Ltp004 n%20lecture1

Strategic Management in Sport LTP004N Spring Semester 2010

AIMS AND OBJECTIVES This module introduces sport management students to the various models of organisational strategy. It provides a framework within which different management functions may be examined and integrated. Within these general aims, the module has been prepared so as to achieve the following. to enable the students to evaluate the key sources of uncertainty facing sports organisations. to introduce the students to the concepts of environmental, social and financial audit and appraisal. to enable students to evaluate the feasibility of proposed sport developments.

LEARNING OUTCOMES On successful completion of this module participants will be able to: outline the various models of the strategic process and discuss the relevance of these models to particular circumstances; analyse the key contemporary features of the strategic sports management environment. identify the strategic choices facing corporate managers in sports organisations; in a sports management context to evaluate strategic choices and to evaluate the feasibility of strategic proposals; identify the problems and opportunities faced by sports organisations in implementing their chosen strategy

Introducing Strategy LTP004N Strategic Management in Sport Week 1 Spring Semester 2010

How do we determine success? Is it winning in sport? Is it making a profit in business. Is it customer satisfaction, retention rates? Is it just survival? The problem with strategic management in sport Utility v Resource Maximisation

Lesson Aims and Objectives Aim: To introduce participants to concepts, theories and processes of strategic management Learning Objectives By the end of this lesson you will be able to Define the concept of strategic management Understand the context of strategic decision making Discuss the notion of success Present the strategy lenses as ways of viewing strategic decisions Understand how to check strategic options fit with the organisation

Strategic Management – some views (1) Saloner et al: ‘ Strategic Management is about helping managers navigate the external environment while making the best use of the organisation’s assets’ A strategy does not SPECIFY any particular actions used to implement it – it is a FRAMEWORK for guiding a choice of possible actions Doyle: ‘ A strategy can be defined as a set of decisions taken by managers on how the business will allocate its RESOURCES and achieve sustainable COMPETITIVE ADVANTAGE’

Strategic Management – some views (2) Fitzroy and Hulbert: ‘ Strategy is about the organisation’s relationship with the environment and deploying the CAPABILITIES and COMPETENCES to enable it to prosper…it can be explicitly formed or implicitly enacted as an evolutionary response to a changing environment’ Johnson et al ‘ Strategy is the DIRECTION and SCOPE of an organisation over the LONG TERM, which achieves advantage in a changing environment through the configuration of resources and competences with the aim of fulfilling STAKEHOLDER expectations

Strategic Decisions are About… The long-term direction of the organisation The scope of an organisation’s activities Gaining advantage over competitors Addressing changes in the business environment Building on resources and competences (capability) Values and expectations of stakeholders which affect operational decisions

Definition of Strategy Strategy is the direction and scope of an organisation over the long term , which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.

Strategic Decisions are Likely to : Be complex in nature Be made in situations of uncertainty Affect operational decisions Require an integrated approach (both inside and outside an organisation) Involve considerable change

Strategic v Operational Management Strategic Management Operational Management Organisation-wide, holistic Functional, Routinised Conceptualisation of issues Techniques, processes, actions Creating new directions: new resource allocations Managing existing resources Developing new resources Optimising existing resources Ambiguous/uncertain Functionally and Operationally specific Long term perspective Day to day issues, annual operating plan

The Vocabulary of Strategy Mission – overriding purpose Vision/strategic intent – desired future state Goal – general statement of aim or purpose Objective – quantification or more precise statement of goal Strategic capability – resources, activities and processes Business model – how product, service and information flow Control – monitoring of action steps

Elements of Strategic Management Understanding the strategic position of an organisation Making strategic choices for the future Actioning strategy

Different Contexts for Strategy Manufacturing – physical product often augmented with service, brand image for competitive advantage. Global v Local competition/sourcing Services – no physical product, competitive advantage based on intangibles increasing Globalisation Manufacturing/ Service Organisations Diverse products/markets/businesses. Structure/control/parenting. Competitive strategy. Portfolio management. Resource allocation/ coordination. Global v Local competition. SBU focus Multinational Corporation Single market. Limited product/service range. Competitive strategy. Strategic capability. Restricted funds. Small Business Diverse sources of funds. Values and ideology. Lobbying. Stakeholder management. Managerialism v Volunteer dependency Voluntary and Not-for-Profit Ideology. Direct/indirect external influence (e.g. government). Competition for resource inputs. Best value in outputs. Interagency cooperation Public Sector

Different Contexts: Sport Examples Nike, Adidas-Reebok, Manchester United, Ferrari, Larger Fitness Clubs Islington Boat Club, Anaconda Swimming Club, Football Foundation, Central Council for Physical Recreation Islington Sport and Leisure Authority, UK Sport, Sport England, Toulouse Rugby Club IMG, Octagon, News Corporation, Fitness First BARCELONA FC Manufacturing/ Service Organisations Multinational Corporation Local private Gym & Fitness Centres, Little Kickers Small Business Voluntary and Not-for-Profit Public Sector

Strategic Paradigms and The Strategy Lenses How organisations approach strategy

Strategic Paradigms What’s a paradigm? A set of assumptions, concepts, values, and practices that constitutes a way of viewing reality for the community that shares them, especially in an intellectual discipline Whittington (1989) believed there were four competing paradigms relevant to strategic management Classical Evolutionary Systemic Processual

Strategic Paradigms – Rational Analysis and Plans Classical Paradigm The environment is dynamic, but essentially predictable Therefore decisions can be made within a rational strategic planning process Based upon Organisational objectives, environmental scanning, strategy formulation and implementation Actions are rational & deliberate, focusing on a single intent Failure is seen as resulting from deviations from this process

Strategic Paradigms – Adapting to Changing World Evolutionary Paradigm The environmental forces create problems, opportunities and ‘bounties’ for the company; continually and unpredictably Managers cannot accurately predict these changes and therefore cannot make rational decisions Strategy therefore is taking advantage of opportunities as the environmental changes Actions that are rational, deliberate and lead to long-term visions will lead to short-term disasters Flexibility of resources, speedy execution and beating the competition allows success/survival

Strategic Paradigms - Organisation and Environment = complex interactivity Processual Paradigm The environment is seen as arbitrary and unpredictable, but not as harsh as the Evolutionary paradigm Poor or below standard business performance goes unpunished by the marketplace; therefore individuals do not have to focus on profitability only Wider individual or collective objectives can be accommodated – individuals can form groups and alliances to further own careers interests Leads to Satisfying behaviour – so long as key stakeholders are kept content Strategy therefore emerges from ‘Political’ issues – It is deliberate, and contested, emerges from compromises, victories and defeats

Strategic Paradigms - Culturally Determined) Systemic Paradigm Strategy reflects the particular social and cultural systems in which strategists participate, defining for them the interests in which they act and the rules by which they survive - class and country may make a difference The decision makers’ goals can be personal, influenced by society, desire for power, socially desirable outcomes which are not profit maximising e.g. full employment, family control Strategy as a social system with many influences and embedded and acting within a complex environment

Paradigms and Strategy Formulation Strengths & Weaknesses Capabilities Opportunities & Threats Environmental Forces Strategy Performance The Paradigm

Implications Managers approaches will be conditioned by the paradigm they follow Paradigms are difficult to change as they are the sum of managers experience and intuitions Opportunities will be evaluated according to cultural as well as analytical methods Strengths and weaknesses are influenced by managerial assumptions Effect of ‘bounded rationality’ (Simon) and limits on option evaluation – danger of current assumptions not fitting future situation The environment – market and wider social and political forces- can impact hugely on an apparently sound strategy

Exhibit I.v Three strategy lenses

The Strategy Lenses Strategy as design Logical analytical process Planned implementation Top-down, management driven process Strategy as experience Adaptation of past strategies based on experience Influenced by taken for granted assumptions (culture) Bargaining and negotiation between managers/functions Potential for ‘drift’ Strategy as ideas Importance of variety and diversity for innovation Emergent strategy from within and around the organisation Top managers create the conditions for this to take place

RACES – Haberberg and Rieple Strategy is usually a set of options for the long term viability of the organisation RACES framework brings together all aspects of the organisation to check the validity of options and help make strategic choice R esources A cceptability C onsistent E ffective S ustainable

RACES in more detail Resources:- Are resources needed available or easily obtainable? How easy are they to imitate by competitors? Acceptability:- Are internal power brokers, leaders and important stakeholders agreed? Are external stakeholders agreed or satisfied e.g. regulatory bodies Consistency:- Does it fit with culture, brand reputation, business architecture If not, has the change implications been modelled into the strategy? Effectiveness:- Does the strategy address the issues facing the organisation and resolve them? Is one option better than another at doing this? Sustainability:- Does the strategy lead to long term advantage and how? If competitors can imitate easily is there any way to make it more uniquely successful

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