Business Analysis

Palepu et al (2010) states the purpose of a business analysis is to identify the key profit drivers and the risks associated to the business, by conducting an assessment of the company’s potential profits at a qualitative level. Law (2014) similarly suggests that business analysis is “a means by which the current performance of a firm is evaluated as part of the strategic planning process”. Therefore, business analysis involves assessing a company’s external environment. Using a PESTAL analysis to assess what can affect the organisation at a macro level, which can influence the future performance of the company. While also conducting an internal analysis that can be achieved via a SWOT analysis, which identifies micro factors affecting the current performance of the company and how it correlates to market share, within the service industry (Law, 2014).

Conducting business analysis is a vital component of any company,to plan and predict any changes within the business environment that could affect the organisation financially or operationally. For example, changes within the macro environment regarding political agenda can influence sport organisations but also the wider business community, such as issues surrounding minimum wage (BBC, 2014). Due to increases within living costs and the minimum wage failing to rise with this correlation, political parties are basing future election campaigns upon this current issue to win votes. However, this change within the macro factor that is increasingly likely to occur due public popularity. Can have massive implications towards business owners, because of the increase within expenditure for wages and the taxation associated with having a work force such as, PAYEE and pensions. Leading to organisations having to cut jobs that will affect the company operationally due to a drop in efficiency, which could potentially lead to bankruptcy.

By conducting a STEEPLE analysis that identifies both the micro and macro factors affecting the future organisation. Can have massive implications towards operations and financial decisions that contribute towards the potential performance. Therefore, it is important to be aware of the influences surrounding the organisation, in order to make a more informed decision that could lead to organisational success.               

	Strengths	Weakness	Opportunity	Threat
Political	Aspiring more people through Olympic legacy.	Change in government	Linking in with government policy of increasing more volunteers	Minimum wage increased
Economical	Sponsorship, opportunities	Increased living costs, affordability for the average individual	Increase the sports awareness	Colliding with other international events, such as Wimbledon.
Social	Increasing participation, improving health	Equipment to get started is expensive	To use and promote a volunteer system	Niche market
Technology	Use of video technology, to broadcast via YouTube	Potentially lose control of marketing	Using social media to talk directly to target audience	The actions of the athletes could damage brand
Ethics	Values, ideologies	Risks associated with extreme sports	To be taught more frequently with mainstream schools	Increase dependence upon government\education system
Legal	Rights and association to sell	Permission needed to use venues	To increase number of locations available (e.g. a tour)	Events can be contested by local residents

References

BBC. (2014) BBC website. Available at: http://www.bbc.co.uk/news/uk-politics-29299230 (Accessed 10th December 2014.

Law, J. (2009) A Dictionary of Business and Management. 5^th edn. Oxford University Press.

Palepu, K. Healy, P and Peek, E. (2010) Business analysis and valuation. 2^nd edn. Andover : South-Western Cengage Learning.

Marketing Strategy and Development

Mullins et al (2000, pp.22) defines strategy by the “setting of long-term goals and developing plans to achieve those goals”. Therefore, “marketing pays attention to the development of a product, its pricing, promotion and distribution” (Smith, 2008, pp.2), which links to the marketing mix also referred to as the 4 P’s of:

·       Product- Physical good.

·       Price- the cost to the consumer.

·       Place- where the sport can be accessed.

·       Promotion- communicating to the market place.

In order to gain an exchange with the consumer (usually monitory value) for the service delivered. By combining Mullins et al (2000, pp.22) definition of strategy and Smith’s (2008, pp.2) definition of marketing, Marketing strategy can be defined by Beech and Chadwick (2007, 400) as “a process of planning, implementing and controlling marketing efforts to meet the goals of an organisation while at the same time satisfying consumer needs”.

During the 2010 South African FIFA World Cup the beer sponsor was Budweiser, blocking all other alcoholic (Beer/Larger) merchandise sold and advertised to captivate the greatest audience possible. However, the Dutch brewers Bavaria used marketing strategies consisting of ambush marketing in order to confuse audiences and gain wide publicity. Through the use of 36 women in orange mini dresses modelled by the wife of famous Dutch footballer Rafael van der Vaart, carrying a label with the brand, which prior to the tournament was campaigned greatly within Holland. Therefore, when images were captured of a group of fans in these minis dresses supporting and being thrown out of the stadium during a Holland match, the dresses that were instantly recognisable due to previous campaigns sparking media attention for the brewery who otherwise wouldn’t of been noticed due to the large sponsorship fees required for FIFA (Kelly, 2010). 

I am going to use the marketing mix to identify and target the largest possible audience.

Product- the sports I have decided to pick are canoeing/kayaking, running/mountaineering and downhill mountain biking to capture the largest possible audience, as statistically shown by sport England’s active survey (Appendix A), due to the already niche market tri extreme operates within.

Price- The price to the consumers will consist of an entry fee to cover the cost operations to the event, whilst each participant is being a charitable fundraiser as demonstrated by the Great North Run (GNR, 2014). The commercial aspects are seen through sponsorship, creating a tier bracket like the Olympic sales rights (IOC, 2014).

Place- The destination requires all three sports to be accessible, such as Fort William where all three physical environments are a lake, mountain range and downhill bike track exists.

Promotion- Tri Extreme will try to communicate to adventure lovers, but also offering an alternative to the tradition triathlon with the potential to gain a market share, elite athletes from each sporting discipline can also compete to make the idea more commercially viable. For example setting off the elite athletes at the front of the race before letting the mass participants start.  

References

Beech, J and Chadwick, S. (2007) The Marketing of Sport. New York: Prentice Hall/Financial Times.

GNR. (2014) GNR website. Available at: http://www.greatrun.org/Events/Charities.aspx?id=1 (Accessed: 3^rd December 2014).

IOC. (2014) IOC website. Available at: http://www.olympic.org/sponsors (Accessed: 3rd December 2014)

Kelly, J. (2010) How ambush marketing ambushed sport. Available At: http://news.bbc.co.uk/1/hi/8743881.stm (Accessed: 3rd December 2014).

Mullins, B. Hardy, S and Sutton, W. (2000) Sport Marketing. 2^nd edn. Human Champaign, IL : Human Kinetics.

Smith, A. (2008) introduction to Sport marketing. London: Butterworth-Heinemann. 

Appendices

Appendix A

Concept Development and Testing

Moore (2002) suggests “The primary purpose of concept testing is to estimate consumer reactions to a product Idea before committing substantial funds to it additionally, concept tests are used to determine the potential target market and how the concept might be improved”. By highlighting the demand and need for the service, through the use of a feasibility analysis that evaluates an idea (Barringer and Ireland, 2012, pp. 105), to understand whether the concept is desirable or not, can a specific target group be selected for testing. Once relevant feedback is received about the service, development of the concept can start through, “a process of successively refining, amplifying and enhancing the basic idea of the product” (Doyle, 2011), only then can the largest possible audience be captivated and for the potential service to be successful.

For example, Adidas’s running footwear goes through numerous safety procedures, to manage the risk associated with manufacturing products such as, preventing the physical and chemical breakdown of products for the prevention of injury to athletes from faulty merchandise, which could potentially damage the image of the brand, leading to a reduction in sales and revenue. Therefore, each product of Adidas goes through vigorous testing from the materials used, to the production process and the supply line. Collecting any relevant feedback, from randomised testing of each product model, to improve and ensure the integrity of the product is consistently maintained, throughout the process upon delivery to the consumer, which upholds Adidas’s standards and ideologies (Adidas, 2014).

Therefore, it is important for the idea of tri extreme to develop further, by making the final selection of which sports should be included within the triathlon. By understanding the majority of extreme sports are a niche market, as identified in figure 1 regarding the participation of the top 10 sports played within the United Kingdom.

 Figure 1, Top Ten Sports

Taking the statistics into consideration, it is vital for the tri extreme idea, to target the largest audience possible, otherwise the concept will not be a success due to low demand. However, Jones (2008) suggests that more traditional sports within the USA such as, volleyball and baseball are experiencing a plunge within participation figures, which can be linked to the increases within participation of mountain biking and snow sports. Therefore, by producing a questionnaire intended at a target sample of schools for students to complete, regarding desired extreme sports. Feedback can be retrieved and correlated, in order to choose the ideal extreme sports with the most appeal to attract consumers within the United Kingdom. Ensuring a younger audience is targeted, due to the increase within participation of extreme sports like mountaineering (Sport England, 2012), because of changes in trends within sports and the increased accessibility. This model can be applied to each country to ensure mass appeal is generated, as the popularity of sports change due to different cultures and lifestyles, which can be used effectively to maximise market penetration.     

Referencies    

Adidas. (2014) Adidas website. Available at: http://www.adidas-group.com/en/sustainability/products/product-and-consumer-safety/ (Accessed: 26^th November 2014)

Barringer, B. Ireland, R. (2012) Entrepreneurship: successfully launching new ventures. 4th edn. London: Pearson.

Doyle, C. (2011) A Dictionary of Marketing. 3^rd edn. Oxford University Press 

Figure 1- DCMS. (2011) Adult participation in sport. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/137986/tp-adult-participation-sport-analysis.pdf (Accessed: 26^th November 2014).

Jones, L. (2008) Xtremesport website. Available at: http://xtremesport4u.com/extreme-land-sports/extreme-sport-growing-in-popularity/ (Accessed: 26^th November 2014).

Moore, W. (2002) Concept testing. Journal of Business Research. 10(3), pp. 279-294

Sport England. (2012) Active people survey. Available at: http://www.sportengland.org/media/162207/03_1x30_sport_factsheet_aps7q2.pdf (accessed: 26^th November 2014).

Idea Screening

Olivier and Florès (2007) identify idea screening as, highlighting the ideas with the most potential. Showing the importance to understand the process of which, ideas should be chosen. Therefore, through the use of a feasibility analysis, an idea can be determined whether it’s viable or not, as suggested by Barringer and Ireland (2012, pp. 105). Figure 1 shows, there are 4 key areas for an idea to pass the criteria:

·      Product/Service feasibility- ensuring there is a demand/need within the market place.     

·      Industry/Target Market feasibility- researching companies producing similar product/services to understand competitors and identify the limited proportions of consumers.

·      Organisational feasibility- whether sufficient resources are available to launch the start up business.

·      Financial feasibility- comparing the cost to the attractiveness of the opportunity.

Figure 1.

Failure to do so can result in inherited risks associated to start up businesses. For example Visa launched a cash card in Hong Kong, 1997, a differentiation to the Octopus card currently in use, similar to the oyster card within London. However Visa, failed to assess its competitors and the needs of its consumers, wanting an easy system to save time, whilst using travel networks. Failing to adopt the scan and use system, allowing its competitor Octopus to dominate the market, with 95% of people aged 16 to 65 in Hong Kong use it (Barringer and Ireland, 2012, pp. 106). Therefore, it is vital for all ideas to be screened before a business can be developed.             

    

Which is why, I am using a decision matrix as seen in figure 2, to assess which idea is best suited to develop further.

Figure 2.

Therefore with considerations to figure 2, I have decided to develop the idea of Tri Extreme. The reason being, the sports can be rotated into different variations to optimise a greater target audience, which can be linked towards increased profits margins and there are no ethical issues, unlike the Steroid Olympics. Which could have mass implications towards increasing drug use within society, a characteristic most sports frown upon and campaign to ban, in order to sustain the values of sport such as, fair play and respect for others. Although, Tri Extreme was not ranked number 1 for safety for participates, due to the inherited risks associated with extreme sports. The long-term effects of drugs, out way the Steroid Olympics potential for entertainment and profit, as the health and safety of participates are paramount. The idea of Elite athlete was considered, due to its high scoring within figure 2, however the BBC show of Superstars was a success in the 1980’s but has since been discontinued. Suggesting that the demand and need for a show/sport of that magnitude no longer exists, therefore with no business/profit potential, the idea would fail.             

References

Barringer, B. Ireland, R. (2012) Entrepreneurship: successfully launching new ventures. 4^th edn. London: Perason.

Toubia, O. Florès, L. (2007) “Adaptive Idea Screening Using Consumers”, Marketing Science, 26(3), pp. 342-360