WWF 1
Case 3: World Wrestling Federation Individual Case Study Submitted By: Erika Donaire University of Belize
Business Strategy 490 Submitted To: Mr. Leroy Almendarez October 12th, 2011
WWF 2
Table of Contents
Vision……………………………………………………………………………………………...3 Mission…………………………………………………………………………………………….3 Introduction……………………………………………………………………………………….3 Analysis SWOT Analysis………………………………………………………………………….…...4 Competitive Forces……………….……………………………………………………….….9 Recommendation………………………………………………………………………………...12 Conclusion……………………………………………………………………………………….13 References…………………………………………………………………………………….….14
WWF 3
Vision
The World Wrestling Federation’s vision is to be a successful empire that expands beyond the norm in the wrestling industry providing the public with more than just traditional wrestling but entertainment in the next five years. To have raised its production values drastically with improved technology as well as to have created a family friendly mainstream entertainment that everyone can enjoy together as well as enjoyed all around the world through its less adult content material and lighter moods in the scripts. Mission
The World Wrestling Federation’s mission is to continuously strive to provide to the fans’ satisfaction the best quality and entertaining of wrestling matches viewable live and at their own conveniences at home. Introduction
Wrestling World Federation (WWF) is currently known as the World Wrestling Entertainment (WWE) due to long time legal battle with the World Wildlife Fund (Liss, 2002). WWE has its roots all the way down to the 1950s. It was created by Mr. Vince McMahon Sr. under which at the time it was known as the Capitol Wrestling Federation. However, according to Dodd (2004), “in the late 1960’s, the name was changed to the World Wide Wrestling Federation” (p. 1). In addition to, another name change occurred in 1979 from the then known World Wide Wrestling Federation to World Wrestling Federation; later followed by the 2002 World Wrestling Entertainment name change (Dodd, 2004, p. 1). During this time, the wrestling industry was divided into territories run by regional promoters. Together they made up the National Wrestling Alliance. Mr. Vince McMahon Sr.’s territories included most of the major
WWF 4
cities on the eastern seaboard which included places such as Philadelphia, Washington, D.C., Boston and New York City. Unfortunately, after some time in the industry, Mr. Vince McMahon Sr.’s health started to fail him and he was forced to sell his precious company. His son, Mr. Vince McMahon Jr., after working for the WWE for approximately 11 years as an excellent ring announcer decided to take over the company which his father had built. However, his father refused to just hand over his life’s work, therefore, required his son to pay for the company which he did in several installments. As soon as Vince McMahon Jr. took over the company, many changes were implemented. These changes created an empire that many at that time would have ever thought possible. Although the WWE operated successfully under these new innovations and owner, Vince McMahon Jr. was not prepared what followed behind his empire’s success. Therefore, this case analysis will focus a SWOT analysis which will provide the gene ral position of the WWE as well as Porter’s Five Forces Analysis of the wrestling industry. At the end analysis will provide a conclusion base on the findings and offer relevant recommendations to the various issues found. Analysis SWOT Analysis of World Wrestling Federation Strengths
The wrestling industry has had its ups and downs from the time of its emergence back in the early 1900s. The WWE is one of this industry’s successors. It has come a long way from being part of the wrestling territories to an entire empire ruling the wrestling industry all over the world! It has survived it all. Therefore, WWE must possess strengths that make it the successful
WWF 5
domain it is today. The WWE gained one of the most important assets, or in other words, one of the most important strengths, the day that Vince McMahon Jr. attained ownership of the company then known as the World Wrestling Federation. Vince McMahon Jr. had ambition. He knew what he wanted to accomplish and went for it. He did not confine himself to the borders that were drawn time ago in that industry. Vince McMahon Jr. thought outside the lines and went beyond anyone else would dare to. He did not want to just continue the success of the WWF as it was known at that time but to create something bigger, to expand beyond traditional wrestling and make entertainment. WWE could not have achieved what it is today without Vince McMahon Jr. opening new doors and guiding it in the right path to an empire’s success. He had the skills to penetrate and create new markets. Consequently, there is also the fact that the WWE has been around for many decades. It has created a loyal fan base that makes it difficult for any competitor to just come in and take over their audience without major difficulty. Furthermore, another of WWE’s strengths lies in the better production values it offers from the new cameras and sets that that it was able to be purchase because of an increase in revenue. This included being able to take the action away from the ring into the lives of the wrestlers due to in the availability of inexpensive videotape. The new television exposure the WWE was getting at the time made it all possible. This further opened doors to even more television broadcasts and programming. This put the WWE at the top. No other competitor dared to go heads up with him. They would all fold their hands and get out of the game. Others would sell out to him. WWE ruled the wrestling industry. In addition to, one of the biggest contributors to the WWE’s long run success is the p ay per-view. People who were not able to attend the big matches that were taking place would pay a one time fee to watch them on television. Vince McMahon found a way to distribute his end
WWF 6
product both effectively and efficiently. This became an important source of revenue for the WWE. According to Dodd (2004), “today, the WWE presents nearly 20 pay per views featuring their two brands, RAW and Smackdown, in addition to monthly specials. The WWE is now offering an on demand channel called “WWE 24-7” which makes use of the extensive video library they possess” (p. 5). WWE’s also strengthens itself through licensing. It did not just bind the U.S.A to it but countries all over the world. It introduced to the market many items with the company’s logo, brand names, images of its wrestlers and their character’s logos as well. The items included shirts, action figures, ice cream bars, foam fingers etc. At this time WWE was a family mainstream entertainment business. Although, the WWE did undergo some changes from family friendly entertainment to strong adult content for a point in time, it later went back to being family friendly. According to the WWE website, sourcing a Nielsen Media Research from 3/28/11 - 6/26/11, it states that the “WWE programming reaches 14.5 million viewers in the U.S. each week”, of which 23 % of the audience is under 18 years old. Therefore, it has still been able to capitalize on wrestling’s popularity with children. Last but not least, as mentioned before, WWE has emerged to become more than just the traditional wrestling company, as Vince McMahon Jr. told Ted Turner in a conversation that occurred when Ted Turner was announcing his entrance to the wrestling business, Vince McMahon Jr. said “I’m in the entertainment business. Big difference.” H e was able to find the right combination of the two and formed what is today known as the World Wrestling Entertainment Inc. He was able to attract audiences from all age ranges from all over the world with its family friendly entertainment of predetermined wrestling matches.
WWF 7
Weaknesses
As powerful as the WWE is, all organizations have some weaknesses. The WWE did not do a good job monitoring trends in the industry, the marketplace and the society for potential threats. The World Championship Wrestling Company (WCW) owned by the billionaire, Ted Turner, sprung up on them as if from day to night. If they had been properly monitoring their environment they would have expected this move and had a contingency plan to offset it. Another weakness on the WWE’s part is the taping of their matches. The mere fact that they taped their matches and did not show them live to their audiences at that time gave the WCW the upper hand in the unethical move of announcing the WWE’s matches winner ahead of time. They needed to update their technology. Nevertheless, their main weakness is the cyclical nature of the wrestling industry with many ups and downs as mentioned in the case study. Opportunities
From the very start, Vince McMahon had seen the opportunity of expanding the company and creating market niches where people would have thought impossible, and although at the time it did not have the financial leverage it does today, he made it happen. Today, he has the finances to expand however and whenever he wants to. In addition to, cable also created an opportunity for the WWF now known as the WWE. Vince McMahon recognized cable’s potential as it came about for helping the WWF strengthen its hold on a national audience and therefore, he went for it. Today, however, the online markets provide endless opportunities to the WWE. Their merchandize such as DVDs, shirts etc. can reach the far ends of the earth. Last but not least, competition offered the biggest opportunity yet. It forced the WWE to improve several aspects that may have been overlooked at first. Without WCW’s competition,
WWF 8
there was little motivation or necessity to be more creative. For example, it took WCW’s unethical ways of announcing WWE’s winners of the predetermined matches for WWE to move on to Live Television. This competition caused them to push themselves even farther than before. Another opportunity is the buy out of their major competitor. They can closely evaluate their competitive options and predict what moves they are likely to make next in order stay ahead. The WWE would be attacking the weak leader's position and focusing all their efforts at that point, or making a surprise move into an uncontested area. This in the longer run may lead to their demise and the WWE taking over their league. Likewise, the WWE could have used their complementary strengths to establish a strategic alliance with the WCW. However, this was not the case. Threats
When the ownership change of the WWE in 1982 occurred by Vince McMahon Jr., a threat faced was from the “little Lords” from the several different territories which he was invading because of not following the gentleman’s agreement which had been intact and enforced from time ago in this wrestling industry. He was creating con flicts for himself all over the country invading their space/territories with WWE’s matches being shown to the audiences at home across the country. Nevertheless, this did no t stop Vince McMahon Jr. from moving forward with his big plans for the then known WWF. Equally important, one of the biggest threats to the WWE at the time was the WCW. At first it did not seem to pose much of a threat to the WWE. However, as the years passed incurring financial losses but still up and running, Ted turner decided to hire Eric Bischoff to run the WCW. This man gave the WWE a run for their money. He managed to completely turn
WWF 9
around the WCW. His strategy was to mimic and outspend the WWF as it was known then. It functioned. They were actually taking ratings and wrestlers away from the WWF. Along with this came another threat, the danger of WWF’s biggest star at the time, Bret “The Hitman” Hart, moving to the WCW. His contract was about to expire when WCW was at its peak and the WWF was suffering. Therefore, the WWF could have not afforded another loss and won Bret “The Hitman” Hart over. However, an investment that although at the time seemed as a good one, turned out to be a loss in the longer run for both Bret and the WWF. Competitive Forces in the Wrestling Industry
Substitutes: Medium to High Threat
Industry Rivalry : Buyers: HighThreat
High Threat.
New Entrants: High Threat
Industry Rivalry
Suppliers: Low Threat
WWF 10
At the time spoken of in the World Wrestling Federation Case Study, there was intense rivalry between WCW and the WWF as it was known at the time. There was little product differentiation between the two, especially because the WCW was mimicking WWF’s every move and stealing their very own wrestlers. This caused serious problems for the WWF. There was also the fact that consumer switching costs were low (Dodd, 2004, p. 5). The fans did not lose out on switching channels where one of the WWF’s matches was showing to one of the WCW’s. Therefore, both companies had to step up their game to grasp their audiences. They had to produce a competitive edge over each other and strengths its position to its fans. However, today the WCW does not exist anymore. Therefore, the industry rivalry is relativity low. The industry is dominated by the World Wrestling Entertainment. New Entrants
There is relatively a high threat of other companies entering into the wrestling industry. They can easily enter but the fact of the matter is that there is no guarantee that they will be successful. The WWF is after all dominant in this industry. Entering this industry does require an ex tensive amount of capital to attain the equipment and wrestlers. Its survival also depends on its publicity and ability to attract its “customers.” There is also the fact that switching c osts of consumers is low in this industry. Your fans can easily switch without the concern of losing out on costs making it relatively easily for new entrants to steal away your customers. Furthermore, product differentiation is not high also facilitating the entries. They can mimic the dominant company giving audiences the same end result. Substitutes
WWF 11
There are many different types of entertainment out there that people can alternatively choose to watch instead of wrestling. For example, there is kickboxing, boxing, baseball, basketball, football which is an all American favorite, soccer, etc providing its viewers with a level of satisfaction that the wrestling entertainment offered as well. Therefore, substitution can be said to be relatively a medium to high threat. The entertainment will not be the same; however, there are a lot of different types to choose from! Power of Buyers
Essentially buyer power tends to be low in the industries where by the cost to customers to switch to any other product is high. However, in this case customers did have the power to negotiate their very own favorable terms for the services o r products offered if they wanted because the wrestling industry at the time of the case study was only concentrated with only two different leagues, the WCW and the WWE. They had to fight with each other to attract and keep their customers. The customers could have easily decided their terms to stay with one or the other. Power of Suppliers
Supplier power tends to be low when the input market is not intense. The suppliers in this case would be the different wrestlers whom are available to become part of the wrestling industry and the companies within it. According to Dodd (2004), he said that “the concentration of suppliers to the wrestling industry is low” (p. 6). This means that are many wrestlers out there who are willing to come and work for the two leagues. Therefore, this signifies that the supplier power is low as well. The companies are the ones that decide the terms of their contracts with little power of input from the wrestlers.
WWF 12
Recommendations
There is always room for improvement in any company this includes the WWE. The first recommendation towards the WWE is to always make sure that management is on top of things! They need to place close attention to their external environment and make sure that they are not missing or staying behind in their industry. Being caught off gu ard causes complications that could have been avoided or offset if they would have being doing a proper job. This also includes placing close attention to their internal environment. They need to make sure that they are treating their employees they way should be. The employees should have a safe and comfortable working environment in order to avoid law suits and even losing important employees for the company. As a result, they ne ed to be aware of any conflicts that may be arising between each other and resolve the issue before it affects the company detrimentally. Sessions should be encouraged whereby the employees can speak out their concerns and give suggestions towards improving their performances. In addition to, they need to keep up to date with technology and never fall behind. For example, the WCW was able to broadcast live shows to its audience way before the WWE could have. Such situations can be avoided if they do the required research to never stay behind in up and coming technological advances. Furthermore, the WWE can make the barriers of entry into the wrestling industry much more difficult to avoid any competitor moving in and reducing the industry’s profits.
WWF 13
Conclusion
World Wrestling Federation is a privately family owned business that have been in existence for many years and shown great opportunities and success. It is a business same as the rest to have challenges and learn from mistakes. World Wrestling Federation has come a long way and will surely be there in the future capturing and implementing new strategic plans. Mr. Vince McMahon Jr. is an entrepreneur who will surely develop the skills and carry on the business to a successful future.
WWF 14
References
Company overview. (n.d.). Retrieved from http://corporate.wwe.com/company/overview.jsp Dodd, M. (2004, December 10). World Wrestling Entertainment Inc. Retrieved from courses.csusm.edu/bus444om/TiP.../Mike%20D%20-%20WWE.doc Liss, D. (2002, November 11). Wwe get the 'f' out . Retrieved from http://www.brandchannel.com/features_profile.asp?pr_id=98 Krajewski, L. J., Ritzman, L. P., & Malhotra, M. K. Operations management contemporary processes & supply chains. (9 ed.). New Jersey: Prentice Hall. Thompson, A. A., & Stridand III, A. J. Strategic management concepts and cases. (13 ed.). University of Alabama: McGraw-Hill Irwin. WWF changes name to world wrestling entertainment after court case. (2006, May 06). Retrieved from http://slam.canoe.ca/SlamWrestlingArchive2001/may6_name-ap.html
