Newcastle United is a British-based football club that is currently facing organizational challenges due to inadequate human resource management and lack of financial support. Its strategic vision is confined to searching for young promising players who would not require high salaries but whose promotion can bring in additional scores to the organization’s image. The purpose of the paper is to explore the club’s strategic vision, to conduct SWOT and PEST analyses and define the major challenges and obstacles that the club should solve. The review of theoretical background could be applied to solving the case study and defining further routes for the club development. The research has shown that Newcastle United has problems with the coaching staff and executive manager who could promote sport marketing initiatives. Additionally, the club manager should pay specific attention to social and political perspectives as well as to social recognition and loyalty to the football club.
Strategic Planning Process of Chosen Organization
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The first recorded football game took place in 1877 in Tyneside at the Eslwick Rugby Club. Newcastle Rangers emerged in 1878 and played in Gateshead. In 1882, the history of the club was featured with the new sides arrived to had the currently known Magpies. Newcastle United origins are found with the merger of two minor clubs in the eastern part of the city. In 1882, the West End Football club was created and two years later, the East End moved to Chillingham Road. Hence, West and East teams were first on the stage of creating Newcastle United (Newcastle United 2010). The owners of the club were of diverse nature, including professionals, shopkeepers, and tradesmen. Many of them played and administered all organizational activities. In 1893, the Tynesiders tried to enter the First Division of the Football League. However, the game administration would not recognize United’s direct entry to the top division. Nonetheless, Newcastle United was finally honored to be the member of the Football League (Newcastle United 2010). Since the very emergence of the club, the Newcastle owners have been introducing diverse strategic plans, but the core of the club’s vision is directed at the quality and competence of game players, and external orientation to club fans. Although the club generates a lower income than Manchester or Real Madrid, the club is still popular among the viewers and committed fans.
In the interview with the club owner Mike Ashley, it has been reported that he plans to sell the club because of debts. The owner recognizes that the club is currently facing problems with financial support and it cannot afford to buy famous European footballers. In this respect, Ashley (2008) announced that his strategy for Newcastle was different. Specifically, the club is looking for young, promising players from foreign leagues that are not famous yet, but whose potential is enough to compete with well-recognized ones. In fact, the current celebrities in football were not always famous, which means that recognition requires a long path to be taken. Specifically, the owner reports, “We search high and low looking for value, for potential that we can bring on and for players who will allow Newcastle to compete at the very highest level but who don’t cost the earth” (Ashley 2008). Such a strategy is beneficial although more time-consuming. Nonetheless, the policy could bring in much more effective results in terms of financial support. This long-term plan could also provide the prospering future for the club. Although the club is in debt, the policy established by Ashley is still successful because the debt has been reduced significantly. It should also be stated that the club has strengthened its position as compared to the situation in 2007. Its strategic planning lets the club sustain a competitive advantage.
It should be assumed that Newcastle United is aware of the current concerns with the environmental policies and corporate social responsibility issues which affect the entire respectability and reputation of the club. In this respect, the club managers are working on the program development that would provide a competitive advantage and recognition of fans and different legal entities, including voluntary organizations. In particular, new energy management program is aimed at lower energy consumption and is related to operational costs, requiring little capital expenditure (Newcastle United n. d.). The energy management is composed of several stages, such as data collection negotiation of utility contracts, energy influence, remote energy study and physical study of properties. All these stages will be carried out with different energy technologies and practices. Constant control of energy consumption is currently an important issue for the football club that wants to sustain good reputation. Furthermore, such an approach can also allow the club to reduce their expenses because of the lower amount of electricity and gas spent (Newcastle United n. d.). Additionally, the choice of suitable software plays a crucial role in managing Newcastle United because it can help to meet the required energy consumption level.
Apart from environmental policies, the club has also established an effective policy that does not require short-term decisions. For example, Douglas (2014) reports that the next year the football team will not require any important decisions concerning the players’ intention to leave. Such important players as Coloccini, Krul, and Sissoko do not plan to leave the team in the nearest two years (Douglas 2014). Therefore, Newcastle United will have much time to search for new promising players, as well as to improve the tactics of the game. Besides, there are many talented players who are planning to return to the team before the deal expiration. This specifically concern Guiterrez and Taylor, who have always been fond of the club and have been striving to gain any opportunity to be the member of the football team (Douglas 2014). The changes in the team will not be radical, which indicates the effective policies introduced and conducted by the club managers and administrators. The analysis of these approaches could be used for understanding major strengths and weaknesses of the club players.
The major strength of Newcastle United lies in their ability to focus on young talented players who are not recognized in the sphere, but could contribute to the quality of football, bringing high results to the team’s score in general. Thus, the managers spend less money on expensive and famous football players who could have contributed to the club’s image. Moreover, the club could bring up new celebrities. In fact, such a strategy is much more beneficial for the team because the final result is more important than the scores earned by separate players.
It should be stressed, however, that the company’s orientation to unknown players is not always successful and can lead to significant losses. For example, it has been reported that the Newcastle’s new boss Alan Pardew admits that he might not be able to keep his most promising players if they receive better offers (BBC 2012). Therefore, the balance should be kept between the ratio of experienced players who should be included into the main team and the ones who can replace those players in case they leave the team. As the British club, Newcastle United could have introduced at least several players of the native origin for the supporter to be more committed to the football team. Alternatively, the club fans fail to create a sense of unity and affinity regarding the crux of the team. Additionally, the players’ loyalty should also be tested in case of provoking interest on the part of other clubs.
The main threat for the club involves increased hostility and unrecognition on the part of the supporters due to strict relations between the countries. Being in the League, Newcastle should be more faithful to its country, leaving much space for the native players, despite the fact that many promising players originate from other countries.
Newcastle should also hope to have the French players and keep them committed to the club. If the treatment table remains empty, the French team could become a real handful. Therefore, the club should also provide an in-depth analysis of the promising players from the native land.
From a political viewpoint, Newcastle should require greater support on the part of governmental authorities. The political recognition plays an essential role in managing the club. Therefore, the club manager should establish trustful relations with the government.
As for economic challenges, the current managing director of the club, Lee Charley has insisted on the football club should being able to invest money in the playing squad to promote positive financial results (Flood 2015). Additionally, the club can also enjoy some financial benefits because of strengthening its position among other football clubs. The Newcastle supports are not satisfied with the way the club has been operated during by Ashley. At this point, tremendous efforts should be made to integrate new marketing ideas.
From a social perspective, it should be assumed that Newcastle United would definitely need the stronger support of its fans and community. As it has been reported by Jensen (2013), “the vast majority of fans would agree that both in terms of players and coaching strength, Newcastle are definitely in need of extra numbers/quality, on non-football (business) side of things at St. James Park it is becoming almost like a ‘Ghost’ town.” Therefore, the integration of new staff is the primary necessity for sustaining social recognition. Additionally, the dismissal of Alan Pardew is also great disappointment for the public (Howarth 2015). Therefore, the club manager should be careful about constant replacement of the personnel, which can build a negative reputation for their club.
The technical problems are not evident at a glance; still, they could influence the quality of the game. Therefore, the transformation of the club should be supplied with sufficient resources and equipment for training and re-organization.
The Relation between Theory and Practice
Strategic planning process serves to highlight organization’s intended approaches to reach its goals. There are different ways of conducting strategic planning and vision, and most of these strategies should lead to the development of the plan that promotes organizational objectives, as well as well-arranged strategic framework that would allow the manager to achieve those goals. There are critical success factors that have backgrounds based on strategic and operational planning (Gates 2010). There exist many approaches to strategic planning that could lay the important foundation for executing work; it also establishes the stage for process improvement, enterprise architecture, risk management, and organizational initiatives. Furthermore, it seeks to explore an organization’s current abilities and environment, the desired outcomes, and aspirations established in an organization (Gates 2010). There are four major elements of the strategic planning process, such as organizational goals, or the “What”, the current situation, including environment, the future outcomes, and the routes for meeting the desired goals.
There should be critical components of strategic framework, including mission, vision, objectives, principles, organizational strengths, challenges, and the strategy. The latter is of derivational nature and could be shaped as soon as goals, mission, and vision have been introduced. A strategic plan is a report that leads to the enactment of a planning activity that elaborates organizational strategy and focuses on the elements that affect its accomplishment. The quality of the outcomes of strategic planning is associated with external forces that define the future environment in various ways, which could not be influenced by an organization. In case scenario planning is employed, there should be corresponding adaptive plans that can be adjusted to external forces. The analysis of an external environment is an inherent component of successful strategic planning (Gates 2010). The managers, therefore, should be able to introduce immediate changes to the analysis. In addition, the external environment can also serve as a powerful driver of new organization’s vision and mission, which could allow the company to sustain a competitive advantage over other firms. Flexibility should be among the main features of strategic scenarios for an organization to oppose changes.
In this regard it is highly important to carry out environmental scanning to contribute to the development of effective strategic framework and make accurate predictions. Due to the fact that future challenges could not be predicted, managers should make certain assumptions and approximate estimations with reliance on their experience and overall statistics (Dobbins n. d.). In this context, Newcastle United should also rely on personal experience and competence when making decisions regarding buying and selling new players, as well as putting certain predictions at stake to develop viable solutions. Sometimes these predictions are not favorable, but they still contribute to the club managers’ experience, and they can make a new decision which would not be based on previous negative experience. In other words, strategic planning implies that managers should possess information about external economic environments, as well as international features of the football business management. The fact that this sphere deals predominantly with human resources should also be taken into consideration. While carrying out an environmental scan, the problem of managing these environments could be raised to identify new schemes and adjusted mechanisms which might be effective in challenging situations.
Review of Literature on the Strategic Planning and How It Is Affected by an External Environment
In order to provide an evaluation of the strategic framework accepted by Newcastle United, the attention should be paid to the case studies that explore the need to introduce strategic framework in other football clubs. As such, Magnusen (2011) explores the case with Cal Poly football team. Specifically, the author finds out that, “this senior project will explore the need for an effective intercollegiate strategic plan based in sport marketing public relations, thus including a comprehensive guide to community relations and integrated marketing communications” (Magnusen 2011, p. 5). The project can also illustrate an interdisciplinary strategic framework based on public relations that can allow Cal Poly Football team to achieve its long-term and short-term objectives. To support the idea, Magnusen (2011) explains that Cal Poly Football has developed a strategic plan that touches on such aspects as fundraising, resource expansion, and recruiting facility; the team, in its turn, relies on its strategic plan to develop marketing initiatives and main community relations. These plans, however, fail to pay sufficient attention to sports marketing and public relations. Therefore, there is an urgent need for the changes to be introduced to the plan to improve the sphere of sports marketing relations, IMC, and community relations. Similar concerns could be adjusted to Newcastle United which should also introduce shifts to the sphere of resource expansion, fundraising, public relations and sports marketing initiatives. The last point should also be reconsidered to ensure the sufficient management of promotion of the new promising players and attract more football club supporters, mentors, and potential investors.
In the studies by Earle (2009), the emphasis has been placed on the analysis of statistical data that helped to define the major connection between strategic planning and other important processes, such as budgeting, annual evaluations, management objectives, and personal surveys. The Athletic managers assume that these interactions exist but they rarely introduce effective models, as well as management tools. In addition, Warner, Shapiro, Dixon, Ridinger, and Harrison (2011) focus on the success factors that can establish successful relationship with the community, which is the key to any football club. While exploring the sports opportunities and competitions at university campus, the attention has been paid to the contexts in which these activities are presented. Many campuses have divisions that create sports activities and involve the community by increasing their awareness and following the external environmental features that shape the students’ experience. There are also football programs that have been integrated into community. However, if university officials add football to the curriculum, it is a unique opportunity to explore how community can react to the environmental change. In fact, the scholars have argued that football at college and university campuses is aimed at humanizing the institution by providing the point for achievement, as well as building the identity and collegiate achievements. This change should result in enhanced sense of the community. Similarly, Newcastle United should adhere to these rules to stay afloat on a larger scale. More important, the attention should also be paid to the analysis of the current situation in the sphere of football, attitude of the community in general, and the common trends in the community interests and preferences. The task of a manager is to attract the new audience and keep the old one.
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Strategic planning relies heavily on resource planning, particularly when it concerns football clubs. As such, Kartakoulis, Vrontis, Trassou, and Kriemadis (2013) focus on strategic planning with the emphasis placed on long-term objectives, as well as the development and implementation of plans developed to reach business objectives. The major goal of strategic planning is to strike the balance between an organization’s goals and those dictated by the environment. Financial management is also critical to football management. Sports finance is associated with the effective management and control of cash flows to enable aspirations and goals. The financial structure of football and all sports organizations embrace several components, such as capital employed, operating cash flows, and assets. Newcastle United, in this respect, should carry out a total re-evaluation of its cash flows, capital and operating capital to make sure that its future prospect is viable and could improve the situation in the club. Similarly, Vrontis and Trassou (2014) focus on the research studies of football clubs. They have defined that football clubs should carefully re-develop and re-examine the nature f their value propositions. They should also perform an evaluation of their potential values, as well as define the genuine competitors to know their strengths and weaknesses. Additionally, a detailed analysis of football management can also provide new opportunities for club strategic collaboration.
In conclusion, currently Newcastle Untied has problems with personnel replacement and fundraising initiatives. The obstacles prevent the football club from establishing trustful relationship with their supporters and investors. At this point the new strategic plan should be developed. Although the course on buying promising but unknown players is justified in financial terms, there should be additional financial funds that could allow Newcastle to retain well-recognized and experienced football players. Thus they will be able to integrate new socially predetermined policies that could attract more investors to the field. Additionally, marketing initiatives should also be reconsidered to make the community more loyal through brand development of the football team. Finally, the technical support of the team should also be re-evaluated to ensure that the team is properly supported with all necessary resources.