Executive Summary for the Golden State Warriors

Transcription

1 Executive Summary for the Golden State Warriors Based on the comprehensive strategic analysis conducted for the Golden State Warriors, which utilized multiple analyses and frameworks, the most viable strategy for this franchise to pursue would be to continue working towards winning a championship. Winning a championship is a strategy that is dependent on the combing of multiple aspects of different strategies in order for it to be accomplished and while few teams are able to make it happen in the short term, the Golden State Warriors managed to do it in just five years. Teams can alternatively pursue individual strategies in hopes that if they become great at a single aspect, so that they may be able to bring themselves closer to achieving what all 30 teams within the National Basketball Association have their sights set on. In reality however it is the combination of various strategies that make winning a championship a possibility. The other strategies identified included the developing of players, maintaining or pursuing a winning culture, and creating roster cohesiveness and although each of these strategies possesses it s own strengths, it is the utilization of them as a whole that provides the most benefits. The altered version of the VRIOS Analysis that was utilized proved to be the most useful analysis in determining the best strategy to pursue. Specifically it was the Resource Based View portion of this analysis where, in describing how a team would make winning a championship, it was realized that it is the combination of strategies that makes it a possibility. In describing the Golden State Warriors organization through the Valuable, Rare, Inimitable, Organization, and Sustainable analysis it was determined that no single strategy was strong enough to bring the benefits that winning a championship provides to an organization. A team s cohesion, experience, attractiveness, and development means very little if those factors do not amount to a championship. The one thing that every single team in the association pursues in the long and short term is a ring but combining the right strategies to do so is a difficult challenge as only one team every year reaches the mountaintop. The Golden State Warrior s five-year plan was fulfilled as they brought home a championship at the conclusion of it and while the other teams may be trying to reach that same peak, the Warriors just seem to be one step ahead of everyone else. 1

2 Industry Analysis: The National Basketball Association is an industry in which all thirty franchises compete towards the same goal, winning a championship. A team can pursue any number of strategies in order for them to reach this pinnacle, but at the end of a season, only one team will be named champion. While there are many factors that contribute towards a team s ability to win a championship, there are four that are downright necessary for a team to pursue. These four critical success factors consist of the strength of a team s roster, the cohesiveness of the players within that roster, the coaching staff, and the overall management of the organization. These four factors have been organized by weight in the Competitive Factors Framework below showcasing how the top five teams in the league stack up against one another. This Competitive Factors Framework serves as a tool for teams to identify how they compare to their closest rivals in terms of the factors they deem most important towards achieve their goal. i Competitive Factors Framework Weight External CSFs Firm Ratings Key Trends - Opportunities Warriors Cavaliers Thunder Raptors Spurs Ave 25% Strength of Roster % Cohesiveness of Roster % Coaching % Management The Strength of a Team s Roster is the most important, and thus the most heavily weighted factor at 25%. Without a well-balanced roster a team s ability to succeed in the post season, let alone make the playoffs, dwindles. The Golden State Warriors and San Antonio Spurs scored a 5 and a 4.5 respectively due to their win percentages and the overall talent on their roster. Each of these teams finished the season as either the one, two, or three seed in their respective divisions and was projected to make a deep run into the playoffs. The Warriors not only finished as the number one seed in the Western Conference, but they also amassed the best regular season record in league history by winning 73 games and losing only 9. Finishing the regular as the number one seed is pivotal towards the winning of a championship because it ensures the facing of a less competitive first round playoff opponent. It is also worth noting that their best player, Stephen Curry was unanimously named Most Valuable Player in the league this year marking his winning of the award for the second consecutive season. ii The next highest factor is the Cohesiveness of Roster weighted at 20%. Team chemistry is incredibly important and the number of assists each team averages per game factored into the scoring of this metric. The warriors again scored a 5, as they are the team with the highest number of assists per game in the league at 30. The Spurs again come in second at 4.5 due to the longevity of their roster as they have experienced success with the same three core players for almost a decade in Tim Duncan, Tony Parker, & Manu Ginobli. The Warriors Score higher than the Spurs because of their ability to maintain roster 1 An Internal Factors Framework was not utilized due to the similarity of information 2

3 cohesiveness and level of play no matter which five players are out on the floor. When Stephen Curry was injured in game four of their first round playoff series against the Houston Rockets this season his team was still able to win their next four out five playoff games without their best player not being in the lineup. iii The next factor, Coaching, is weighted at 15% and is a strong determinant of how successful a team will be. The Spurs came in first in terms of this metric at 4.5 followed by the Warriors and Raptors both tied at 4. The coach s overall win percentage as well as his teams current record was factored into deciding a team s score. Greg Popovic of the Spurs has the second all time win percentage of coaches who have coached over 1500 games played. His team however finished as the second seed in the Western Conference, which contributed to him not receiving a perfect score of 5. Steve Kerr of the Warriors and Dwane Casey of the Raptors both scored 4s, Kerr because of the relatively few number of games coached and Casey because of his lack of success in the playoffs and the Raptors currently being in second place in the Eastern Conference. Steve Kerr now has two years worth of coaching experience under his belt and his team has finished as the number one seed in both seasons, winning a championship at the culmination of the first. At the end of this season his team finished with the best win to loss record in league history and this feat is a testament to his ability to coach and manage his players. iv Management was the least weighted factor at just10% and is measured by how well a team drafts, facilitates trades, and manages its players. The Spurs narrowly edge out the Warriors at 4.7 and 4.5 respectively in this category. The Warriors drafting of Klay Thompson, Stephen Curry, and Draymond Green, all of whom developed into All-Stars, occurred within a 5-year period and contributed to their high score. The Spurs on the other hand secured Lamarcus Aldridge, David West during their free agencies and signed Kawhi Leonard as well as the aforementioned players to contracts that were all considered below market value. The Warrior s current management acquired the team in 2010 and implemented a 5-year plan with the end goal of winning a championship. They drafted the right players, made all of the necessary roster changes, and at the culmination of the season they won a championship, right on schedule with their initial plan. v While all of these factors may be weighted differently, a team must perform exceptionally well in regards to each of them in order to win a championship. The weights assigned to them purely indicate how necessary they are towards achieving this goal. A roster s cohesiveness will suffer if the players aren t well rounded and highly skilled, a coach cannot implement his strategies without a capable and cohesive roster, and if the team does not perform well it reflects poorly on the organization s management. It s a domino effect that each team must navigate in order to reach the playoffs and ultimately the finals for a chance to bring home a championship. 3

4 Internal Analysis: Typically to conduct an Internal Analysis both a VRIOS Analysis and an Internal Factors Framework would be done to analyze an organization s most important resources and capabilities. The Internal Factors Framework would conclude the VRIOS Analysis and lay out the most important Resources & Capabilities with weights attached to each of them. A slightly different direction was taken for the completion of this Internal Analysis in order to make it more applicable to the values and goals of a franchise within National Basketball Association. Rather than replicate the Competitive Factors Framework from above with an IFF, a single detailed VRIOS Analysis was conducted for the Golden State Warriors. This analysis addresses the single most important Resource & Capability, Winning a Championship, and how it encompasses every other R&C. The VRIOS Analysis is a multi-step analysis of the key Resources & Capabilities of a firm or franchise. These R&Cs are measured by assessing how Valuable, Rare, Inimitable, Organizational, and Sustainable they are. Those R&Cs that perform well in regards to these categories translate to a higher VRIOS score and thus a greater impact on the competitive advantage that they address. Each Resource & Capability that a firm possesses is evaluated based on each of these characteristics to determine its usefulness, value, and impact on specific and defined competitive advantages. If an R&C has a high VRIOS it translates to the overall performance of a firm in regards to the competitive advantage that the R&C addresses. vi The first step of the VRIOS Analysis was to create a list of Resources & Capabilities that are applicable to what the Golden State Warriors organization hopes to accomplish. Winning a championship is an all-encompassing capability and is the focal point of the analysis below because it addresses multiple competitive advantages such as innovation, differentiation, and diversification. The Value derived from becoming champion of the league comes in the form of consumer notoriety as well as a cash bonus that is awarded in increments to each playoff team where the champion of the finals receives the most. The Rarity of this capability is centered on the uniqueness of this Warriors roster and is exemplified by their record setting 73 win season, something that has never been done before, symbolizing their differentiation. This team s Inimitability focuses on the how the Warrior s management diversified their spending among players and navigated the league-mandated cap-restriction that allows each team only a limited amount of money to spend on their roster. This facet also showcases the organization s cost leadership advantage as championship team whose attractiveness to cheap free agents is highest. This team s innovative style of play and structure will be difficult to replicate, as teams will have to navigate new cap restrictions that will come into effect in the coming years. The Organizational aspect applies to the Golden State Warriors franchise as a whole and how their drafting and acquisition of the right players afforded them the opportunity to assemble a roster capable of not only developing a winning culture, but also bringing a championship to the San Francisco Bay area. Finally the Sustainability factor deals with the maintaining of this level of play and this organization s plans for the immediate and long-term future. Each of these factors is summarized and further expanded upon in the second step of the VRIOS Analysis below. 2 2 Termed Resource-Based View 4

5 Description: Winning a championship is the long or short term pinnacle for every team dependent upon their strategy How Valuable is this R&C? How Rare is this R&C? How Inimitable is this R&C? How Organizational is this R&C? How Sustainable is this R&C? How important is this R&C? Summarize VRIOS What has been the firm's performance are this R&C? What is this R&C and how was it identified? Which opportunities, threats, challenges issues or trends does this R&C allow the firm to address, and are they significant? How does what the firm has for this R&C compare to what its rivals possess if they possess anything similar? How difficult, expensive and/or time consuming would it be for a rival to copy the R&C or substitute another R&C? Where does the R&C reside (within firm/on value net) and who controls and most benefits from it? To what extent is it likely that any supporting R&Cs, further investments or externalities will remain or happen? On the basis of the answers to all of the VRIOS questions, how important is this R&C (in words)? Create a concise summary of all of the VRIOS-related answers above. Explain in concise form how well the firm has taken advantage of this R&C. Arguably the most important resource/capability. Teams receive a number of benefits just from making the finals, nevermind winning a championship. Making the finals guarantees the two teams who end up there millions of dollars in cash considerations, which depend on multiple factors including their regular season record. While every team that makes it into the playoffs receives money from the prize pool determined just before they begin, the team that wins the championship receives the most compensation. Aside from cash considerations, the team benefits from other factors that cannot be assigned a value such as notoriety, marketing potential, and viewership. The Warriors' value as a franchise skyrocketed by over 30% in the season following their winning of a championship. If any other firm in any other industry experienced a 30% increase in valuation over the course of a year, those who invested in its stock would be able to comfortably retire. Winning a championship allows a team to differentiate itself from all 29 other teams within the association and any competitive player within the league will tell you that while winning regular season games is great, those wins become meaningless if a championship does not follow. This Warriors team has a unique set of talent from the starters to the bench that cannot be replicated by any other team. The fact that a player as transcendent and talented as Stephen Curry was drafted with th 7th overall pick is testament to how rare a player such as him can be. Only two of the players drafted before him, Blake Griffin and James Harden even come close to the level of talent and marketing potentia that Steph brings to the Golden State Warriors and neither of them has brought their team close to a championship. It would cost their rivals the entirety of their cap space and then some to imitate the Warrior s roster. The contracts of the players on the Warriors are far below market value and this team has one-of-a-kind talen in their core three players. At the culmination of Finals in which the Warriors defeated Lebron James' Clevelend Cavaliers, the Warrior's sixth man, Andre Iguadola was named Finals MVP. This is a testamen to how deeply talented this team is, something that is near impossible to replicate. This R&C encompasses the entire organization. Without the general management of the team pulling the trigger on the drafting of core players Stephen Curry, Klay Thompson, Draymond Green, and Harrison Barnes, the Warriors would not have the talent they needed to succeed. The coaching staff headed by Stev Kerr, unleashed the offensive capabilities of Stephen Curry and maximized his potential by implementing style of play that suits him and his teammates perfectly. The team itself is where the talent to win games resides and through them trusting one another on the court, they have maximized their level of play over the past two seasons. Incredibly sustainable, this team is in good position to be a force for at least the next five years. The core three players in Stephen Curry, K;ay Thompson, and Draymond Green whom the team receives the greatest level of play are all on affordable contracts that extend past the rise in cap space projected to occu at the end of the season. The Warriors' ability to score at such a high volume minimizes the number of minutes that their star players play each night which translates to less wear and tear on their bodies and keeps them fresh throughout the course of a rigorous NBA season. Winning a Championship is arguably the most important R&C. The benefits of taking home the Larry Obrien Trophy at the conclusion of a season are limitless due to the numerous outcomes that come with winning a championship. Winning a championship makes the team a more attractive destination for free agents while also increasing the overall notoriety of the team. The reason few non-nba fans know about the Minnesota Timberwolves is because of the level of success they have experienced through the course of the past ten years. Success translates to news headlines and what the Warriors are doing right now has turned the microscope of the world towards them drawing fan interest and free agents to the San Francisco Bay area. Winning a championship is arguably the most important resource & capability that an NBA team can achieve. With all 30 teams in the NBA competing towards the same goal, it makes reaching the NBA finals that much more difficult for the Warriors. This Warriors team has a unique set of talent and cohesiveness that has infinite value as demonstrated by their incredible win/loss record during the regular season. Riva are unable to imitate the Warriors roster and success because of how their roster is configured. Only one team can win a championship each year and the more time between a team s championships the less valuable they become. They have assembled a team with the best player in the league as well as a top 3 shooting guard and small forward who all have minimalist contracts. With the new TV deal kicking in thi upcoming season players will demand more money as the cap rises and replicating what the Warriors hav managed to do will be nearly impossible. Everyone from the top down in this organization benefits from the success of winning a championship. Players get salary incentives, the ownership group reaps the financial rewards, and the organization as a whole gets a boost in its reputation. The Warriors have taken full advantage of the benefits that came from their winning of a championship during the season. They signed Draymond Green to an affordable contract during his free agency that grants them valuable cap-space that they would have had to use on him if he had demanded more. He signed a one-year offer in order to get the best value for his skills during this coming offseason when a projected spike in cap space is expected to occur. Their overall value as a franchise has increased exponentially by over $600 million dollars and their notoriety is climbing by the day with their transcendent star continuing to defy the capabilities of what an NBA player can do on a basketball court. 5

6 Strategy Formulation Analysis: A strategy formulation analysis is the compiling of the external (Critical success factors, Competitive factors framework, & External Factors framework) and internal (VRIOS & R&Cs) analyses. By compiling both the external and internal analyses a full SWOT analysis can be conducted in order to identify key strengths, weaknesses, opportunities, and threats. A Strategy Statement Analysis can be used, as well as a Strategy Canvas Analysis, both of which analyze the strategies that are currently, or set to be, implemented by the firm. The canvas analysis goes deeper and allows a firm to compare their strategy implementation against that of their competitors. It is also important for firms to utilize different strategies than their competitors in order to further differentiate themselves from their competitors. Below is a completed Strategy Statement Analysis for the Golden State Warriors. vii Strategy Statement Analysis Strategy Arenas R&Cs Strategy Type Competitive Advantages Alternative strategies Arenas into which R&Cs are to be applied R&Cs the strategy seeks to leverage or address Specific type of strategy (e.g., intensive market penetration) B-C explanation of the strategy Marketing of Players Player Acquisitions Maintaining Progress Implementing players into advertisements that promote the Warriors organization Signing & trading players in order to add immediate talent to Warriors' roster Maintain current level and pace of play into the playoffs Marketing potential of Stephen Curry Adding talent to the roster Maintaining winning culture Influence brand awareness Generating cap space by trading and buying out inefficient players Depth of roster Differentiation: There is no other player in the league quite like Stephen Curry, he has won consecutive MVPs one of which was unanimous, something that has not been done before. Cost Leadership: Through eliminating costly contracts from the roster and chasing cheap free agents the Warriors can maximize the potential of their available cap space. Differentiation: Because of the depth of the Warrior's roster it allows them to utilize the talent on their team as capable replacements for their starters when they need a rest. Current Strategy Win a championship in order to bring immense benefits to the Warriors organization Roster cohesiveness, coaching, talent level Utilize roster experience Diversification: Winning a championship requires all three forms of competitive advantages which the Warrior have in spades. They have the league's marquee player, a talented roster, and a winning culture backed by solid coaching. The Warriors current strategy focused on winning a championship essentially embodies every other strategy that the team can possibly pursue. The end goal of any playoff team (all 16 of which the Warriors are competing with) is to win a championship and thus many of them pursue similar strategies. However what separates the Warriors is their level of success implementing their strategies. Their advertising capability is unparalleled due to their level of notoriety, which can be attributed to their winning culture, dominance in media, and having the most marketable player, Most Valuable Player in the league in Stephen Curry. Their ability to sign and trade players is at an all time high with teams willing to trade for the players on their roster with championship experience. Free agents as well as experienced veterans are also lining up to sign for less in hopes of winning a championship. Their ability to maintain their current level of play is evidenced by their 73-9 season, the best regular season record in NBA history. Where previous teams have experienced minor drop-offs in play following their championship runs, the Warriors improved their record and experienced a surge in play during their most recent campaign. Each one of these 6

7 factors contributes to their ability to win a championship, something that looks almost certain at this point. The nature of the NBA is different from that of a typical industry. Where a firm in a nonsports industry may compete on innovation and differentiation approaches such as process improvement and technology enhancement, teams within the NBA compete on factors such as player development, coaching, and experience. The Warriors, whose direct competitors consist of title-contenders such as the Cleveland Cavaliers and the San Antonio Spurs, have proven to have very few if any weakness. This Golden State team performs well across every single dimension, to the point where identifying a weakness is a seemingly impossible task. The factors being compared in the Strategy Canvas Analysis below: talent level, playoff experience, brand recognition, player development, and coaching already take into account strategies implemented by teams as those strategies were the determinants of the score a given team received. To provide an example, the Warrior s current strategy focused on winning a championship directly influences their talent level and playoff experience of a team due to their roster being assembled with champion caliber players. The Warriors pursuing of alliances strategy centered on the implementing of players into advertisements to promote the organization was taken into account when determining the team s brand recognition score. Player acquisitions as well as those remaining on the roster from last year s championship run were strong determinants of talent level because of the continuity and experience factors associated with maintaining a similar roster and adding necessary free agents. 3 Focal Company vs. Rivals Talent Level Playoff Experience Brand Recognition Player Development Coaching Warriors Spurs Cavaliers High Focal Company vs. Major Rivals Canvas Warriors Spurs Cavaliers Low Talent Level Playoff Experience Brand Recognigition Player Development Factors that Rivals Invest in and Seek to Compete on Coaching 3 Completing a new strategy canvas for this group is unwarranted, as the Focal Company vs. Major Rivals Canvas from the Player Analyses provides everything that one needs to know about how the Warriors compete against their direct rivals. 7

8 Strategy Viability Analysis: A strategy viability analysis consists of comparing how a firm s various strategies, resources & capabilities, and critical success factors supplement the long-term objectives and goals outlined in its mission statement. It also compares these factors to the present market that the firm operates in, the economic players within the industry, its customers, and the roles within the company. This analysis serves as a way to compare the firm s current strategy to other strategies that could potentially be implemented. It also allows a firm to assess how effective these strategies might be in correlation with the current standing of the firm as well as its industry s current and future state. To what extent: Is it Consistent? Does it Match? Is it in Alignment? Strategy Viability Analysis Establish Winning Culture Adding Talent to Roster Maintain Roster Cohesiveness Win a Championship With the team's mission With the team's long-term objectives With the team's R&C profile With sufficient arenas of opportunity With the team's overall CSF profile With the team's current delineations of roles & responsibilties, empowerment approaches, reward systems and coordinating mechanisms 5 Does it Fit? With the team overall? The Strategy Viability Analysis is an incredibly useful tool in determining which strategy is best suited towards their long-term objectives and overall vision. This table displays how winning a championship facilitates each important facet of the franchise. It earned the highest rating in every single category because it is that valuable to a team and it is the reason each and every team works towards achieving this goal in either the long or short term. Each of the other strategies are essentially stepping stones within the allencompassing strategy of winning a championship. A team must develop a winning culture, which is done through developing cohesiveness between talented players who can be acquired via free agency, traded for or drafted. The Golden State Warriors took an incredibly smart approach by utilizing each of these strategies one right after another. They drafted three players in Stephen Curry, Draymond Green, Klay Thompson who they then developed into all-stars. They followed this up with making key acquisitions in Andre Iguodola, Shaun Livingston, and Andrew Bogut to supplement their developing stars. The Warriors then developed chemistry over time, fostering roster cohesion and ultimately they established a winning culture by amassing an incredible win-loss record over the course of two seasons while also fulfilling their primary goal and strategy of winning a championship. A single one of these strategies alone will not do much for an organization 8

9 however through combining two or more of them a team will be able to bring itself closer towards the ultimate goal and strategy of bringing home a championship. The second half of this Strategy Viability Analysis entails determining the positive or negative effects that the implementation of a given strategy will have on the firm in regards to its approach to the current market & its customers, economics & politics, technological trends, and risks & opportunities. This comes in the form of a Quantitative Strategic Planning Matrix where weights are assigned to various critical success factors that may supplement any of the proposed strategies. Those factors with the most potential effect towards a specific strategy are assigned higher weights. Below is the Quantitative Strategic Planning Matrix for the Golden State Warriors, which assesses the importance of various Resources & Capabilities to the given strategies. Quantitative Strategic Planning Matrix Importance Weight Establish Winning Culture Performance Rating 9 Addition of Talent to Roster Performance Rating Maintain Roster Cohesiveness Performance Rating Win a Championship Performance Rating Critical Success Factors Key R&Cs/Strengths: 1 Experience of coaching staff/roster 35% Talent of roster 30% Player Development 25% Attractiveness to free-agents 15% Four R&Cs were identified to have the most significant value towards each of these four strategies. An experienced coaching staff and roster knows what to expect of themselves each and every season and this experience is the most important resource for any strategy because it serves as a checks and balances for that teams performance. This experience factor assists a team in developing a winning culture, as well as developing chemistry between players because the players and coaches have been a part of winning teams before and they know what is best for a team. The talent of the players on the roster serves as the second most important resource because while having talented players is important, no single player can do it all on his own. The reason this Warriors team is so successful is because they have talent from the top down on their roster and it has led to them developing a winning culture for themselves, becoming an attractive free-agent destination, and attributed to their cohesiveness because everyone trusts one another. Player development cannot be forgotten and serves as an incredibly important asset to any team trying to win a championship in the long run. The Warriors drafted well and developed their young players to perfectly fit a role where they could flourish. Through developing players from within it allowed players like Steph Curry and Klay Thompson to develop chemistry with one another that wouldn t be possible if they simply kept on adding different players every year. Lastly the organization serving as an attractive destination for free agents significantly impacts their ability to add talented players who are looking for a ring to their roster. If these free agents are willing to stay for more than a year they may be able to develop chemistry with the other players on the roster and over time even develop a winning culture. Winning a championship is the strategy with the greatest overall impact derived from these factors because each one of them plays a significant part in building a team capable of bringing home a championship.

10 i Cummings, J. L., Dr. (2016, March 17). External Analysis Lecture. Lecture presented at Business Policy in Selling School of Business, Baltimore ii Strauss, E. (2016, May 10). Rewriting history: Unanimous MVP Steph Curry loves the moment. Retrieved May 10, 2016, from iii Video: Stephen Curry exits with knee injury. (2016, April 24). Retrieved May 10, 2016, from iv Hirschhorn, D. (2016, May 10). Stephen Curry Wins NBA MVP Award After Record- Setting Season. Retrieved May 10, 2016, from v Thompson, M. (2015). The long journey of Warriors owner Joe Lacob. Retrieved May 10, 2016, from vi Cummings, J. L., Dr. (2016, April 7). Internal Analysis Lecture. Lecture presented at Business Policy in Selling School of Business, Baltimore vii Chapter 16: Strategy Formulation Analysis from the text 10