Running head: EXTERNAL ENVIROMENT REPORT-NBC SPORT GROUP 1
EXTERNAL ENVIROMENT REPORT-NBC SPORTS GROUP 4
External Environment Report-NBC Sports Group
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Introduction
It is undeniably true that the internal factors help orchestrate sound plans required by any industry to achieve its goals. Still, it is important to identify the most important elements of the external environment in which an organization operates. Although it is difficult to control the aspects of the external environment, it is important to put them into consideration, so as to be able to respond to any change, if needed within the organization (Winseck, 2008). The paper provides a case study of NBC sports group, specifically focusing on its organization, swot analysis and external factors influencing the company. Pestel framework and five-forces model have also been used to enrich the reader with an understanding of the external environment at which NBC sports group operates.
Organization of the Industry
The NBC sport is owned by the NBC Universal Television group. As a programming division of NBC network, the group is responsible for broadcasting American sports. The channel, formally operating as “NBC News” broadcasts diverse sports array, including the NFL, Olympic games, Triple Crown and Premier League, among others. Since its establishment, the organization is guided by the following goals: Innovativeness; being able to design and produce quality networks, Offering quality services; being able to meet the needs of its customers at a most convenient cost, access to broad market and maintaining the company’s brand name. In fact, the NBC sports have been identified as one of the most dedicated cable channels in America (Winseck, 2008).
Organization Structure
The NBC sports group is owned and managed by NBC Universal Television group. On the other hand, the NBC Universal is managed by the Comcast Cable; one of the leading high-speed internet, video and phone providers nationally. Jon Litner is the current president of the Comcast Cable Company. It is the factor that NBC Universal Television operates cable networks that it is responsible for the management of the NBC sports group. In fact, NBC sports group is considered as one of the NBC Universal Television division. The NBC Universal Television is headed by Mark Lazarus, 20 years old and a cable industry veteran. In the year 2011, the newly elected executive leadership of NBC sports group was announced, in one of the New York Magazines. Jon Miller, a 30 years old veteran of NBC sports was elected as president. Mike McCarley was elected as a Senior Vice President, responsible overseeing Promotion, Strategic Marketing, and Communications. Jamie Davis (former vice president), was elected as a strategic manager and Sam Flood as the Executive producer of NBC sports. See the organization chart below).
Organization Structure
Comcast Cable Industry
President: Jon Litner
NBC Universal Television group
President: Mark Lazarus
NBC sports group
President
Jon Miller
Strategic Manager
Jamie Davis
Senior Vice President
Mike McCarley
Executive Producer
Sam Flood
Current Conditions of Organization in Relation to External Environment
According to John Miller, the NBC sports group has achieved more than expected since the year 2007. For instance, the channel has introduced TV listing, NBC Sports Agency, and NBC affiliates. In addition, the channel has developed customer supply system that has proved most reliable and efficient means of linking the channel with its clients through a new website paradigm. Still, the variety of networks, channels and online services such as NBC Olympics, NBC Sports digital, Universal Sports mobile and Rotoworld.com are very unique to be duplicated by the competitors, making it difficult to imitate the brand name. Essentially important, an NBC sport has identified its esteemed customers, making it possible to design the services that suit the clients. However, the NBC sports group is facing the challenge of implementing most of its strategic plans due to the influence of external factors (external environment). Namely, these include economic, social, political, technological, environmental and legal factors. The factors from the PESTEL framework as illustrated in the figure (1) below.
PESTEL Framework
(Figure 1)
Political Factors
In the year 2007, the chairman of the National Flag Foundation (NFF) stormed National sports televisions with criticism that they do not cultivate and maintain a national identity (Kerstine, 2007). He, therefore, pushed a motion that, any sports game should start with the national anthem. His argument was strongly opposed by NBC Sports group and other sports channels such as super -sport. Unlike Hoehn (2003) who considers national identity as the most marketable product that draws higher rating for televisions, NBC Sports group argued it would waste much time. In the year 2002, the National Broadcasting Company (NBC) broadly exhibited a higher level of patriotism, nationalism, and internationalism when it broadcasted every game played during Winter Olympics starting with the national anthem. Later the president of NBC universal televisions claimed that it wastes a lot of time. This explains why NBC sports group is reluctant implementing the policy, despite the continued pressure from the politicians and political parties.
Legal Factors
The increasing rate of growth in the field of sports has been accompanied by increased complexity of the legal issues facing the sports broadcasting industries. In fact, the sale of media and broadcasting rights has been the major revenue for sports teams and sport governing bodies. That president of NBC sports group claims that some of these rights are sold very expensive, leading to a potential infringement of the broadcasting law. Still, by the factor that the competition law is now limiting the number of live televisions, sometimes the NBC sports group happens to be outlawed live broadcasting.
Social Factors
Notably, the NBC sports group focuses on the sports array. As a result, most of its customers are those interested in sports. But this is not the ultimate goal of NBC sports group. In fact, the company aims at reaching many subscribers as possible, to place itself at a competitive advantage, unlike its competitors. However, building a healthy relationship with clients not interested in sports has always being a problem. Still, there exist other dominant sports broadcasters, who have sufficiently attracted a large number of viewers. In such a case, it proves difficult for the NBC sports group to break the existing audience behavior.
Technological
The modern broadcasting sector is rapidly undergoing a significant technological change. One of the most technological challenges the NBC sports group has been facing is to make their services available on various portable devices. Still, the industry has been facing the challenge of integrating multiple platforms like their competitors. Integration of modern technologies such as digital terrestrial broadcasts, Over-the-Top (OTT) convergence and internet protocol (IP) has proved it both practically and financially challenging to the organization. Essentially important to note, the NBC sports group has tirelessly been working to migrate from the traditional form of broadcasting, by specifically improving proliferation of digital devices, broadband penetration, and bandwidth. The technological challenges are more experienced as the organization tries to move in pace with emerging broadcasting technologies.
Economic factors
The Economic power of NBC network can be seen a factor of the external environment. This is from the fact that, the company’s revenues are greatly influenced by the above-discussed factors; that is, legal, political, technological and social factors. Most importantly is how the network places itself in the market competitive advantage. The research carried out by SNL Kagan (2012) indicated that the network revenues are growing slowly at a rate of 2% a year. The growth is significantly lower compared to the rate of growth for other sports networks such as ESPN, which is estimated to be growing at a rate of 9% in every year. The variation is greatly determined by the number of subscribers and dominance to geography.
Threats:
• Competitors healthy relationship with sport personnel
• Strong brand name of competitors such as Super sport.
Opportunities:
· Higher demand from customers to have more online services.
· Increased knowledge from customers to have access to what they want in a network
· Availability of internet marketing tools
· Availability of resources from the competitors.
· Increased demand for televised coverage training and sporting activities.
Swot Analysis of NBC Sports group
The swot analysis above helps the NBC sports group to determine the opportunities to capitalize in and the threats to counter. Eliminating the threats creates more opportunities. For the external environment, the NBC sports group should focus on threats and opportunities, because they are the only external factors.
Five Forces Analysis
Five Forces Analysis is a framework that analyses competitive power in a business using the five forces. The first force is Buyer Power- these analyses how NBC sports customers affect the decrease in price. It is driven by a number of customer differences between competitors, ability to substitute, sensitivity of prices, and changing cost especially by powerful buyers who have the power to dictate the price. The second force is Threat of new entry which is the ability to other people to enter the market also affect the power of NBC sports. There is a small barrier in entering the business although It costs more money and time for entry. Also, there is protection for technology and little economies of scale in place, and NBC sports can preserve great position and take advantage of the market.
Thirdly there is a Competitive rivalry that is competition aggressiveness in the market also affecting NBCs power. There is a good number of competitors with same and even greater capabilities than NCC sports. This great level of competition in the world sports market affects the market power of NBC sports. The fourth force is Supplier Power- you must assess how vendors may increase the price for your input materials. NBC sports have different types of suppliers some small and others large. Major suppliers of the sports news, for example, the Football Association of England may increase the amount of TV rights thereby increasing the price of its products. Few supplier choices make you more venerable to them and so they have more control over you. Lastly; Threat of substitution- if there are other alternative products which can replace you offering, then your power in the market is affected. For example, NBC customers may decide to go and watch the games live in the stadium. This is why it is important to check if your customers can find a different way of doing what you offer and if it is less costly than what you do.
Strategic Group Mapping
According to Akio (2005), strategic group mapping is mainly used to display the competitive position of rival firms in the market. In every industry, there are different types of companies in the same market. Some firms enjoy stronger market position than others, therefore analyzing the industry’s competitive structure and identifying the strategic group is very important. Strategic group maps have many purposes such as; identifying strategic problems, identifying attractiveness and unattractiveness, identification of close and distant rivals, used to identify opportunities and to analyze the type and level of entry barriers in the market among others.
Strategic group mapping uses many criteria to categorize firms. These are; geographic coverage, pricing policy, product quality, the marketing effort, extent of branding, the number of market segment served, product/service diversity, marketing effort , the extent of branding, price or quality, and many others. According to the example below, we categorize the NBC sports group and other competitors like ESPN, FOX sports, CBS sports network, SEC network and COMCAST SPORTNET across two criteria: product range and geographical scope.
Strategic Group Map
BroadCBS sport
ESPN
NBC sports
FOX sports
SEC network
PRODUCT COMCAST
Sport net
RANGE
Narrow
National GEOGRAPHICAL Global
SCOPE
Conclusion
To overcome the above external factors affecting the strategic plans of NBC sport group, the network aims at improving its innovativeness. The innovations will be inclined to producing crisp and effective networks. This will, in turn, attract more clients and subscribers, making the network achieve its goal wide network coverage. Undeniably, innovativeness is the only means to beat its competitors such as ESPN, FOX sports, CBS sports network, SEC network and COMCAST SPORTNET in the market.
Reference
Winseck, D. (2008). The state of media ownership and media markets: competition or concentration and why should we care?. Sociology Compass, 2(1), 34-47.
Akio, T. (2005). The Critical View of Resource Based View of Strategic Management. Journal of Management, 125-155.
Hoehn, T., & Lancefield, D. (2003). Broadcasting and sport. Oxford Review of Economic Policy, 19(4), 552-568.
Kersting, N. (2007). Sport and national identity: A Comparison of the 2006 and 2010 FIFA World Cups Politikon, 34(3), 277-293.
