic operational environment is based on the organizational outcomes. The individual event management company in the sports tourism sector of the economy is subject to a greater amount of competitive pressure than those firms which exclusively produce in order to sell in the domestic market or export physically. Thus the competitor orientation strategy of the firm in the foreign tourism and event management industry is determined by the level of internal and external competition. Internal competition occurs in a variety of situations. Service providers such as communication, banking & finance, transport, hotel accommodation, medical services, air lines and the food & beverage industry all would be geared to meet the new demand generated by the inflow of foreign tourists. How best to meet this competitive pressure depends on the firm’s ability to absorb excess demand through capacity and value creation. Internal value chain management process of the firm decisively places some limitations on its ability to meet this extra demand. Therefore it’s the pricing policy, HRM and internal management culture that ultimately enable the firm to meet this demand successfully. If the attendant VRIO (value, rarity, inimitability and organization) framework is sound enough to enable the management of the company to withstand pressure and devise alternate plans to compete against rivals then there is the possibility of success. However if the VRIO framework is relatively weaker so that competitors are able to copy the firm’s resources then the strategic advantage disappears. In other words by substituting ISO 9001 2008 Standard into the VRIO equation it’s easier to obtain a performance-based picture of the strategic event management firm in the tourism industry in Singapore (Beard and Sumner, 2004). Viewed from the Singapore Formula One Grand Prix – 2009 angle, it’s obvious that the average firm’s resource and quality management processes have to meet the above Standard in order to successfully close the gaps left behind by falling quality standards in the sport tourism and event management sector in Singapore. At the individual firm level a sectoral bias towards at least some of the key processes enshrined in ISO 9001 2008 Standard is essential. This is none so well apparent than in the existing gaps in the quality management, resource management, service management, operations management, design and development management, continual improvement and product management processes in the event management sector in Singapore (www.praxiom.com). These processes mentioned here are just a few of the 20 odd processes incorporated into the ISO 9001. ISO certification involves overhead costs for many organizations and therefore service industry such as sport tourism and connected event management, requires regulatory regimes plus compliance legislation to enforce such certification procedures within the organization. Management consultancies operate in a highly competitive environment of their own. This phenomenon makes it all the more difficult for the event management company to identify and address competition-related issues. The following Directional Policy Matrix is used in this report with a view to overcoming the existing limitations of the Boston Matrix. In the first place a multivariate Directional Policy Matrix like this has many advantages when compared to a univariate matrix. The DPM is a unique device that enables the management to identify those market segments which have a promise of future positive returns from those which do not. Figure 1: Directional Policy Matrix Source: www.market-modelling.co.uk As the vertical and horizontal axes show competitive strength of the firm is matched against the market attractiveness. The pies demonstrate the market segmental strength by way of diameter size. Bigger the diameter of the pie, the bigger the amount of potential revenue to be earned from that market segment will be. The top-left side of the matrix has more potential for product/market positioning strategies. This report has fundamentally identified a similar trend in the foreign tourism industry in Singapore and by extension, the event management concept as associated with Singapore Formula One Grand Prix – 2009 is determined by an identical policy matrix rather than the conventional Boston Matrix approach. 2. B. Marketing mix When the marketing mix – price, product, place, promotion and by extension people, process and physical evidence – is considered against the DPM, there are a lot of opportunities on the marketing front available to the average firm in Singapore. However the event-specificity might curtail the degree of freedom because Singapore Formula One Grand Prix – 2009 has a limited time span and therefore a limited event life cycle. This last concept has a very significant impact on the organizational outcomes too. A conceptual framework for a uniquely propositioned marketing strategy depends on the viability and logicality of these planning outcomes. Assuming that a good marketing plan once put in place would take care of the 7 Ps above, there is very little else to accomplish in order to maintain a good cash flow and ensure positive and constant returns over the event life cycle – launch, growth, maturity and decline (Armstrong, 2006). Price of the product is essentially a reference to the larger context of the company’s pricing strategy and especially in the Singapore Formula One Grand Prix – 2009 context, there is very little liberty if any available to the firm to adopt a pricing policy of its choice. In fact market skimming would seem to be the most ideal pricing strategy for many mushroom businesses that sprout around in Singapore immediately before the event. Product characteristics include those tangible and intangible benefits for sports tourists. A typical cross section of youth and elderly would grace the venue only to vanish immediately after. In other words the seventh P “Physical evidence” of the product does not exist in services, though it’s not altogether impossible to identify non-physical product characteristics like quality with some tangible benefits. Place again imposes some limitations on the firm’s ability to exploit broader marketing principles. Market segment is exclusively intended for the sports people and therefore there is a drawback associated with its geography. Asian formula one spectators’ typology does not fit the broader stature of the European or the North American spectator. Along with a proper promotion policy, an ideal people-oriented service provision strategy ought to be coordinated by the organizing committee itself. People-centric end-product promotion in services is nothing new. Sports tourists become the target of this promotion campaign (Masterman, 2004). While the emphasis might be placed on the overall promotion strategy to attract as many tourists as possible to the venue, there won’t be an iota of effort to continue such service afterwards. This is a strategic shortcoming in the continual development process. 2.C. SWOT analysis The individual firm’s competitive and operational environments need an in-depth analysis here in order to understand the many implications arising from the policy choice constraints and the presence of a significant quantity of pressure on corporate responsibility related to sustainability and the rationale for continuous development of marketing strategy. A simple SWOT analysis would demonstrate how best or worst the average event management firm in the sport tourism industry in Singapore is placed vis-à-vis its rivals. While many event management firms have a diversified product portfolio so that the end of the event does not necessarily mean the end of the business, there are some firms which invariably target the local people who are typically being encouraged to spend time away from home in an exotic environment. It’s the hospitality industry that has more interestingly got into this act of adopting a multi-prone strategy of promoting products in continuously shifting marketing dimension. Thus weaknesses of the organization are associated with the inability to shift strategy as and when it's needed. An obvious implication of this strategy is the commitment of the management to achieve organizational goals in perpetuity. According to Mallen and Adams (2008), stakeholders of sport recreation and tourism event management firms tend to overshoot their targets in times of global meltdown because they barely take trouble to place the organization in its proper strategic market/product/customer orientation perspective. In Singapore this stakeholder behavioral pattern has attracted little or no attention at all despite its increasingly negative impact on the event’s outcomes. In contingency model building efforts of the individual researcher, there is a marginal incremental addition to the total revenue outcome if the firm identifies and targets market segments separately so that the firm is sure about the positive revenue generating segments as against those which do not. Further there has not been any effort to do a stakeholder mapping with regard to their influence on the even in Singapore, specifically the impacting behavior of the stakeholder. Shareholders, managers, directors, employees, creditors and suppliers act in conformance with organizational culture and goals while customers, debtors, government authorities and others tend to distrust the very reason for untiring efforts to meet profit targets. In other words this tug-of-war between the two camps of stakeholders inevitably leads to a very difficult situation where the management fails to set profit targets. 2.D. Porter’s Five Forces Porter’s Five Forces and their strategic weight (Porter, 1980) can be used finally to assess the dynamic prospects associated with sport tourism and event management concepts. According to Porter supplier power refers to the degree of freedom that suppliers have over the firm which buys supplies from them. In marketing supplier power matters to such an extent that suppliers in the open market might act in a manner that threatens strategic objectives of the firm. For example customer care practices require a host of supplier networks to coordinate every aspect of the marketing process from the time of inquiry to the end of the event. How sport tourism industry in Singapore would respond to all this, depends on a number of other variables such as the concentration ratios in the supplier industries, the availability of and the degree of dependency on credit, macro-economic variables, e.g. interest and business tax rates and a host of other factors. Buyer power is perhaps the most effective force with far reaching consequences for the business that the company has to face. For instance sports tourists have a variety of choices to make between competing events held in different parts of the world at a given time. European events mostly coincide with the Singapore Formula One Grand Prix – 2009 event. Here the buyer power is remarkably greater in comparison to other products. The only plus factor in favor of the event can be seen in the summer season when foreigners tend to visit countries in Asia. Rivalry or competition in the event management market segment is almost intense during the event because existing scale economies of individual competitors would serve as the stepping stone to a price cutting war. Excess capacity and thus the slightest hint of cost and productivity benefits associated with the probable winning over of market shares of rivals would compel them to act quickly and decisively, thus leading to a considerable price-cutting war. Fourthly the threat of substitutes does not necessarily have an impact in the sport tourism industry because the whole marketing effort can be singularly connected with a particular event. Services cannot be easily substituted unless price variations are so divergent to allow a degree of freedom to the customer to decide between two service providers. Again substitution of services such as hotel accommodation and transport could be potentially damaging if it comes from friends and family. For example foreign visitors being accommodated at and transported by friends and related family members who are citizens or resident in Singapore could mean a very real threat of substitution. Finally Porter’s Fifth Force is about the threat of entry by new firms and it has a very negative impact on the existing firms in the industry. Here what matters is the cost of production. Those firms whose costs are higher will be compelled to shut down. There is a persistent threat to existing firms coming from possible alliances and re-alliances within the industry rather than from outside. While the level of competition in the sports tourism and event management market segment in Singapore has been determined by the strategic regulatory environment in addition to other variables, the regulatory regime has done more to prevent easy entry than to enable healthy competition. In fact idle scale economies in the industry would force authorities to reorient competition towards achieving price-service-value synergies at the expense of undesirable outcomes associated with free entry. The potential price-service-value synergies have to be taken seriously into consideration in mapping out a comprehensive marketing plan. Conclusion There is a very strong case for the continuous improvement planning of the Singapore Formula One Grand Prix – 2009 event irrespective of its limited event life cycle. Strategic marketing efforts require a multi-level design-plan-implement approach at both national and individual levels. While the sports recreation and tourism event management industry encompasses a great network of individuals and firms, there is a still larger strategically important competitive and operational environment. It’s this environment that demands greater attention by policy makers. Recommendations The following recommendations have to be taken into consideration in the preparation for the forthcoming Singapore Formula One Grand Prix – 2009 in September. The marketing sphere of the event requires a comprehensive national level design, planning and implementation approach that essentially focuses on the very basic principles of sustaining the campaign to its successful conclusion. Hazard policy patch work by individuals and firms would not bring in any benefits. There must be a well coordinated marketing effort to achieve price-service-value synergies. Finally the organizing committee has to step into the vacuum created by the absence of a quality management and supervision authority at the National level in keeping with ISO 9001 2008 Standard. REFERENCES 1. Armstrong, G. 2006, Marketing : an introduction : an Asian perspective, Pearson Prentice Hall, Singapore. 2. Armstrong, G. and Kotler, P. 2004, Marketing: An Introduction, 7th Edition, Prentice Hall, New Jersey. 3. Beard, J. W. and Sumner, M. 2004, Seeking strategic advantage in the post-net era: viewing ERP systems from the resource-based perspective, The Journal of Strategic information Systems, Vol.13, Issue 2, pp129-150. 4. DHL Delivers F1 Freight to Singapore for 2008 Formula 1 Singtel Singapore Grand Prix, 2008, from, www.logasiamag.com. 5. Goldblatt, J. 2001, Special Events: Twenty-First Century Global Event Management, 3rd Edition, John Wiley & Sons, Inc, New York. 6. Hudson, S. 2002, Sport and Adventure Tourism, Routledge, New York. 7. 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