An Environmental Analysis of Cycling South Africa (2010)
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AN ENVIRONMENTAL ANALYSIS OF CYCLING SOUTH AFRICA (2010) by PETRI BESTER submitted in accordance with the requirements for the degree of MASTERS IN COMMERCE in the subject BUSINESS MANAGEMENT at the UNIVERSITY OF SOUTH AFRICA SUPERVISOR: PROF JW STRYDOM NOVEMBER 2011 DECLARATION I declare that An environmental analysis of Cycling South Africa (2010) is my own work and that all the sources that I have used or quoted have been indicated and acknowledged by means of complete references. ___________________ _____________ Mrs P Bester Date ACKNOWLEDGMENTS It is with sincere and immense gratitude that I would like to thank the following people and institutions for their contributions, time and advice which enabled me to complete this dissertation. All the honour and glory to God for without Him none of this would have been possible. My supervisor, Prof Strydom, for his shared commitment to and vision for my research. Without his enthusiasm, knowledge, guidance and encouragement I would not have been able to complete this dissertation. No one could ask for a better mentor. Mr Barry Mocke, former CEO of CyclingSA, for his instrumental assistance in the research and Mr Zoon Cronje for the web administration of the questionnaire. The Bureau of Market Research at Unisa for the electronic design of the questionnaire. Dr Marhi Pohl who spent many hours with me and my statistics, always patiently explaining the finer details of inferential statistics. Moya Joubert for editing my dissertation. All my colleagues, Nadine, Tracey, Irezé, Letitia and Jessica, for their sympathetic ears and shoulders. I would like to honour my parents for believing in me and my abilities. Thank you for always reminding me that if I did my best, it would always be enough. To the love of my life, Etienne, for his encouragement during the tough times. ABSTRACT During the past few decades, the sport industry has experienced immense pressure to commercialise its operations and conform to traditional business practices (Chadwick 2009:191). With this evolution from a pure leisure activity to a multimillion dollar industry, it has become evident that the unique characteristics and deeply rooted historical culture of sport pose significant challenges for the sport manager during the process of commercialisation and the application of strategic management. The aim of this study was to analyse the current business environment of Cycling South Africa (CyclingSA) in such a way that the factors in the micro-environment, market environment and macro-environment that impact on the organisation‟s strategic decisions could be identified. The results should allow sport organisations to engage more effectively in strategic management by focusing on factors that influence the sport organisation‟s business environment in particular. A survey of CyclingSA members‟ perceptions of the organisation‟s current effectiveness in the business environment revealed a strong focus on financial and marketing elements. The study also found that factors such as loyalty programmes, talent identification and sport science support, safety in the physical environment, antidoping regulations, transformation and black economic empowerment and environmental friendly practices play a key role in CyclingSA‟s business environment. It is evident from the study that sport organisations, with specific reference to CyclingSA, should engage in strategic management by adapting traditional business principles to suit each organisation‟s unique needs. Keywords: Strategic management, business environment, macro-environment, microenvironment, market environment, sport organisations, sport marketing, Cycling South Africa LIST OF ABBREVIATIONS ASO Amuary Sport Organisation ASOIF Association of Summer Olympics International Federation BEE Black Economic Empowerment BMR Burea of Marketing Research BMX Bicycle Motorcross CyclingSA Cycling South Africa FIFA International Federation of Association Football IAAF International Association of Athletics Federations MTB Mountain biking UCI International Cycling Union TABLE OF CONTENTS CHAPTER 1 BACKGROUND TO THE STUDY .......................................................1 1.1 INTRODUCTION ............................................................................................1 1.2 BACKGROUND INFORMATION ON THE RESEARCH PROBLEM ..............3 1.3 PROBLEM STATEMENT ...............................................................................8 1.4 BACKGROUND INFORMATION ON THE RESEARCH SUBJECT ...............9 1.4.1 History of and background on cycling .................................................... 9 1.4.2 Establishing CyclingSA ........................................................................ 10 1.5 RESEARCH METHODOLOGY ....................................................................11 1.6 RESEARCH OBJECTIVES ..........................................................................13 1.7 CHAPTER LAYOUT .....................................................................................14 1.8 CONCLUSION .............................................................................................14 CHAPTER 2 THE BUSINESS ENVIRONMENT OF THE SPORT ORGANISATION 16 2.1 INTRODUCTION ..........................................................................................16 2.2 SPORT MANAGEMENT DEFINED .............................................................17 2.3 THE FUSION OF LOYALTY, IDENTIFICATION AND IRRATIONAL OPTIMISM ...................................................................................................18 2.4 THE TENSION BETWEEN WINNING AND PROFIT-MAKING....................19 2.5 TRANSFORMATION OF SPORT INTO A BUSINESS ................................19 2.6 THE NEED TO BALANCE VARIABLE QUALITY AGAINST COMPETITIVE BALANCE IN SPORT .........................................................20 2.7 STRATEGIC MANAGEMENT AND THE ENVIRONMENTAL ANALYSIS OF THE SPORT ORGANISATION ............................................21 2.8 THE MICROENVIRONMENT.......................................................................23 2.8.1 The management function of sport ...................................................... 24 2.8.2 The marketing function of sport organisations ..................................... 28 2.8.2.1 Word-of-mouth marketing .................................................................... 30 2.8.2.2 Branding............................................................................................... 32 2.8.2.3 Sport franchises marketing .................................................................. 34 2.8.2.4 Public relationships in sport ................................................................. 35 2.8.2.5 Mass media and their application in sport ............................................ 38 2.8.3 The human resource function .............................................................. 40 2.8.3.1 The board-executive relationship in a sport organisation ..................... 40 2.8.3.2 Human resource management (HRM) of the sport organisation .......... 42 2.9 THE MARKET ENVIRONMENT .................................................................. 45 2.9.1 Industry competition and potential entrants.......................................... 46 2.9.2 Suppliers and intermediaries................................................................ 46 2.9.2.1 Sponsors and sponsorships ................................................................. 47 - i - 2.9.2.2 Sporting goods suppliers...................................................................... 51 2.9.2.3 The media as intermediary................................................................... 51 2.9.3 Consumers........................................................................................... 52 2.10 THE MACROENVIRONMENT .................................................................... 53 2.10.1 The international environment .............................................................. 54 2.10.2 The technological environment ............................................................ 56 2.10.2.1 The sport media and technology .......................................................... 57 2.10.2.2 Social networking and message boards .............................................. 57 2.10.2.3 Management programmes and software.............................................. 58 2.10.3 The social environment ........................................................................ 59 2.10.3.1 The shift to healthier lifestyles .............................................................. 60 2.10.3.2 Social reform ........................................................................................ 60 2.10.3.3 Gender equality .................................................................................... 61 2.10.3.4 The effect of crime on sport ................................................................. 62 2.10.4 The physical environment .................................................................... 62 2.10.4.1 Environmental practices ....................................................................... 63 2.10.4.2 Physical sporting facilities .................................................................... 63 2.10.5 The economic environment .................................................................. 65 2.10.5.1 The current economic environment ...................................................... 65 2.10.5.2 The demand for sport products ............................................................ 67 2.11