Diversification Strategy discussion
Introduction: The Manchester City Football Club (MCFC) has become a major force in the soccer world, winning titles and setting records both on and off the field. This case study will examine the investments and strategic management choices that have given MCFC a competitive edge, with an emphasis on the club’s internationalization and diversification strategies. We may learn more about what drives MCFC’s ongoing success in the soccer world by examining the situations in which diversification succeeded or failed to provide value for the club, as well as how the club’s resources and skills have impacted its diversification choices. 1. Determining a Competitive Advantage: MCFC has positioned itself strategically to acquire a competitive edge by using a comprehensive strategy that includes both off-field and on-field tactics. The team has invested a lot of money in player development programs, coaching staff, and player signings on the field; this has led to several Premier League titles and success in European tournaments. Away from the pitch, MCFC has set itself apart with creative marketing and business tactics that have grown its worldwide fan base and brought in big sponsorship agreements. MCFC’s competitive edge is largely attributed to its aggressive globalization and diversification strategies. The club has branched out into other business areas and formed alliances with clubs abroad by growing its activities outside of the UK market. For example, partnerships with US, Japanese, and Australian teams have strengthened MCFC’s global reach and drawn supporters from all over the globe. Furthermore, by branching out into industries like esports, content creation, and stadium construction, income streams have become more diverse, lowering dependency on more established ones like matchday ticket sales. By using diversification tactics, Manchester City Football Club (MCFC) has been able to create a competitive advantage. Some significant elements that have aided in its success are as follows: a. Global Branding: MCFC has developed a powerful worldwide brand by branching out into countries including China, the US, and Australia. This has expanded its global fan base and created new opportunities for retail sales, sponsorship partnerships, and TV broadcasting rights, among other sources of income. b. Player Recruitment: MCFC’s capacity to draw elite players from around the globe is another important component of its competitive edge. Having a multicultural team with players from several nations and cultures has allowed MCFC to distinguish itself from other football teams with an eye-catching brand. c. Athletic Achievement: MCFC’s success on the field is a result of its diversification. The club has been able to win numerous league titles and establish itself as a top team in both domestic and international competitions by investing in elite players and top-notch facilities. This has drawn prestigious sponsors and partners in addition to growing its fan base. d. Resources and Capabilities: MCFC has the funds to invest in player acquisition and infrastructure thanks to the Abu Dhabi United Group, its owner, which has a strong financial support. The team’s success on the pitch has also been aided by the development and nurturing of potential players through its robust youth academy. 2. Diversification Promotes Value Creation: For MCFC, diversification has been beneficial in a number of ways. The club’s worldwide reach has increased and new income streams have been made available by its expansion into other countries. Collaborations with teams in other areas, including New York City FC in the US, have helped the team expand its fan base and break into new markets. Esports endeavors have also targeted younger audiences, encouraging fan interaction and generating possibilities for business partnerships and sponsorship. Additionally, diversification has helped MCFC protect its company from risks and uncertainties in the future. By spreading its investments among a variety of businesses, the club has lessened its reliance on a single source of income, lessening the negative effects of market swings. Even in the face of obstacles like the COVID-19 pidemic, the club’s operational stability and profitability have been maintained by its strategic resilience. Through a variety of methods, MCFC has been effective in generating wealth through its diversification strategies: a. Huge Fan Base and cash Streams: MCFC has been able to access a wider fan base and generate substantial cash from product sales, TV broadcasting rights, and ticket sales by branching out into new regions. As a result, the club’s overall revenue and profitability have increased. b. Risk Diversification: MCFC has been able to lower its risk and prevent overreliance on one specific area by spreading its spending throughout a number of sectors, including player recruiting, facilities, and marketing. This has made it possible for the team to overcome obstacles related to money and keep its financial stability. c. Brand Awareness and Image: MCFC has improved its brand awareness and image by implementing a worldwide branding strategy. This has elevated the club’s profile as a leader in the football industry in addition to helping it draw in more supporters and sponsors. Although diversity has helped MCFC produce value, there have also been instances in which diversification has not done so: a. Ineffective Diversification Attempts: In the past, MCFC has invested in a women’s team and undertaken an ineffective stadium project in an attempt to diversify. In certain instances, these investments resulted in financial losses and failed to produce the anticipated returns. b. Resource Intensity: Diversification demands a large investment of resources, which, if mishandled, can put a pressure on a business’s finances. In the case of MCFC, exorbitant costs as a result of market diversification and investments in elite players have strained the club’s resources. c. Lack of concentration: Losing concentration on the primary business is a possible consequence of diversification. The goal of MCFC’s development and diversification may have taken the team’s attention away from its primary activity, which is football, and this could have had an impact on the team’s overall performance and on-field results. Nevertheless, there have been cases when MCFC’s diversification failed to provide the expected outcomes. For instance, the club’s attempt to enter the Chinese market via a local partnership was hampered by legislative limitations and a lack of enthusiasm from the community. Comparably, the investment in a digital media platform fell short of income projections due to its inability to draw in a sizable user base or establish lucrative partnerships. In these instances, MCFC’s diversification results were impacted by a number of variables, such as the competitive landscape, market conditions, and the club’s internal resources and competencies. The difficulties encountered in the Chinese market highlighted how difficult it is to navigate cultural and legal differences. In the meanwhile, fierce market rivalry prevented the digital media platform from gaining momentum and limited its ability to generate money. 3. The Impact of Capabilities and Resources on Diversification MCFC’s competitive edge is derived from its resources and capabilities, which have played a vital role in shaping its diversification choices. The club has been able to spend heavily in players, facilities, and new projects because to its strong financial position and affluent owners. Because of its strong brand identification, capable leadership team, and robust financial position, MCFC has been able to pursue ambitious expansion initiatives and take sensible risks. Furthermore, MCFC’s dedication to developing its human resources and cultivating an inventive corporate culture has been essential to its ability to stay competitive. Modern training facilities, sports science courses, and data analytics tools have improved operational effectiveness and on-field results. Strong stakeholder ties and collaborations have allowed MCFC to effectively use outside resources to promote value creation across the whole business. The resources and competencies of MCFC have been crucial in influencing its decisions about diversification. Here are some important things to think about: a. Financial Resources: MCFC has been able to invest in player recruiting, facilities, and international branding initiatives because to the owner’s substantial financial support. The club now has the tools it needs to pursue diversification plans thanks to this. b. Talent Management competence: The MCFC has been able to create and nurture talented players from inside its own system because to its strong youth academy and talent management competence. Because of this, the club now has a solid core group capable of competing at the top levels, which is essential for its international growth. c. great branding and marketing skills: MCFC’s great branding and marketing skills have enabled the team to grow its fan base and bring in a sizable sum of money from a variety of markets. The club has been able to draw in elite players and sponsors by using this skill to craft a distinctive and appealing brand image. In summary, Manchester City Football Club has established a competitive edge in the soccer market thanks to its strategic approach to globalization and diversification. The main factors contributing to MCFC’s success have been its diversification into new business sectors, worldwide market expansion, and risk management techniques. Although certain diversification endeavors have presented difficulties, the club’s assets, competencies, and strategic vision have been crucial in guiding its diversification choices and preserving its standing in the world of soccer. MCFC has effectively leveraged its diversification initiatives to generate a competitive edge. Nonetheless, a few botched attempts at resource intensity and diversity draw attention to possible problems with this strategy. The club’s excellent assets and competencies—especially in terms of funding, personnel management, and branding—have been instrumental in its decisions to diversify. ================================================================================ References BBC Sport. (2021). Manchester City: A timeline of Sheikh Mansour’s ownership. Retrieved from https://www.bbc.com/sport/football/54602733 Deloitte. (2021). Deloitte Football Money League 2021: Edition 24. Retrieved from https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/deloitte-football-moneyleague.html Manchester City Football Club. (n.d.). About Us. Retrieved from https://www.mancity.com/about Maume, B. (2020). How Manchester City Built Global Brand and Positioned Themselves as Best English Club in the Local Market. Journal of Marketing Analytics, 8(1), 23-39. DOI: 10.1057/s41270-019-00127-2 O’Brien, S. A. (2019). Strategic Management in Football: The Case of Manchester City Football Club. International Journal of Business and Management, 3(2), 45-56. Premier League. (n.d.). Manchester City – Club Profile. Retrieved from https://www.premierleague.com/clubs/11/Manchester-City/overview SportBusiness. (2020). Manchester City’s digital strategy pays off despite heavy losses. Retrieved from https://www.sportbusiness.com/2020/09/manchester-citys-digital-strategy-pays-off-despite-heavylosses/ The Guardian. (2021). Manchester City scores record £445m revenues but wage bill among highest. Retrieved from https://www.theguardian.com/football/2021/feb/23/manchester-city-score-record-445mrevenues-but-wage-bill-among-highest Wright, C. (2021). The Evolution of Manchester City’s Global Brand and Relationship with Soccer Fans. Soccer & Society, 20(3), 371-389. DOI: 10.1080/14660970.2020.1713449
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