Strategic Management in Sport

Danny O'Brien, Milena M. Parent, Lesley Ferkins, Lisa Gowthorp

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781351970808
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Estrategia empresarial

What role can strategic thinking play in contemporary sport management? It can be the difference between leading or languishing – it's that important! Covering sport at all levels, from community-based sport to elite sport, this is the first textbook to focus on strategic management in a sport context.

The book introduces the fundamentals of strategic planning, environmental analyses, strategic direction and leadership, strategy formulation and selection, implementation, strategic control, and change management. Designed to encourage students to develop a strategic mindset, as well as critical thinking and problem-solving skills, the book unpacks key concepts such as leadership, governance, organizational change, and the multiple layers of strategy in sport.

Full of real-world case studies from diverse, international sport business environments, and useful pedagogical features such as review questions and guides to online resources, this is an essential text for any sport management course and an invaluable resource for sport development, recreation management, or events management courses.

1
The process of strategic management in sport

Opening Case: Under Armour’s Quest for World Dominance

In the late 1990s, a walk-on player for the University of Maryland Terrapins football team, Kevin Plank, was irritated with the cotton T-shirts he and his teammates were forced to wear under their shoulder pads. The shirts would become soaked with sweat, which made them heavy and uncomfortable. Always a tinkerer, Plank experimented with making his own T-shirt by emulating the figure hugging, moisture wicking garments he had seen athletes wear in sports like cycling. His teammates were so impressed with Plank’s microfiber innovation that he ended up outfitting the entire squad. These were, of course, the humble beginnings of the sport apparel success story, Under Armour. At the time, Nike and adidas dominated the sports apparel market, but Plank soon grew his fledgling company and diversified into multiple products in numerous categories, while never deviating from his focus on sport and innovation and his vision to rival and eventually overtake adidas and Nike.

Fast-forward to 2014–2015, and Under Armour had spent close to USD 1 billion on the purchase of three mobile applications that specialize in physical activity and diet tracking. On the surface, these seem completely unrelated to Under Armour’s core sporting goods and apparel sector. But Plank spent large amounts of time explaining to his staff the company’s goal to use these new capabilities to amass the world’s largest digital health and fitness community, which would then fuel a big data engine to help drive Under Armour’s future product development, merchandising, and marketing. Although Nike still dominates the US market, Plank’s strategy has already seen Under Armour leapfrog adidas to second place in that massive geographic market. Internationally, however, Under Armour still ranks third behind Nike and adidas (Foster, n.d.). An extremely capable general, Plank’s ultimate vision for Under Armour is nothing short of global market leadership.

■ Strategic management in sport

The opening case highlights the uniqueness of sport as a context for studying, understanding, and practicing strategic management. Large sport organizations, like Under Armour, do not achieve their ultimate vision without strategic management – financial lenders require the accountability offered by formalized planning, and senior managers need strategic direction to help guide decision-making around resource acquisition, production, and distribution processes, which helps them position their respective organizations to effectively fulfill their mission and compete against rivals.

Indeed, perhaps the defining feature of sport is the presence of institutionalized competition. Shilbury (2012) observed that “competition… is the heart and soul of sport management” (p. 2). This makes perfect sense in the arena of organized sport, where individual athletes and teams compete against each other to win leagues, world titles, and Olympic medals. But even in seemingly non-competitive sport, the sport management environment is still characterized by competition. Take recreational skiing, for example: snowsport-related hardware companies compete with each other to sell skis, snowboards, bindings, and apparel. Meanwhile, ski tourism operators compete with each other to provide transport, accommodation, and instruction services, while ski destinations rival with each other to attract tourists and host events. In and among all of this, different snowsport disciplines such as downhill, slalom, cross-country, biathlon, and snowboard compete with each other and other sports to attract participants, sponsors, media coverage, and government funding.

Therefore, while the sport environment is diverse and involves many seemingly non-competitive aspects, from an organizational perspective the fact remains that sport organizations compete with each other for access to valuable tangible and intangible resources. These resources allow sport organizations to provide certain products and services and to compete for the loyalty of customers, members, and clientele. Competition is indeed at the core of sport management, and how sport organizations identify their core purpose, stake out their domain, and differentiate themselves from rivals ultimately determines their level of competitiveness and ultimate survival – hence the need for strategic management in sport.

Critical thinking Box 1.1

Go to: https://careers.underarmour.com/life-at-ua

After perusing this website, explain how Under Armour’s vision, mission, and core values influence the company’s strategic direction.

■ What is strategy and strategic management?

The term strategy is used so widely that a discrete and unambiguous definition should be simple. We hear the word used in so many different sporting contexts – for example, in relation to Olympic bid strategies, the New York Yankees’ recruitment strategy, the Indian Premier League’s cricket growth strategy, or Real Madrid’s digital strategy, plus myriad other instances. So clearly, defining the term “strategy” in one discrete sentence is not as straightforward as you might think! Strictly speaking, the word strategy actually derives from the Greek strat-egos, which translates to “the general’s view.” This militaristic perspective provides a useful analogy: the army general is like a chief executive officer (CEO), and the officers below the general equate to department heads and middle-level managers. However, even generals are accountable for their performance as they report to the political leadership of their nation. Similarly, a sport organization’s CEO is employed by, and is accountable to, the board of that organization. It is the responsibility of the board to monitor and evaluate the performance of the CEO. What is emerging here is a more inclusive conception of sport leadership, one that will be picked up on later in the book that conceives of leadership as a shared responsibility, which contrasts the traditional single person “command and control” conception.

Rather than proposing a strict definition of strategy, de Kluyver and Pearce (2012) suggested it is more useful to identify what strategy actually pertains to. They proposed:

Strategy is about positioning an organization for competitive advantage. It involves making choices about which industries to participate in, what products and services to offer, and how to allocate corporate resources. Its primary goal is to create value for shareholders and other stakeholders by providing customer value.

(de Kluyver & Pearce, 2012, p. 2; emphasis in original)

The statement “positioning an organization for competitive advantage” is crucial to our understanding of strategy. Simply put, competitive advantage refers to an organization’s ability to create value that its rivals cannot, which then allows the organization to gain an edge over those rivals. In the opening case, Under Armour seeks to create competitive advantage over key rivals like Nike and adidas by creating a relationship with its customers that competitors may struggle to match. In another example, Evolve MMA is the market leader in Singapore for mixed martial arts (MMA) instruction/coaching and competition. In an industry sector characterized by small operators, Evolve MMA stands out because it operates across four five-star facilities and boasts the largest, most experienced instructor team in Asia with over 1,000 years of collective world championship experience (Evolve MMA, n.d.). This broad scope of operations allows Evolve MMA to offer clients an integrated service throughout their MMA involvement, from introductory experiences and coaching for children through to competing at world championship levels and everything in between (Evolve MMA, n.d.). So we can see how Evolve MMA differentiates itself from its competitors by its sheer size and its unique position as a one-stop shop that allows clients premium access to five-star sport facilities and instruction.

Obviously, sport organizations like Under Armour and Evolve MMA, or Manchester City Football Club, a university athletic department, or your local hockey club, do not operate with one single strategy. Rather, organizations employ numerous strategies at various levels and with respect to any number of stakeholders – hence the need to manage strategy. It is true that not all sport organizations practice strategic management, but to maximize the chances of organizational success while minimizing the prospect of organizational failure, the management of strategy – strategic management – is imperative. Harrison and St. John (2014) define strategic management in the following way:

Strategic management is the process through which organizations analyze and learn from their internal and external environments, establish strategic direction, create strategies that are intended to help achieve established goals, and execute those strategies, all in an effort to satisfy key organizational stakeholders.

(p. 4)

■ The context of strategic management in sport

The international sport environment is multifaceted; it influences and is influenced by any number of other sectors such as media, tourism, fashion, technology, education, and religion, to name a few. It has supply and demand sides, where the former is characterized by forprofit companies, like Under Armour in the opening case, that produce and trade in sporting goods and services; the latter consists of participants seeking involvement in sport activity as individuals or within teams or clubs, either as amateurs or as their primary source of income. Hoye, Smith, Nicholson, and Stewart (2018) helpfully delineate sport into three main sectors:

• 1 The state or public sector (national, state, regional, and local governments);
• 2 The non-profit/voluntary sector (community-based clubs, sport governing bodies that regulate and manage participation opportunities); and
• 3 Professional and commercial sport organizations (professional leagues and teams, sport apparel and equipment producers [think Under Armour in the opening case], media companies, major stadium and event managers, etc.).

While the sport industry may seem incredibly complex, the principles of strategic management can help to cut through this complexity because the concepts explored in this text are designed to offer insight to all layers of the sport environment. For example, board members of a local non-profit football club must consider the club’s value proposition in relation to competitors, and while the scale is vastly dissimilar and there will be different influences, so too do board members of Nike need to consider the company’s position relative to competitors. It is the context that changes, not the concepts. With this in mind, as you read this text, it is important for you to constantly make connections across cases and focus on the concepts being explored rather than the contexts within which they are presented. What you learn about managing the organizational culture of a local football club may indeed hold true for managing the organizational culture at Nike!

■ The strategic management process: an overview of this book

So how do sport organizations like New Zealand Rugby (and its All Blacks rugby team) achieve success and maintain that success over such long periods of time? They do this by differentiating themselves from their competition; that is, by deviating in key ways from the more widely accepted practices of their competitors. This entails major risk because “accepted” ways of conducting business are accepted because they are considered “safe” – or in strategic terms, legitimate. This means there are two main ways for an organization to stand out from competitors: either by success, or alternatively, by failure. Obviously, the former is more desirable than the latter, and this is where strategic management plays a key role in enabling sport managers to provide at least a measure of certainty in an uncertain environment.

Figure 1.1 The strategic sport management process

Figure 1.1 depicts the various steps involved in managing strategy. As in all textbooks, these types of figures simplify what happens in the real world, but nevertheless they provide a foundation upon which we build deeper understanding. Strategic management is far more complex than a static snapshot, and it involves more than producing a strategic plan every few years or every Olympic cycle. Rather, strategic management should be perceived as an iterative process that evolves over time, with no “right” place to begin. For the sake of analysis and building understanding, we have chosen to start with environmental analysis.

As an iterative process, strategic management involves making choices. Decisions need to be made about the sector(s) the sport organization is best suited to compete in and what products and/or services it can viably offer to satisfy the needs of key stakeholders. The term stakeholder refers to groups or individuals who share some level of interdependency with the focal organization; whose actions affect, or are affected by, the focal organization; and who have the sense of an interest or right in the focal organization (Merrilees, Getz, & O’Brien, 2005). As in any walk of life, sound decision-making is founded upon equally sound information about the available alternatives. In the strategic management process, this information is derived from environmental analysis.

Obviously, there are many ways to scan an organizational environment, but essentially, senior management needs hard data and detailed information upon which to base its strategic decision-making. Organizations typically undertake both internal and external environmental analyses. For internal environmental analysis (Chapter 2), ma...