Case study on Manchester United in the reference book CORPORATE
STRATEGY authored by Gerry Johnson (University
of Strathclyde), Kevan Scholes (Sheffield Hallam University ) and Richard
Whittington (Saïd Business School, University of Oxford ) is a good example changing culture and changing strategy with time. Following are the suggested solutions :
Question 1 Do you feel that the various aspects of
corporate governance discussed in section 4.2 are appropriate for a football club? What
changes in governance would you like to
see?
Ans : Manchester
United is undeniably both big and a business driven by the expectations of the
stakeholders. They both are at the extreme –
1.
Football Lovers :
who would go frenetic to see that
their club wins all the matches and
trophies. For that they do not mind
travelling many miles to cheer up the players.
2.
Investors : Their expectation is only increasing
shareholder’s wealth like big corporate.
The club management’s financially driven ethos is undermining the ‘most followed game’.
The governance of the club has to have a balance
between these two extremes. In today’s context organizations are expected to be
accountable and responsive, not only to those owners and managers in the
governance chain but to a wider range of stake holders – including community at
large.
In larger organizations like Manchester United,
governance chain is complicated as there is a need to employ professional
managers to run the organization without being shareholders on the board – that
adds several layers in the management.
The concept of governance chain challenges the
directors and the managers to be knowledgeable about the expectations of the beneficiaries to
actively work on their behalf and to keep them informed.
Martin Edwards, major share holder acted as Chief
Executive till Peter Kanyon in 2000
joined as a professional Chief Executive. Edwards was not at one with the
manager Sir Alex Ferguson and was unpopular with the fans for his attempts to
sell the club.
Principle- Agent model is a reminder that ‘agents’
will tend to work in their own self interest and need to be encouraged to work
in the interests of the principal. In case of Manchester United to define the
principal is a debatable matter. Existence of the club is due to investors, but
it is the performance of the players
which builds the fan following. The popularity of club is based on the
game of players like David Beckham. The club treats them as a commodity and
trades in the benefit of shareholders.
The facilities in club for training and stadium all
needs capital. Listing of MUFC as a Plc on the stock market get bonuses.
Because training facilities are provided by the club, so they have put a limit
to wages below 50% of budget which leads
to players down graded performance. All the money comes from the fans. The club
does not repay back them anything except the entertainment. For sustained fan
followership, the clubs need to look at
their CSR programs.
Question 2 Using section 4.3.1 and
exhibit 4.5 undertake a stakeholder mapping exercise for any strategic
development that is likely to be under consideration by the board (for example,
‘The formation of a European super league of major clubs’). How would you use this analysis if you were: a board
member wishing to support the strategy?
an opponent of the strategy?
Ans . : Stakeholder mapping identifies
stake holder expectations and power and helps in understanding political
priorities. It underlines the importance of two issues :
- How interested each
stakeholder group is to impress its expectations on the organization’s
purposes and choice of specific strategies.
- Whether stakeholders have
the power to do so.
For Manchester United if we drawup the stakeholder
map it would be as follows :
Stakeholder
mapping identifies stake holder expectations and power and helps in
understanding political priorities. It underlines the importance of two issues
:
- How interested each
stakeholder group is to impress its expectations on the organization’s
purposes and choice of specific strategies.
- Whether stakeholders have
the power to do so.
For Manchester United if we drawup the stakeholder
map it would be as follows :
Organization might address the expectations of the
stakeholders in segment B through information – for example the community
groups. These stake holders can be crucially important “allies” in influencing
the attitudes of more powerful stake holders : for example, through lobbying.
Stakeholder mapping might help in understanding
better some of the following issues :
·
Whether the actual levels of
interest and power of stakeholders properly reflect the corporate governance
framework within which the organization is operating.
·
Who the key blockers and
facilitators of a strategy are likely to be.
·
Whether repositioning of
certain stakeholders is desirable and / or feasible.
·
Maintaining the level of
interest or power of some key stakeholders may be essential. E.g. public
‘endorsement’ by powerful suppliers or customers may be critical to the success
of a strategy. Equally, it may be necessary to discourage some stakeholders
from repositioning themselves. This is what is meant by keep satisfied in
relation to stakeholders in Segment C, and to a lesser extent to keep informed
for those in segment B.
These questions raise some difficult ethical issues for managers in deciding the
role they should play in the political activity surrounding strategic change.
Most stakeholder groups consist of large numbers of
individuals (such as customers or shareholders), and hence can be thought of
largely independently of the expectations of individuals within that group. With
some stakeholder groups this is not the case : they consist of a small number
of individuals or even single individuals (e.g. the chairman of the company or
the minister of a government department).
Question 3 Refer to exhibit 4.7 and decide which ethical
stance you feel best describes Manchester United now and how you would wish to
see the club. Justify your own position.
Ans :
Different companies take different ethical stances. There is likely to be a strong relationship
between the ethical stance, the character of the Manchester United and how
strategy is managed. The four type of
ethical stances can be :
Manchester United Directors can
probably be classified under longer-term
shareholder interests category. A sports
club may also be considered with a stance of multiple stakeholder obligations as players and channel partners do have
strong stake in the affair of the club. But the strategy control in the case
remains internally with the directors
and chief executive.
The second type of ethical stance is tempered with long term financial benefit to
the share holders of well managed relationship with other stakeholders. The
strategy of the club to tie up with Nike and New York Baseball club confirms
this stance. Building a stadium with a
capacity of more than 65,000 seats at Old Trafford serves the purpose of above stated
objective.
The corporates make attempt to ‘give something back’ to the
society. Manchester United also established a partnership to raise £ 1 mn for unicef,
the united nations children fund in the year 2000. This was perceived as
fitting the ethos of the Manchester united as reaching out to global children
and involve visits by players and officials to some of the poorest communities
in the world in Mangolia, Brazil and Uganda, united encountered some families
surviving on salary less than £200 a
year.
This attempt can not be seen
as a shift towards shaper of society. The club claimed that one should not
underestimate the power of football influence others including governments. So
the fund raising for the Unicef was a step to build loyalty of fans through
brand building.
Que. 4 Refer to section 4.5.3 and decide what you
feel were the key cultural characteristics of Manchester United in terms of values, beliefs,
behaviours and taken-for-granted assumptions:
(a)pre-1990, and (b) today? What are the
implications of these changes to current
and future strategies?
Ans. : As
the Manchester United has
grown there emerges a change in ethical stance. This has
also brought in a major change in
the loyalty towards the club. It gets
reflected from the transfer of star
player David Beckham to Spanish club Real Madrid and
Chief Executive Kenyon joining
rival club Chelesa.
The roots of
these changes are in shift of values and
beliefs.
Values – have clearly shifted towards a more
commercial agenda.
Beliefs – The time honoured religious metaphor for
football – or rather how it used to be.
Actions of Beckham, Ferguson and Kenyon has a reason of shift in cause of the game. Early
in 1990 and professional football was played for the
benefit of supporters profit is only a means to an end. Today it is a big
business.
A reasonable set of alternative assumptions for the
early years of the new century could reasonably be postured:
Professional football is played because it is a
core product profit is essential but
reinvestment in players might give longer term benefits. Television is an
integral part of the game today offering sponsorship and brand recognition
potential football should be
professionally managed. It does not matter who invests in the club or which
players are employed by the club so long as it is successful.
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