Strategic Management - Assignment PDF

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STRATEGIC MANAGEMENT
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Executive Summary
Specialized football is more than just an elite sport. Football with a global prominence is also a
rapidly developing industry, and thus be analysed as such. Among various international football
associations Liverpool Football Club attains a special place and recognition among wide base of
followers across the world. Thus implementing traditional micro- and macroeconomic
management theories the paper has provided comprehensive insights about the strengths, threats,
limitations and opportunities which Liverpool must take into consideration while making a
competitive advantageous position in the football industry. In addition to this, economic
performance of the football association also been analysed to obtain knowledge about
Liverpool’s current economic growth.

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Table of Contents
Introduction......................................................................................................................................6
Discussion........................................................................................................................................6
Internal Analysis of Liverpool FC...............................................................................................7
Financial Analysis of Liverpool FC............................................................................................8
Macro Environment Analysis of Football Industry (PESTEL Analysis)..................................10
Stakeholder approach towards Liverpool FC............................................................................14
Implementation..........................................................................................................................15
Conclusion.....................................................................................................................................15
References......................................................................................................................................17

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Table of Tables
Serial No Heading Page No
1 Liverpool FC’s Economic
Performance
08
2 Club Revenues of Football
Associations
10
3 TOWS Matrix 14

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Glossary of Items
Abbreviations- Liverpool FC (Football Club), FA- Football Association
Key words- Liverpool FC (Football Club), Football Association, Competitive Analysis, Premier
League

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Introduction
Football is certainly one of the most powerful and renowned sports in the world,
connecting communities, inspiring sentiments and breaking down cultural obstacles and
obstructions (Kenyon and Bodet 2017). Football has also emerged as one of the most lucrative
industries with a major financially viable impact in infrastructure growth, sponsorships,
advertisement right and financial transfers of sportsmen. One of the recognized football teams
which has generated substantial amount of economic growth and well-established position in the
football business domain is Liverpool Football Club (Liverpool FC) (Liverpool FC 2018). Since
the Liverpool FC has been founded in 1892, the club name has been identical with reputation and
fame. Paché and Ika (2016) have revealed that both at international and national level, Liverpool
is the most thriving British club of all time and have won around 20 league titles, 8 league cups,
5 European Cups and almost 3 UEFA Cups (Liverpool FC 2018). Furthermore, after claiming its
ninth League Title in 1990, Liverpool entered into a downward spiral. However, with some Cup
trophies along with certain average league finishes during the 1990’s and early 2000’s, it seemed
that Liverpool’s star has declined (Paché and Ika 2016). Nonetheless, the football team
eventually proved their determination in the most exciting method feasible following the success
of the Champions League final in the 2005 they proficiently improved from 3-0 down at half
time in order to ultimately defeat Milan on penalties (Liverpool FC 2018). The following report
aims to provide inclusive financial analysis of Liverpool FC and further will offer Macro and
Micro Environment analysis of the football club. In addition to this, the paper will highlight vital
opportunities and threats of Liverpool FC with TOWS matrix and stakeholder approach towards
Liverpool FC.
Discussion

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Internal Analysis of Liverpool FC
Being one of the most recognized sports club across the European continent belonging to
Fenway Sports Group constitutes a strong brand name with highly dedicated fan following.
Strengths- The organization has an exceptional marketing and global brand prominence with
exceptional quality merchandising Liverpool FC has proficiently achieved sponsorships with
Crown Paints, Carlsberg, Candy as well as Standard Chartered Bank (Liverpool FC 2018). The
introduction of James Milner has signified that Liverpool produced substantial rate of versatility
in their line-up with the previous city man who exhibited competence of filling in at full back ore
across the mid-field and sometimes at front with the forwards if required (Parnell, Millward and
Spracklen 2015). Furthermore, the Liverpool line-up emerged as one of the most well-balanced
line-ups with considerable potential.
Weaknesses- Kenyon and Bodet (2017) have claimed that two significant misfortunes like
Heysel Stadium disaster (1985) as well as Hillsborough Disaster (1989) have caused detrimental
impact on the football association. Furthermore, author has noted that Liverpool has not being
competent to correspond to series of goals which the top four contenders were getting on a
constant basis. Such a lack has posed challenges to the football association (FA) whether the new
additions will have capability to fit appositely in the system Rogers plays with Liverpool defence
(Parnell, Millward and Spracklen 2015).
Opportunities- Reports by Paché and Ika (2016) found that companies in all fields are shifting
towards sports in order to drive higher level of awareness of their products and services with
increasingly impressive brand visibility. Liverpool must benefit from this elevating rate of
advertising and brand prominence which would facilitate the FA to successfully build on brand
equity.

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Threats- Hargreaves et al. (2016) have observed that in recent times, ‘the Liverpool way’ has
been diluted and has been experiencing threats due to certain hybrid of politics and turmoil
internally along with a shifting landscape of football externally. However, according to Paché
and Ika (2016), though FA has undergone certain radical developments, the sincere fans of
Liverpool have continued to show their dedication and watched their games with disdain as
football became corporatized.
Financial Analysis of Liverpool FC
The globalization and commercialization of football are typically referred currently as the
increasing commercialization of football that has resulted to new sponsorship agreements and
deals. These phenomena recently have been experiencing certain forms of progress but are
profoundly deep-rooted within every major club. Furthermore, several supporters still show
importance with their presence as vital contributors to revenues (Liverpool FC 2018). In
addition to this, match day incomes comprise around 19pc of all of Liverpool FC’s incomes
along with the expansion of Anfield that serves a contributory role in sustaining competitive
figures relative to rival base of Liverpool (Hargreaves et al. 2016).
Figure- 01
Liverpool FC’s Economic Performance

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Source: (Rohde and Breuer 2016)
Reports by Liverpool FC (2018) have revealed that over the past two decades, European
clubs ob average have experienced around 9.8 % annual growth with the average revenue that is
three times estimated during the year 2000. Furthermore, within England, the average income
since 2010 has been approximately 82% for football associations that is recognized as the major
growth achieved by any of the European leagues. Thus, Bounds (2018) has claimed that only the
German and Spanish leagues are sincerely comparable with 64% and 56% respective growth on
average. With around £365.5 million generated in revenue, Liverpool FC has witnessed around
21% increase on aggregated revenues in comparison to past years valuation. This growth has
been reflective of both the Premier League economic climate but further the commercial efforts
Liverpool FC has done over the last few years. However financial reports have stated that though
the matchday incomes of Liverpool FC has surpassed revenue rate of its strongest rival
Manchester City, Liverpool’s total revenue growth has been below other competitors by
emphasizing on the needs to extend Anfield stadium (Mcmahon 2018). The FA has been
struggling related to its broadcasting authorities but these data have been calculated following
Liverpool’s first season under Klopp as well as its broadcasting incomes which have been
estimated to be lower as the FA has not been able to achieve success in the Champion’s League
(Kenyon and Bodet 2017). However, in relation to commercial deals, Liverpool has attained a
well-established position in comparison to both Arsenal and Chelsea.

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Figure no 2
Club Revenues of Football Associations
Source: (Liverpool FC 2018)
Furthermore, as per Rohde and Breuer (2016) in 2014, revenue rate of Manchester United
was estimated to be around €397m and currently has been estimated to be around €691 with a
percentage growth of around 74%. Similarly Manchester City’s income growth has been
calculated to have increased from € 284 million in 2013 to € 527 in 2016 that is regarded as an
exceptional increase of around 85% (Liverpool FC 2018). Thus, comparatively, Liverpool FC’s
revenue growth has risen from around €235 in 2013 to an amount of €407 in 2016 with an
increase of around 75% which surpassed two Manchester Clubs (McDonagh 2017).
Macro Environment Analysis of Football Industry (PESTEL Analysis)
Political factors- The political factors which leverage the business processes of football in
recent times have decreased at a significant rate ever since the administrative policies of

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Margaret Thatcher. Hewer, Gannon and Cordina (2017) have claimed that during those days
government intervention in football was profoundly largest. However, currently the taxation
policy is regarded as a feature which poses immense impact on the business and specifically on
the sportsmen of FA such as Liverpool FC. Furthermore, McCarthy et al. (2014) have mentioned
that because of increased taxation rates that have reached up to 55%, Liverpool FC’s players
develop disinterest to participate in the English Premier League and showed inclination towards
nations with lower rates.
Economic Factors- Liverpool FC along with other FA are subject to similar forms of inflation
as well as interest rates as any other sectors dealing with labour expenses. Though remuneration
rate of football players are augmenting in contradiction to general business trend, attaining
revenue amounts greater than the yearly turnover of Liverpool (Hewer, Gannon and Cordina
2017). Furthermore, the overall economic crisis followed by increased levels of unemployment
does not appear to be identified as a critical obstruction for the football industry in relation to the
effects it has had on diverse industries. According to Mcmahon (2018), one of the major revenue
stream which has propensity to influence Liverpool FC is sponsorship contracts which tend to
characterize around less than one-fourth of revenue of the English football business. The
growing demand for tickets has been witnessed to be high regardless of price rates whereby it
justifies high rate of footfall in Premier League stadium even when ticket prices have ranged
between 32 to 75 pounds (Plumley, Wilson and Ramchandani 2017). Thus, the demand for
club’s merchandising decline tends to fall under same category with diverse range of branded
products being sold at regular basis by Liverpool club at high prices. Such a purchase emerges as
an anomaly in the overall economic crisis and further signifies reasons of continual scrutiny by
the governing bodies of sport industry (Liverpool FC 2018).

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Social Factors- Throughout years and regardless of shifting changes in lifestyles, Liverpool has
remained a major part of football lovers’ life. Such an association with developments in
consumer behaviour must not be disregarded. Furthermore, Corporate Social Responsibility
(CSR) initiatives are identified as expanding trend in the industry (Rohde and Breuer 2016).
Thus, as an essential effort to set up strong social profile, Liverpool FC has been efficiently
engaged with several programs in order to counteract current issues in both local such as
illiteracy as well as high rate of criminal offense among juveniles and international community
like hunger and shortage of proper medication in low developing nations such as Africa
(Liverpool FC 2018).
Technological Factor- According to reports by author, certain technological developments such
as magnetic season ticket strips have permitted clubs like Liverpool FC to enhance their services
towards spectators thus efficiently providing enhanced experiences. Meanwhile, innovative ideas
related to perimeter promotion in moving or laser panels has efficiently facilitated clubs like
Liverpool FC with industrial products to be sold further amplifying their revenue rate (Bounds
2018).
Environmental Factors – At this juncture, author has noted that environmental determinants
have diminutive rate of influence to football sector thus very low on Liverpool FC. However,
changes in climatic conditions along with environmental calamities have certain propensity to
leverage football industry but only as an encouragement for initiatives in Corporate Social
Responsibility program for example the “Reds Going Green” campaign (McDonagh 2017).
Legal Factors- Legal cases and declarations such as Premier League versus Karen Murphy
concerning television and communications rights are likely to have significant control the air as
well as sponsorship deals of Liverpool clubs that tend to pose critical impacts on one of the

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major revenue streams of Liverpool FC (Paché and Ika 2016).
In this section, Porter’s Five Forces model will be applied to analyse competitive forces
which Liverpool FC experiences by separately evaluating the bargaining power of customers and
suppliers alongside threat of substitute products and new entrants as well as the competitive
balance within the industry.
 Bargaining power of Suppliers (low) - Kit and sports instrument suppliers tend to offer
products which can be substituted easily without any large amount of switching expense.
Furthermore, as per the view of Plumley, Wilson and Shibli (2017), as these products
cannot be distinguished from their rivals it results them to have low bargaining very low.
Furthermore, level of employee harmony is not soaring as there can be witnessed
concentrated rivalry among potential employers such as suppliers of labour that is
consequential to their low bargaining power (Dima 2015).
 Bargaining power of Customers- Roberts et al. (2016) claimed that as far as the
distribution network is taken into consideration as football is regarded as an insubstantial
product or service, the rate of business and utilization have correspondence to production
point thus resulting to no requirement of major distribution networks. On the other hand,
customers identified as sponsors of Liverpool FC offer the club with substantial financial
profits to gain huge services (Plumley, Wilson and Ramchandani 2017). However, this
purchaser collection does not seem to posses adequate authority in relation to football
sector as product as well as its individuality appears to reduce if not eradicate cost
sensitivity. Thus the bargaining power of customers has been observed to be immensely
low at this stage.
 Threat of Substitute Products- As per the studies of Dima (2015), there can be

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identified eight other football leagues which offer an alternative to the product of Premier
League which magnetizes over 50% of the potential or current customer base such as
people who shows immense inclination towards football. Furthermore, because of social
characteristic and the association between supporters and their relevant FA in the football
sector, the exchanging cost is expected to be high thus the threat of substitute products is
also high.
 Threat of new Entrants- Horrocks et al. (2016) have indicated that because of
irregularity of football industry, the component of ambiguity of potential latest entrant is
immensely low. This is because the Premier League members are well-equipped of the
progress of Liverpool FC in advance.
 Competitive Rivalry within the Industry- According to Bounds (2018), on the basis of
competitive imbalance within the league, it can be stated that competitiveness on the
playing field tends to have a supplementary direct impact on the act which is performed
off the field.
TOWS Matrix
Threats Opportunities
Other peak clubs importing more
proficient players
Critical problems among stakeholders
Must target international fan bass such
as India, China and the United States
Greater rate of brand visibility would
facilitate Liverpool set up brand
recognition (Bounds 2018).
Weakness Strengths
Player and management issues
unable to achieve major titles in the
English competition (Mcmahon 2018).
Strong global brand name and dedicated
fan base
Exceptional marketing, worldwide
brand existence and high quality
merchandising.

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Figure no 3
Created by author
Stakeholder approach towards Liverpool FC
The stakeholder (players and coaches’) most significant expectation lies on sportive
success. In Liverpool FC, these stakeholders’ agreement financial incentives typically relates to
success when the team wins. Furthermore, Horrocks et al. (2016) have stated as the Bosman rule
is implemented in Europe; often players typically engaged to their club are exceptions.
Stakeholders’ approach tends to cost between 50% to around 72% of Liverpool’s total cost.
Author has also mentioned that Liverpool players are stronger as most of them are engaged to
unions like PFA in England (Butler and Massey 2018). The impact of these unions over is
fundamentally based on wages and establishes minimum remuneration and clubs are not allowed
to evade their bottom line.
Implementation
Liverpool FC must implement competitive strategy which will combine the influence of
external situational analysis as well as certain integrative apprehensions of the inner situation of
the FA (García and Welford 2015). Through the competitive strategy Liverpool FC will aim at
achieving significant competitive benefits in the football industry against its rivals. Furthermore,
according to Reeves et al. (2018), competitive strategy will comprise of the business strategies as
well as initiatives applied by Liverpool to magnetize customers or its fan followers and further
reinforce its position as a major FA (François and Bayle 2017). The competitive strategy
comprises a competitor angle which will prescribe several ways to set up the sustainable
competitive advantage.
Conclusion

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Therefore, from the above conclusion it can be stated that, Liverpool FC must implement
efficient competitive strategy in order to attain significant competitive advantage position in the
football industry. Liverpool despite of relatively low revenue in comparison to its rivals has
achieved success in many leagues thus maintaining its huge follower base. The paper has offered
inclusive insights of the way Liverpool has expanded its follower base and its stadium recently.
In addition to this, the report offered detailed financial analysis of the FA in the last few years
along with comprehensive macro as well as micro environmental analysis.

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