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Strategic Management

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Table of Contents

Executive Summary. 3

Introduction. 4

Corporate Objectives. 5

External Analysis. 5

PESTLE Analysis. 6

Porter’s Five Factor Model 6

Internal Analysis. 7

Organization Resources & Competence. 7

Business Functions. 8

Basis of Competitive Strategy. 8

Key Market Segments. 8

Business Strategy. 9

Strategic Choice. 9

Strategic Evaluation. 10

Conclusion and Recommendation. 11

Reference List 12

Appendices. 15

Executive Summary

In this report, Manchester United Strategy is analyzed through the application of both internal and external tools (Anderson, 2012, p. 23). There are a number of challenges that the organization continues to face especially from the manner in which it does its business and strategies that it employs. Consolidation and development of its presence in the global market is another major challenge that the company continues to face in terms of making sure that it succeeds (Power, 2008, p.116). Glazer takeover of the organization resulted into a debt that the company continues to grapple with over the years. The BCG matrix, 5 Forces Model, SWOT analysis, PESTLE and VRIO are the tools employed in the analysis of the company strategy. The methods are considered to be the best when it comes to analysis of the company strategy and its performance in the market over the years. The market attractiveness of the organization both locally and internationally is addressed in the report with the aim of informing the general public (Stone, 2012, p. 32). Global competitors of the organization such as Barcelona and Real Madrid have a number of strengths that have continued to propel them. Recommendations to help Manchester United to continue being a strategically positioned company in the global market are also contained in the report.

Introduction

Research shows that association football is one of the greatest entertainment events in the word and this is because of the manner in which they work to influence the society and at the same time promote sportsmanship (Murray-Watson, 2006, p. 21). It is estimated that 2.5% of the international trade is accounted for by association football. Data available also indicates that the European Football market grew by 19.1 Billion Euros in 2014. This represented an 11% growth from what had been reported the earlier year. In this market, Manchester United is one of the most significant brands that the world has ever heard (Green, 2014, p.83). The success of the football club can be attributed to a number of factors. Commercial links and other forms of partnership such as sponsorship can be attributed to the manner in which the company has continued to generate revenue over the last two decades (Conn, 2012, p. 31). Turkish Airline, Chevrolet, AON, DHL and Audi are some of the companies that have continued to strengthen the brand around the world. In total, the club has been able to win 41 trophies in its 135 year history. The main purpose of this report is to provide a strategic analysis of Manchester United (Dzombak, 2013, p. 16).

Corporate Objectives

The main strategic objective of Manchester United is to organize its skills and management when it comes to making sure that goals set are achieved (White, 2008, p. 34). The scope of the organization ranges from the manner of its organization regarding the success of the business and the kind of approaches to the dealing of competition in the industry (Tyrrell and Meek, 2006, p. 39). The focus of the company over the years has also been on making sure that its operations around the world are well structured and yields the desired results. The success of the company strategy is pegged on a number of ideas that are held true and dear.

External Analysis

PESTLE and the five factor model have been used in the past when it comes to understanding the success of any given company in the industry that it operates. In this report, the two tools were employed in analyzing the external strategic position of Manchester United and how it has continued to perform over the years (Shury and Landamore, 2010, p. 32). They are considered to be the most relevant tools when it comes to understanding the global football market and factors that have continued to shape it over the years (Shury and Landamore, 2010, p. 31). They are the easiest way of understanding the strength and weakness of any given strategy.

PESTLE Analysis

The purpose of this particular analysis is to look at the Political, Economic, Sociocultural and Technological issues together with their implication on the success of the company strategy (Glenda and Rollin, 2010, p. 26).

Porter’s Five Factor Model

  1. Existing competition

Manchester United continues to face stiff competition from other clubs such as Manchester City, Arsenal, Barcelona and Leicester City.

  • Threat of new entrant

There is a threat of new clubs entering the new market because of their financial stability and takeover by wealthy investors (Murphy, 2006, p. 76). However, the high cost of players and stadium acquisitions is the reason behind slow entry of new players.

  • Bargaining power of suppliers

There is scarcity of professional players in the industry and because of the strength of Manchester United in the industry; there are several challenges that other suppliers continue to face thus making it hard for them to enter the industry (Morgan, 2010, p. 54).

  • Bargaining power of buyers

The club has a lot of supporters around the world and it is because of this reason that it is strongly firm in the market (James, 2008, p. 54). In addition to that, there are so many supporters of the club who have continued to acquire its merchandise in different stores around the world. Lastly, the number of sponsors to the club has continued to increase over the years.

  • Threats of substitutes

The loyalty of fans to the club is likely to shift because of its performance in the premier league (Inglis, 2012, p. 4). In addition to that, the brand is likely to witness a number of major shifts in the way its merchandise perform in stores and the kind of investor response they get from poor performance.

The analysis above indicates that the English Premier league is a key development area for the club and how it continues to perform in the industry from time to time. In addition to that, the success of the brand in the market is pegged on how it performs in the league (Hamil, 2008, p. 38). This creates a situation where a shift in the strategic planning must be undertaken.

Internal Analysis

The internal analysis of Manchester United focuses on the structure of the company and the manner in which different strategies have impacted its performance over the years (Dunning, 2009, p. 52). This includes the business functions of the organization, its resources and the kind of competence that has been witnessed over the years.

Organization Resources & Competence

Resources and capability models of Manchester United have been assessed and reported over the years. The analysis shows that the club is relatively strong and positioned in the market through the use of different strategies that enhance its performance (Dobson and Goddard, 2014, p. 21). The financial importance is important but weaker as noted in the reporting due to the manner in which systems have been designed by the organization. The debt restructuring exercises that have been involved in by the company continues to shape its financial structure and at the same time the manner in which it has designed different systems (Devlin, 2005, p. 31). The introduction of EUFA financial fair play regulations have seen the organization undergo a number of changes that are aimed.

Business Functions

The business functions of the company includes field soccer within the English Premier League market and at the same time the manner in which it has continued to shape how systems are designed around the world (Mihir, 2007, p. 13). Research has shown that the business model that the market continues to use over the years is a clear indication of the role that its strategies play when it comes to guaranteeing the success of the business model. On the other hand, the model that the company applied when it comes to the sale of its mercantile around the world is the reason behind the success of the brand (Justyn and Bostock, 2011, p. 87). Advertisements and commercials also remain an important part of the strategy that is employed by the company when it comes to meeting its objectives.

Basis of Competitive Strategy

The market in which Manchester United operates in is quite competitive and this is because of the manner in which strategies are organized and the kind of approach that the company gives to challenges that continue to emerge regarding competition (Andrews, 2008, p. 40).

Key Market Segments

The football market is appealing to the general audience with 80% of the world population said to be directly or indirectly influenced by football in different ways (Gregory, 2016, p.21). It is because of the nature of strategies that are applied by those who seek to make sure they achieve the goal of engagement and at the same time the focus of different systems that are applied by the business. In addition to television commercials and advertisements, Manchester United is also involved in a number of business ventures and investment in fashion and at the same time the impact that this has on its market presence is overwhelming (White, 2008, p. 74). Sponsorship rights is also another area that the business has continued to rip big in terms of royalties that are awarded by the advertiser and the manner in which the same has continued to shape the approach that the business has.

Business Strategy

Generic strategies in terms of cost of leadership indicate that the management is structured in such a manner that different systems are implemented (Murphy, 2012, p. 33). The manager of the club goes through a number of vetting sessions aimed at making sure that the top leadership of the club yields desired results and at the same time there is effective planning. The business model that the company employs works to make sure that business is done in the right manner and at the same time there is a unique approach to the market that is full of competition. The Boston matrix analysis indicates that the business strategy that is employed by Manchester United is vision oriented in nature and at the same time focuses on the manner in which systems that are in place are structured when it comes to presenting the desired results. The choice of strategy is left for the management to decide but on the other hand, there are systems in place aimed at making sure that an evaluation of the same is undertaken (Crick and Smith, 2010, p. 32).

Strategic Choice

Despite garnering at least, 350 million fans around the world, the club has not reached the peak of doing business. Nevertheless, the worth of the brand of almost US $ 1 billion still needs improvement. However, it is also important to acknowledge the achievements of the business. It is the first football or sports brand to worth over a billion US dollars (Grant, 2012, p. 12). Achievement of such great milestones should be preceded with better achievements to keep the company in its esteemed high status. One strategic choice seems feasible for the growth of the brand. The choice is franchising the club to other continents where its presence is absent.  The ideal destination for the choice is Asia and Africa, because the club has spread its influence in the Europe continent. The decision will serve the business in several ways that will boost its income and enhance its better reputation. The club has at least 100 million of its fans from Asia. Therefore, franchising it to the region will not fall short of investors. Its rapport is high in the region due to the immense fan-base (Grant, 2009, p. 21). The community has a breed of better players that bring speed and agility in the game of football. Developments of the franchise will not yield profits for the first part of the business. However, after a short period (less than a year) it will provide annual income to the mother company. Similarly, investment in the African continent would provide the same results due to the talent and interest in football in the region. Moreover, the club will spend less on its scouting expeditions because its branches will be better equipped to handling the offshore monitoring and selecting of unique talent (Crick and Smith, 2010, p. 19).

Strategic Evaluation

Before making the franchising decision it is vital to analyze and evaluate the choice. It involves three aspects including suitability, acceptability, and feasibility. For a company to remain afloat in business it needs to become proactive and utilize the new ideas from its staff and even fan base. In 2005, the company earned £157 Million, and ten years later it had £395 Million. The curve has to continue with the growth, lest is will slump. Therefore, it is suitable to implement the proposed choice of franchising the club. Asia as a continent consists of countries with vibrant economies (Conn, 2007, p. 35) Presence of the club in the region will woo more investors thus enhancing the company’s portfolio. More than A half of Manchester United fans are from the Asian Continent. Additionally, to reciprocate the extended followership from the continent would be a better strategy for the club.

The followership of, at least, 1 million fans in the region is an indicator of acceptance of the club and business in the region. Therefore, they would not have to implement other strategies to win the hearts of the Asian community. Conversely, it would spend less in establishing its ground in the region compared to the other regions (Elberse, p.35). Additionally, Africa as a continent flourishes with talent that crowd the premier league. Thus, countries whose players earn their living from the league have unconditional support for the league.as a result, investing in the region would not face competition or barriers.

Franchising the brand in Asia and Africa will cost the company less than 5% of its worth. In return after a year of two in operation in the region, they will reap 6 and 3 percent profit respectively. Moreover, the company needs an enhancement in the portfolio due to the huge debt of the business. Currently, the club has a debt of £650 million with an annual interest of £60 million. Therefore, an improvement in the revenue earnings of the club will help towards the clearing of the debt and improving service for the company (Grant, 2009, p. 32). however, the sponsorship deal of Addidas helps in clearing of the debt of Manchester United, the marginal revenues from Asia and Africa branches would elate the status of the club both regarding sport and business status.

Conclusion and Recommendation

Manchester United is both a great football club and a successful business brand worldwide. However, there competitors emanate every day with the enhancement in sponsorship of the other football clubs in Europe. However, it needs to uphold its core competencies to ensure its domination in the football pitch and business world. A failure in one of the departments is detrimental to the club since they are complementary. The challenges of the club include the overwhelming debt and the inconsistent performance of the club both in the domestic and European championships. In comparison, to its competitors, the company has an outstanding record, that failure to achieve the same serves as a dis appointment to its stakeholders. However, the implementation of the proposed strategies will restore stability to the club and boost its profits.  Currently, the club is managing its threats and weaknesses adequately to remain in the business and sports world. Moreover, its restoration to glory is imminent due to the cohesiveness of its business strategies, company’s vision, and core competencies.

Reference List

Anderson, R.  2012. Manchester United share sale causes controversy among fans and investors, British Broadcasting Corporation.

Andrews, D. 2008. Manchester United: A Thematic Study. London: Routledge.

Conn, D. 2012. Manchester United tackles debt by floating on New York Stock Exchange, The Guardian News and Media.

Crick, M. and Smith, D. 2010. Manchester United: The Betrayal of a Legend, London: Pan Books.

Conn, D. 2007. The Football Business: The Modern Football Classic, Edinburgh: Mainstream Publishing.

Green, A. 2014.Baron Capital’s stake in Manchester United – getting the numbers right. Andy Green.

Devlin, J. 2005. True Colours: Football Kits from 1980 to the Present Day. London: A & C Black.

Dunning, E. 2009. Sport Matters: Sociological Studies of Sport, Violence and Civilization. London: Routledge.

Dobson, S. and Goddard, J. 2014. Ownership and Finance of Professional Soccer in England and Europe, International Sports Economics Comparisons, Westport, CT: Praeger Publishers.

Dzombak, D. 2013. The Billionaire Fund Manager bets Betting Big on Manchester United Stock. The Motley Fool.

Elberse, A. The Ferguson’s Formula, HBR Org.

Glenda, R. and Rollin, J. 2010. Sky Sports Football Yearbook 2008–2009. London: Headline Publishing Group.

Grant, M. 2012. Contemporary Strategy Analysis: Texts and cased .8th Edition, Chichester, Hoboken, N.J.: John Wiley and Sons Ltd.

Grant, M. 2009. Contemporary Strategy Analysis, 7thEdition, West Sussex: John Wiley and Sons.

Gregory, C. 2016. The Annual RPI and Average Earnings for Britain, 1209 to Present (New Series), MeasuringWorth- UK-CPI.

Hamil, S. 2008. Case 9: Manchester United: the Commercial Development of a Global Football Brand, Oxford: Butterworth-Heinemann.

Inglis, S. 2012. Football Grounds of Britain, London: Collins Willow.

James, G. 2008. Manchester: A Football History, Halifax: James Ward.

Justyn, B. and Bostock, A. 2011. The Official Manchester United Illustrated Encyclopedia, London: Manchester United Books.

Mihir, B. 2007. Manchester Disunited: Trouble and Takeover at the World’s Richest Football Club, London: Aurum Press.

Morgan, S. 2010. Design for life:  Inside United (Haymarket Network).

Murphy, A. 2012. The Official Illustrated History of Manchester United, London: Orion Books.

Murphy, A. 2006. The Official Illustrated History of Manchester United, London: Orion Books.

Murray-Watson, A. 2006. Glazer puts three more of his children on Manchester United’s board, Telegraph.co.uk.

Power, H. 2008. Credit crisis one year on: Risky debt notes could be a losing game,  London: Telegraph Media Group.

Shury, A. and Landamore, B. 2010. The Definitive Newton Heath F.C., SoccerData Org.

Stone, S. 2012. Manchester United profits fall by £12.3m, The Scotsman: Johnston Press Digital Publishing.

Tyrrell, T. and Meek, D.  2006. The Hamlyn Illustrated History of Manchester United 1878–1996. London: Hamlyn.

White, J. 2008. Manchester United: The Biography, London: Sphere.

White, J. 2007. The United Miscellany, London: Carlton Books.

Appendices

Figure 1: VRIO analysis
Figure 3: Branding
Figure 2: SWOT Analysis
  Strengths Good OrganizationHighest AttendanceStrong sponsorship
Weakness Huge DebtInconsistent results
Opportunities Good ReputationUse players for advertisement
Threats Competition from new clubsFIFA transfer ban
Figure 4: PESTLE Analysis
Figure 5: Porter Forces

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