Manchester United Football Club; Strategic Analysis

Manchester United Football Club
Manchester United Football Club

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Manchester United Football Club; Strategic Analysis

Executive summary

The main purpose of this report is to provide a critical analysis of Manchester United Football Club internal and external factors affecting its strategy formulation and implementation. PESTLE Analysis and SWOT analysis are some of the tools used to access the factors affecting strategic management and evaluation in the company. Finally, a recommendation is to be given for the best applicable strategy using Ansoff Matrix.

a. Corporate objective

One of Manchester United’s business objective is to increase revenue by expanding its businesses. The company’s strategies comprise of expansion of global portfolio sponsorship, development of the retail business, enhancement of broadcasting news and taking advantage of the digital technology. Additionally, Manchester obtains revenue from some businesses: broadcasting, sponsorships, retail, merchandising and licensing, mobile content, and match-day tickets (Manchester United, 2016).

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b. Macroeconomic analysis

PESTLE Analysis

Strategic decisions made by the company are highly affected by macro-economic factors such as taxes, governing laws and regulations, as well as demographic changes (Sue, 2013).

1. Political factors

These comprise of the laws and regulations that govern the way an organization carries out its activities. The government regulates a company’s activities through tariffs, taxes, and incentive provision. Since the company’s goal is to increase revenue in its existing business ventures, it is important to adhere to tax payments to ensure that its activities are not interrupted through legal claims. For example, the company had a case for failing to pay taxes as required.

It, therefore, calls for managers to ensure that the company liaises with the set regulations to ensure the business activities run smoothly. In many countries, there are stadiums that fans use to watch football matches (Aileron, 2013). Also, broadcasting corporations are charged for airing the football matches. The revenue collected by the governing authorities as a result of the football matches in connection with the company help in enhancing the stakeholder relationship leading to minimal regulations.

2. Economic factors

Inflation, living standards, and growth capacity of a set target market influence the strategies set in place. Since the company runs some businesses, it formulates specific plans for the different ventures. In the retail, merchandise, and mobile business, the company markets the products in new and emerging economies to increase its market share. More products are shipped in countries that are facing inflation since the value of the product rises against the local currencies. The company also manufactures products in varying degree of performance for different income earners to increase specific customer value and avoid market discrimination.

3. Social factors

Different countries exhibit varying social and cultural perceptions. To take advantage of the social issues, the company the company employs players from different social backgrounds to increase its global penetration. Since football is social, it provides room for the company to integrate different groups of people by the provision of uniformed merchandise.

The sale of t-shirts and shoes with the company’s logo keeps its fans united and, in essence, leads to increasing in revenue collected from the sale of tickets (Manchester United, 2016). The company’s fans are united through the United’s anthem and uniform products. The company’s strategic managers make use of the unity amongst its fans to diversify its product portfolio for increased revenue and profits.

4. Technological factors

The world has become a global community due to the improvised technological advancements. Digital technology is one of the major technological advancement that is used for business strategies. The majority of consumers watch football through the social sites. The company uses the sites such as Instagram, Facebook, and Twitter to market its match-day activities for ticket sale as well as its merchandise.

Fans are united through the sites and made aware of the company’s strategies as well as get their needs for an increase in customer value. The company was able to generate more than $10 million in revenue in the year 2015 through its mobile content activity. Through the website, followers are updated about the company’s activities and products making technology a vital element in its strategy formulation.

5. Environmental factors

The internal and external environment is another factor affecting strategic formulation and implementation by the company. Provision of conducive work conditions, as well as an exercise in corporate social responsibility, are some of the measures Manchester takes into consideration to make its strategies effective. The company outsources its operations and follows the set environmental protection standards to ensure it minimizes pollution and protects the environment.

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6. Legal factors

Legal standards and regulations should be followed to ensure that there are market sustainability and growth. Through its legal team, the company takes care of legal issues and ensures all departmental functions operate as required by the legal authorities to ensure there are no obstacles while carrying out its normal business operations.

c. Competitive analysis

SWOT analysis is another effective method used to assess the potential implications of a strategy (Ovidijus, 2013). In the case of Manchester United, one of its main strength is a wide base of fans and popularity. The company uses the loyalty from fans to market its different product portfolios for increased revenue. Still, the company has a strong financial strength. Hence, it’s able to finance its operations and satisfy all its stakeholders.

The company’s main weakness is its concentrated market making due to stringent rules of the European Football Clubs making it hard to diversify its product portfolio in other countries. However, the company has a great opportunity for increasing its market share since more people are getting attracted to football and associated products.

Being one of the best football clubs, the company uses the opportunity to strengthen its products and harness more fans through its uniform products. However, the company faces intense competition from other English clubs such as Manchester City that have an equal fan base making it hard to penetrate. To phase out the competition, the company maximizes its already popular name to increase its market share and to give out customized products (Manchester United, 2016).

d. Internal analysis strategic capabilities

Strategic capabilities consist of financial, human, and capital resources that an organization uses to formulate and design its strategies. To make a strategy effective, the different strategic capabilities must be integrated. Regarding resources, there are those that are basic and unique. The unique resources are the core competencies of an organization while the basic resources are those that must be present for a strategy to be implemented.

General workforce, finances, and infrastructure are the basic resources. Brand name, trademarked products, and expertise skills or differentiated product portfolios are some of the core competencies that a company takes advantage of in formulation of strategies. Manchester United’s core competencies are brand name and a wide fan base that makes it attract some of the best players as well as market its subsidiary products.

ManU’s business functions comprise of financing, purchasing and supplies, production, human resources, marketing and research and development. All these departments are integrated together to ensure that daily operational functions run smoothly (Mackenzie, 2015).

e. Basis of competitive strategy

1. Key market segments

Manchester FC has a line of business venture it operates. In line with the retail and merchandise, the company targets young adults for its branded t-shirts and other merchandise. Most fans are young adults and form the highest market. The middle-income earners mostly attend the live matches and form the market segment for the match-day business venture.

2. Business strategy

The increase in product portfolio is one of the company’s business strategies. Differentiation by using its trademark and logo is one of the methods the company has been using to ensure the products reach to its target market, and the consumer’s value is maximized (Ovidijus, 2013). Fans go for their company’s products, and it is through differentiation that Manchester has been able to retain and increase its market share. Since wide fan base is one of the organizations strengths, it uses it to increase its sale in merchandise and tickets.

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3. Strategic choice

New product development is the best strategy the company can use to increase its market share and revenue (MSG, 2011). Since the company already has a wide and increasing market share, increasing in product portfolio is likely to get a high customer recognition thus increasing its revenue. The existing products have a high market share and sales revenue, and the company is assured of market penetration of a new product since the existing fans will be the ones to purchase the new product. A new product will lead to increased revenue.

f. Strategy evaluation

Product development is the most suitable since the existing products have already attained high market share and market awareness. Since the company has many fans who are loyal, the new product will have high acceptance rate amongst the different stakeholders as it is feasible and has a high potential for generating returns.

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g. Conclusion and recommendations

Manchester United faces social, environmental, political, legal, and economic issues in its strategy formulation and implementation. All these factors influence the outcome of strategy, and the company takes them into consideration before formulating and implementing a strategy.

8.1. The company has been maximizing its strengths effectively since it takes advantage of the wide fan base to increase its product portfolio for increased market share and revenues.

8.2. The main weakness that the company has when compared to its major rivals is a concentration in the European market which has limited fan base compared to other regions where its competitors exist. Financial problems is another weakness the company faces due to the imminent player transfers that cost the company a lot of finances.

8.3. The main threat faced by Manchester FC is competitors. Since the company is operating profitably and has a high market capitalization, it can be said that it is managing its threats effectively. The company increases its fan value by designing custom made products at low prices making the fans remain loyal.

8.4. Manchester’s vision is to be one of the best clubs that provides the best returns to its shareholders and sponsors. The increase in product portfolio is one of the strategies the company uses to increase revenue. When there is high revenue, the returns are high thus the vision of the company is not different from its strategy since strategies are formulated in line with the vision of the company.

References

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Mackenzie, 2015. How to align your entire company with your strategies [online] Available at https://moz.com/blog/how-to-align-your-entire-company-with-your-marketing-strategy

Manchester United, 2016. Manchester United Charter [online] Available at http://www.manutd.com/~/media/Files/PDF/ClubCharter/2012/Manchester_United_Club_Charter.ashx

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