Scenario planning: Manchester United Football Club

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Table of Contents

INTRODUCTION............................................................................................... 4

MANCHESTER UNITED FOOTBALL CLUB (MUFC).........................................................................4

VALUES............................................................................................................................ 4

VISION.............................................................................................................................. 5

UNITED KINGDOMS AND GLOBAL DEMAND FOR MUFC PRODUCTS ...................................................5

FACTORS........................................................................................................ 5

TIMEFRAME........................................................................................................................ 6

GENERATING FACTORS FOR MUFC........................................................................................... 6

GENERATING FACTORS........................................................................................................... 6

UK Economic Stability...................................................................................................... 7

Political Stability............................................................................................................. 7

Global Economy.............................................................................................................. 8

Football Administrative Bodies Regulations...........................................................................8

Financial Welfare of Sponsors.............................................................................................8

State of Technology.......................................................................................................... 8

Shareholder Disputes........................................................................................................ 8

Impact of Media.............................................................................................................. 9

Broadcast Reach............................................................................................................. 9

Trends in Transfer Market.................................................................................................. 9

Performance of Other Football Clubs...................................................................................9

Immigration Laws............................................................................................................ 9

SCENARIOS...................................................................................................12

GENERATING SCENARIOS...................................................................................................... 12

SCENARIOS...................................................................................................................... 13

SCENARIO NARRATIVES...................................................................................14

REHEARSING STRATEGY WITH SCENARIOS..........................................................15

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STRATEGIES IN TOWS MATRIX..........................................................................18

SO STRATEGIES................................................................................................................. 18

WO STRATEGIES................................................................................................................ 18

ST STRATEGIES................................................................................................................. 19

WT STRATEGIES................................................................................................................ 19

CRITIQUE..................................................................................................... 19

REFERENCES.................................................................................................21

APPENDIX..................................................................................................... 22

APPENDIX 1: INCOME STATEMENT FOR MANU..........................................................................22

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Introduction

The global business environment continues to experience transformations in the way

businesses operate in their respective markets. In the past businesses focused only on

increasing their profitability. However, this has since changed. Currently, the management of

businesses focus not only on enhancing their profitability but also on developing and

implementing strategies that strengthen the current and future position in the market. One of

the businesses that have gone through tremendous transformation in response to changes in

the corporate world is Manchester United Football Club (MUFC). Speaking from this

perspective, this report will develop strategies for MUFC for the next 5 years. To achieve

this, this report will analyse various scenarios and how they affect the company.

Manchester United Football Club (MUFC)

Manchester United Football Club was founded in 1878 and has grown to become one of the

biggest clubs in the world. The club boasts of a net worth of $3.165 billion and is ranked as

the 2nd most valuable club in the world. Similarly, Manchester United Football Club is ranked

as the 3rd richest club in the world with annual revenue of 363.2 million, which reflected a

13.4 per cent increase (Richardson 2013). The club operates under Manchester United Plc

Company, which manages Manchester United soccer team and all its associated activities,

which include foundation, fan zone, team merchandise and media network. Ranchhod and

Marandi (2012) observe that MUFC, steeped in history, tradition, glamour and success the

club has had its share of tragedy and failures too.

Values

MUFC has key values that play a critical role in promoting its philosophy. The company has

focused on developing loyal and omitted staff, who provide support for long-term growth and

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as such, benefit shareholders and promote their success. Similarly, the club believes in not

only winning the trophies but also impacting the community in which it exists (Manchester

United Football Club 2013). The club encourages each of its members to tackle social and

environmental issues at both national and international level using its brand in order to create

awareness on different issues that the community face.

Vision

Manchester United Football Club has key values that are embedded in its vision and mission,

thus determine how the business is run. MUFCs mission is to be the best football club in the

world, not only on the pitch but also off the pitch.

United Kingdoms and global demand for MUFC products

MUFCs products and services have a high demand across the globe. Notably, the products of

MUFC are on high demand, not only in the United Kingdom but also across the globe. For

instance, while there is a high demand for MUFCs tickets in the United Kingdom and in

different parts of Europe, there is also a high demand for its sports apparel across the globe.

In line with this, while the club has a debt of 389.2million, the clubs annual revenue grew

by 13.4 percent to 363.2 million (Market Watch 2013). Furthermore, the adjusted net

income increased by 282.2 percent to 17.2 million while the adjusted earnings per share was

up by 266.7 percent to 0.11.

Factors

There are different steps that played an essential role in developing or rather identifying

factors that affect MUFC strategies in the markets.

Step 1 Developing the scenario.

Step 2 Generating factors for MUFC

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 Step 3 Eliminating some factors to remain
with important factors

Step 4 Developing scenarios

Step 5 Evaluating consistency in the

scenarios

Step 6 Presenting scenarios

Step 7 Evaluating the effect of the

scenarios

Step 8 Developing possible strategies

Step 9 Re-examining the strategies

Timeframe

This report developed scenarios and factors for MUFC for the coming five years, from 2013

to 2018.

Generating factors for MUFC

There are different factors that were considered that could have either a positive or negative

impact on the future of MUFC. It is essential to mention that there were different challenges

that were encountered when predicting the impact of these factors on MUFC, with these

challenges varying in complexity.

Generating factors

This report considered 12 factors that have an impact on MUFC. One of the important issues

to note about the factors that were identified is the fact that they fall in various categories

namely: social, political, economic, competition, technical, regulation and environmental.

Speaking from this perspective, this report uses SPECTRE analysis to evaluate the

importance and uncertainty of these factors as they relate to MUFC.

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Factor Range of factor values Current situation

UK Economic Stability Growth-------------Recession Recession

Political Stability Weak-------------Strong Strong
Global Economy Growth-------------Recession Growing
Football Administrative Bodies
Weak-------------Strong Strong
Regulations
Financial Welfare of Sponsors Poor-------------Excellent Excellent
State of Technology None-------------Significant Advancing
Shareholder Disputes None-------------Significant Low significance
Impact of Media Low-------------High High
Broadcast Reach Low-------------High High
Trends in Transfer Market Poor-------------Excellent Excellent
Performance of Other Football
Poor-------------Excellent Average
Clubs
Immigration Laws Weak-------------Strong Strong

UK Economic Stability

The stability of the United Kingdoms economy will play a significant role in determining

whether MUFC succeeds or fails in its industry. In this case, the stability of United

Kingdoms economy has an impact on both the internal and external environment of this

club, and determines the managements decision.

Political Stability

Political stability is vital to developing key policies that affect businesses, in this case MUFC.

Whereas the United Kingdom has a stable political environment, a change in political regime

may have an adverse effect on the operations of MUFC.

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Global Economy

The global economy will either have a positive or negative impact on the profitability of

MUFC depending on whether this economic is growing or declining. Moreover, the global

economy has an impact on financial growth of MUFC.

Football Administrative Bodies Regulations

Football administrative bodies regulations will impact on how MUFC operates in the sports

world. Notably, introduction of new regulations may impact negatively on how MUFC

operates, thus slowing down its growth.

Financial Welfare of Sponsors

The financial welfare of sponsors will determine the financial capability of MUFC. For

instance, MUFC could find itself in a financial if its financial sponsors became bankrupt.

State of Technology

The state of technology will impact on MUFC capability to develop new products, enhance

efficiency as well as reach out to its fans and other shareholders with ease. In this case,

improving technology will improve MUFC productivity efficiency.

Shareholder Disputes

Shareholder disputes have a negative impact on the progress of MUFC, both in terms of

finance and strategic development. In this regard, increasing disputes among shareholders

will have a negative impact on its capability to develop vital strategies in the market.

Moreover, in the worst scenario, shareholder disputes may result in dissolving of MUFC as a

club.

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Impact of Media

The media is a vital organ through which MUFC is able to reach to different stakeholders. As

such, the media could have an impact on how MUFC brand penetrates to different parts of the

globe.

Broadcast Reach

One of MUFCs goals is to reach a wider market. As such, the impact of MUFC across the

globe depends heavily on its ability to widen its broadcast reach. In this case, reaching a

wider market through broadcast will help increase its popularity and as such, it ability to

enhance revenue earnings.

Trends in Transfer Market

Trends in the transfer markets will affect the amount of investment that MUFC spends on

players as well as acquiring new talent. In addition, player transfer is also a source of revenue

for MUFC. Therefore, changing trends in transfer markets will determine whether MUFC

increases or decreases revenue earnings from transfers.

Performance of Other Football Clubs

The performance of other football club in the United Kingdom and Europe as a whole will

either increase or decrease MUFCs competitiveness, especially with regard to attracting

sponsors and talent.

Immigration Laws

The United Kingdoms immigration law could affect the ability of MUFC to acquire talent

that is essential for its success as a football club. In this case, accessibility to vital manpower

is dependent on whether the United Kingdom implements stringent immigration laws or not.

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Figure 1: The Map of 12 essential factors that have an impact on MUFC

Key MUFC Resources

There are various vital resources that MUFC have in the market.

RESOURCES IMPORTANCE RELATIVE STRENGTH

Global brand awareness 8 6

Finance 7 5
Technology 8 7
Distribution channels 7 8
Culture 9 7
Skills/talent 9 8

Table 1: Vital resources of MUFC

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Figure 2: Resource mapping

Arguably, there are different strategic resources that affect the the success of MUFC in its

respective industry. These resources include:

1. Skills skills will play a significant role in promoting the ability of MUFC to develop

products for its clients across the globe. In this case, skills will help the club to remain

consistent in its performance. On the other hand, loss of skills will have a negative impact

on performance leading to loss of revenue and market share.

2. Orgniazational culture organization culture will help MUFC to develop skills as well

as enhance the development of its global brand. In this case, culture will provide guidance

on how the organization should be run to maximise producitivity.

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3. Distribution channels distribution channels will define how MUFC access its customer

across the globe. In this case, efficient distributions channels will increase sales and

strengthen MUFCs financial position on the market.

4. Finaces the finances of this club will play an essential role in helping develop global

brand, help in acquisition of the necessary technology and promoting global brand

awareness through advertising.

5. Technology technology will serve as a basis of developing new products as well as

reachining out to stakeholders and customers in the market.

6. Global brand awareness note that encouraging strong brand awareness will help

MUFC to gain stability in commanding a formidable market share, thus increasing its

profitability.

Scenarios

Generating scenarios

This report employed the bottom-up approach to generating scenarios. In reference to

Palomo, Martn-Lpez, Lpez-Santiago and Montes (2011), the bottom-up approach involves

different stakeholders in generating scenarios, a factor that helps empower stakeholders

regarding different strategies that are developed. With this in mind, the report use different

factors namely: UKs economic stability, political stability, and the impact of media, to

identify 4 specific scenarios that could have adverse effects on MUFC. Note that scenario 4,

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which was based on One World Dollar, was implausible, and as such, it was eliminated from

the scenarios.

Factor 1 2 3 4

Impact of the media

High

High
Low

Low
(High/Low)

Weak
Political stability

Strong

Strong

Strong
(Strong/Weak)

UKs economic stability

Recession

Recession
Growth

Growth
(Growth/Recession)

Implausible

Scenarios

Scenario 1: Second Cold War?

In the first scenario, the paper will consider increasing immigration regulations due to

political realignment and weakening economic ties.

Scenario 2: Recession Incoming 2018

In the second scenario, the paper will consider economic challenges and their impact on

sponsors financial welfare

Scenario 3: A Handicap for United

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 In the third scenario, the paper will look at the impact of the media on the success of

MUFC in different economies across the globe.

Scenario narratives

The scenarios in this research will take the form of an analysis of various situations that affect

MUFC.

Scenario 1: Second Cold War?

There are numerous transformations that continue to emerge in different parts of the globe

that have a negative impact on businesses. Speaking from this perspective, the governments

across the globe, through political realignment are tightening immigrations laws, especially in

the case where such political realigned result in creation of allies and enemies. Note that these

immigration regulations continue to impose limits on social interaction among individuals

while tampering with the existing economic ties among nations. Furthermore, whereas there

are numerous developments with regard to economic recovery, the United Kingdom is still

struggling to come out of recession.

Scenario 2: Recession Incoming 2018

The largest markets across the globe continue to face numerous economic challenges because

of the 2007/08 economic recession. In this regard, there is a considerable drop in the

consumption rate in these countries. Whereas this is the case, there is sufficient evidence that

indicates that the last recession and rumours of future recession have done little to deter

different investors from sponsoring MUFC, and generally the football game. On the other

hand, tightening migration laws in the United Kingdom have had a negative impact on the

social interaction among people, especially with regard to the interaction of sportsmen.

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Scenario 3: A Handicap for United

There are various developments that have lessened the cost of operations of businesses and

increase brand awareness across the globe. Among these developments include technological

developments and the media that have enhanced efficiency in organizations and as well as

enhanced the way businesses and organizations promote their brands across the globe. In this

case, businesses that knew how to use the media effectively were likely to get a jumpstart as

compared to businesses that did not know how to use the media effectively.

Rehearsing strategy with scenarios

STRENGTHS WEAKNESSES

1. MUFC has a strong global brand 1. The club has experienced financial

challenges in the recent past

2. Has strong sponsorship from

individuals and companies such as 2. The success of Manchester United

Nike depends heavily on talent acquisition both

from the United Kingdom and across the

3. Has a large capacity stadium that
globe.
contributes positively towards its

revenue 3. While the club has a huge fan base, this

depends on how successful the club is on

4. Has excellent market framework with
the pitch
a global brand presence

5. Has a great fan base, which provides

an opportunity to generate revenue

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 through tickets and merchandise

Scenario 1: Second Cold War?

OPPORTUNITIES THREATS

1. The club has an opportunity to develop 1. Increased control on immigration will

talent from the United Kingdom and as limit the talent pool for this club, thus

such, reduce spending on foreign inhibiting the club from accessing rich

players. talent from other markets apart from the

United Kingdom
2. The club has an opportunity to develop

segmented markets such as Asia and 2. Increasing immigration control and

other parts of the globe and develop political rivalry across the globe may

products that specifically targets these have a negative impact on products that

markets. are manufactured in specific parts of the

globe, a factor that may affect MUFCs

products.

Scenario 2: Recession Incoming 2018

OPPORTUNITIES THREATS

1. As a result of tightening immigration 1. Weakening economies and recessions in

laws, the club has an opportunity to different countries across the globe may

enhance its current program that limit MUFCs capability to attract new

develops local players from a young investors. This may have a negative

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 age. This will put it ahead of its implication on its financial capabilities.

competitors who have weak talent

2. Tightening immigration laws may limits
development programs.
MUFCs corporate social responsibility

2. While economies may face numerous programs as well as its talent

recession seasons, the consumption of development programs.

sports products is rarely affected by

such recession. As such, MUFC has an

opportunity to attract investor even

during tough economic moments.

Scenario 3: A Handicap for United

OPPORTUNITIES THREATS

1. The weekly wage cap will reduce the 1. The weekly wage cap will have a

costs of the wage bill of this team. negative impact on MUFCs capability to

attract and retain talent.

2. Availability of the media that played a

vital role in enhancing the brand image 2. Increasing competition from other

of MUFC in different markets across European markets such as Italy and Spain

the globe. continues to threaten MUFCs position as

one of the global leaders in football.

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Strategies in TOWS Matrix

SO Strategies

1. MUFC should focus on using their strong global brand to develop products that target

segmented markets such as Asia and the United States.

2. Develop new products that can be marketed through the existing marketing framework of

this club.

3. Use the fan base to promote its brand, especially with regard to new products in the

market and as such, easily penetrate both new and old markets with new products.

WO Strategies

1. Focus on sourcing finances from a wide pool of sponsors such as companies and

organizations and in return, partner with them in different corporate social responsibility

programs.

2. Concentrate on developing its own talent rather than acquiring talent through transfers.

This will help reduce the overhead costs of acquiring and managing talent at MUFC.

3. Focus on excellence since this is the single most important factor that continues to enable

the club to increase its fan base.

ST Strategies

1. MUFC should concentrate on enhancing way of collecting revenue such as through

merchandise and efficient management of stadium fees. This will help the club to increase

its revenue even in times recession.

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2. Engage in different global activities at the end of every season such as global tour as a

way of raising awareness and meeting the fans. This will help the club to generate more

revenue through a wider customer base.

WT Strategies

1. In order to minimize weaknesses and reduce its threats on the market, the management of

this club should focus on developing new markets, not only of its merchandise but also of

its skills. In this case, rather than concentrating on its football academy in the United

Kingdom, the club should also concentrate on developing football academies in other

countries especially in Africa, which has a large talent capacity.

Critique

This report utilized SWOT analysis in conducting the strategic approach that MUFC could

use in the next five years. Whereas the tool provides an important overview of the strategic

approaches that could be adopted, there are various weaknesses that emerge. To begin with,

while SWOT analysis played an essential role in identifying different strategic approaches

that could be used by MUFC, the tool does not provide an avenue to analyse the strengths and

weaknesses of the available strategies, and as such, adopt the best option. Similarly, the tool

does not provide a way of identifying alternative strategies that could be implemented to offer

the best results.

In addition to this, one of the greatest challenges of using SWOT analysis to develop

strategies is embedded in the fact that the tool does not provide a way of prioritising the

strategies that have been developed. On the contrary, SWOT analysis assigns equal weight to

different issues that are identified, thus limiting the user in choosing the best alternative.

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Furthermore, to effectively use the SWOT analysis tool, one must be skilled or rather

competent in different business issues. In this case, SWOT analysis tool cannot work on its

own to help manager make decisions.

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References

Manchester United Football Club 2013, Corporate social responsibility. Available at:

http://www.manutd.com/en/Club/Corporate-Social-Responsibility.aspx. (Accessed 4

December 2013).

Market Watch 2013, Manchester United: 2013 fourth quarter and full year results. Available

at: http://www.marketwatch.com/story/manchester-united-2013-fourth-quarter-and-

full-year-results-2013-09-18. (Accessed 4 December 2013).

Palomo, I, Martn-Lpez, B, Lpez-Santiago, C and Montes, C 2011, Participatory scenario

planning for protected areas management under the ecosystem services framework:

the Doana social-ecological system in South-western Spain, Ecology and Society,

vol. 16, no. 1, pp. 23.

Ranchhod, A, and Marandi, E 2012, CIM coursebook 07/08 strategic marketing in practice,

Routledge, New York.

Richardson, J 2013, Glazers' investment paying off with Manchester United now worth a

whopping 3billion. Daily Express. Available at:

http://www.express.co.uk/sport/football/431310/Glazers-investment-paying-off-with-

Manchester-United-now-worth-a-whopping-3billion. (Accessed 4 December 2013).

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Appendix

Appendix 1: Income Statement for MANU

Income Statement for MANU (Source: http://www.bloomberg.com/quote/MANU:US)

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