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Case 3.6 – NBA 1. Using Porter’s competitive forces model, analyze the NBA’s market situation. How does the use of Akamai help the NBA compete in this market?
2. Using Porter’s generic strategies model, what do you think is the NBA’s overall strategy or strategies?
3. Why is it important that all fans in the world have the same experience?
4. Why is it important that individual franchise owners can build, manage, and distribute on the NBA platform of their own content?
5. The word “partnership” appears several times in the video. Who are the NBA’s partners? How does the concept of a strategic ecosystem apply to the NBA’s partnership strategies? 1. Using Porter’s competitive forces model, analyze the NBA’s market situation. How does the use of Akamai help the NBA compete in this market?
Reminder of Porter’s 5 forces :
- Industry rivalry
- Buyer power
- Suppliers power
- Threat of substitutes
- Threat of mobility Potential entrants
-Less prestigious basketball leagues
-National leagues (powerful feeling of belonging)
-Other professional sports leagues like the MLB, the NLF or the NHL. 2 mains threats of substitutes (reasons that would drain traffic from NBA.com to other websites):
- Other major American professional sports leagues (better online content, more easily available…)
-Amateur content uploaded on streaming websites or peer-to-peer platforms (faster download, no forced ads). The bargaining power of “buyers”:
-A very high bargaining power of basketball fans due to the alternatives they have: television, live… the only advantage of NBA.com is primarily is the additional content and providing valuable insights and commentaries on matches.
-A very low bargaining power of the media and the other corporations because of the monopoly that allows the NBA to demand huge fees for agreeing with a TV channel to broadcast a NBA game. Low bargaining power of suppliers as they are numerous with similar CDN. The use of Akamai allows basketball fans throughout the world to access as fast as possible NBA’s virtual assets. It allows the NBA to focus on a specialized niche. The entry barriers are secured because of :
-the NBA’s copyrights
-the high speed loadings
-a limited phenomena of piracy when a content is available for free 2. Using Porter’s generic strategies model, what do you think is the NBA’s overall strategy or strategies? Reminder of Porter's generic strategies model First two strategies:
- Cost leadership
- Focus Irrelevant for the NBA Based on :
- Improvement of performance
- Creation of unique products
- Advanced technological support Third strategy : Differentiation Evolution of the Basket Association of America, created in 1946, to become the first professional basketball league in the world:
the NBA. The NBA has been shaped to conquer a broad market (difference with MLB or NFL). Notoriety of the NBA based on the famous rivalries and legends (Larry Bird VS Magic Johnson, Micheal Jordan feats). Important work made by David Stern to improve the NBA's image. Growth of the NBA on the international level, permitted by a wide product range. This growth leads to new sponsorships outlets. Opportunities of local advertising thanks to the strong national support to players in certain country. Ex: Yao Ming in China. Akamai -with its 25 000 servers placed all around the world- enables the NBA to fully follow its differentiation strategy : the quality of the NBA content, improved over the years, is made completely available in almost every country thanks to Akamai’s servers In order to follow this differentiation strategy effectively, the NBA also develops specific strategies in parallel :
- Celebrity strategy
- Global strategy
- Product extension strategy
- Partnership strategy
- Localization strategy In conclusion, the overall strategy of the NBA is a differentiation, based on the technological advance gave by Akamai’s support. This differentiation is completed by more specific strategies, such as Global strategy, Celebrity strategy or Partnership strategy, enhancing the spreading of the NBA. 3. Why is it important that all fans in the world have the same experience? As the most interesting basketball championship in the world, moreover including numerous foreign players (currently 84), the NBA has real assets to expend itself around the world. The key-point is to avoid a feeling of exclusion from the non-American fans By providing all fans in the world the same experience of the competition, the NBA enforces its business model everywhere around the world. The closest competitor, the Euroleague, is still separated from the NBA by a big gap. With its 35 000 servers located in more than 200 countries, Akamai's services bring along a real added value to the NBA.com website. “Think global, act local” Patrick Geddes
It seems quite impossible for another competition to take the spotlight away from the NBA, that is why it is important that all fans in the world have the same experience. Conclusion : 5. The word “partnership” appears several times in the video. Who are the NBA’s partners? How does the concept of a strategic ecosystem apply to the NBA’s partnership strategies? The NBA has many partners, from TV broadcasters to the biggest fast food chain (Sprite, Coca, ABS, IBM, Lenovo…) The uncontested leader Partnership permits... - food companies: An enormous market regarding the world renowned of the NBA and a very good image
-The TV broadcasters: give the access to the Basketball’s matches / interlink all partners Recruitment of international players -> Sense of belonging The NBA's goal: to implicate each and every basketball fan, regardless of their physical location.
The NBA's ecosystem:
- Numerous companies
- Enhanced platform thanks to Akamai services
- Continuous growth "Think global, act local." The NBA Tony Parker Advantages Take advantage of the great visibility of each other
-> The importance of the notion of interdependence in an ecosystem -The companies from the digital world: advantage of the fame by helping the NBA technically The role of Akamai in the NBA ecosystem - provides to all the other partners the possibility to watch in real time the NBA's matches
- possibility of having their ads seen by potential customers from all over the world
- one of the major partners of the Association, as it offers a key-service that benefits a whole eco-system 4. Why is it important that individual franchise owners can build, manage, and distribute on the NBA platform of their own content? Each team has its own franchise
1 Canada Strong rivalry between the teams
The court, and the franchise market In order to be powerful on the Franchise Market, each team has to build its own image Akmai brings to NBA teams the perfect tool to achieve these objectives
Allows the franchise owner to aim precisely diversified public classes The local community of a team is very important
The franchise owner is able to have access to a segment of the population that the NBA can't reach
The NBA and the franchise owner have complementary strength
The power of a franchise also depends on the media market
NBA's website represents a main issue
Akmai plays a major role in allowing the franchise owner to build, manage, and distribute their own content on the NBA platform