A SWOT analysis for the Indian Premier League

The Indian Premier League has evolved into one of the most exciting sports franchisee in the world. Thanks to Board of Control for Cricket in India (BCCI) for initiating this professional league for Twenty20 cricket. More than a sporting franchisee, this has evolved into a business entity with its headquarters in Mumbai, India. It runs under the supervision of BCCI Vice President Chirayu Amin, current Chairman & Commissioner of IPL, and CEO, Sundar Raman. This concept was initially started after the controversy between BCCI and Indian Cricket League (ICL). Currently, the competition is contested by 10 teams each managed by its owners.

1.2 Business Model and Growth

This entity came into existence in the year 2008 and soon flourished into a big money making business. Though the IPL had a strong marketing campaign which came up with different ideas to promote their business, the major breakthrough was when they telecasted the IPL matches live on YouTube. This not only drew the attention of the existing fans but also drew the attention of millions of YouTube users. This had a major impact on its brand value which was estimated to be around $ 4.13 billion the same year. Another amazing statistics of this business entity is that, it is the second highest paid league next to NBA, based on first team salaries on a pro rata basis. The average salary of an IPL player is estimated to be $ 3.84 million per year. The franchisees which have been associated with the IPL have also managed to increase their brand value, for example, Chennai Super Kings (one of the franchisee) has their brand value estimated at $ 48.4 million. The IPL has successfully entered its fourth season after a lot of controversies and other legal issues. This entity is surely turning out to be one of the biggest business entity in the sporting world. This has drawn the attention of many other countries who are coming up with similar concepts. But the IPL stands ahead of them with their unique marketing strategies and concepts. This is one company who had got their vision, mission, goals and objectives defined properly with a strong strategic planning. These are being implemented at the proper time with no major deviations to them.

Franchisees and Investment

Franchise

Owners

Price

Brand Value

Pune Warriors

Sahara

US $ 369.33 million

Latest Addition

Kochi

Kochi Cricket Private Limited

US $ 341.12 million

Latest Addition

Mumbai Indians

Mukesh Ambani (Reliance Industries)

US $ 96.57 million

US $ 40.8 million

Royal Challengers Bangalore

Vijay Mallya (UB Group)

US $ 95.48 million

US $ 41.9 million

Deccan Chargers

Deccan Chronicle Group

US $ 91.57 million

US $ 34.4 million

Chennai Super Kings

India Cements (N. Srinivasan)

US $ 77.9 million

US $ 48.4 million

Delhi Daredevils

GMR Group

US $ 71.83 million

US $ 40.5 million

King XI Punjab

Ness Wadia, Pretty Zinta, Mohit Burman, Dabu, Apeejay Surendera Group

US $ 65.1 million

US $ 36.1 million

Kolkata Knight Riders

Red Chillies Entertainment

US $ 64.23 million

US $ 46 million

Rajasthan Royals

Emerging Media, Shipa Shetty, Raj Kundra

US $ 57.29 million

US $ 45.2 million

Source : http://en.wikipedia.org/wiki/Indian_Premier_League

IPL Mission and Vision

Vision : Nothing less than the transformation of cricket into a genuinely global sport

Mission : To make cricket enticing and accessible – and hence more lucrative

2. SWOT Analysis of the Indian Premier League

IPL is now been considered as one of the biggest entertainer in terms of cricketing action. This is infact turning out to be a big business entity and as other business entities do, it has its own competitors. It had surely left some competitors way behind but still it has to remain focused on its goals.

Swot is an acronym for the internal strength and weakness of a firm and the environment opportunities and threats facing that firm. Swot analysis is a traditionally popular technique through which managers create a quick overview of a company’s strategic situation. Each and every organization has its strength, weakness, opportunity and threats. So the SWOT analysis for IPL is as under

2.1 Strengths

The strength of an organisation may be defined as something it can do well, excel in doing it better than their competitors can do or doing. It can also be a key factor that differentiates you from you competitors and also a crucial factor that helps your growth. There are companies who fail or judge what they are good at. Strength can be something which is solid like a large, growing customer base or less measurable. Your strength can also become your greatest weakness, for example, you might be a pioneer in the business but if it is taken for granted, it can become your greatest weakness.

The foundation of the Indian Premier League (IPL) is the Twenty20 cricket format which is played between 2 teams in two hours and thirty minute. You can imagine how fast and exciting it would be considering the amount of time involved. This is a shorter version of the original game which makes it more interesting. The is of an appealing nature not only to the spectators but also to the TV audiences worldwide.

The IPL has gone one step further than the other sports entities by employing economists who are structuring its lead which maximises the revenue. The entity becomes successful when the sport is unified.

Icons of the sport from different countries play together, this makes it interesting and also has helped increase the overall audience base.

The money not only comes from the title sponsor of the tournament but also from the franchisees inside the league, so it generates huge income.

The franchisees follow their own marketing strategies to promote their team which indirectly promotes the entity as a whole.

2.2 Weaknesses

A weakness is a deficiency, a gap or a problem that may stop your business from developing or reaching its peak. It means that the business is not doing something right as it should be done. It can be a outdated thing that can be applied no longer even though it was used before. It maybe an important factor that you are supposed to do or implement but the business has its own doubt on the system. The SWOT analysis gives a clear picture of what you are good and doing; whatever is opposite to that can be marked as your weakness. Weakness is said to be very tangible.

The shorter version of the game played has become very popular which could replace the original version of the game.

The target audience come from different geographical areas and will have to invest a lot of money on travel and accommodation. They might also end up standing in long queues when the game is played between popular teams.

The amount of money invested by the franchisees are huge and some franchisees will not be able to stand short-term failures. They might end up by taking some quick decisions like terminating managers or team players. This does not look good in the long run as the confidence is broken.

To gain some quick returns some franchisees have hiked their advertising/sponsorship fees. The sponsors keep a close eye on all the franchisees and move their investment to a reasonably priced team which has been consistent with their performance.

2.3 Opportunities

Every business would have their own opportunities that can help them grow. The SWOT analysis looks at the external opportunities available for a business to flourish. An opportunity can also be used to find out and analyse what your competitors are not doing right, in other words, your competitors weakness can be an opportunity for you. Tapping the opportunity at the right time can help you develop your business and complete your goals. Opportunities provide a base line for a business entity to carry out its strategic planning keeping in mind their future requirements or long term goals. The faster these opportunities are tapped and utillised the more aggressive would be the growth. Opportunities can be based upon observations, market surveys, business techniques implemented by rivals etc.

The strength of IPL is its large potential mass audience. The marketing strategies are attractive and implemented in a planned manner. This offers the advertisers and sponsors better marketing opportunities.

The concept of having a number of franchisees as competitors helps create a huge fan base for the entity. Franchisees always find new ways and techniques to market their particular team to gain attractive sponsors and fan followers. If the franchisee is able to make some reputation in the long run, it would have a solid fan base which inturn would increase the amount of income from TV revenues not only for the franchisee but also for the entity.

The fan base is spread across different geographical area and the sport is also played at different locations. It means that fans pay varying amounts to watch the sport. This would ensure a proper approach in marketing the products as well as the brand via different mediums.

The generation of revenue can come from more than one way. Since the franchisee system is employed the fans have a wide range to select with respect to merchandises like shirts, caps etc. These would help generate a huge amount of income through sales.

It also provides an excellent opportunity for the grounds to generate huge revenue during the tournament. They make huge money by selling refreshments and other services during the games. Each franchisee can choose a particular ground as their home ground, which inturn helps the ground to sell merchandises of the home team which also generates huge money.

The opportunity to tap youngsters as long term followers are also part of the marketing tactics. The sale of merchandise and tickets would increase at at a rapid pace. Each support their preferable team, they compete and compare their teams with that of their colleagues. This helps increase the youngsters fan base which would help boost up revenue.

Another important aspect of the IPL has been that the franchisee fees would be at a fixed rate until 2017-18. This would help the investors investment safe from inflation which is a common factor in India as far as investing is considered.

2.4 Threats

All business entities are prone to some kind of threat. It could be an unstable market condition or can also be a disturbance inside the company that can decrease productivity. A weakness of your company identified by a competitor can also pose a serious threat to your company. It is important that an organisaton at every stage identify their threats at each stage of development and try to eradicate them as quickly as possible.

The IPL has reached a level that that needs to be maintained. It also requires constant improvement and changes so that more and more people are attracted towards it. A slightest of deviation on the improvement and change can also mean the end of an entertainment sports, this would also result in fans loosing interest in the league.

The viability of the league must also be a great threat. The revenue can fall if the competition drops off its level. The main attraction of the league is its ability to make top ranked players to play for different franchisees. If they are not able to attract best players to play for the league it would start loosing its attraction.

The franchisees income is largely based on the fan-base they have, if this comes down they would be earning income to pay their players salary. The franchisees also buy the best players for a lot of money, if the players do not perform and win competitions for them, it takes a long time for the franchisees to get their return on investment. Hence, they are forced to stay there for a longer period.

The franchisee fees are very high and they keep increasing. For example, the most expensive sale in the first edition of IPL was Mumbai Indians which was bought by Mukesh Ambani for $111.9 million but the franchisee for the newly added team Pune Warriors had to pay a fees of $369.33 million which is more than 3 times than the initial edition.

The highly supported franchisees earn a larger chunk of the revenue than the highly priced team. This is because of the concept itself, which ensures fans are thoroughly entertained to the best. The more support a team receives from the audience the more revenue they generate.

3. PEST ANALYSIS OF ODEL

A PEST analysis is a framework that helps identify the environmental influences that may have a huge impact on a business depending upon the political economic, social and technological forces which may also include optional factors like environmental and legal. The factors mentioned above with external micro-environmental factors and internal sources, can be used to formulate the opportunities and threats in a SWOT analysis.

The SWOT analysis shows us the different factors that may affect or help the business with its growth plan. The PEST analysis provides us an insight of the macro environmental activities which can drive the business in achieving its goals. The analysis is included in a strategic analysis, which mainly focuses on the external analysis carried out. It provides a projection of various macro environmental factors which can be taken into consideration by the company for its strategic planning. This can be considered as an useful tool to determine the market growth or decline, the position of the business, the present/future potentials, directions for operation etc.

4.1 Political issues:

Political issues may be defined as the amount of intervention by the government in the economy. Some areas affected by political interventions are tax policies, labour laws, restrictions on trade etc. Constant changes in government and government policies can affect the smooth running of the business as the planning needs to be changed in accordance with the new policies.

The major political challenge faced by the IPL is that more politicians are involved in the game. As mentioned earlier, the IPL was initiated by the BCCI and it may be termed as a sister concern of BCCI. The problem is that the governing council consists of some senior politicians who keep changing as and when the government changes. Which means there is a instability at the management, which can have an adverse effect on the entity.

3.2 Economic factors

The country’s inflation rate purely depends on the financial system followed by the country. If strong financial systems are implemented the country’s inflation rate would be at a controlled and satisfying level. This is a very good sign for any company operating in and outside the country. This will provide an opportunity for companies and other investors who operate outside the country to invest money. This can be a even bigger opportunity for IPL, as this would mean more and more investors would opt to fund different franchisors or the entity as a whole. This would mean the revenue of the IPL would increase at a rapid and steady pace which can lead to more expansion plans outside the country.

3.3 Social factors

The strength of IPL has been its capability to attract best players from the international level, who play for their home country. These players are the most wanted players both in their country as well as in the IPL. Since they play all round the year they are prone to injuries which makes them to opt out of competitions at times. It turns out to be a major concern for the franchisees as they invest a lot of money on these players and yet they receive no services from them, when they are injury prone. Since various players from different countries work for their franchisees, it also worthy to note that any cultural differences back home can mean a player not playing for the franchisee.

3.4 Technological Factors

The world of technology keeps changing and improving day by day. It becomes mandatory that the company keeps a tract of all new improvements and implement technologies which could be useful to them. It becomes imperative that to keep up with the competitors business and technology go hand in hand. Since IPL is completely an entertainment business, it becomes more important the latest technologies are use to keep it more interesting. It should with the help of technology deliver its good all around the globe rather than on concentrating traditional ways to deliver it.

5. FOUR ‘P’S MARKETING

5.1 Product

The product offered by a company can be tangible or intangible. In the case of IPL, the product is intangible. IPL provides sporting entertainment to its customers. The company has made all its efforts to deliver its products to a wide range of people irrespective of age, sex, religion or status. It has ensured that the product is delivered to them is worth their investment. The product is not only enjoyed by the investors or the franchisees but also by the audiences which makes this a unique entertainment product.

5.2 Price

There are a very few competitors for IPL which makes it the most preferred one in its kind. Hence the price fixed for the franchisees, sponsors and players are done by the IPL management. The IPL follows some strict policies which makes the pricing more competitive and fair. Through its unique marketing strategy it ensures that the franchisees and investors are made aware that their investment is worth every penny. One more consideration has been the popularity of the game and its ability to reach people. The ways carried or implemented to reach deliver the product to billions of people does justice to the price. Since the sport is popular the franchisees are sure of their return on investment though they had invested huge amounts set as price.

5.3 Place

The place refers to a place where the product of a company can be purchased or available. In the case of IPL, the product is delivered everywhere. The matches are played at a particular venue and the audiences are allowed to purchase tickets to watch the match in a stadium. It also caters to the home audience but delivering the product right at their door step. It has tied up with sponsors who have agreed to telecast the matches live on the television. The IPL has gone one step further by entering into a agreement with google to telecast the match live on youtube. The customers have nothing to pay to watch the match live on youtube. This has been a major breakthrough which had attracted more audience, as they get the product right at their door step with no extra cost.

5.4 Promotions