Summary
The National Collegiate Athletic Association (NCAA) creates opportunities for students to learn and compete, while also participating in sports. The association is a non-profit organization that has developed its history to become an influential institution with the ability to moderate all collegiate athletics in the United States. NCAA has the authority to perform various regulatory duties including distribution of power to the members. Despite the achievements of the NCAA, the debate has emerged over the effectiveness of the association to address members’ demands and hence reduce the public’s level of trust. The association has been facing several integrity and ethical issues after the emergence of high-level scandals and broad disparities in its budget and rational aspects among approximately 350 Division I member institutions (Anderson & Schlosser, 2013). Such issues affecting the collegiate need a model to fix the situation in the context of the contemporary athletics setting. With reference to the case study of monopolistic power of the association, this paper intends to analyze the SWOT that would be significant for the management to gain support from its member institutions.
SWOT Analysis of the Monopolistic Power of NCAA
Strengths
The first major internal strength of the NCAA collegiate is strong capabilities. The organization has strong financial, capital, and personnel resources that are significant to developing a sustainable competitive advantage over its rivals in the marketplace. The ability of the NCAA to offer scholarships to most of their athletes along with high standard athletic competition gives the institution the power over other competitors (Anderson & Schlosser, 2013). High revenue collection from sources such as television companies, which have to sign contracts worth billions of dollars over a period of time, adds to the capability of the organization to influence the market.
The second source of the organization’s competitive advantage is the strong record of successful entry into markets throughout the United States. The organization has a rich history of establishing new products in the local market but also considering a variety of markets based on the reviews from domestic consumers (Anderson & Schlosser, 2013). As such, the association uses its experience from various ideas in several markets to develop effective leadership and management of people resolutions.
Another significant strength that contributes to the outstanding performance of the organization is its superior quality products and services. The collegiate has the ability to increase its market share since it enjoys loyalty from the existing customers. The strong customer loyalty is attributable to the institution’s commitment to offering high-quality products and services. Carl Anderson indicates that the high-quality products place the collegiate in a better position to compete with other international players in the global market. Furthermore, the NCAA has strong brand equity and brand awareness. The entity possesses some of the highly acknowledged brands in the local market. The high level of recognition, according to Carl Anderson, contributes significantly to attracting new customers seeking to meet their demands in neighboring competing industries.
Moreover, the collegiate has several patents and copyrights acquired through innovation and the purchase of some rights from the original developers. The development is essential for the company to hinder challenges that may come from other market players with various influences. Lastly, high-profit margins, particularly the ability to charge premium prices compared to the rivals is a strong aspect for the NCAA collegiate. Premium charges have given the collegiate resources that are significant in thwarting competitive factors while also facilitating research and development initiatives.
Weaknesses
Despite the history of success in diverse fields, the NCAA collegiate has other sections that lack effective capabilities and skills and hence limit the ability of the organization to establish a sustainable competitive position. Insufficient resources and capabilities include physical resources such as land, human resources, and financial assets. Other weaknesses include environmental considerations and workforce diversity. The organization operates in an industry that makes it difficult to use intellectual property rights in prohibiting the replication of business models. As such, the collegiate business model is vulnerable to replication despite having several patents and copyrights. According to Carl Anderson and Francine Schlosser (2013), the efficiency of intellectual property rights only applies to companies at the same level of competition but not emerging firms at other levels. NCAA collegiate has initiated various projects to integrate technology into its operations as a way to improve efficiency in meeting the market demands. However, the level at which the company has adopted technology in its processes is inadequate to promote higher efficiency to remain a leader in the industry.
Another serious weakness of the organization is the low return on investment. Historically, the NCAA collegiate had developed from a struggling foundation to become stable with ownership of many assets and resources in the market. However, Carl Anderson and Francine Schlosser (2013) insist that the most reliable way for the company to operate and measure its profitability would be using Return on Investment Capital instead of relying on financial analysis of components like Return on Equity and Return on Assets. The organization has a weak Return on Investment capital that requires strategies to promote stability.
Lastly, the organization offers a less diversified product due to its strong focus on the domestic market. The NCAA case study indicates a limited product portfolio despite NCAA’s dramatic growth in the domestic market compared to its competitors. Anderson and Schlosser (2013) explain that the narrow focus can limit the success potential of the collegiate in the global market. Consistent with porter’s generic value chain, the focus strategy can compromise NCAA’s profitability and sales performance.
Opportunities
NCAA collegiate can evaluate the macro-environmental factors and developments and identify an opportunity that can help consolidate the current market base or position the aspects for wider growth. Opportunities can include economic growth, a rise in consumers’ spendable earnings, political transformations, technological innovations, policy alterations, and changes in consumer favorites. Despite having monopolistic power, more opportunities are available to help the company increase its market growth and earn high profits.
The first major opportunities for NCAA are the growing market size and changing consumer preferences. The previous decade has experienced a drastic growth of market size which gives an opportunity for the NCAA collegiate to increase its membership. New customers who have joined the collegiate have new demands and preferences, which necessitates the company to strategize on maintaining loyal customers while also satisfying the needs of the new clients (Anderson & Schlosser, 2013). These developments give the collegiate a chance to diversify using different brands and also modify the existing brands with features that meet the customers’ preferences.
Second, the NCAA collegiate can exploit the transforming Technological Innovations to become more competitive in their market. New innovative developments such as machine learning and artificial intelligence are changing the way the industry in which NCAA operates is working. Therefore, these technological developments, according to Carl Anderson and Francine Schlosser (2013), provide an opportunity for the institution to improve its efficiency while using low costs of operation along with using the changes to initiate the transformation of processes of the collegiate.
Third, the organization can take advantage of e-commerce and social media-based business models to reach more customers. This is significant in linking a company to local suppliers and logistics providers. Therefore, the NCAA collegiate can utilize the model to connect with the suppliers and international logistics providers, which in turn reduces the costs of entry to new markets. The company can also use a lower marketing budget to reach customers using the ever-growing social media platform in its operations.
Threats
The NCAA collegiate faces several macro-environmental factors that can derail its business plan. Similar to the adoption of the e-commerce model that the collegiate has adopted to reach its customers, the competitors can also use the methods like social media to advance competition both in the local and international markets. On the other hand, international geopolitical factors including Brexit, increasing protectionism, foreign exchange crisis and lower oil prices affect the business environment in which the collegiate also operates (Anderson & Schlosser, 2013). The growing culture of fixed prices in the industry could limit the organization’s intention to increase the cost that its premium services warrant. Despite working in markets that have a culture of stagnant prices, the company also faces a threat of levies on environmental regulations in developed countries. This risk could result in high logistical expenses and higher packaging costs for the organization.
Recommendations
NCAA needs to reorganize its structure, which would be significant in reforming issues concerning rules compliance, scholarships, and athletes’ academic progress. The organization needs to solve the revenue-sharing and regulations governing student-athlete existence along with evaluating the financial disbursement plan of an individual after the athletic process. These strategies would be important to better the relationship of the athletes with the institution after the program. There would also be enhanced competition involving smarter students who are also athletes. Geopolitical factors are also significant determinants of the success of business operations of the NCAA collegiate. The institution needs to closely monitor and examine the events of aspects such as Brexit, the Foreign exchange crisis, inflation, and sanctions after which they should form an integral part of their strategy.
Reference
Anderson, C., & Schlosser, F. The monopolistic power of the NCAA. In Academy of Management Proceedings (Vol. 2013, No. 1, p. 18027). Briarcliff Manor, NY 10510: Academy of Management.