Strategic Position Analysis And Product Diversification Essay For West Ham United.

You have been approached by West Ham United (sport management/marketing students

i) Analyses the strategic position of that organisation, using relevant analysis tools

ii) Analyses and evaluates the options for diversification of the organisation’s existing product portfolio

iii) Makes specific recommendations for the organisation based on this analysis

The report should include appropriate contemporary academic and practical business references (in the case of the latter, specific to your chosen organisation) and rely on the critical application.

This report aims to analyse the strategic management option of the organisation West Ham United. With the increasing football clubs in UK and the paralleling increasing supporters of football, West Ham United has to enhance its management strategically to be ahead of its competitors and gain a competitive advantage. The report sees the strategic position of the organisation relating it to the Bowman’s strategic Clock (Bell, Brooks and Markham, 2013). A VRIN analysis is done to evaluate the sustainable competitive advantage for the organisation. The frameworks like PESTLE and SWOT are used to analyse the business environment of the company. Finally the strategic recommendation with potency to develop the products is given to show that the organisation still has the capability to grow.

West Ham United is the highest in the English football club that is based in Upton Park, England, presently playing Premier League, which the highest division of the English Football. Due to the moderate results accomplished by West Ham United FC in the activities of football in the last years, it had not qualified in any competition in Europe (Borooah and Mangan, 2012). West Ham United was placed in top 7 in the Premier League clubs by Brandfinanace in the 50 most valuable brands of football in the world that demonstrates the popularity of the club at a global stage.

The following diagram will portray the highlights of 31^st May 2013 year end with the potency of development of the organisation, because the new contracts of sponsorships will fetch the additional funds whereas 99 year lease of the stadium will increment the capacity of the stadium by 54% that will give substantial added revenue from the matches and the season tickets (Burdsey and Gorman, 2014).

Figure 1: Highlights of 2012-2013, position of the organisation

The following table will show the position of the company financially:

	2012			2013
	Player trading	Operations (excluding player trading)	Total in £	Player trading	Operations (excluding player trading)	Total in £
Turnover of the group	-	89815	89815	-	46165	46165
Other Op. Income	-	1030	1030	-	730	730
Administrative Expenses	(13800)	(75900)	(89700)	(9770)	(58680)	(68460)
Operating Profit / Loss of the group	(13800)	14945	1145	(9770)	(11785)	(21565)
Profit from the disposal of the players	170	-	170	910	-	910
Profit and Loss on the activities of operations before tax and interest	(13630)	14945	1315	(8860)	(11785)	(20655)

 Table 1: Profit and Loss Account at the year end of 2012 and 2013

Present Strategy

The above table shows the position of the organization and the improvement in the financial terms due to the escalation from Championship to the Premier League at the season end of 2011-2012. The growth of profit before taxation and interest and the turnover growth from the table demonstrate the future prospect of the organisation with the possibility of probable investment since there is financial stability of the organisation (Burdsey and Gorman, 2014). The increase in the administrative was anticipated due to the promotion of the Premier League, it shows that the decrease in the expense with give a stable position to the club.

The organisation’s current strategy is given in the following table that shows the most expensive match tickets (day) and the most expensive season tickets for the FA Premier League Season 2013-2014.

Most Expensive Day Tickets of Match		Most Expensive Season Tickets
Club	Price (£)	Club	Price (£)
Hull	31	Hull	404
Aston Villa	44	Aston Villa	594
Liverpool	51	Manchester City	781
Manchester United	54	Liverpool	851
Manchester City	57	West Ham	911
West Ham	66	Manchester United	951
Fulham	74	Fulham	998
Tottenham	80	Chelsea	1251
Chelsea	88	Tottenham	1844
Arsenal	125	Arsenal	1994

 Table 2: Expensive Season and day tickets

The above table shows West Ham United uses the Bowman Clock currently and can be positioned given in the following figure.

Figure 2: Bowman’s Strategic Clock for West Ham United

 After studying the factor that West Ham has high match and high season tickets as compared to the other Premier League Club; also considering the aspect that the club owns the average rates for their official merchandise, West Ham’s present strategy can be positioned as High/Risky margin” on the Bowman’s Clock since the average outcomes implies a mediocre perceived value of the customers (Calligeris, Burgess and Lambert, 2015).

The basic necessities of West Ham are to be capable enough to compete in the market since the stores and the home stadium are the significant revenue sources. VRIN framework will show if the organisation is the source of the sustainable competitive edge. The following table will demonstrate the VRIN evaluation of the capabilities of the club

Capability	Value	Rarity	Inimitability	Non-sustainability
David Gold – Joint-Chairman	The human capabilities will provide robust competitive edge because the David Gold has high experience to offer	Moderately rare at the level of Premier League. The present trends show that the football clubs are acquired by the foreign investors without having a prior experience in this specific market (Chapman, 2005).	It can be imitated by capitalizing contracting experts with the experience in this field only.	Significant investment is required. Moderate, possibly difficult to substitute.
Boleyn Ground Stadium	The capability has a nice value but the mediocre capacities do not give significant competitive edge.	Not unusual since the capacity is average at the Championship Level and Premier League.	Possibility of imitated since most Championship clubs and Premier League have same stadiums	Substitution- Olympic Stadium will substitute Boleyn Ground from the beginning of the season 2016.
Olympic Stadium	This specific capability has got potential value and can fetch significant competitive advantage	This stadium will be the Top 5 of the stadiums in U.K. by the capacity that makes this specific capability rare	Very difficult to imitate exclusive of the important investment that most clubs does not have the intention to do.	Difficult to substitute
2012-2013 financial statements	The organisation’s financial stability is a very significant factor	The football clubs’ financial stability at the level of Premier League is not rare keeping in mind the fact that the investments made by the owners and the shareholders has the potency to be rare, when the regulations of the new Financial Fair Play are executed (COTTE and Chatard, 2011).	This capability as mentioned earlier is very simple to imitate currently by the competitors but the circumstances may alter with the execution of the regulations.	Not Sustainable
Two online stores and official stores	This capability has value and can offer competitive edge in the terms of finance	This capability is not rare because every English football clubs from the Championship and Premier League have these facilities.	The capability is not difficult to imitate	Though official stores are considered very important by the clubs, this capability has the potency to substitute itself by the non-official merchandise.
Support of Global fan	This capability has high value and can offer competitive edge specifically in the terms of finance	FA Premier League is deemed to be the top division of the English football clubs globally and have great support from the fans globally that make the capability not rare.	Can be imitated with the investments for the promotion of the club at the international level.	This capability is simple to substitute for the non-UK fans since the majority of the situations thare is no emotional association between the supporter and the club
Academy of Football	This capabilities have recognised value being one of the greatest Youth Academics globally and can offer competitive advantage	It is often deemed to be the Top 10 in Youth Academies and the in English Football Top 3 thereby making it rare capability keeping in mind the present trends of the acquisition of the players instead of the investment in the Youth Academics (Di Mascio and Bradley, 2011).	This capability id difficult to imitate since the important investment is required. However the present trend is the acquisition of the players instead of the investment in the Youth Academics.	Bearing in mind the Academy of Football reputation and the outcomes it had, there is no possibility of substitution of this capability.

 Table 3: VRIN Analysis Framework

From the above VRIN Analysis it shows that the various capabilities that West Ham United possesses can give an important competitive edge. The capabilities like the Academy of Football, Olympic Stadium and the management experiences can help the West Ham United to overpower their competitors in both UK and international level.

The organisation West Ham United functions in the FA Premier League, the greatest and the highest division ranked in the English football. According to (Di Mascio and Bradley, 2013), the finance experts in football, the Premier League clubs have cumulated revenue of around £2.26bn in the years 2011-2012. Furthermore, it was estimated that there was a growth in the revenue to £2.6bn in the year 2012 and it will move to £2.9bn in the year 203-2014 for the first time. The following diagram will show the revenue generation for the Premier League Football clubs of the industry.

VRIN Evaluation of the Capabilities

Figure 3: Revenue sources of the Premier League Clubs

The PESTLE analysis of West Ham United is given below showing the analysis of the external industry in which it operates its business (Dr. SP Mathiraj and Jothi M, 2011). The following table demonstrates the critical issues in the industry and provides a better emphasis of the industry to construct a feasible strategy.

Political	-Work Permit for the players. -Price Caps set by the government for the protection of the consumers. -The new regulation of the Financial Fair play that will increase the control on cost and the profitability of West Ham United.
Economic	-Shift from the recession to the recovery; change in economic environment. -High rates of immigration leads to the increment in the rates of the production thereby leading to huge concentration of people in London. -Low rates of inflation increments the power of spending.
Social	-Improvements in the standard of living because of the increment in the pay. -The consumers are very keen to buy the club products of West Ham United since football is the popular sport there. -Increment of interest in the football due to the organisation.
Technological	-Increment in the utility of e-commerce -Utilisation of the PROZONE3 for the analysis of match day -Emergence of the cloud computing that assists in incrementing te organisational productivity to increment the experiences of match day for the fans
Environmental	-Emphasis on the protection of the environment in regards to the factors like noise pollution
Legal (similar to political)	-Work Permit for the players. -Price Caps set by the government for the protection of the consumers. -The new regulation of the Financial Fair play that will increase the control on cost and the profitability of West Ham United (Gelade, 2014).

 Table 4: PESTLE Analysis

The most significant issues that will dictate the alterations within the industry are the taxes that are charged by the Government, regulations of Financial Fair Play and the escalating interest in West Ham United. The regulations will bridge the gap between the powerful clubs and the others that will give benefits to West Ham United which has less financial capability.

The following table will illustrate the various aspects of the industry in which West Ham United is operating.

The bargaining power of the buyers	The threat of new entrants	The competitors rivalry	The threat of the substitutes	The bargaining power of the suppliers
There is a low bargaining power of the buyers because the industry has a little impact of the decisions of the fans in terms of the prices of the tickets and the merchandise of WHU. WHR decrease the buyer power by giving them loyalty system (season tickets) and rebates of various segments like under 18 customers and over 65 customers	There is an average threat of the new entrants in this industry because huge investment id required entering the market. The threats that are existing already is the promotion of the clubs to Premier League from Championship that is generally has less resources and cannot compete with the top clubs.	The rivalry is very much prevalent and high. The clubs invest more in the squad and the facilities since the higher position fetch more income in the revenue terms. The top five positions in the league guarantee the presence of the club in the European market. This will fetch revenues further and increment the brand equity (Giulianotti, 2011).	There is a low threat of substitutes in this industry because football is the popular sport not in United Kingdom only but globally.	This is an average to high industry. The organisation that supply WHU with the sports related products and services like training, turf merchandise, match equipment, etc. are generally sponsored by officially to the club (Adidas for WHU). It increases the bargaining power.

 Table 5: Porter’s Five Forces Framework

SWOT Analysis will define the external and the internal environment of the organisation in regards to strengths, weakness, opportunity and threats of West Ham United and the industry that it executes its operations.

It is a recognised brand globally with an increment of awareness in US, Asia and the Australian markets. There is a presence of high quality in their merchandising. It is the future home stadium with the escalated capacity. The associated sponsors are Adidas, SBOBET or Alpari. There exists a huge support from the fans (Groot and Zoutenbier, 2014). There is stability in the financial position of WHU as compared to the competitors of the similar size.

There exists less awareness and popularity globally as compared to the other English clubs like the Liverpool or Manchester United (Pringle et al., 2013). There is low financial power as compared to the competitors like Chelsea FC or the Manchester City.

The targeting markets like Australia, Asia or the United States of America being the potential markets to target for increasing the brand equity (Millward, 2013). More advertisement will increment the brand equity in the international markets. There will be opportunities of ticket revenues after the move to the Olympic Stadium.

The acquisition of the other football clubs by the financially robust businessmen is a probable threat. The regulation of the new Financial Fair play and the following trends of the other clubs to target the global markets are potential threats (Jones, 2011).

The following table will give the strategic recommendation along with the development in the product

Strategy 1: Market Development	Strategy 2: Market Development	Strategy 3: Product Development
The first recommendation to West Ham United is to acquire a smaller club from the foreign markets like China so that the country can use the same logo like WHU (Vokes, 2010). The new club will promote the brand of WHU in the global market to increase merchandise sales and brand equity (Williams, 2009).	WHU should sign up partnership with the companies that operate in the international market to promote the brand in the global market to increase the brand equity (Reinhard and Bigueti, 2013).	The development of new product under the WHU logo is a strategic recommendation (Southern, 2014). It can build a rugby team which is a popular sport after football. This will increase revenues and the new addiction of the consumers towards their new product.

Product Diversification Recommendations

Table 5: Strategic Recommendation and Development of Product

Conclusion

The report shows the different aspects of West Ham United and the capabilities of the organisations. It aimed to make a growth in the industry with sustainable competitive advantage and brand equity. It is found after a detailed analysis that the company is in a comparatively better position as compared to the other clubs. The point that is emphasised here is that WHU has to increase it brand equity by strategic alliances so that it can generate more revenue. There is also an option for developing a product like rugby which the next popular sport after football.

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