PEST AND INDUSTRY ANALYSIS:ARSENAL FOOTBALL CLUB

“The Gunners”

SNAPSHOT:

Arsenal Football ClubEnglish Premier League Football Club based in London, EnglandOne of the most successful clubs in English Football, having won 13 first division and premier league titles and 10 FA cupsArsenal's parent company, Arsenal Holdings plc, operates as a non-quoted public limited companyOnly 62,217 shares in Arsenal have been issued and are not traded on a public Exchange such as FTSE.In April 2010, business magazine Forbes ranked Arsenal as the third most valuable football team in the worldDirectors with significant investment in the club include Stan Kroenke,Danny Fiszman,Peter Hill wood Lady-Brace well Smith and Alisha UsmanovThierry Henry is the club's top goalscorer with 226 goals in all competitions between 1999 and 2007, having surpassed It’s the only club with most consecutive seasons spent in the top flight (84 as of 2010–11The longest run of unbeaten League matches (49 between May 2003 and October 2004

PEST ANALYSISPolitical FactorsStringent Employment Laws amongst players (Work Permits)Consumer protection (Setting of price caps by the government)Emphasis on Environmental protection (Noise pollution)Adherence to effective safety standards (Threats arising from terrorism)Imposition of high taxes by the government (wages)

PEST ANALYSIS

Economic Factors

Shift of economic climate (transition from recession to recovery)High concentration of people in the Capital (London)High immigration rates of foreigners, especially Asians and AfricansLow inflation rates which affords people high spending powerProduction rates are higher due to the increase in the number of jobs

PEST ANALYSISSocial FactorsHigh diversification rates, which promotes passion for the gamesPeople are characterized to be workaholic, which stimulates national economyHigh Preference on leisure (Peoples’ lifestyle is “Sports Nut”)Soccer has inspired adults, young adults and even the aged Improved living standards due to reasonable pay

PEST ANALYSIS

Technological FactorsIncrease in E-commerce (Online shopping)Improvement in match day experience for fans with integrated IT managementUse of Buffalo technology to protect dataUtilization of PROZONE3 for match day analysis.

PEST ANALYSIS

Factor Trend Evaluation Impact(1=low;5=high)

Rank in terms of Importance

Political •Strict Employment laws•Consumer Protection•High taxes•Safety Standards•Environmental protection

ThreatOpportunityThreatOpportunityOpportunity

55532

4

Economic •Recession to recovery•Low inflation•High production rates•High immigration

OpportunityOpportunityOpportunityOpportunity

3444

3

Social •“Sports Nut”•High living Standards•Workaholic•Need for Leisure

OpportunityOpportunityOpportunityOpportunity

5534

2

Technological •E commerce•IT Management•Buffalo Technology•PROZONE 3

OpportunityOpportunityOpportunityOpportunity

5555

1

INDUSTRY ANALYSIS

English Premier LeagueWorld's most lucrative football leagueCombined club revenues of £1.93 billion ($3.15bn) in 2007–08Total club revenues of €2.326 billion in 2008–09The second most profitable after the German Bundesliga Premier League clubs are some of the richest in the worldDeloitte listed seven Premier League clubs in the top 20 for the 2008–09 seasonIt’s ahead of Spain’s La liga and Italy’s Serie AA total of 43 clubs have competed in the Premier League

MEMBERSHIP BENEFITSGuaranteed ticket availability for all league matches at Emirates StadiumOver 140,000 made available to red members last season1500 guaranteed tickets for all premier league matchesThe friends and family option-offers you the opportunity to purchase multiple tickets on your membership card. 

PORTER’S FIVE COMPETITIVE FORCES

PORTER’S FIVE COMPETITIVE FORCES

Bargaining Power of customers•Bargaining leverage is neither high, neither low•Buyer volume upon successful times are high•Buyer information can be considered high•Brand identity is strong•Price sensitivity is not extremely high•Product differentiation is very high•Buyer concentration vs. industry is low•Many substitutes are available

PREMIER LEAGUE’S TICKET PRICES

EPL Most Expensive Tickets

PORTER’S FIVE COMPETITIVE FORCES

Threat of Substitution•Low switching costs•Buyers are not highly inclined to substitute•Price-performance, to a certain level, has no influence on the proffered team•Trade-off of substitutes

PORTER’S FIVE COMPETITIVE FORCES

Bargaining power of suppliers•High diversity of suppliers•Volume is important to supplier•Inputs have a high impact on costs and differentiation•Switching costs of firms in the industry are low•There is a low Presence of substitute inputs

PORTER’S FIVE COMPETITIVE FORCES

Threat of New Entrants•There is quite an easy access to inputs•There is economies of scale•High capital requirements•There are strong brand identity in the soccer sector of the sports industry•Switching costs are high•Easy access to distribution•Low expected retaliation from well established teams

ARSENAL’S FUTURE

Arsenal’s squad averages 23.2 years which offers potential for growth and maturity.

PORTER’S FIVE COMPETITIVE FORCES

Rivalry•High exit barriers•Low industry concentration•High fixed costs/High value added•Low industry growth•Low product differences•Low switching costs•High brand identity•High diversity of rivals

PORTER’S FIVE COMPETITIVE FORCES

SUPPLIER POWER

BARRIERS TO ENTRY

THREAT OF SUBSTITUTE

S

DEGREE OF RIVALRY

BUYER POWER

•High diversity of suppliers•Volume is important to supplier•Inputs have a high impact on costs and differentiation•Switching costs of firms in the industry are low•There is a low Presence of substitute inputs

•There is quite an easy access to inputs•There is economies of scale•High capital requirements•There are strong brand identity in the soccer sector of the sports industry•Switching costs are high•Easy access to distribution•Low expected retaliation

•Low switching costs•Buyers are not highly inclined to substitute•Price-performance, to a certain level, has no influence on the proffered team•Trade-off of substitutes

•High exit barriers•Low industry concentration•High fixed costs/High value added•Low industry growthLow product differences•Low switching costsHigh brand identityHigh diversity of rivals

•Bargaining leverage is neither high, neither low•Buyer volume upon successful times are high•Buyer information can be considered high•Brand identity is strong•Price sensitivity is not extremely high•Product differentiation is very high•Buyer concentration vs. industry is low•Many substitutes are available

BLUE OCEAN STRATEGYArsenal FCAs a entity, the club has expanded the width of its market by exploring other areas such as India and AmericaArsenal FC has embarked on a strategy of saving energy costs, emulating key competitors in total revenue by 2015.Buyer utility maps and buyer cycles are measures employed by the club to study supporters’ preferences and enhance satisfaction.By adopting such measures, the club will effectively utilize the BOS by making competition from other clubs irrelevant.

CONCLUSIONPotential Future ChangesForeign investments by individuals imposes financial burden (massive debts among clubs)Wage caps should be in place to fend off astronomical wages paid to playersThe FA needs to impose a ban on the “Big four” clubs regarding the amount and number of players they can sign (stabilize competition)Goal line technology should be enforced to enhance fair play.Buyers should also have a say on the maximum amount they are willing to spend on tickets.

COMPETITOR AND MARKET ANALYSIS

Arsenal Football Club

KEY COMPETITORS:”THE BIG FOUR”

“The Big Four”

Team Management/Board

Players/Acquisitions

Players/Financial Culture

Total Revenue

2009/2010

Manchester Utd

•Coach: Alex Ferguson•In charge since 1986•CEO: David Gill•Ownership: Glazer Family/ Other Minority Owners

•25 Man squad•Player diversification•Net buyers of players•Effective use of youth players(academy)

•High discipline within the squad•Financial Extravagant•Team with highest debt in the league

€327.0m

Arsenal FC •Coach: Arsene Wenger•In charge Since 1996•CEO: Ivan Gazidis•Ownership: Stan Kroenke/ Other Minority owners

•25 man squad•Global in terms of procurement•Price cap on signings•Very successful academy(youth players)•Buy Cheap Players

•High discipline•Wise spending(players and property)•Effective Free Cash Flow•Financial sensitive(operate under a manageable debt)

€263.0m

Chelsea FC •Coach: Carlo Ancelloti•Appointed in June 2009•CEO: Ron Gourlay•Ownership: Roman Abramovic/Other minority owners

•25 man squad•Regular buyers of players•Limited use of youth players•Diversity amongst players

•High player power(Terry & Lampard)•Financial extravagant2nd in terms of debt in the league

€242.3m

Liverpool FC •Coach: Kenny dalglish•Appointed Jan 2011•CEO: Spencer Stuart•Ownership: New England Sports Ventures/ Other minority owners

•25 Man squad•Player diversity•Net buyers of players•Ineffective use of players

•High Player power(Carragher, Gerard)•Financial extravagant•Operate under a massive debt

€217.0m

KEY COMPETITORS

La Liga

Team Management/Board

Players/Acquisitions

Players/Financial Culture

Total Revenue

2009/2010

FC Barcelona

Coach: Josep GuardiolaAppointed in 2008CEO: Rob ConwayPresident: Sandro RosselOwnership: Membership(socis)

Effective use of youth players(Academy)Diversification amongst playersSign mostly domestic players

High player disciplineWise investments(players)Huge spread in player ages

€365.9m

Real Madrid FC

Coach: Jose MourinhoAppointed in June 2010President and Director: Ramon CalderonOwnership: Membership

Global in terms of procurementIneffective use of youth players(Academy)Net buyers of playersHighest buyer(unwise spending)

Record setter in the transfer marketHighest buyer in terms of individual players(Christiano Ronaldo)Financial Extravagant

€401.4m

KEY COMPETITORS

Serie A

Team Management/Board

Players/Acquisitions

Players/Financial Culture

Total Revenue2009/2010

AC Milan Coach: Massimiliano AllegriAppointed in June 2010President:Silvio BerlusconiOwnership: (Silvio Berlusconi)

Global in terms of procurementPlayers are mostly from Italy and BrazilSell players at profits

High team disciplineWise spending(Players)Operate under a less debt

€196.5m

Inter Milan Coach: Leonardo AraujoAppointed in Dec 2010President: Massimo Moratti

Diversification within the squadPlayers are mostly from ItalyObtain cheap players from AfricaEffective use of youth players

High team disciplineOperate under an effective cash flowFinancial sensitive(spending)

€196.5m

OTHER COMPETITORS:EPL

CHAMPIONS LEAGUE CONTENDERS

Team Management/Board

Players/Acquisitions

Players/Financial Culture

Total Revenue2009/2010

Manchester City FC

Coach: Roberto ManciniAppointed in Dec 2009CEO: Gary CookOwnerhip:Sheikh Mansour

Squad diversificationNet Buyers of playersIneffective use of youth players(academy)Hefty price tags on players

Significant losses on player salesHigh player powerExtravagant spending(strikers)

€101.2m

Totenham Hotspurs

Coach: Harry RedknappAppointed on Oct 2008CEO: Daniel LevyOwnership: ENIC International ltd/other minority owners

Squad diversificationBuyer relatively cheaper playersSale players at profitsEffective use of the youth team

High squad disciplineOperate under an effective Cash flowWise spending on players

€132.7m

EPL VS. OTHER MAJOR LEAGUES

ARSENAL FCStadium CapacityThe stadium opened in July 2006 and has an all seated capacity of 60,355Second largest football club stadium in England behind Manchester United's Old Trafford

ManagementRecently appointed three senior executive positions at the ClubTom Fox (Chief Commercial Officer), Svenja Geissmar (General Counsel) and Trevor Saving (Head of People and Operations) All three will report into Chief Executive Officer, Ivan Gazidis

OwnershipIn total, Arsenal's board of directors currently hold 45.6% of the club's sharesThe largest shareholder on the board is Stan Kroenke, with 18,240 shares (29.9%) owned via Kroenke Sports EnterprisesNext is Danny Fiszman who holds 10,020 shares (16.1%Richard Carr has 2,722 (4.4%) and club chairman Peter Hill-Wood owns 500 (0.8%)Minor shareholders of the club, including former players Ian Wright and Liam Brady, and three shares owned by the Arsenal Supporters' Trust.

FIRST TEAM SQUAD

A Total of 25 players from various countries.GoalkeepersManuel Almunia(Spain),Lukasz Fabianski(Poland),Jens Lehmann(Germany),Wojciech Szczeny(Poland)DefendersBacary Sagna(France),Laurent Koscielny(France),Johan Djourou(Switzerland),Kieran Gibbs(England),Thomas Vermaelen(Belgium),Sebastian Squillaci(France),Gael Clichy(France)MidfieldersAbou Diaby(France),Cesc Fabregas(Spain),Tomas Rosicky(Cech Republic),Samir Nasri(France),Denilson(Brazil),Aaron Ramsey(Wales),Alex Song(Cameroon),Jack Wilshere(England),Andrey Arshavin(Russian),Emmanuel Eboue(Ivory Coast),Emmanuel Frimpong(Ghana)StrikersRobin Van Persie(Holland),Theo Walcot(England),Marouane Chamakh(Morocco),Nicklas Bendtner(Denmark)

ARSENAL FC VS. MANCHESTER UTDRevenue and Net ProfitMatch day revenue is rather comparable between Man Utd and ArsenalMedia revenue is higher for Man Utd due to the further progress in Champions League and EPLArsenal did much better commercially on and off the field due to 156M made in property developmentProfit from the sale of players has tripled that of Man Utd due the club’s reputation of selling players at good values.

POTENTIAL FOR GROWTH

Which Club has a better future Opportunity for growth?Player Sales:

On the field, I rate both teams equally in their ability to progress to later group stage and be in the top four in the EPL.Arsenal have a greater propensity for revenue stream from player sales. Man Utd do not traditionally monetize this area wellOverall, in terms of adding value to shareholders, Arsenal is the better investment.Cash level, Debts and Assets AnalysisMan Utd had twice the amount of total assets compared to Arsenal in 2010The increase in Debtors within one year from 278 mil to 675 mil puts Arsenal in a better financial position in terms of the interests paid to finance the debts

ARSENAL VS. MAN UTDFree Cash flow, Depreciation and Interest ExpenseArsenal operated under a superior cash flow compared to Man UtdThis reflected lower interest payments and lesser capital expendituresThe club was in a better shape due to good profits and lower depreciation compared to Man UtdThe interest expense as a percentage of total debt is higher for Man Utd at 10% compare to 6% for Arsenal indicating much higher cost of capital.Man Utd tend to be net buyers of players instead of sellers which is why their net capital expenditures is higher than that of ArsenalRight now Arsenal can probably pay down its debts due to its effective FCF. They paid down 135 mil in debts this financial year.

REVENUE REFLECTIONSCommercial, Broadcasting and Match day RevenueReal Madrid FC ranks first in terms of commercial revenue(Sale of jerseys and other endorsement deals)Arsenal and Man Utd boast huge earnings in terms of match day revenues(high price tags on tickets)Real Madrid FC also earns massive profits from the sale of its broadcasting rights(Exert a Monopoly power over other teams)

Arsenal Revenue Statistics vs. Other Clubs

MARKET SIZEEnglish Premier LeagueWorld's most lucrative football leagueCombined club revenues of £1.93 billion ($3.15bn) in 2007–08Total club revenues of €2.326 billion in 2008–09The second most profitable after the German BundesligaPremier League clubs are some of the richest in the worldDeloitte listed seven Premier League clubs in the top 20 for the 2008–09 seasonIt’s ahead of Spain’s La liga and Italy’s Serie AA total of 43 clubs have competed in the Premier League

KEY TRENDSCorporate StructureOperated as a corporation and is owned by the 20 member clubsChairman, Chief Executive and Board Of Directors oversee daily operationsThe FA has VETO power when new rules are adopted by the premier League SponsorshipThe Premier League has been sponsored since 19931993-2001: Carling( FA Carling Premiership)2001-2004-:Barclaycard(Barclaycard Premiership)2004-2007:Barclays(Barclays Premiership)2007-Present:Barclays(Barclays Premier League)

CONTINUED: KEY TRENDSFinancesThe Premier League has the highest revenue of any football league in the worldTotal club revenues of €2.326 billion in 2008–09Premier League clubs are some of the richest in the world

"Football Money League", listed seven Premier League clubs in the top 20 for the 2008–09 season

StadiaStadium attendances are a significant source of regular income for Premier League clubsCombined total capacity of the EPL in the 2010–11 season is 770,477 with an average capacity of 38,523For the 2009–10 season, average attendances across the league clubs were 34,215Total aggregate attendance figure of 13,001,616

GROWTH RATE: EPLWorld’s Favorite LeagueEPL has risen well above Serie A and La Liga in the past year by €1 billion (£0.7 billion).Games are broadcast to 600 million homes in 202 Countries across Europe, Asia, Australasia, Oceania, Africa, the Americas and the Middle EastThe global rise of the Premier League Overseas rights 2010-2013 £1.7bn?2007-2010 £625m2004-2007 £325m 2001-2004 £ 178m

TARGET MARKETArsenal FC/EPLEast Asia, Africa, Middle East, the US, Canada and AustraliaPotential Sources for maximization of revenues overseasPremier League giants Such as Arsenal and Chelsea are now focusing their markets in IndiaWHY INDIA FOR ENGLISH CLUBS? Population of 1.15bnUnderlying interest in football/Premier LeagueUntapped commercial opportunitiesWealthy target audience in Indian middle classFootball identified with youth - there are 325m Indians aged 20 - 35Chance to influence/improve local footballOpportunity for corporate social responsibility (CSR) input

MEDIA COVERAGE

United Kingdom and IrelandRevenue from television rights has helped sustain clubs both on and off the fieldMajor media sponsors include Sky, BBC and ESPNThe Premier League sells its television rights on a collective basisThe first Sky television rights agreement was worth £304 million over five seasonsThe league brought in £320 million from the sale of its international rights (2004-2007)Television rights alone for the period 2010 to 2013 have been purchased for £1.782 billion

CONTINUED: MEDIA COVERAGEWorldwideMedia Coverage plays a vital role in enhancing the EPLMost watched sporting league, followed worldwide by over half a billion people in 202 countriesIn the US, coverage is shared between Fox Soccer Channel, Fox Soccer Plus and ESPNIn Canada, Rogers Sports net owns the Premier League rightsThe Premier League is particularly popular in Asia(widely distributed sports programme)In China, data from 2003 suggested that matches were attracting television audiences between 100 million and 360 million

Market SegmentationType of Factor Consumer Markets Industrial/

Organizational Markets

Characteristics of People/Organization

Young Adults,Adults,AgedMiddle & Upper Class(Europe)All Classes(globally)“Sports Nut” Lifestyles

Entertainment IndustryHeadquartered in UKAdvanced TechnologyComplex ManagementHigh Profits

Purchase/Use situation High brand LoyaltyPleasure maximizationRepeat purchase behaviorPrice Criteria

E-commerce/physical buying/sellingRevenue generationRepeat/regular SalesPrice CriteriaDisintermediation

Users’ needs and preferences for product characteristics

Product/Service differentiationLow prices/High qualityBrand Sensitive

High team performanceBrand ExpansionHigh QualityEffective Design featuresLow manufacturing costs(suppliers)

COMPETITOR’S ANALYSIS

Performance measure of team success/failureWinning a certain number of games every seasonQualification for the European competitionsGaining maximum points from weaker teamsConceding less goals as possible and scoring as many as a team canFocusing on winning silverware both domestically and AbroadMaking efforts to try and operate as more environmental friendly organizationsThese include waste minimization, waste disposal and energy & water use

CONCLUSION

Competitors’ Analysis:Teams that keep managers for long spells show more success than those that change management oftenTeam success(winning trophies) generates revenue for the clubClubs that operate under effective cash flows are able to avoid massive debts and high interest payments.Revenue maximization can be achieved by eliminating the monopoly in television rights(Sky)Penetration into new markets such as India can easily boost a c lub’s financial capacityBrand Loyalty is enhanced by clubs’ participation in community activitiesMarket Segmentation enhances clients/clubs relationshipClub’s focus on operating environmentally friendly has other teams embarking the same policies which in turn safeguards the environment.

INTERNAL AND SWOT ANALYSIS

Arsenal FC

BUSINESS MODELManager(Arsene Wenger) •Noted for his observant and intellectual

approach•Uses statistical analysis to track development of his players•Experiments players in different roles(playing them in different positions•The club offers him complete and full support

Academy •Consistently produced footballers ready for first team football•Arsenal’s under-18 are regularly coached by Wenger to measure their capability /Effectiveness•Scouts are paid to conduct research both in and out of the country for best competing players

Acquisitions •Developing young players at the academy and turning them into world class players(Ashley Cole)•Buying young players and developing them into an integral part of the arsenal squad•Selling players at healthy fees(purchasing Anelka from PSG at £500,000 and selling him to Real Madrid FC for £ 22.3m

BUSINESS MODELSelective Use of Investments •Players are sold when they are at their

peak level and not decline•Effective selling of merchandise(well established distribution channels)•Attraction of wealthy sponsors(Nike)

Style of Play •Attractive style of play•Playing mostly conducted in the middle•Creating chances is just as important as maintaining possession•Compete to win trophies which is translated into revenue

Stadium •Investment in large quality stadium(Emirates Stadium)•Increase in match day revenue due to stadium expansion•Extra income from pre-season events(meetings and other tournaments)

BUSINESS MODELWhy is Arsenal’s Business model different from

other teams? Conservative financial approach(price cap on wages and transfer

fees)

Infrequent change in team leadership/management(Arsene Wenger has been in charge since 1996)

The clubs uses a unique style of play(avoidance of long balls and play is mostly centered on the middle)

Sell players at a profit(Marc Overmass was initially bought for £5.5m and later sold to FC Barcelona for £22.3m

Effective use of the academy to groom young players(Jack Wilshere)

Revenue vs. Ependitures:2005-2011

Season Revenue Departures

Expenditures

Arrivals Total

2010/2011 8.096.000 £

24 16.720.000 £ 15 -8.624.000

£

2009/2010 41.976.000 £

18 8.800.000 £

17 33.176.000 £

2008/2009 20.944.000 £ 16 35.332.000

£ 20-14.388.000 £

2007/2008 50.248.000 £

23 25.916.000 £

17 24.332.000 £

2006/2007 14.102.000 £ 22 13.266.000

£27 836.000 £

2005/2006 22.000.000 £

22 40.480.000 £

22 -18.480.000 £

ARSENAL FC: REVENUELevels Of InvestmentArsenal generates a huge portion of its annual revenue through various sources.These includes television revenue, commercial revenue and the transfer of players.The overall idea of setting a price cap on the amount of money that can be spent on a particular player has proved vital in club investment.All proceeds generated from such transactions are carried forward to the next budget in the following year.

Arsenal’s Financial Report

2010 £m

2009 £m

Total wages 110.7 104.0

Additions to intangible assets (player registrations)

19.9 41.3

Profit on sale of player registrations (38.1) (23.2)

Net expenditure 92.5 122.1

Arsenal FC: Resources

Structural Assets Relational Assets Human Assets

•Emirates Stadium•Club Vision, Culture and Goals of Arsenal FCManagerial systems

•Club fans and Club image•Season ticket sales •Sponsorship and Supporters•Promotion •Brand

•Expertise of football managers •Expertise of players

BCG MATRIX

Arsenal FCStars (=high growth, high market share) – AsiaCash Cows (=low growth, high market share) – EnglandDogs (=low growth, low market share) – AmericasQuestion Marks (= high growth, low market share)- India

SWOT ANALYSISBusiness StrategyThe strategy of Arsenal FC is to convert more fans into business customers and enhance customer value through implementation of CRM tools. For this purpose it has tied up with the technology sponsors Dimension Data. Other strategies include:

To seek own routes to market for media rightsTo deliver branded services to customers through Arsenal TVTo have proper mix of home-grown and imported talentsGroom players in-house (like Gibson and John Wilshere)Acquire players in case of requirement (like Chamakh and Koscielny)

Strength Weakness Opportunity

Threat

•Brand conscious•Greater Fan base(High ticket sales)•Effective distribution Channels•Effective free cash flow•Increase in Stadium capacity

•Product and product variety(jerseys to credit cards)•More focus on proceeds than soccer

•Penetration to the American market•Coalition with other teams(USA and Belgium)•Diversification of the squad(origin)

•Change of team leadership/ownership•Insufficient funds put into academies•Failure to win trophies

Porter’s Value Chain Model

Primary Activities

Secondary Activities

Inbound Logistics

Outbound Logistics

Operations Marketing and Sales

Service

•Transfer of players and coaching staff

•Nike shirt deals•Season tickets

•Arsenal TV•Finance(club’s credit cards)

•Sponsorship deals•TV deals•Endorsements

•Customer service Website

Firm Infrastructure

Human Resources

Technical development

Procurement

•Emirates Stadium•Luxury apartments(formerly highbury stadium)

•Soccer academy(training)•Scouts(recruiting players)

•Internet presence enhanced and e commerce enabled•Personalized content delivered direct to fans(match day analysis)

•Nike manages club’s merchandising operation

CHOICE OF STRATEGY

Generic Strategy

Arsenal FC offers a wide variety of products and servicesThese ranges income from commercial revenue, financial and merchandising incomeThe club also operates a TV channel, Radio Station, Publishes a magazine, provides newsletters broad bands, and desktop alertThe club therefore has to sought out the best strategy to increase revenue while saving costs and maximizing customer satisfaction.Hence, in analyzing the strategies, the company has to put forward two drivers that ultimately impact the company’s revenue status.These includes the Critical Success Factors and the Key Performance indicators.The CSF measure identifies the factors that are necessary for the company to develop and grow

DRIVERSKey Performance Indicators(KPI)Sound business planStable administration, close communication between all levels of Club ManagementHigh quality coaches at both senior and underage levelsHigh profile and acceptance within the communityStrong Club presence in schools, both primary and secondarySound oval management, high standard of club facilitiesSound financial management, expenses kept in line with income baseDevelopment of Juniors, particularly local based players

CONTINUED: DRIVERS

Internal and External factors that affect Cost differentiationThere are three major cost categories that affect the choice of the strategy used.These include both Internal and External costs related to the operation and development of the corporate Arsenal FC, the costs related to the operation and development of the sporting club, and other related costs.

Corporate Costs Infrastructural costs

Club related Costs

•Dept and maintenance costs•Costs related to the commercial activities

•Compensation of the players and staff•Purchase of new players and stuff

•Maintenance and development cost of the stadium

STATUS AND PERFOMANCE:ARSENAL FCGeneric StrategyThe scale and scope of activities are greater(differentiation of products/services)There are far more alternatives for the configurations value-adding activities(suppliers and distributors)There are not only greater difficulties in coordinating global activities abut also greater scope of competitive advantage if activities are effectively coordinated(new markets such as America and India)The strategy takes into account cultural and linguistic similarities and differencesNational economic and factor conditions can be harsened to give competitive advantage

GRAND STRATEGY

Factor Plan of Action

Innovation •Integrated IT development to improve match-day analysis

Market development Asia•Coalition with Asian companies(Hoang Anh-Vietnam’s largest property developers and the main distributor of Arsenal FC merchandise in Southeast AsiaAmerica•Partnering with youth teams to enhance technical assistance(Richmond Strikers Soccer Club•Increase fan base by holding pre-season tournaments in the US•Establishment of club’s megastores in cities like LA

Product development •Pre-season membership and loyalty through direct mail and website

Market penetration •Core market is the UK•Contributes up to 94% of its revenues•These include match day revenue, membership/subscription revenue, sponsorship/endorsements and TV deals•6% of its revenue come from other markets such as Asia and America.

CONCLUSIONInternal and SWOT AnalysisA conservative financial approach has helped improve the club’s image both on and off the fieldA stable manager has steered the club’s success by signing quality players at cheaper feesArsenal’s style of play has attracted/increased the fan base , hence growth in revenueThe club has diversified its resources in a precise manner, thus generating substantial revenue(players and property develoment,eg highbury transformed into luxury apartments)Exploring and entering new markets such as India and The US offer potential for future growthEffective distribution channels enhance club loyalty and increase consumer confidence

CONCLUSION

Generic StrategyInnovation has been delivered through new product quality and servicesStrong brand loyalty has also been created through effective advertising and promotionDistributors have been able to add value to the products through effective distribution channelsMerchandise has been made available to the market at cheaper prices through use of latest technologyProducts have also been marketed on the basis of price to achieve economies of scale.