Nascar Case Study Solution
Threats
Threats in SWOT analysis are defined as external factors that can threat to company’s success. Economic down turn was experienced in late 2000 which can be threat for NASCAR because if there is economic down turn then people would be having less return on investment. Earning of people would be effected and they would be more conscious in spending their money. Economic down turn also results in increase fuel prices which also affected NASCAR. Because fans of NASCAR used to attend its event from long distances. NESCAR had a rule of 65/25/10 for revenue distribution. 65 percent revenues from media rights would be distributed to race tracks, 25 percent revenue would be distributed to competing team and remaining 10 percent would be retained by NESCAR which is sanctioning body. Competing team wanted to increase their portion of revenue from 25 percent because of increase in operating cost of a race team and also there is decline in the number of full-season sponsorship. NESCAR also faces threats from other sponsors because they are making massive investments to improve experience of fans. For example which includes upgrading existing avenues, building new avenues, providing Wi-Fi facility and also providing other interactive mediums to interact sports on smartphones. Fan base of NASCAR comprised of married males with an average age of 47, which passes their fandom to their youngsters and create generational loyalty. So the challenge is that the family system in America was changing resulting in reduction of influence of married male fan base over their youngsters. Along with it perceptions about car was also changing with perceiving car a vehicle to reach at point B from point A, rather than as a fun project. Now if NASCAR make substantial investments in new segments which are based on new customers then it might face negative comments from its core fan base.
Porter’s Five Forces Analysis
Porter’s 5 forces is a model that is used to analyse industry in which company is working. It helps in determining what are strengths and weakness of any particular industry. It suggest that every industry is different from one another. It is important to understand industry in which company is working because NASCAR’s bottom line i.e. net profit is heavily depends on this. There are 5 forces that are used to identify profitability, intensity and attractiveness of NASCAR business.
Competitive Rivalry
This force indicates capability of competitors. Teams usually represents sponsors in NASCAR and the medium of advertising is drivers. Therefore it can be said that drivers and race cars are competitors. These drivers can go against NASCAR if they got better opportunity in terms of prizes and television exposure. If viewers enjoy other race cars and drivers more than NASCAR then viewers can shift to those other interesting cars and drivers. NASCAR could be having threat from its two direct competitors that is Formula 1 and Moto GP. They need to create competitive benefits for drivers so they don’t shift to other competitors.
Supplier Power
The supplier power indicates the number of suppliers are available in industry and what is the cost associated with supplier if company shifts from one supplier to another. In this industry there is supply monopoly because drivers with required skills and resources are limited.
Buyer Power
This force is regarding to customers that is it easy for customers to shift to other products. If there is more switching cost is associated then customers are less likely to switch. In the case of NASCAR customers are its viewers. Viewers can switch to other competitors easily because viewers will having low switching cost.
Threat of Substitution
Substitutes are referred as alternatives. The substitutes in this case can be other entertainment means like viewers can shift to other sports. So there are wide range of substitutes are available in this scenario which suggests that threat of substitute is high.
Threat of New Entry
It is defined as how it is easy for any company to enter in that particular industry. In the case of NASCAR threat of new entry is low. Because if any company needs to enter in this business than they have to make heavy investments. They need to build cars and racing tracks and also needs to pay hefty amount to drivers for switching.
PESTEL Analysis
Political
It cannot be concluded from case study that there would be change in resource allocations. NASCAR had got benefit from lower taxation policies which results in increasing in profits. So they made heavy investments in the research and development. As NASCAR is working in various markets so it needs to face different regulations. It is also noted that NASCAR has faced increased scrutiny regarding regulatory. Every government has different priority so NASCAR has to be prepared for it as priority can be shifted to other sector.
Economical
Economic factors includes taxation rate, exchange rate, economic performance of that particular company, conditions of labour market, inflation rate etc. Fortunes of the NASCAR and its competitors can be impacted if there is government intervention in the marketing and sales sector. NASCAR can leverage capabilities of employees to create new opportunities and improve existing opportunities.
Social
Every society is different from each other. Each has different social values and norms. It helps in understanding regarding society and preference of customers. Social factors includes traditions, culture, attitudes towards specific services and products, demographics, norms, interests etc. It can be concluded that advertising through other means rather than traditional (i.e. newspaper) can be preferred in this society.
Technical
Technology has impact on almost every business. It includes innovation in business strategy. In this case of NASCAR it can be noted that companies are heavily spending for research and development. NASCAR should also work on its media rights policy with Turner Broadcasting System.
Legal
Legal plays an important role in every country because every country has different legal terms and conditions. NASCAR needs to be make sure that they protect their legal rights in every county so any company does not harm to its legal rights.
Environmental
Environmental factors are also important for every business. Because usually governments don’t allow those business which can harm to environment. These environmental factors includes laws regarding pollution, climate change, safe waste disposal, policies regarding insurance etc. NASCAR needs to make sure that its cars are not generating pollution more than acceptable level..........
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