Barclays Premier League and Manchester United - Term Paper Example

A Strategic Analysis of the Barclays Premier League and Manchester United CONTENTS Executive Summary 2 Market Environment Analysis 2 Strategic Analysis 7 Conclusion - Strategic Fit Analysis 15 References 16 TABLES AND FIGURES TABLES Table 1 – UK Ten Economic Freedoms 3 Table 2 – Barclays Premier League Attendance (2008 – 2009) 10 Table 3 – UEFA Champions League Attendance (2008 – 2009) 12 Table 4 – World’s Richest Football Clubs 13 Table 5 – World’s Most Valuable Football Clubs 14 FIGURE Figure 1 – Porter’s Five Forces Model 8 Executive Summary This report undertakes a strategic analysis of Manchester United in the Barclays Premier League that will utilise analytical tools to equate conditions in the market environment for that club and the league itself. In conjunction with the foregoing, the resource capability of Manchester United will be examined, highlighting its threshold, unique resources as well as core competencies. In pursuing the aforementioned, some brief facts and information on the preceding will serve as a necessary foundational backdrop. Both the club and the league are at the pinnacle of popularity in football both in the country they operate as well as on a global scale. From a business standpoint, the strength of the fan base represents the foundation that defines the quality, level of play and most revenues that drive sports, and from these quarters Manchester United and the Barclays Premier League are established and entrenched operations. The analysis as uncovered in this report provides an understanding of the success factors, resources, market conditions, market environment, threshold and unique resources for the subjects under study. The findings are that the reputation, long historical standing, level of competition between teams in the league, coaching, and players have made and make Manchester United as well as the Barclays Premier League two of the more revered and noteworthy sports examples. Market Environment Analysis An analysis of the environment in which the Barclays Premier League and Manchester United operate aids in an understanding of the external forces impacting and affecting it (CIPD, 2008). A PESTLE Analysis is utilised as a tool for gleaning and understanding of the large picture in terms of the arena a business operates in (CIPD, 2008). The following will look into the Barclays Premier League and Manchester United from this standpoint. As the foregoing term is critical to this examination, it shall be explained in conjunction with the analysis. 1. Political This looks at what is occurring politically in the organisation’s environment as represented by tax policy, political stability, reforms, and other factors impacting the manner in which an organisation operates. a. Barclays Premier League Organised in the United Kingdom, the Barclays Premier League operates under a stable government, with policies, tax laws and related facets as long-standing and known areas. The political stability of the government, as well as its international standing, has aided in the reputation of the league. The country ranks as tenth on the list of economic freedom, placing it in the elite standing internationally thus supporting the preceding statement: Table 1 – UK Ten Economic Freedoms (Heritage Foundation, 2009) 89.8 Business Freedom Avg. 64.3 90.0 Investment Freedom Avg 48.8 85.8 Trade Freedom Avg. 73.2 90.0 Financial Freedom Avg 49.1 61.0 Fiscal Freedom Avg. 74.9 90.0 Property Rights Avg 44.0 40.3 Government Size Avg. 65.0 84.0 Fdm. from Corruption Avg 40.3 80.4 Monetary Freedom Avg. 74.0 78.5 Labor Freedom Avg 61.3 b. Manchester United Operating in the environment of the United Kingdom, Manchester United enjoys the political stability of the Barclays Premier League thus benefiting the club as well. As it competes against other English clubs the overall environment aids in its external reputation. 2. Economic The direction and nuances of the economy with respect to growth, inflation, consumer income, cost of living standards, unemployment and other factors that in this case would impact game attendance and merchandise purchases of a football club. a. Barclays Premier League The strength of the British economy that is tied to the European Union that provides its citizens with a strong economic base. This stability permits them to purchase tickets to attend games and pursue the sport via a well-developed broadcast network, as well as soccer, is the sport popularized by the British, tracing its beginnings to ancient China and then Greece (Shepard, 2008, P. 29). Through marketing and promotion, the Barclays Premier League generated revenues in excess of £1.8 billion (Premierleaguesoccer.org, 2008). b. Manchester United The club generated £256 million in revenues for the 2009 season that represented a 22% increase over the previous year that was in part aided by £90 million in broadcast receipts from television rights (utv.com, 2009). 3. Sociological This aspect of a PESTLE analysis in this context looks at cultural norms, the social markup of the market a. Barclays Premier League As the UK’s most popular sport, the Barclays Premier League primarily appeals to males and has a global audience that views the sport in over 200 countries, representing a viewing audience in excess of 4.5 billion (euchampion.com, 2009). b. Manchester United With a global fan base that is over 300 million, Manchester United is one of the most successful sporting teams in the world. Its social impact reaches worldwide in terms of impact, influence and merchandise sales. 4. Technological This segment can impact organisation, particularly sports, in the manner in which the games are made available to the public in terms of mediums, along with other advances in screening games, breaking down team plays and athlete tendencies, etc. a. Barclays Premier League Advances in computer-aided game enhancements have helped to improve the entertainment value of the sport as a result of statistics, freeze frames, instant replays and other advances that help to break down the game for viewers in every aspect (Telegraph, 2009). These advances, that include Internet-based applications and broadcast highlights that have heightened the entertainment value. b. Manchester United The aforementioned technological advances are available to all pro teams, thus this does not represent a particular advantage, except Manchester United’s fan base makes it noteworthy. 5. Legal Legislative and or regulation changes that pertain to athlete contracts, trades, new rules, and associated facets can impact operation within this sport. a. Barclays Premier League Recent concerns regarding escalating costs and the 1996 Bosman ruling that was put forth by the European Court of Justice impacted one of the most important costs and player areas in football (Hann et al, 2004). The transfer system means that is the player’s current club does not equal the offer being made by a rival, then that player is free to move to the bidding club, with a transfer fee paid to the old club if it does match the offer and the bidding team still desires the move (Matheson, 2003, Pp. 23-25). The foregoing ruling states “…all players who have reached the end of their contracts are free to move throughout the world, subject only to the provisions concerning training compensation” (Fizel and Fort, 2004, P. 72). Rulings such as these mark legal facets that provide for clubs to trade up for beter players. b. Manchester United The preceding legal ramification works in Manchester United’s favour, but, owing to the present raft of television contracts and sports merchandising revenues, the disparity is not as great as it seems as other clubs through creative financing and related means have the capability to woe players as well. 6. Environmental This facet of the PESTLE analysis looks at environmental areas, some of which can be either social and or economic. a. Barclays Premier League As the world’s most watched sport, soccer is a cultural phenomenon that has devised rules and regulations governing team, and player conduct (Barclays Premier League, 2009b). The foregoing set forth the league’s relationship with the clubs as well as other bodies such as the Football Association and the Federation of International Football Associations (Barclays Premier League, 2009b). The preceding is listed under Environmental factors in that it represents a cultural connection to the rest of the football world as well as foundations for securing societies trust in the way the sport is run. b. Manchester United The preceding foundation is a cornerstone that Manchester United has built upon since its establishment. That reputation and thus social standing has been built on sportsmanship, fair play, great players and coaches that include Matt Busby, and Alex Ferguson (Knol, 2008). These foundations of excellence have helped the public’s confidence in the club that has captured the public’s imagination from a cultural and social standpoint. Strategic Analysis Porter’s Five Forces Model represented the framework for the strategic analysis as well as strategic fit analysis. Within its context, it contains the strengths as well as weakness evaluations forming the content of the latter. The Five Forces Model is utilised for an analysis of industry sectors, business strategy, and understanding the positioning and performance of an organisation with respect to its competitors (Birkner and Birkner, 2002, P. 14): Figure 1 – Porter’s Five Forces Model (Value Based Management, 2008) The preceding diagram has been included here as a visual aid in understanding the components of the Five Forces Model that represent (MindTools, 2008): 1. Supplier Bargaining Power Under the Five Forces framework if suppliers are powerful they can exert influence over materials, labour as well as services. Bargaining power for suppliers is usually high in a market dominated by a few large suppliers as opposed to many. a. Barclays Premier League The suppliers in this context are the players and coaches that are the core of soccer play. From this perspective, they have and do not have power in that the league is the highest paying and the most popular thus representing the preferred destination they aspire to. Competition for supplier power is more a case of being within the league with its teams than externally with other clubs in Europe, however, that is a factor (Fisher, 2002, P. 21). b. Manchester United As set forth above, as the league is the pinnacle destination, players and coaches seek, with Real Madrid and other top tier clubs in Italy, Germany, and France also providing bargaining power. Manchester United does have rival teams able to match it with respect to pay, and facilities, thus rising player pay rates does give players an edge in supplier power. 2. Buyer Bargaining Power The bargaining power of buyers can put pressure on a company when they hold substantial power. Buyer bargaining power stems from the aforementioned small cadre of buyers, them making purchases in large volumes, being able to easily switch to other competitive supply. a. Barclays Premier League The popularity of the league means that it is a preferred destination for the great soccer players of the world, thus adding to gameplay and name cache. The league does have bargaining power in terms of broadcast and commercial rights as well as over fans. b. Manchester United The players represent the suppliers in professional sports, and as one of the more dominant teams in terms of play, titles, and ability to pay top tier players; the team is in a prime position to continue the acquisition of talent. Rising match day prices and pay cable are causing fans to question team decisions, but as the most popular club in soccer, fans still ante up for tickets and cable fees (Jones, 2006, P. 19). 3. The threat of New Entrants This is important in that when it is easy for new entrants to gain access, the competition will be extremely fierce. a. Barclays Premier League The history of football, as well as the established pecking order in league play, eliminates the ability for setting up rival leagues. Regional leagues in the United States, South America and elsewhere do not have the base of players to match quality play, and name recognition and history to challenge the Premier League. b. Manchester United History, championships, and tradition, are the hallmarks of all sports. The costs to put together a football team means it is less costly and more effective to buy an existing team than create one (Andrews, 2004, P. 102). 4. Availability of Substitutes The facet of the Five Forces Model entails when substitute products or services are available that would represent utility on the part of customers. a. Barclays Premier League The UEFA (Union of European Football Associations) Champions League represents a challenge to the popularity of the Barclays Premier League in that it offers the most coveted trophy in European football (Corran, 2009). In terms of average attendance, the UEFA Champions League averaged 40,309 fans per match (ESPNsoccernet, 2009b) as compared to 35,656 for Barclays Premier League (ESPNsoccernet, 2009a). To put the foregoing into perspective, it needs to be noted that the UEFA Champions League has 113 teams from throughout Europe (ESPNsoccernet, 2009b), while the Barclays Premier League has just 20 clubs (Barclays Premier League, 2009a). The Barclays Premier League is comprised of clubs located only in the United Kingdom, as opposed to the UEFA Champions League that represents 31 countries (UEFA.com, 2009), however, the Premier League is more popular worldwide. b. Manchester United Substitute products in soccer entail coaching and player changes as well as playing style. Recent history has seen Manchester United dominate the Premier League and thus provide it with an advantage in securing players as well as other talents, along with a high degree of public acceptance on a global scale (Jones, 2006, P. 22). Manchester’s dominance of the Barclays Premier League has been both a blessing and a curse in that their level of success is expected, while legions of fans pray for their downfall and rise of other clubs (Telegraph, 2008, P. 19). In spite of the foregoing, Manchester United leads all football clubs in attendance by a wide margin: Table 2 – Barclays Premier League Attendance (2008 – 2009) (ESPNsoccernet, 2009a) Rank Team Total Average 1 Manchester United 1,430,776 75,304 2 Arsenal 1,140,755 60,039 3 Newcastle United 926,244 48,749 4 Liverpool 828,610 43,611 Table 3 – UEFA Champions League Attendance (2008 – 2009) (ESPNsoccernet, 2009b) Rank Team Total Average 1 Manchester United 448,000 74,666 2 Real Madrid 275,000 68,750 3 Barcelona 538,116 67,264 4 Bayern Munich 326,000 65,200 5. Competitive Rivalry The above represents the degree of intensity that exists between organisations in an industry segment. High competition can be a result of many companies being either the same size or having similar talent levels, as well as little to differentiate between the firms. a. Barclays Premier League The Barclays Premier League’s appeal is broadened to the extent that is games are broadcast in the United States over ESPN (MediaWeek, 2009), and “… is the world’s most popular and most watched football league – with a cumulative global audience in excess of 4.5 billion” and viewed in excess of 200 countries (Barclays Premier League, 2009a). The UEFA Champions League that is often referred to as the European Cup has a worldwide audience of over 1 billion that is also seen in excess of 200 countries (euchampion.com, 2009). b. Manchester United Manchester United is the most successful English football club in the modern era has won 18 titles, with 13 runners up positions for a total of 31 appearances for all titles, with 11 coming since the 1990s (Napit.co.uk, 2009). Liverpool, with 18 titles and 12 runners up appearances is in second, followed by Arsenal’s 13 titles and 8 runners up appearances are the other leaders (Napit.co.uk, 2009). In terms popularity, Manchester United is the most popular soccer club in the world with in excess of 300 million fans globally accounting for an estimated 5% of the world’s population (articlebase.com, 2008). That fan base makes Manchester United one of the richest soccer club in the world, and the richest in England, providing it with the resources to hire the best coaches, players and support personnel in keeping with advancing its aims of more championships and success: Table 4 – World’s Richest Football Clubs (CanadianContent, 2008) 1) Real Madrid (Spain): £236.2m 2) Man Utd (England): £212.1m 3) Barcelona (Spain): £195.3m 4) Chelsea (England): £190.5m 5) Arsenal (England): £177.6m 6) AC Milan (Italy): £153m In terms of value, Manchester United is the world’s wealthiest team: Table 5 – World’s Most Valuable Football Clubs (The Offside, 2009)  While the foregoing might not seem like an indication of competitive rivalry, the fan base and revenues generated by football clubs is their reason for being, along with championships as it is a business as well as entertainment, with profits the bottom line. The foregoing is linked to the marketing, coaching, and promotional machines behind each club that generates its cache. Conclusion - Strategic Fit Analysis In their book “Exploring Corporate Strategy”, Johnson et al (2008, P. 22) tell us that “Strategy is the direction and scope of an organisation over the long term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”. The parameters entailing corporate strategy under this study includes is a corporate strategy that represents the overall scope as well as the purpose of the firm in fulfilling the expectations of stakeholders (Lynch, 2006, P. 561). A third strategy that will be considered is termed as an operational strategy. The preceding is concerned with the manner in which each segment of the operation is organised to impact upon and deliver in consort with the corporate as well as business unit strategies (Mintzberg et al, 2005, P. 188). The strategic analysis aids used herein provided insight as to relative positioning and business environment context of the Barclays Premier League and Manchester United (Chaffey, 2008). The foregoing PESTLE and Five Forces Model have brought forth an understanding of the positioning of the aforementioned subjects for this study that revealed their strengths, weaknesses as well as unique resources and core competencies. The strategic fit of the Premier League and Manchester United within the football world as evidenced by the tool analytical tools used herein. The Five Forces Model analysis also represented the means to analyze the strategic fit of the Premier League as well as Manchester United within their respective business environments. The nature of this study pointed toward including the strategic fit in the Five Forces Analysis, as a result, its comprehensive nature. The tools used, in combination, revealed the superiority of the Premier League as well as Manchester United in the competitive soccer environment as entities whose positions will not be supplanted in the foreseeable future. References Andrews, D. (2004) Manchester United: A Thematic Study. Routledge. London, United Kingdom. P. 102 articlebase.com (2008) Manchester United Fc, Everton Fc & Liverpool Fc. 8 April. Retrieved on 10 December 2009 from http://www.articlesbase.com/soccer-articles/manchester-united-fc-everton-fc-liverpool-fc-381267.html Barclays Premier League (2009a) Statistics. Retrieved on 10 December 2009 from http://www.premierleague.com/page/Statistics/0,,12306,00.html Barclays Premier League (2009a) VisitBritain joins up with the Premier League. 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