This report is aimed to analyze the strategy employed by Sports Planet, an indoor futsal provider and how they have became one of the leading names in Malaysia.The report will start off with the introduction of the company follow by the PESTAL analysis, Porter’s 5-forces model, VRIN analysis, business strategy and value chain of the company, the suitability of the current business strategy and lastly the conclusion. Section 1 – Introduction of Sports Planet Sports PLANET is the number one provider of the perfect indoor futsal experience in Malaysia.
The company began in November 2002 as a response to the growing need for good futsal venues, facilities and services.Within one year of its induction, Sports Planet had opened up 4 additional venues and holds the record for the single largest indoor soccer venue as recognized by the Malayan book of records. Ultimately, Sports Planet targets football enthusiast and offer the service of convenient and quality futsal venues. Sports Planet aims to advance the sport of futsal by developing futsal skills, inspiring life and fostering bonds and communication. Section 2 – PESTAL AnalysisPolitical – Sports Planet was recognized by the Malaysian Association by being awarded the prestigious ‘Most Promising Franchisor of the Year’ and ‘Best Sales Growth’ awards.
As the Malaysian Franchise Association was formed to support the implementation of the government program to promote entrepreneurship through franchising, Sports Planet is one of the many franchisors that the government in Malaysia is trying to encourage. The Malaysian Government has also made it easier for franchisees to obtain special government based loans that are guaranteed by the Credit Guarantee Corporation.The availability of these loans has made the setting up of a Sports Planet franchise venue extremely affordable and profitable, thanks to the support by the Malaysian Government. The support by the government is important as it makes it easier for franchisees to set up a futsal venue under the name of Sports Planet and with more franchisees, this will help Sports Planet spread their business all over Malaysia and they even have a futsal venue in Singapore as a result of this franchising.Economical – As a Sports Planet franchisee, there are many economical benefits that will assist and support the running of the business. Franchisee’s will receive sponsorships by Adidas and REVIVE, marketing advice and techniques, full consultation on the layout of the selected venue, hands on training for managers and supervisors and cash flow forecast with detailed costing. It will cost around RM450 000 to RM850 000 for capital investment to become a Sports Planet franchisee and capital investment is expected to be recouped within 12-18 months, depending on the business generated at the venue.These economical benefits are important as it will help to entice franchisees, as well as provide great assistance in the running of their futsal venue. This will encourage more franchisees to venture into this business as they know they will get capable assistance and there is a lower likelihood of their venture not making a profit. Social – With football being the most popular sport played in primary and secondary schools in Malaysia, implementing a futsal culture will be integral to sustain as well as promote this culture.
Enthusiast who cannot find a suitable location to play football due to heavy industrialization or inclement weather will be able to play futsal at this indoor futsal venue. With this futsal culture, more Malaysians will keep fit and look after their health as playing futsal is more fun than going for long runs or dieting. Aspiring football players who wish to further develop their skills are also encouraged to play futsal as it promotes quick reflexes, pin point passing and quick thinking.Thus apart from Sports Planet aiming to make profits, Sports Planet also promotes healthy living and promotes futsal skill growth amongst its enthusiasts. As football is extremely popular in Malaysia, Sports Planet is offering the football enthusiast a solution whenever there is inclement weather. Enthusiasts are able to experience a wholesome indoor futsal experience.
The football culture in Malaysia will not wane as well as there will always be a location to play football despite their fields being taken away due to industrialization.This will appeal to all age groups of football enthusiast and gives Sports Planet a competitive advantage. Technological – Sports Planet makes use of artificial turf in all its indoor futsal venues. Artificial turf is the preferred playing surface as it stands up to heavy use and requires no irrigation or trimming. It also requires no sunshine and it is low maintenance.
However artificial turf does have its downside as it has limited life and some heightened health and safety concerns. Installation of artificial turf is also cheaper than maintaining natural grass and in this way, Sports Planet is able to save costs.Environmental – Some of Sports Planet outlets make use of pre-existing warehouse spaces or abandoned open areas to convert these areas into indoor futsal venues. Thus there is no further development or industrialization to damage agricultural lands. The indoor futsal venues also provide customers with alternate football options in inclement weather as normal pitches would be rained out, but customers will be able to play in the indoor venues.
Legal – Sports Planet enforces a rule of thumb to all franchisees that opens a indoor futsal venue under their name.Each pitch is to measure 7500 square feet. There is a minimum of 20 meters ceiling height, the higher the better. The venue has to be easily accessible and nearby residential areas. The rental rate of the warehouse or building has to be RM0. 70 to RM 0.
90 per square feet. These rules of thumb ensure that there is a level of consistency between all Sports Planet indoor futsal venues despite the numerous franchisees. This level of consistency will then translate to the quality promised by Sports Planet of a wholesome experience being delivered no matter which outlet is visited.Thus Sports Planet will not have to worry about over stretching themselves if growth is too rapid as they will always be able to deliver their wholesome experience as long as the rules of thumb are followed. Overall, having Sports Planet expand their operations all over Malaysia will greatly increase the interest in football and also increase the participation in football related activities.
This is because there will always be a venue to play despite bad weather. The playing experience of customers will also be greatly enhanced as the rule of thumb ensures strict compliance of quality and playing field standards.With the governments support to encourage franchisees, Sports Planet will have no end of potential franchisees and this will help Sports Planet grow exponentially as more indoor futsal venues will open up in Malaysia and Singapore and thus a greater football culture can be cultivated. Section 3 – Porter’s 5-Forces Model The Porter’s 5-forces model consist of i) Threat of new entrants, ii) Threat of substitutes, iii) Bargaining power of buyers, iv) bargaining power of suppliers and v) rivalry between competitors (Porter 1998). The threat of new entrants for futsal business is high.
The reasons for that can be narrowed down into three main factors. The popularity of futsal, the industry young age and there’s a big market for it. The crazes for futsal have been spreading across the globe rapidly and ASEAN countries like Thailand, Indonesia and Malaysia are all in the thick of it (Kasim 2012 ;amp; The Star 25 August 2013). As mentioned, the product life cycle of futsal business is still considered to be at the growing stage and it is a relatively anonymous market (Kaestner 2004). There are still plenty of untapped business opportunities for people to explore and reap the commercial benefits out of futsal.Although there is a big market for futsal businesses, there is an emerging trend of new entrants which target particularly on the niche market of futsal enthusiasts.
Predominantly, these businesses only concentrate on providing futsal pitch for their consumer instead of delivering a more wholesome experience (FutsalHub 2011 ;amp; Golazo 2013). This can pose as a threat since people might be attracted by the cheaper booking rate. Next, the threat of substitutes in futsal industry is average. There are no major and foreseeable threats of substitutes in the market.Nevertheless, there is a possibility of people simply losing interest in futsal and switch to playing other kind of Sports.
However, this remains unlikely as the foundation of futsal is based on football which is one of the most popular Sports worldwide (B R 2011). Next, the bargaining power of buyers is average. The first factor for increasing bargaining power of buyer is the low cost of switching to competing services as competitor’s charges are roughly the same or lower (FutsalHub 2011). The second factor which increases the bargaining power of buyer is the standardization of services in fustal industry.As much as possible Sports Planet tries to differentiate itself from its competitors but in term of their core business of providing futsal pitches is still something difficult to be unique.
The first factor for decreasing bargaining power of buyer is that consumers are small and numerous in comparisons to the number of seller. Futsal arenas require advance booking up to weeks for timeslot on weekdays after working hours or on weekends (Mahalingam 2011). This proves that there are not enough futsal arenas to satisfy the consumer’s demands. The next force on the bargaining power of suppliers is average.The main supplier in futsal industry shares some similarities with the football industry and that is providing fittings and materials for setting up a futsal arena.
In order to provide high quality futsal pitches it increases the bargaining power of suppliers as there are currently limited suppliers in the country which are able to provide superior turf for futsal . The second factor is the high cost of switching supplier since alternate supplier might not even have the capability of meeting Sports Planet required standard (Dolles ;amp; Soderman 2005).The last force relating to the extent of rivalry between competitors is low. This is done by combining all the above forces together to conclude that the market demand is still growing swiftly. Sports Planet was and still the pioneer brand in the futsal industry. Sports Planet is a widely recognized brand throughout the country and region (Sports Planet 2008).
Although the core business shares similarities with its rivals, the quality of their services and facilities is highly differentiated and more superior when compared to its competitors.All these factors enable Sports Planet to be at the forefront of the industry which results in the low extent of rivalry. After analyzing the five forces, the only force which counts as high is the threat of new entrants. As the popularity of futsal continues to raise the likelihood of big players entering the market raises too. These big players might even be in the form of a government organization.
As more and more competitors start to enter the market, the industry will quickly become overcrowded and consumers demand will start to decline.Additional resources and effort would then be required to further differentiate the business from its competitors so as to remain as an attractive option for the consumers. Failure to do so might lead to more people opting for options which specialize in targeting niche market. Section 4 – VRIN Analysis Physical Competency – Physical resource management is the important factor for Sports Planet to create and maintain their competitive advantage over other indoor football venues that may offer lower prices.As Sports Planet offers a total enriching experience of all its customers in terms of playing venue, it has to ensure that its pitches are of the highest standards.
As Sports Planet also offers live football viewing at its indoor venues to complete the total football experience, it has to ensure it has secured rights and patents to transmit the live matches and also ensure uninterrupted feed. Therefore by maximizing the market potential of playing and watching of football as various indoor futsal venues, Sports Planet will ensure its competitive advantage in the industry.Value of Strategic Capabilities – After identifying the physical resources and the competitive advantage that Sports Planet has, it is important to develop the capabilities required to serving its customers in order to broaden the target market with value (Grant, 2001). In order for customers to pick Sports Planet as their preferred choice, Sports Planet has to maintain their quality pitches and ensure every customer leaves with an enriched football experience. A vending machine to dispense drinks is readily available to quench thirst of playing customers or watching customers.Smoking zones are also located away from playing areas to promote healthy lifestyle and to ensure the comfort of other customers who do not smoke.
The strategic locations of Sports Planet indoor futsal venues are also vital as it makes it more accessible to the public. Rarity – Sports Planet boasts the ability for customers to watch their favorite teams in action on television and being able to emulate their idols by playing on their futsal pitches at the same venue immediately after. There are no other indoor futsal venues who offer this same service and as such it distinguishes itself from the other indoor football venues.Inimitability – Sports Planets ability to make it easy for franchisees to come onboard the indoor futsal venue is unique and complex to replicate. Franchisees that have no experience at all are not turned away and in fact Sports Planet will train new franchisees how to manage the business and how to maximize their ability to rake in a profit.
Non-Substitutable – The risk for capability substitution is low as Sports Planet offers a whole packaged experience of playing and watching football and the experience taken away is irreplaceable at other venues.Other indoor futsal venues might offer lower prices but they are not able to offer the same quality offered by Sports Planets due to its strict rule of thumb over pitches. Thus other indoor venues cannot match up to what is offered by Sports Planet indoor futsal venues. Section 5 – Business Strategy for Sports Planet and Value Chain Sports Planet’s company mission is: To provide the best futsal facilities to our customers, with specific emphasis on customer service, quality, safety and integrity (Sports Planet 2008).In order to achieve this company mission the business strategy Sports Planet employ is “The Broad Differentiation Strategy”.
Sports Planet is well suited for differentiation strategy because the company has strong resources and capabilities which enable it to satisfy consumer’s needs in approaches that are difficult for its competitors to copy. Sports Planet is currently the only company which offer FIFA sized futsal pitch in Malaysia. Some outlets of Sports Planet also have badminton courts and snooker tables available to provide a wider variety of Sports for their patrons to choose from (Sports Planet 2008).Furthermore, Sports Planet also offers attractive packages for both block and corporate booking and is highly competent in assisting the planning and hosting of an event or tournament (Sports Planet 2008). Sports Planet is also able to rely on its strong brand management and effective marketing to ensure that the brand reaches out to other countries in the region (Abiodun 2011). This is evidence in Sports Planet effort in making their franchising process as easy as possible so as to attract and encourage potential investors to come forward and franchise the Sports Planet brand (Capital 2013).
An example of Sports Planet franchisee in Singapore is UberSports (UberSports 2012). Sports Planets is also actively involved in organizing and hosting football training camps/clinics to help promote the Sports and healthy lifestyle. An example would be the FCBESCOLA camp where coaches from Barcelona Football Club, one of the most famous and successful football clubs in the world will visit Malaysia (FCBESCOLA 2013). Being the organizer for this camp Sports Planet branding, image and reputation is able to benefit from it greatly in an international context.For Sports Planet differentiation strategy to be successful it is reinforced by the primary and supporting activities of its value chain (Mindtools 2013).
For primary activities the focuses is on inbound logistics, operations and marketing and sales. Sports Planet constantly works with its suppliers and strives to improve the standard of its futsal arenas. The organization also makes sure it maintains its infrastructures in tip top conditions. This is to ensure that the qualities of the infrastructures are not compromised as they are vital for the core operation of the company.Marketing helps the consumers to comprehend and appreciate the differentiated offers offered by Sports Planets versus their competitors.
Lastly, by combining both excellent customer services and the ease of making a booking with Sports Planet the company is able to establish a strong rapport with its customers. For supporting activities the focus is on human resource management and procurement. Effective employment and employees training will enhance the quality of customer service.While procurement of superior materials for the company products will give the company an edge over its rivals and keep up the differences. Section 6 – Suitability of Current Business Strategy Key elements of differentiation business strategies used by Sports Planet| PESTEL Factors| | Political| Economic| Social| Technology| Environmental| Legal| Strong resources and capabilities: high quality product and services.
Product differentiation| -gaining government recognition| -gain sponsorships and partnerships with international organizations| -N.A| -acquires and uses the latest technology| -N. A| -N. A| Strong brand management: local and regional franchise| -government support which make it easier to franchise the company brand| -attracts franchisees to invest in the company| -attracts customers to choose the company brand-promote active and healthy lifestyle| -N. A| -N.
A| -set minimum standard for the company franchised outlets | Effective marketing: promote differentiated offers of the company| -N. A| -attracts customers to choose the company brand| -educate the customers of the company differentiated offers| -N.A| -N. A| -N. A| Key elements of differentiation business strategies used by Sports Planet| Porter’s Five Forces| | Threat of new entrants| Substitutes| Buyer’s Power| Suppliers Power| Rivalry in the industry| Strong resources and capabilities: high quality product and services. Product differentiation| -discourages new entrants due product/services differentiation| -able to compete with substitutes which target a niche market due to high products/services quality.
| -reduces the bargaining power of buyer due to product differentiation| -N.A| -outlast the company competitors with strong resources| Strong brand management: local and regional franchise| -more outlets to contest new entrants-willingness to contest new entrants| – substitutes of similar standard not available| -N. A| -increases the chances of finding alternate suppliers with presence in other region| -more outlets to ensure presence within competitors operating areas| Effective marketing: promote differentiated offers of the company | -encourage brand loyalty | -N. A| -educate the customers of the company differentiated offers| -N.A| -differentiated products breed customer loyalty| In conclusion, Sports Planet is able to utilize the differentiation business strategy to great effect because of the company strong resources.
The company is not only capable of providing top quality products and services it is able to maintain its own high standard in a consistent manner as well. As a result, Sports Planet has built a strong brand image which is able to garner the support of the government as well as having developed a strong rapport within its customer base