The Premier League is the most watched football league in the world and it’s at the first level of the English football league system. Contested by 20 clubs, it operates on a system of promotion and relegation where each club plays every other club twice, once at home and once away, getting three points for a win, one point for a draw and zero for a loss. The team with the highest point at the end of the season wins the league for that particular season. Seasons run from August to May, with teams playing 38 games each totalling 380 games in the season. The 20 clubs acts as shareholders with each team having one vote for issues like contracts and rule change. It is sponsored by Barclays Bank and therefore officially known as the Barclays Premier League.
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Manchester United has been in the top flight on English football and will be our focus for this report. The club was formed as Newton Heath in 1878, joined the Football League in 1892, and has played in the top division of English football since 1938 with the exception of the 1974-75 seasons. Average attendances at the club have been higher than any other team in English football for all but six seasons since 1964-65.
Manchester United are the reigning English champions, having won the 2008-09 Premier League. The club is one of the most successful in the history of English football and has won 22 major honours since Alex Ferguson became manager in November 1986. In 1968, they became the first English club to win the Cup. They won a second European Cup as part of a Treble in 1999, and a third in 2008, before finishing runner-up in 2009. The club holds the joint record for the most English league titles with 18 and also holds the record for the most FA Cup wins with 11.
Manchester United FC was recently acquired by the American magnate, Malcolm Glazer. For the clubs strategic planning session, he is interested in finding answers to the following questions:
What should Glazer’s strategic priorities be for Manchester United? What targets should he establish for his management team?
What determines organizational capability in football (soccer)?
What can Glazer do to help Manchester United regain its position as England’s best football team? Should Glazer retain Alex Ferguson as head coach/team manager?
The case reveals that David Gill, the MUFC Ltd Chief Executives’ most pressing concern now is the imminent retirement of Sir Alex Ferguson, MUFC’s most successful coach. The club hasn’t found a replacement for him, and to seek his replacement Mr. Gill is pondering the fundamental qualities that make a football manager successful in England and Europe. This study aims to answer the owner and the CEO’s questions.
Problem Definition/Structuring:
To effectively answer the questions listed above, it is important that we understand the club (Manchester United FC), the industry it operates in (EPL/UEFA), and the inter-relationships between variables, so that we can target variables to be improved in measurable ways.
In the cognitive map that was developed for this case (figure 1.0, see appendix), we can identify Manchester United’s fundamental objective as ‘To be the best club in England’. This ambition is a huge holistic goal that is influenced by many factors and goals, clustered with different levels of causality. For instance, in its simplest form, to be considered the best club in England, Man U has to win the premier league trophy and the FA cup at least. To do this, they would need to play good football, which in turn depends on the quality of the players and the coach. Now, these two depend on a variety of factors as shown by the detailed cognitive map.
We have also added a SWOT (table 1.0 in the appendix) analysis to examine the state of the club and to help Mr Glazer to determine his most pressing needs.
Industry Analysis/PESTEL:
Having looked at the different factors that determine if a club can become the best in its league, we move on to examine the place of the club in the wider football industry. With the use of a PESTEL analysis for a 5 year scenario, we analyze the macro variables affect Manchester United FC. The analysis suggest that the over the time period under consideration economic factors (players transfer fees and salaries), regulatory factors (FA/UEFA) and increased competition from newly acquired clubs will be the main factors to watch. Table 2.0 in the appendix shows the detailed PESTEL picture.
Literature Review:
Manchester united delivers its key value creating service through its human resources and not machines. From the influence diagram in figure 1.0, their success depends on the quality of players and coaching crew. In pondering the sustained success of MUFC during the Ferguson era one wonders what the difference might be since other clubs also have players and coaches. In Mintzberg, et al, (2009), we are reminded of the economics view that holds “that it is the efficiency of the production system that plays a central role competition”. Mintzberg, et al (2009) go on to argue that competitive advantage is rooted in the culture of the firm; implying that the uniqueness of a particular team might account for their strategic advantage. In the light of this, one can better understand the actions of Sir Alex Ferguson in 1986. After he was appointed, he started setting standards of conduct, training; effectively, he was establishing a structure, a way of doing things – the Manchester United culture under him. All of these culminated in a build-up of capabilities within a culture of excellence that has given the club strategic competitive advantage over their rivals.
So, what makes Manchester United FC tick? Penrose (1959) answered the question when she asserted that “firms derive their advantages from market imperfections”. In recognising that though the English Premier League might be very competitive, it cannot be described a perfectly competitive market. The same information, knowledge and capabilities are not shared by everyone in the same degree. The capabilities of MUFC’s head coach have clearly been the unique basis for their competitive advantage. This is not to say that Sir Alex Ferguson was the only resource at MUFC’s disposal, because as Mintzberg, et al, (2009) “firms are a bundle of resources in competition with each other. Rather, he was the prime architect of the team’s success by organising and effectively deploying all other resources to achieve set objectives. This can also be seen in the case of Apple Computers after the exit and re-entry of Steve Jobs.
Also, Jay Barney (1991) argued that a firm’s competitive advantage was a function of the quality of the bundle of resources at its disposal. For a football team, the players and coaches matter the most. While money is important, it is not critical because it has been shown that the hallmark of a great coach is the ability to record remarkable success with relatively unknown players, as shown by Ferguson (Aberdeen) and Mourinho (Porto). Manchester United FC only achieved sustained competitive advantage after Ferguson took over. The capability to groom budding youngsters to super star status was rare, valuable, inimitable (because most coaches couldn’t replicate that) and non-substitutable (there was only one Sir Alex Ferguson). Other factors that helped MUFC can be identified in the work of Magaret Peteraf (1993) as; resource immobility (he identifies talent early and commits them to an exclusive long term contract) and heterogeneity. The last point can be seen in the way he assembles unique talent in his teams make up and blends them to suit his desired game strategy. In conclusion, having Sir Alex Ferguson, as coach truly is their competitive advantage, and finding a coach who displays similar qualities is a must if the club must sustain their advantage post Ferguson.
Recommendation:
What should Glazer’s strategic priorities be for Manchester United? What targets should he establish for his management team?
Focus 1: Convince Sir Alex Ferguson to remain at Old Trafford in the short to medium term; another two seasons.
Focus 2: Find a suitable successor to Sir Alex Ferguson. Though continuity of Fergusons structure is important, it is best to be open to some change and lay more emphasis on a coach that has demonstrated similar capabilities to Ferguson. While getting him to commit to retaining as much of the current structure as possible.
Focus 3: Generate more revenue.
He should establish the following targets for his team:
Identify a young, long term replacement for Ferguson before the season ends.
Secure a 20% increase in revenue via new deals within the year.
Further exploit the opportunities in Asia
Grow the number of Man U card holders to 3 million
Appoint more franchisees and spin offs in Asia.
Secure new markets for the Manchester United brand.
Organise formal fan clubs in other continents; Australia, Africa and South America.
Source for new commercial partners on the new continents.
Win the English premier league, the FA cup, and reach the semi-finals of the UEFA champions league (at least).
What determines organizational capability in football (soccer)
The key driver of organisational capability in football is the quality/talent of the head coach/manager.
Poorly managed teams with skilful individual players achieve very little. Clubs with a lot of money don’t always attain success, but great coaches build great teams. And whenever they have the luxury of talented players and money then it’s even better.
What can Glazer do to help Manchester United regain its position as England’s best football team? Should Glazer retain Alex Ferguson as head coach/team manager?
Yes, Mr Glazer should retain Sir Alex Ferguson as head coach in the short term. Also, he should develop a clear succession plan to integrate the would-be successor into the current team culture.
Secondly, Mr Glazer should allow the manager full control of the football aspects of the club, as this was how Ferguson was able to build his dynasty in the first place. He should concentrate primarily on the commercial aspects.
He should set clear and measurable objectives for the manager and equip him with the required resources.
Appendix: Fig 1.0
Table 1.0
Strengths
Weaknesses
Strong brand equity
Strong fan base
Weak cash position
Uncertainty of Ferguson’s future
Weak coach succession planning structure
Opportunities
Threats
Alex Fergusons’ exit
Intensified competition from other deep pocketed clubs for talent
Table 2.0
PESTEL ANALYSIS
P
E
Stability of ownership
Limited stadium capacity
Changes in interest rates
Inflated transfer/sign off fees
Intense competition for talented players
S
Increasingly restive fans
Increasing influence/bargaining power of superstar players
T
Increasing complaints of traffic congestion for match days
E
More rich owners taking over clubs
L
F A restriction on home talent
UEFA crackdown on breakeven
UEFA crackdown on expensive signings
Council restrictions on stadium expansion/construction
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