Business 401: Case Assignment

John Doe
Trident University
Business 401: International Business
Summer 2013
Module 1: Case Assignment

Dr. Abou-Robieh, Moutaz

Every four years there is an Olympics event held in a different city from around the world to bring together superior athletes that represent their respective countries to participate in a friendly competition. The Olympics is broken into two events summer and winter games. The Olympics represents three themes coming together: excellence, friendship and respect. The modern Olympics have been around since 1896 and although when you think of the Olympics you rarely think of it as a business but it is much like any other franchise out there. The Olympics is a brand unto itself; which is globally marketed around the world. The 2006 Winter Olympics was the first Olympic event held under the new IOC Television & Marketing Services SA, which was formed to assist with marketing the Olympics. IOC Television & Marketing Services SA hired Geoffrey Stone to examine branding, funding, and promotions results under the new marketing structure to find out how successful if at all they had been during the 2006 Winter Games.
All of this needed to be completed and assessed in time to prepare for the upcoming 2008 games in Beijing, China. The OIC wanted to assess what went well and what needed to be improved upon for the next games. Stone had three questions he wanted to answer, had the 2006 Winter Games been a success? What worked well, and what did not? What changes, if any, should he recommend to the IOC as the organization moved forward? To do so Stone had to look closely look at three areas: funding, branding and marketing. The Olympics is operated by many different organizations, therefore, making it difficult to make decisions or changes regarding the hosting, funding and broadcasting of the Olympic games. The Olympics are hosted by a non-profit organizing committee from the city where the games will be held that year called the Organizing Committees for the Olympic Games (OCOGs). Then each country that participates in the Olympics has their own National Olympic Committee (NOC). Lastly, there is the International Federations (IFs) for sports on the Olympic program. All of these committees must work together to successfully host, fund and broadcast an Olympic event. Most of the resources to host the games are traditionally allocated to the IFs with no controls in place to deter or prevent any of these local governments from using the Olympics for their own political and/or financial agendas. Then there are the Corporate sponsors who were maximizing their profits by exploiting the Olympic Games to meet their needs with no control or limitations on the commercialization of the Olympics. Therefore, the IOC was put in place to control and limit commercialization of the Games. In 1980 while Juan Antonio Samaranch was president of the IOC his goal was to create a financial independence for the Olympics knowing that the Olympics brand itself could be marketed to fund and support future games.
However, this was a huge undertaking because you had to track and control all of the agreements separately for each sponsor to ensure they were providing the agreed upon funds as contracted. Soon after the IOC developed a 4 year marketing program to help simplify the process called the “The Olympic Partner” (TOP) program which would put in place the sponsors for the next four years until the following games were held. This was an exclusive world wide right to a specific product or service for one company for a four year period until the following
games. Funding for the Olympics is therefore provided by the TOP program that is responsible for providing substantial year-round contributions of products, services, technology, expertise and financial resources upwards of $80 million. This is the agreement made in order to be selected as a TOP program sponsor. About 40% of the profits made by TOP are provided to support the development and training of Olympic athletes from around the world. As the TOP sponsors realize investing in and ensuring the success of the athletes and the programs to develop them ensures profits for the TOP sponsors as well. Early on in the history of the Olympics there was no specific brand symbol that represented the games. First in the 19th century Baron Pierre de Coubertin founded the IOC and then in the 20th century the interlocking rings that we know today was introduced as the brand symbol for the Olympics. Since every four years the Olympics is held in different cities from around the world unique in landscape, culture, religion and traditions the Olympic committees have had some free reign to mold the Olympics to represent the local country and populace hosting that years games as long as it was in line with the overall theme of the Olympics. This makes each year unique yet familiar to the fans, which only enhances the brand and makes it more marketable with each games. The IOC exclusively owns the broadcasting rights to the Olympic games as well, which include television, Internet, mobile and radio broadcasting. This is a very profitable marketing area for the Olympics. Hours of coverage and areas or countries of coverage, each with an associated cost, break down the broadcasting of the Olympics. In the past the Olympics has signed deals exclusively as with the TOP program for the broadcasting rights for an entire games or two in a row.
With all this in mind Stone began to assess the 2006 games. Knowing he now had to provide insight and recommendations to the IOC. He based his analysis by comparing the 2006 games to prior games. He was able to compare the revenues to the IFs, which showed an increase from $92 million in 2002 to $126 million in 2006 winter games. Although less of a profit than the summer games it was still a substantial increase.
Stone realized it was very difficult to compare this year’s games with previous games because of many factors. For one summer games were always more profitable overall then winter games. Overall viewer ratings declined in Canada and the U.S. but it was unclear exactly why. In Canada the hockey team did awful early on so maybe that was the reason for less viewers there. But why in other locations when with newer technology like the ability to stream live video feeds which allowed for more broadcasting hours overall viewer hours dropped by 66% in the U.S. So it was not a clear-cut determination of whether or not broadcasting had improved based on his findings.
There was one area that Stone could measure true success, which was Olympic awareness, which is one of the IOC’s main objectives. The 2006 Torino games increased Olympic awareness from 87% in 2004 to 94% in 2006. This clearly was a success, which would surely increase profits in the future.
In the end I am not sure that Stone could say that overall the games were a success proven by the increase in revenues to the IFs. He could say that increasing Olympics awareness by 5% contributed to the success as well. He further could say that the next Olympics can improve in broadcasting with more awareness and increased broadcasting opportunities such as stream live events and the Internet if marketed properly there was plenty of room for improvement. Lastly, Stone could inform the IOC that the funding being provided by the TOP program was also a success providing year round contributions to fund the upcoming Olympics and the future Olympians through athlete support and athletic development programs. Overall, from all the data collected it seems that the Olympics is a profitable and successful business with a well known brand symbol with a potential to expand with each games. Through market research and assessment by the IOC the Olympics is sure to be successful for many years to come.

References:

Elam, Elizabeth L. R. and Hamakawa, Curt L., (2008), The Journal of Business Cases and Application: International Sport Marketing: Branding and Promoting the 2006 Olympic Winter Games, www.jbcaonline.org