Strategic Management – Case Study #2 Manchester United FC Question #1 The Manchester United club can adopt different ownership types as follows: Private owned company – This is the current ownership form. In terms of expectations we find it appropriate to distinguish between a family owned business like MUFC was before 1991 and a company owned by investor groups such the Glazers. It is more likely that a conflict in expectations would arise in the latter.
As in the case of MUFC, investors would seek to maximize profits by “turning the club into a product” while taking significant debts which puts the club’s future risk. This may result in a conflict with the fans expectations which don’t care for profit but for performance and tradition. Whereas if a family owned the club their expiations might be more similar to the fans’ expectations. Public limited company- The goal of a PLC is to maximize profits.
So a similar conflict of expectations might arise as in the private owned company case. However, the gap can be somewhat mediated if fans acquire shares of the company as was the case for MUFC. Ownership by members – In this form the club is owned by members. In this form the clubs are not businesses per se, thus the differences in expectations are much less acute. Rich Benefactor- In this form a rich tycoon provides the club with funds with zero cost.
In this case supporters’ expectations of keeping the clubs tradition and culture might conflict with the benefactor’s expectations. Question #2 |Power |Interest | | | |Low |High | | |Low |foreign customers,
Government,|Sponsors, Media | | | |supplier | | | |High | |Investors, local supporters , Employees – | | | | |mostly manager and players | In the first question we covered the major conflict that may arise between two key players: investors (shareholders) and supporters.
A similar conflict may arise between shareholders and employees as the manager for example expect that the club’s main purpose is to show top performance whereas again shareholders are looking for profits. Question #3 – MUFC Culture trend MUFC’s values, beliefs and taken for granted assumption undergone major changes from the pre 1990’s period. The changes are a result of both external environmental forces in the “football industry” and internal changes in ownership structure. Values – As the company became public its values changed, as by definition a PLC’s main value/goal is to maximize profit.
On the contrary, when the club was family owned generating profits was not a declared top priority. Beliefs- Before the 1990’s football was more of a worker-class interest. The main belief that guided the clubs was that it should develop locally (e. g. invest in local players; build a bigger local fan base). When TV broadcasting of games became ultra-popular and as the ownership structure changed the club aimed to globalize. Paradigms – Before 1990’s the underlying paradigm was that the club’s ultimate goal is to “produce” top quality football. As time passed the club taken for granted assumptions changed.
The new paradigm is that the club is a financial asset. This change had a major impact on the stakeholders’ behavior (e. g. players pay more attention to the commercial aspect) The changes we mentioned above had a major impact on the MUFC’s strategy. In the search for profits the club turned its attention to global markets. For example MUFC plays pre-session games in south-east Asia to boost sales there. Question #4 – Shift in MUFC’s Corporate Social Responsibility and Ethics The organization’s CSR and ethics stance have changed significantly over the lase three decades.
When the club was family owned and was a more local enterprise it conducted as a forum for stakeholder interaction. That is, MUFC focus was not on the bottom line but rather on performance and satisfying its supports. The environmental forces and the change in ownership structure have caused a shift to a enlightened self-interest stance. That is, the club’s new main agenda was to achieve high profitability while keeping its stakeholders satisfied. We can see this stance in action as the Glazers tried to conduct talks with fan unions in order to gain their support.