1) Include a link to the article.
http://news.bbc.co.uk/2/hi/business/8253953.stm
2) Include a short summary of the article.
After 17 years of cooperation, Liverpool Football Club has decided to end its 17 year partnership of having Carlsburg as its main shirt sponsor. Instead, they have signed a new four-year deal with Standard Chartered Bank with a reportedly 80 million pounds, one of the largest in football history. Managing director of the club, Christian Purslow, hopes that the extra funds available for the club will be able to attract supporters from developing markets, such as Asia and Middle East.
3) Topics Covered in Syllabus
1.3 Organizational objectives
1.4 Stakeholders
1.9 Globalization
3.1 Sources of finance
4) Apply one business tool/theory/technique to the organization
1.9 Globalization and 3.1 Sources of Finance
Although Liverpool and Carlsburg have clearly enjoyed their long standing relationship (it is extremely rare for football clubs to have a sponsor for as long as 17 years), Liverpool decided to change the primary sponsors for a few reasons:
1) Financial Reasons
A significant increase in amount offered-- Team manager Rafa Benitez has commented that the club needs more transfer funds (for new players) available in order to continue compete with tops teams in Premier League and abroad for silverware. In a business point of view, the on-field results will directly affect the organization's expansion plans in a large potential market like Asia, especially when competitors such as Arsenal, Manchester United, and Manchester City are also trying to expand to the same market. Furthermore, the large source of fund available to the club means Liverpool can secure their best internal stakeholders (ie. players, coaches-- which acts as "product" in this case) through increased salaries in order to continue their market leadership within the country.
2) Non financial Reasons
Reputation of Standard Chartered in the aimed markets-- Standard Chartered Bank has an established market in areas exactly where Liverpool wants to expand. Thus, the brand name of Liverpool can expand to the bank customers and increase brand recognition. In other words, Liverpool might hope to promote its club through potential joint-venture methods between the two organization and/or with customers of Standard Chartered, creating more opportunities for new sources of funds and perhaps, brand loyalty.
Change of brand image-- The long relationship between Liverpool and Carlsburg has made global football fans automatically associate the two clubs together. Liverpool might be hoping for a "cleaner", "healthier" image, instead of automatically linking football with alcohol, in order to attract family and youth, and children markets.
Standard Chartered's Reasons to choose Liverpool as shirt-sponsor:
1) Financial Reasons
Cost-effective marketing-- Liverpool is widely considered to be one of the largest football clubs in the world, with over 200 official supporters clubs. Standard Chartered will have brand exposure all over the world (through television broadcasts) every time Liverpool plays a game. The international exposure received can also help Standard Chartered reach new markets, such as South America and the rest of Europe.
2) Non-financial reasons
Exclusive rights-- Liverpool might give rights to Standard Chartered, for example, allocate tickets in executive boxes for Standard Chartered customers. This can be a marketing gimmick for the organization (ie. lucky draw) in order to ensure brand loyalty and boost revenue through exploiting customer's interests.
Hi Ruby,
ReplyDeleteInteresting article... I agree with your reasons of to why liverpool football club has signed a new four-year deal with Standard Chartered Bank with a reportedly 80 million pounds. This action, as you explained, is tightly related to globalization because Liverpool Football club is becoming partner with a bank that is well established in Asia. However, it seems like you have not mention much about this, so, i would like to share some of my opinions about this topic. As many may know, Standard Chartered Bank is a well established bank in the area of Asia. Liverpool Football Club signing a partnership with the Standard Chartered Bank will definitely benefit a lot through because of globalization.
First, Liverpool Football Club can benefit from the economies of scale of Standard Chartered Bank's image or name in Asia, and this will help them to enter the Asian Market a lot easier.
Second, the partnership with Standard Chartered Bank allows Liverpool Football Club to grow at a faster pace than if they were to grow organically. Because Standard Chartered is well known in asia, this helps Liverpool Football Club to have more choices in their expansion plans.
Third, Liverpool Football Club can expand to Asia through the partnership with Standard chartered Bank. This can help them benefit from the increase of customer base. As the customer based of Liverpool Football Club increases, the sales or revenue should proportionally increases as well.
Nevertheless, there are still some potential problems of expansion overseas. Political and economic conditions in foreign countries may limit the extent to which business or company like the Liverpool Football Club can prosper in overseas market. Also, a lack of local knowledge and experience may create problems for firms operating in new markets.
Therefore, Liverpool Football Club signing the contract with Standard Chartered Bank is an essential step to globalization and will provide them a lot of advantages in future, but, this club must take considerations of some of the potential problems of expansion overseas.
I believe this is an important issue that this club must keep in mind before they have any further actions of entering, the Asia market.
Overall, this is rather interesting article because it contains a lot of potential business theories and questions that can be discussed.
Good job.