Analysis and Decision CIM Final

8/11/2019 Analysis and Decision CIM Final

1/6

Colombo - 14345558

Types ofFans

Fans for the

player

Fans for theclub

Fans of thegame

Expectations

Affordability

Concern over businesspractices

Interaction across theglobe

Richer fan experience

Accessibility and mobileinterface

7%8%

20%

65%

Regularly

Occasionally

Have done

but not in last

12 months

Have never

done

0

200

400

600

800

1000

1200

1400

1600

Matchday

million

Broadcasting

million

Commercial

million

2011

2012

External Analysis

Table 1: PESTEL

Fan Analysis

External Environment Analysis

Local Environment Issues International Environment Issues Implication to LFC Impact

Political/Legal Politically stable

New Rules and Regulations in FA on balancing the

books

Stadium construction regulations

Transfer policies

Interested in foreign direct investment in

emerging nations

Bureaucracy is high

LFC might need to somehow stop spending more than

they earn in order to sustain in seasons

International countries support great brands that enhance

livelihoods through CSR

Intl- Positive

Local- negative

Economy UK Disposable Income Low

Potential of triple dip recession

Emerging nations e.g. China, Indonesia

and Africa

Middle class rising with rising disposable

income

Local market is under pressure Disposable income

decreasing leading decrease revenue

international markets show great potential for growth of

LFC and Brand associations

Intl- Positive

Local- Negative

Socio-Cultural Fans are loyal to football clubs buffering sales

A strong traditional culture in soccer

Interested in western trends and sports

and soccer fans globally are rising e.g.

China 60 million, Thailand 14 million,

Indonesia 60 million

Fans have strong loyalty to the club sustaining the brand

however this might not last long if LFC keeps on losing

matches

New geographic segments emerging aid in growth

Intl- Positive

Local- Positive

Technological Increase in use of Apps and Multi-functional

devices e.g. smart phones and tablets

Technology to increase user experience in

traditional soccer stadiums

Increase in technological advancements

and social networks

Globalizing through technology

Increase in tablet and smart phone use

Technological advancements open new opportunities to

engage fans and increase loyalty.

Increase brand awareness globally through social

networks and bring international fans closer to the clubs

Intl- Positive

Local- Positive

Environmental

Eco friendly consumers are rising

Increase in efficient control system for power e.g.

lighting of stadiums

Need to develop eco friendly alternative systems to satisfy

key stakeholders.

Increase in cost in short term but long term efficiency is

created saving costs

Intl- Positive

Local- Positive

Figure 3: Football Match attendance

requency

Figure 1: Fan typeFigure 2: Fan Expectations

Figure 4: Industry Revenue 2011/2012


2/6

Colombo - 14345558

Table 2: Porters five force analysis

Table 3: Competitor Analysis VS LFV

Football Club Total Profits % of Traditional Revenue

from Total revenue

Rev per Ticket

/Attendance

Current Focus

Liverpool (-) 41 Million Match Day22.4%

Broadcasting35.5%

Commercial42.1%

New Media0%

900/45555 Increase Seating Capacity to 60000 & Large

commercial sponsorship deals with untapped brand

value.

Manchester United 101 Million Match Day33.2%

Broadcasting36%

Commercial29.3%

New Media1.5%

1425/76212 Sponsorship deals in American Market and Focus on

sponsorships from international brands

Arsenal 34 Million Match Day41%Broadcasting38.8%

Commercial20.3%

New Media0%

1543/60355 Commercial growth centred in Asia

Chelsea (-) 49 Million Match Day30.1%

Broadcasting44.7%

Commercial25.2%

New Media0%

1605/42055 Securing a site for the construction of 60000 capacity

stadium.

Five Force Analysis (Porter)

Industry Forces Description Degree of influence by industry forces Impact on industry profitability

Threat of New Entrants Entry barriers such as large capital investments discourage new

entrants

Few new entrants due to recession

Low- New entrants coming to the football industry

is low.

Doesnt effectDoesnt hinder industry profitability

due to limited new entrants coming in

Threat of Substitutes Substitutes such as Music festivals and other sports, e.g.

Cricket, Basketball, American football, Baseball well

established in some international markets

High-Although the largest spectator sport

substitutes take up free time of consumers which is

limited

Effects profitability negatively - Industry

attractiveness reduces, consumers find other interest

in different sports and entertainment

Bargaining power of

suppliers

Sponsors mainly have a moderate bargaining power since the

game is big and fans love the game They want to be associated

with the industry giving leverage to clubs

Moderate- Sponsor are willing to spend on football

due to large reach and fan base internationally.

However individual clubs need to attract sponsors

effectively.

Effects profitability positively -Sponsorship deals

very lucrative and sponsors pump millions of pounds

to the industry.

Bargaining power of

customers

Customers are currently demanding better experiences at

lower prices

Loyal fan base keeps industry running during recession

High- Fan loyalty runs the industry even during

recession. Bargaining power is very high

Effects profitability positively - Currently due to less

disposable income there has been difficulties to the

industry. Loyal Fans drive profitability

Industry Rivalry Competition between club on and off the field

Competitions for talented players increase player wages

High- Competitive rivalry between top clubs and

nation very high

Effects profitability negatively- Strong rivalry and

demand by clubs for talent increase costs

Insight: The Industry is a mature industry but with huge growth potential in emerging markets such as China and India, Industry Rivalry and demand for players is decreasing profitability by taking more of the

revenue. It is an industry where the top clubs in FA, and UEFA drive the industry. The football world cup may provide a opportunity to reach globally driving industry profitability up


3/6

Colombo - 14345558

Internal Analysis

Core competency Evidence Future Challenges

International business development Global Fan base / Global Sponsorships / Greatest percentage of web traffic

from India (58%) and South Africa/ Growing fan base in Thailand and

Indonesia

Maintaining the equilibrium between the domestic

and international fans.

Player recruitment Key player recruitments in the past such as Albert Stubbins in 1946 and Ian

St. John in 1961

Increasing wages of players and staff, rising cost of

player recruitment and high industry rivalry.

Brand building and Sports marketing International sponsorships by global companies / Regional sponsorships

(Honda in Thailand)/Leverage on brand name

Manage the behavioural changes of fans

Social Media activities 12 Million fans on Face book / 1.5 million followers on Twitter Facilitating interaction through these channels and

maximising revenue.

Table 5: Core competencies

FSG Stability

Vast Experience in the sports and

media industry

Resources (Financial and non

financial)

LRMR Marketing expertise

Successful recruitment opportunities

LFC Brand Brand Recognition around the world with a

deep heritage.

Partnerships Global partnerships and sponsors which

enhances the presence

Digital Know

How

Vast knowledge, presence and interaction

in new media activities

Fan Insights First hand data regarding fans

Table 4: Competitive Advantage

Figure 5: Ashridge Mission model

Strategy

-Improving player

performance & strategic

player investment

-Young player

development

-Improving fan experience

and interactions with the

club

-Leveraging the clubs

global following to deliver

revenue growth.

Purpose

To maintain quality on and off the

pitch through strategic investments

Values

-Collectivism

-Respect 4 all

-Goals 4 All-Equality

-Anti tolerance

policies against any

form of

discrimination

Standards & Behaviour

-Having an equal opportunity policy to keep

staff informed, of matters that affect growth of

the business.-Having CSR initiatives to use the power of

clubs equity to create positive change in

MISSIO

N


4/6

Colombo - 14345558

Table 6: Financial Analysis

2012 2011

GP Margin 10% 12% GP margins have reduced.

However the cost of sales are

lower compared to the turnover

NP Margin -22% -25% Admin expenses have risen

drastically. Therefore a net loss is

incurred year on year.Admin Expense as a% of

sales

111% 137% Growth in Admin expenses shows

a higher % as opposed to revenue

growth.

Quick Ratio 0.47 0.32 It is unable to meet its liabilities

through the current assets.

Debt to Equity Ratio 95% 48% Low financial Leverage.

LFC VS FSG

Figure 7: LFC VS FSG Analysis

Education Respect 4 All- Disability awareness sessions

Truth 4 Youth Deliver social messages

Health LFC Action for HealthCommunity health and lifestyle initiatives

Social

Inclusion

Tactics 4 Families- Supporting positive family relationships

Goals 4 All

Physicalactivity

Football Camps

Goals 4 GirlsAimed at young women

Table 7: CSR Initiatives of LFC

Figure 8: Value Proposition

0

50000

100000

150000

200000

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

Turnover vs Wages

Turnover Wages

Figure 6: Turnover VS Wages

Possitive Factors

Brand strength

Fans aroung the world

Possitive Factors

Financial capabilities (3 billionequity interest)

Marketing and branding expertise

Networks

Negative Factors

Financial implications

Underperformance of the team

Players

Negative Factors

No experience in the footballindustry.

LFC vs FSG

Core

World class

football

Expected

Presence in leading leaguetournaments

Trophies

Performance through star

players

Heritage

Augmented

Entertainment

Champions

Star Players


5/6

Colombo - 14345558

Table 10: Risk Analysis

Impact

High Medium Low

Probability

High

Match day attendances falling.

Credit from financial institutions to football clubs for expansion.

UK regulators stalling stadium developments

Financial fair play model being introduced in the Premier League similar to

UEFA

Financial fair play (FFP) regulations coming into effect..

Sanctions on non-compliant teams of the FFP.

Not being able to carry out the player acquisition (100Mil),

stadium development (150Mil) & International business

development (50Mil)

Mediu

m

Continuous poor performance on field reducing player options through

acquiring for LFC.

LFC deviating from its Vision and Mission due to a lack of strategic clarity.

LFC going bankrupt due to liquidity and cash flow.

Wage control of players

Player transfer market

Good players at LFC moving to other lucrative clubs due to LFCs

current position.

Low FSG not willing to bear the losses and selling the club off.

Table 8: Stakeholder

Stakeholder Power Interest Expectations

Local Fans High High Superior on-field performance, good match day experience, prudent management of

the club ensuring longevity

International Fans Low High Superior on-field performance, overall good brand experience

Sponsors/Partners Low High Generate more brand visibility through partnering with Liverpool, positive brand

affiliation

Shareholders High High Economic success/ Return on Investment

Players Medium High adequate wages, good training facilities, medical plans if injured

Governing Bodies High Medium

to Low

Fair play, adherence to rules and regulations, maintenance of financial and safety

standards

Constructed Source

Dimension Characteristics Evidence Dimension Characteristics Evidence

Physique The Colour Red

& Liver Bird

Affectionately referred to as the Reds and

uses red as the player outfit colours.

Personality Established, Traditional,

compassionate, family

oriented

Founded in 1892 and is one of the oldest clubs in the league &

comprises a rich heritage liked to the Liverpool city

t

r

l Relationship Strong bond withfans; especially

local fans

-Have the highest merchandise sales amongsttop clubs showing, loyalty of local and

international fans and brand love.

-Large fan base on social media networks

Culture A strong sense ofcommunity, togetherness

and family values

-Comprehensive CSR program which has wan the community mark-Associate with the iconic football anthem You will never walk

alone and uses it in the logo

Internal

Reflection Always to-gather,

never give up

The Hillsborough disaster, brought a lot of

LFC fans to gather

Self Image Successful Regarded as the most successful English club of all time

Constructed Receiver

Table 9: Brand Analysis

Key Issues

-LFC has been excluded from the UEFA Champions

league resulting in lost revenue streams and falling

brand equity.

-Regulatory standards affecting the financial

constraints of LFC

-Plans to grow top line revenue with financialconstraints

-International growth has been deprived due to

lack of financial strength (Franchising)


6/6

Colombo - 14345558

Table 11: TOWS

Opportunities Threats

-Popularity of Association Football is growing globally

-The Premiere league has the highest revenues of any league in the world

-New devices such as tablets and social media opening up new revenue

streams and helping to connect with the global audience more meaningfully

(Appendix 8 & page 16)

-The demand for sports sponsorships are growing & more & more brands

want a share of the pie.(Appendix 4).

-New Financial fair play regulations by UEFA to be adopted by Premier

league

- High ticket prices causing some fans trading watching matches on TV

instead of the stadium

-Recession causing lower disposable incomes in UK

- Competitor clubs ahead in innovation (Chelsea stadium with led lights,

arsenal ipad match program, Manchester city twitter integration)

Strengths

-An Iconic football club brand replete with history and

tradition.

-Regarded as the most successful football club in the

premier league.

-Strong presence in China and South East Asia

-The worlds most globally active sports brand on

social media

- Proven Track record of Owners and Partners in sport

marketing (FSG & LRMR, Warrior Sports )

-Loyal fan base which spends on merchandising

-The only club in UK to have full access to their own

wifi network

Strength to meet Opportunities Strategies

-Leverage Brand Equity & Successful history to attract more fans in Existing

markets

-Utilize strong presence in social media to generate higher match day and

merchandise revenues from the current fan base

-Negotiate better sponsorship deals with the expertise of FSM

-Increasing replica kit revenues through expertise of warrior sports

-Higher match day revenues by enabling sponsors to do r eal time marketing

through wifi network

Strengths to Defend threats

-High brand loyalty among Liverpool fans will drive match attendance.

-Growth opportunities in merchandise sales outside of UK especially in

Asia where LFC is strong and income levels are rising

-As the only club in UK to have access to their own WIFI network data,

Liverpool can be the first to launch new product targeting sponsors

Weaknesses

-Weak Financial position with net losses in 2010/2011

and 2011/2012

- Low match day revenues compared competitors

- Poor on field position resulting in non qualification to

champions league and lower proportion of league

revenue

- Lower TV broadcasting revenues

Minimize weaknesses and to maximize opportunities

-New types of sponsorships available through the use of new technologies

which will help boost revenue.

-Tap new markets such as the Middle East which has a high level of interest

in the British leagues

-Ability to use new media to televise home games not covered by major

broadcasters

Weaknesses not to Expose Threats

-Ability to use funds of FSG in the form of capital infusion to negates some

of the losses.

-USE FSG funds to acquire new players if needed to secure top league

positions

-Loan players to another club to earn extra revenue

References

Analysis & DecisionCase Study

Campbell (The Ashridge Mission model)

Kapferer (Brand Prism)

Philip Kotler (1986), Megamarketing, Harvard Business Review. (March- April 1986)

Analysis and DecisionCIM course book

Analysis and Decision CIM Final

Documents

Transcript of Analysis and Decision CIM Final