Manchester United: Not a team, but a business

Sports play a role in many different people’s lives. Soccer or Football depending on where you live, takes the cake as far as being the most popular sport in the world. Manchester United happen to be the world’s richest and most popular soccer team. Often criticized for their large amount of spending in order to acquire the world’s greatest talents in the sport, Manchester United has managed to win the most Premier League titles and 3 UEFA Champion’s League titles. Although, Manchester United has had a lot of success on the field, they have had even more when it comes to the business aspect.

Wall Street Valuation
From a financial standpoint, Wall Street has valued Manchester United as being the richest soccer club in the world. Mike Ozanian from Forbes states, “Wall Street now affords United an enterprise value of $3.6 billion. Math: market value ($3.05 billion) + long term debt ($613 million) – cash ($57 million).” This valuation is very impressive due to Manchester United having a poor season due to their shift in management after Sir Alex Ferguson retired last season. 

Manchester United and Adidas:
Recently, Manchester United ended their partnership with Nike and moved on to Adidas. Mike Ozanian from Forbes tells us, “English soccer team Manchester United and German sportswear maker Adidas have agreed to the richest uniform deal in the history of sports. Adidas will pay $1.3 billion over 10 years to United, or $130 million a year, beginning with the 2015-16 season.” You would think that 1.3 billion is enough, right? Not for Manchester United. Mike Ozanian also states, “But the Adidas kit deal, coming comes along with the team’s $559 million, seven-year shirt deal with Chevrolet (also the richest in sports) means it will continue to have the cash flow to turn an operating profit and sign elite players.”


Capacity and Inventory:
Since Manchester United are very popular, there will be a huge demand as soon as the new Adidas uniforms roll out. However, until then Manchester United will still have a lot of the Nike uniforms available. Manchester United will have to decrease their capacity slowly and lower the price of the Nike uniforms as the end of the season approaches. This will result in a decrease of the Nike inventory due to more sales, which is what they want as soon as they can start selling the new and highly anticipated Adidas uniforms.


The Competition:
Manchester United may have the lead but other teams are getting closer. The two most popular teams in Spain would be Real Madrid and FC Barcelona. Forbes put a value of 3.44 billion for Real Madrid and a 3.22 billion valuation for FC Barcelona. Another advantage for these clubs is that they have the two best players in the world, Cristiano Ronaldo (Real Madrid) and Lionel Messi (FC Barcelona).


  • Do you think that sports teams are nothing more than a business?
  • What are some good ways to sell inventory that consists of jerseys with decreasing demand?
  • Do you agree with Manchester United’s valuation?
  • Do you think it is fair to fans to constantly release new jerseys, which causes them to keep repurchasing?




A tale of two companies


When people think about the biggest discount retail stores, they think about Wal-Mart or Target. For a while now those two stores have dominated the discount retail market. Yet, that was not always the case. From the 1960s to the 1990s the two stores that had the majority of the market share were Wal-Mart and Kmart. Both Wal-Mart and Kmart were founded in 1962 and focused on minimizing cost as their business strategy. From the 1960s to the early 1990s they both experienced a lot of growth and Wal-Mart and Kmart generated revenues of 15.96 billion and 25.63 billion respectively. As the 1990s continued the two companies headed into different directions. Wal-Mart became the behemoth that it is today while Kmart began to dwindle. One of the reasons that happened was because of how they developed or in Kmart’s case ignored supply chain management.

Kmart        walmart    Supply chain management is the integration ofactivities that procure materials and services, transform them into intermediate goods and the final product, and deliver them to customers. Competition is no longer between companies; It is between supply chains.

Wal-Mart was a leading pioneer in supply chain management in the discount retail store industry. Most of the concepts they introduced in the 1990s are still in use today by many discount retail stores. Some of the concepts that Wal-Mart introduced were bypassing the whole-sellers to replenish their stores, developing a network of regional and local distribution centers, cross-docking at the warehouses, owning a captive fleet for store delivery, investing in the data-link connecting stores to the headquarters so that demand can be communicated effectively and without delay, and actively collaboration with suppliers like P&G to share demand data. Wal-Mart saw their revenues soar because of the implementation of these concepts and broke away from the rest of the pack.

Instead of trying to develop their supply chain management and focusing on minimizing cost Kmart bought high end items to stock their shelves, going away from the strategy that made them successful in the first place. In the early 2000s they tried to revert back to their previous strategies but were too late and were heading towards bankruptcy. They merged with Sears and even with the help of Sears, Kmart stores have not been ale to regain their market share. Today very few Kmart’s exist and every week more and more Kmart’s close. The future of Kmart is cloudy. Supply chain management is an integral part of how businesses are ran and has the capability to determine whether businesses are successful.


Do you think Kmart can make a comeback and regain their market share? Or are they too far behind too catch up?

Do you know of any other instances where supply chain management had such a large impact in two or more competing companies? What were the results?

Inventory too hot to hold

For companies inventory management is essential as their exists economic downturns and upturns. These trends in the economy can drastically effect company cost as holding onto inventory can become expensive. Demand is often a difficult thing to get correct. We see many companies looking to sell and reduce inventory as soon as predicted demand for goods do not pan out the way they suspected. Often times the ridding of inventory is a difficult task as the liquidity to react quickly historically is not there. Inventory can be stolen, it can become obsolete and it could be sold but many companies are now starting to believe dedicating money to inventory is a high risk with a high cost. What are the alternatives as the companies need to keep up with the demand by their clients as the cost of a shortage is even greater? Through problem solving initiatives like Six Sigma companies are more fit to react to customer demands. Theses investments in a higher level of inventory management rather than in inventory can be more competitive and eventually get more bang for the buck.  Companies, in order to remain competitive, have to reevaluate where their resources are being focused and the use of technology is a resource that would be very beneficial in their future. The Ford Motor Company reportedly saved $600 million by the implementation of a Six Sigma management system. In 1999 Ford started to train their top level management then the officer group, and then the leadership group. After a year and half Ford has reportedly spent $6 million in training their several levels of management in Six Sigma. Ford rates the level of training by way of colored belts like that of a karate dojo:

Green Belt: “They receive one week of training that includes a basic understanding of how Six Sigma works and an overview of the Black Belt tools. Green Belts learn to help Black Belts do projects faster. Green Belt training allows the people who are affected by the Six Sigma projects to be able to continue to monitor and control the improvement and to do their jobs better”

Black Belt: Process full time for two year. The training includes, “define-measure-analyze-improve-control cycle” , “mapping, cause-and-effect diagrams, failure mode and effects analysis, design of experiments, and mistake proofing”

Master Black Belts- Handpicked by upper management; describes duties are.. “My core job responsibility is to help Black Belts with the tools, eliminate road blocks and support them during the various phases of their projects”

Project Champion- Work alongside master black belts and provides them with necessary resources to complete tasks.

This sort of implementation depends on the companies dedication to customer service and by senior leadership. With such a large company as Ford Motor Company making a commitment to new, nimble approaches to inventory management there can be an example for companies of all sizes that there are very good alternatives to the negatives that come with projecting demand the traditional way.

How often do you believe companies tend to under estimate the demand in the market?

Do you feel that smaller companies have the chance to save proportionally the same level of capital a company like Ford did using something like Six Sigma?

Porshe, the new image of hybrid?

In the news, I saw that Porsche announced that they were planning on selling out of their most expensive model by December of this year. They made 918 of the 918 Spyder Hybrid model to create an exclusive and desirable sports car. Being priced at $845,000 makes this car the most expensive car that Porsche has ever made. Also, with the battery that it has, buyers could be elligable for a federal tax credit in the United States of about $3,666.

Porsche had actually planned on using the sales revenue from this model to help recover from recent expansions and new buildings. They also used this car to raise their sports car or sedan percentage, specifically in the United States. With the new Macan model and the multiple models, including a hybrid model, of the Cayenne, Porsche was selling mostly SUVs. They wanted to take their brand image back to the sports and speed aspect in which they were originally developed on.

However, when people think of Porsche, they do not think of hybrid. While it is a trend in the car industry to have at least one hybrid model, a car with the reputation that the 918 Spyder has is not one that should be made into a hybrid. Consumers think of speed and power, along with the aesthetic appeal that most Porsche cars have to offer.

Even while I believe that the 918 Spyder was not the correct model to make as their second hybrid car, the exclusivity that they added on to the idea of this car was a smart move. With the Cayennes and Macans hitting the market in America, Porsche was losing their prestige image to the brand. Pricing this new car where it is helped set the tone of how prestige and exclusive they want the brand to be.

Do you think exclusivity is a good enough way to set a prestige image to their brand?–finance.html

Dunkin’ into Success



I’m not an frequent coffee drinker, but I do find myself going to Dunkin’ Donuts for the occasional hot drink. What I do find particularly interesting about the franchise, is that almost every time I go, there seems to be little to no line. So what is it that keep’s its operations running smoothly and efficiently? Dunkin’ Donuts takes a disciplined approach that is able to balance consumer demand with operational execution. Its strategy of offering limited time offer deals has been among the best to work in the restaurant industry. Their strategy allows them to offer a differentiated menu to its wide array of customers. Through this method, Dunkin’ Donuts is able to introduce new products bringing in new customers. Setting themselves apart from its competitors is a key factor that has helped keep Dunkin’ Donuts a thriving business. Limited time offers allows Dunkin’ Donuts to explore new options, to get a feel for what customers want. Many times they find that customers really like a particular item, and they end up integrating it into their core menu.

Dunkin’ Donuts’ success comes from a vast and diverse pipeline that allows them to offer similar but different products engaging its customers to try new things, leading to increased sales. Customization is Dunkin’ Donuts’ core competency, not only does product quality matter, but its service as well.

Dunkin’ Donuts has a very low capital requirement relative to the rest of the coffee retail industry. This is due in part to its business model, centered around establishing franchises across the world. So what are some ways in which it keeps driving profits? One factor to consider is the flow of customers, something very important to managers at Dunkin’ Donuts. Being able to stay on top of demand, especially during peak hours, is an essential factor for their success. Dunkin’ Donuts usually offers little to no in-house dining space. Allowing them to reduce expense and continue to increase their contribution. They focus on giving the customer the convenience of getting an on the run breakfast and or coffee.

What is your opinion about Dunkin’ Donuts?

Do you believe their success is due to their diverse menu or more closely related to coffee demand?

Do you think that by offering quick service, Dunkin’ Donuts is neglecting product value?

Any good or bad experiences?

Played on Paper: Operations Management is Key to Sporting Success

Brian Rea For ESPN
Brian Rea For ESPN


The world of sport changes every day, and so does the way we develop champions. Although fans may not realize it, operations management has as much on-field significance to their favorite sports teams as it does to their day-to-day jobs and businesses. On-field success in the modern sporting industry is far too valuable to rely on the subjective whims of coaches and scouts to find talent of a high enough caliber and develop it. According to Hamford Professor Jim Bamford, who has done extensive research for the World Academy of Sport and has partners in numerous different sports’ teams, it is important for owners not to neglect this by focusing on their bottom line only:  “There is a direct correlation between what happens on the pitch and the users’ experience. So the next stage is to see how we can use numbers, metrics and business analysis to improve the on-field performance. This should create a virtuous circle of improvement.” That is why the top organizations in the field of sports analyze performance metrics, stadium management, and organizational structures and practices to improve their return on investment and ultimately augment the profitability of the business. Although it is impossible to utilize theory to predict the actual demands in traditional business or like here in the spontaneity of sports, Professor Bamford states: “Operations management can aid the athlete and players by ensuring they are at the right place, with the right kit at the right time to turn in a winning performance,” and “….Operations management has the potential to increase the satisfaction of the spectators even further.”

Performance metrics coupled with the rise in technology are reshaping the role of the scout and the formula for success for coaches and players. Teams are tracking everything with their players down to the finest of details. The movie Money Ball is a great example how the Oakland A’s, a professional Major League Baseball team, used saber metrics and mathematical modeling to form a highly successful baseball team even with their low levels of revenue. The San Antonio Spurs, according to an ESPN article, utilize “Stats’ SportVU’s high-speed photography, using real-time acceleration stats” which can”more tangibly measure game-play execution.” Advanced stats such as “Who isn’t getting back on defense” and “Who can shoot a jump shot with defense in their face” are replacing the eye and ear tests. Today, hard numbers are preferred. For top professional athletes, performance off the court is also analyzed just as much. With team psychologists and frequent physiological tests measuring all aspects of athletes’ bodies, the analysis never ends.

Organizations can profit from efficient configuration and planning of their stadiums to improve fan experience and their return on investment. Jumbotrons and Wi-Fi at some stadiums are calculated efforts at this. Also the physical layout and organized personnel within the stadium is crucial for experience and fan safety as tragic events can be avoided such as the Hillsborough disaster, where 96 people died due to poor stadium design and training of staff.

Effective integration of operations management into the often un-orchestrated world or sports is a tough formula to devise. However, those organizations that achieve this balance and invest their resources correctly into technology aimed at analyzing and improving all aspects of their operations on the field as much as they do off the field are positioned to succeed more than their foes. Well, on paper at least.


Google and It’s Robotic Operations


The Google Company signed a 60 year, 1.16 billion dollar lease to renovate three large hangars at a NASA airfield outside of San Francisco, to create a facility for research and development of robotics, aviation and space exploration. In a press release, NASA announced that “Planetary Ventures LLC, a shell organization operated by Google for real estate deals, will contribute $1.16 billion over the course of the lease, while reducing the government agency’s maintenance and operation costs by $6.3 million annually” (Lawler, 2014). Since 2013 Google acquired many companies that specialize in the production of robot, robotic technologies and other parts.  Some of these companies include Japan-based, Schaft Inc. which makes humanoid robots; US-based, Industrial Perception makes robot arms and robot vision or the Titan Aerospace in the US produces solar-powered drones. The reason why Google decided to make this investment in these facilities is due to the increased demand for industrial robots. This is a new market that is rising. Google took advantage of this, and decided to lease this site that provide Google an ability of greater production of industrial robots. The use of industrial robots that are connected to a control system enables companies to use apps to personalize the robots to perform specific tasks. In 2013 about 179,000 industrial robots were sold. Out of those 100,000 alone went to the Asian market. The largest current market for these robots is China.

The reason that there is a higher demand has to do with capacity. We talked specifically in class about capacity and determining capacity requirements. In this scenario, “a combination of rising wages and the need for new production capacity that can manufacture products to global standards is driving this demand” ( Banker, 2014). Google is an example of engaging in strategic capacity planning. They are matching capacity with the anticipated demand requirements which is the increasing demand of industrial robots in the global market. They probably asked themselves what kind of capacity they need and how much they need, which led them to decide to expand their headquarters. Google understands the technology and capacity increments. They understand the opportunity they have for change to dominate this new developing market. Therefore Google is targeting the Chinese market for industrial robots since they see the highest opportunities there. Google has already made plans to cooperate with Chinese contract electronics manufacturer Foxconn, who want to purchase 10,000 robots. Google is taking the right steps and engaging in long range planning, by addressing the needs of a new production capacity.

Do you think Google is doing a good job matching capacity with demand requirements? Do you agree with Google’s decisions to take over the operations at these facilities? Do you think robotics is in our near future?


Banker, Steve. “Google’s Robot Strategy.” Logistics Viewpoints Logistics Supply Chain and 3PL Executives RSS. N.p., 11 Nov. 2014. Web. 11 Nov. 2014. <>

Gibbs, Samuel. “Google Leases Nasa Airbase for Robots, Planes and Space Exploration.” The Guardian. Guardian, 11 Nov. 2014. Web. 11 Nov. 2014. <>.

Lawler, Ryan. “Google Takes Over Operations Of Moffett Airfield From NASA, Will Invest $200M Into The Site.” TechCrunch. N.p., 10 Nov. 2014. Web. 11 Nov. 2014.<>

Is Apple Heading the Right Direction?

A recent report from Kantar WorldPanel ComTech shows that the market share of iPhone has dropped in the U.S. while it has increased in almost every other countries in the world. According to the report, the market share of the iPhone has dropped 3.3% in September compared to last year in the U.S. An article from BGR which quoted the data from ComTech’s report says that Apple isn’t really concern about the market share in the U.S, or even the market share in the world. It is now focusing on providing the better product and experience to consumers.

Being the most valuable public company in the world, it is shocking for me to know that if Apple is actually not concerning its market share in the cell phone market. As a public company (or even a private company), act in share holders’ interests is arguably the priority task. It seems to me that Apple is now a little off balance in term of serving the interest of the share holders and its general customers. A article from Nikkei says that Apple is now considering to let Pegatron to join the production of iPhone 6/6Plus along with Foxconn to meet the demand around the globe.

Is Apple actually should not be concerned about the market share in the U.S. as long as the numbers in other countries look good? Should they set up another assembling line to meet the demand in other countries and provide the best product and experience to its users or should they be focusing on the U.S. more?


Nikkei – Pegatron Beefs Up For Robust iPhone 6 Demand

BGR – Apple Actually Lost Market Share in Q3 Despite iPhone 6 Launch

EBay Makes a Comeback


Today’s world is primarily driven by the internet, including e-commerce. This does not come to the surprise of EBay CEO, John Donahoe. Technology has driven scale and automation and our shopping experiences have become less dependent on human interaction and more dependent on a steady WiFi connection. Donahoe says, “these changes in the commercial landscape tend to be ‘phrased in zero-sum terms: big retailers versus the little guy. Local versus global. ‘”

While EBay is a major contributor in this landscape, its biggest competition is Amazon. Amazon is known for driving retailers out of business, especially with its most recent proposition to deliver packages with drones. One thing that stands out about Amazon is the idea of “showrooming.” Amazon’s mobile application will allow you to scan a barcode of any item in a store and it will show comparable items with competitive pricing. You can essentially buy the item in a few clicks while still in the store.

EBay is initially thought of as an auction website. However, “since Donahoe took over in 2008, he has slowly moved the company beyond auctions, developing technology partnerships with big retailers like Home Depot, Macy’s, Toys ‘‘R’’ Us and Target and expanding eBay’s online marketplace to include reliable, returnable goods at fixed prices.” This is EBay’s process strategy that will revolutionize the e-commerce world, and to Donahoe’s hope, take on Amazon.

In our Management of Operations course, we have talked about the idea of a “process strategy.” The objective is to create a process to produce products that meets customer requirements within cost and other managerial constraints. EBay is taking on a “mass customization” approach to its process strategy. It is the rapid, low-cost production of goods and service to satisfy increasingly unique customer desires. EBay is creating a “process redesign.” It is the fundamental thinking of business processes to bring about dramatic improvements in performance. We learned that changing processes like this can be difficult and expensive. EBay did not acquire all of its retailers for cheap, they had to put in an investment in order to create profitability which is what is needed in a process redesign.

EBay wants to push the concept of a “digital wallet.” While other digital payment options exist, like Google Wallet and Apple Pay, EBay wants to expand it. In 2002, EBay bought PayPal as a way to safely transfer money between people who don’t know each other. EBay has also been experimenting with a concept it calls Connected Glass, an interactive glass that may one day create a “smart” mirror in a store that can take measurements and allow you to try on outfits virtually.

While Donahoe doesn’t know exactly where all of his technological efforts will lead him and EBay, he says, ‘‘I would say everything we’re doing is just enabling the future.’’

Do you think the PayPal Digital Wallet is going to take off? Or will it be forced to the side by Apple Pay and other digital wallets?

Read the article here

Pasting the Middleman Back In

Many people want to be entrepreneurs, but many of those don’t really know what kind of business they would start. It’s likely the biggest obstacle in the way of becoming an entrepreneur. Since the dot com boom, and Amazon, companies have made small (or large) fortunes serving just as the middleman. It’s not just for e-commerce anymore either. Basically, any process that can be simplified by a third party can be made into a company in some way.

Take the case of Brian Chesky and Joe Gebbia for example. These two had just moved to San Francisco in 2007 with an idea for a company called Airbed & Breakfast. Soon after, there was a big conference that was booked in town, and all of the local hotels were booked solid. With bank accounts that didn’t match their entrepreneurial ambition, Brian and Joe decided it was the right time to get started and offered up the living room area to their apartment, that they couldn’t even afford, for rent during the conference. The guests slept on airbeds and were served homemade breakfast in the morning. They banked some $800 by renting out their place. Not two years later, that same apartment was now the home base for Airbnb.



Airbnb is a website that serves as the bridge connecting travelers to lodging. What was once a single room operation to rent their apartment to conference-goers, Airbnb can now put you, the traveler, in a place to stay all around the world. This idea for Brian and Joe could not have come at a better time either, as 2007 was just before the economy went into a recession. Being in San Francisco didn’t hurt either, being that it is basically the technological hub of the country (possibly the world), so a startup like this is well-suited for Silicon Valley. Also, being an internet startup provided immediate benefits as well. Being that this was taking off during the biggest economic downturn of our time, the low overhead of an internet company was certainly helpful in getting Airbnb to progress, and being online, instant access to customers and their feedback was available. Advertising was also available at the click of a mouse.

Just six years after being founded in 2008, Airbnb has over 800,000 listings across 192 countries, and as of April of 2014, Airbnb is valued at $10 billion.

This service, and services like Uber and Lyft, just prove that with technology the way it is going today, if you can find a way to simplify a task for someone, or just make things more convenient, you could start one of these so-called “middleman companies”  and find yourself one day a partner in a multi-billion dollar company.

Do you utilize the services of these middleman companies? What attracts or detracts you from doing so?