Notes for class on case # 3 2004
[1982 – lucrative, no-growth business
The younger McMahon takes over WWF.
-- in what business is WWF at beginning of the younger McMahon’s regime?
Who are the customers?
What kind of business is this anyway? Are any of you fans? Why should people want to watch fake sport?
Indicate the industry characteristics of this business in 1982 – market size, scope of rivalry, industry life-cycle, other. [wants to go from regional to global; in the business of fake sport; lose conglomeration of local organizations, no large competitors]
Note from mission to vision for McMahon and WWF -- WHAT ARE THESE?!@
. By 2000 WWF is the only professional wrestling organization broadcasting syndicated events on all seven continents. Ironically, the history is as follows: by seeking to totally transform WWF, McMahon invites the attention of Turner with his conglomerate’s vast resources. WCW is born in 1988. By 1993 WCW is dominating WWF in terms of revenues and profit. McMahon built his empire on the theme that wrestling entertainment is a family show. To come back and defeat Turner he does a 180, focusing on race, sexuality, and mayhem. In one way, WCW gave McMahon an opportunity. It accelerated the popularity of the fake sport, increasing revenues for both corporations. McMahon turned the opportunity into a strategy.
2. You know from the text that the professional wrestling business became focused, through the strategies of McMahon and Turner and their lieutenants, on stereotyped character types – Hulk Hogan may be the most famous, and is typical. The last big strategic struggle for McMahon centered around his superstar, Hitman Hart. The text does not go into detail as to the last interaction between McMahon and Hart – some of you may know it. McMahon sabotaged Hart’s last staged bout, causing his opponent to win. McMahon now turned his growing reputation of someone his stars could not trust into his own public persona, “Mr. McMahon,” even sometimes entering the ring to wrestle (remember his history at military school).
3. Market size and profitability – text tells you that in 2000 the industry produced revenues of over one billion with 35 million viewers every week. That is all you get. Supplementary info that is helpful is that Pay-Per-View purchases (several ‘viewers’ can watch one purchase) went, for WWF alone, from 2.3 million in 1997 to 6.8 million in 2000. WWF net revenues in 1995 were $87,000,000 compared with $379,000,000 in 2000. Net income was net loss of $4,400,000 compared with positive result of $58,900,000.
4. March 23, 2001, Turner sold WCW to WWF. One wonders, what had McMahon done as a CEO to ultimately win.
5. Five forces of competition in 1982 AND in 1988 when WCW enters, BECAUSE a central strategic question is, does the nature of the industry and the nature of the forces of competition within it justify the investment and risk of new entry. WOULD IT CONCEIVABLY BE WORTH IT FOR ANOTHER GROUP OF INVESTORS TO TRY TO ENTER THE INDUSTRY IN 2004?
6. KSFs –WHAT?
4.