Analysis of New York Yankees (NYY)’s Decision Making Using the Business Pressures-Responses-Support Model

By | January 2, 2014

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With the trend of globalization, changing business demand and more turbulent business environment, it is believed that business environment changes bring not only challenges but also opportunities to all the business entities. One framework that assists companies to get adapted to the changing business environment and come up with smart decision making that increases the core competitiveness and business intelligence is the Business Pressures-Responses-Support Model which will be elaborated in the following.

Business Pressures-Responses-Support Model
Figure 1.0 The Business Pressures-Responses-Support Model

The business environmental factors

When we talk about business environment, there are actually two different and linked concepts: external business environment and internal business environment. According to Derk-Jan Haverkamp (2007, p. 59), internal business environment refers to the available organizational resources while the external business environment market features. As we know, both the external and internal business environmental factors will have heavy impacts over the business activities that a company is engaging at. In term of the external business environment, several key factors have been listed above in the model shown in the figure: globalization, customer demand, government regulations, competition level and other market conditions. And in term of internal business environmental factors, though not shown in the model they usually include labor force diversity, financial situation, employee and executive compensation issues, internal political status, organizational structure and so on. These factors tend to discourage or encourage the company to continue the current business activities through the bringing of both opportunities and pressures to the company.

Take the New York Yankees (NYY) as an example, before the building of the current new stadium, it faced four major kind of environmental factors: in term of internal environmental factors, the ballooning pay for top baseball players actually brings in pressure for the company to create more revenue and ensure that the revenue would not drop significantly to ultimately ensure the profitability of the business; in term of the external environmental factors there are three kind of factors. The first kind of factor is the increasingly popular substitute products that the people could enjoy such as the watching games on television and playing or watching other kinds of sports such as tennis and basketball. In term of basketball especially, there is also one of the world’s top league in the world in the United States, the NBA. Therefore, the threat created by these popular substitute products instead of watching baseball in the stadium is obvious; the second and third kinds of external factor is the changing customer demands inter of requesting for more high technological entertainments as well as more humanized services. Please take note that, though these business factors tend to create threat to the normal business operation of the New York Yankees (NYY) at the first glance, they actually suggest opportunities to one of the league’s top teams at the same time. For instance, though not mentioned in the case, we do know that another internal environmental factor of the team is that as a traditional top team, the team has sufficient capital and strong financial situation to actually enable it to perform the changes through implementing changes to the current operations by meeting the changing customers needs. In the next part of the discussion we will talk about another key part of the model the organization responses.

External environmental factorsInternal environmental factors
Threat of substitute productsBallooning pay for top baseball players
Changing customer demands: requesting for more high technological entertainmentsSufficient capital and strong financial situation (additional information – not mentioned in the case study)
Changing customer demands: more humanized services

Table 1.0 The external and internal environmental factors before the building of the new stadium

 
Organization’s responses

The organization’s responses refer to the actions taken to counter pressures or take advantage of opportunities that have been identified by the business entities (Duffy 2009). As indicated in the Business Pressures-Responses-Support Model, there are several usual responses that a business company may use in this stage to minimize the threat and utilize the advantages identified. The first strategy is the collaboration of the partners. With the increasing trend of globalization, actually it is been long admitted that one company can not solve all the issues by a company alone without strategic partnership with the other companies due to the limited of the resources as well as the different market focus. Hence such collaboration could sometimes be of great importance with strategic significance even the partnership with competitors would be necessary under some particular scenarios. For example, for Apple Inc, though it does focus on a lot of business activities related to its major products (iphone, ipad, imac and other series of products) such as R&D and even retailing. It does not achieve the success by itself alone. Take the manufacturing as an instance, to achieve the target of cost control and higher operational efficiency and productivity, the company has outsourced the major production process to China, a country with stable political environment and low priced labor force through the collaboration with a Taiwan company. Other organization responses also include new business model development, new vendors and so on which will not be discussed in detail in this part. In short, the target of the organization responds to the external or internal business environment is to ensure a better competitive position for the company in a long term basis by changing the company’s strategy to get adapted to these environmental changes.

Looking back to the case of New York Yankees (NYY), with the increasing pressure from the external environment such as the enhanced threat from the other types of entertainment, the company did not insist on competing with these types of threat, but to integrate these different types of entertainment into its business activities by building up a new stadium which also provides other types of customer experiences such as game playing. This organizational response is also based on the utilization of the company’s internal environment: the sufficient capital and strong financial situation.

Decision and support

The last component of the model is the decision making process and support which refers to the computerized support that facilitates monitoring of environment and enhances response actions. The core activities in this part are: analysis, decision makings and predictions. These activities are actually supported by the integrated computerized decision making and support as indicated in the model above.

Looking back to the case of New York Yankees (NYY) we can identify several key activities in this area.

First of all, in the new stadium because of the consideration to provide more video which is loved by the majority of the fans, the stadium provide a number of monitors in term of different size in different locations in the stadium to enable the fans to view the instant and most recent scenes in the field as well replaying the most wonderful moments in the games in different angles. For example, there is a 100 feet wide and 59 feet high monitor to show the live game coverage which is an exciting customer experiences and can not be substituted by other type of entertaining such as the online game playing.

Secondly, using the most advanced technology; the new stadium not only could broadcast the promotional information but also the real time update of the traffic and weather information. As mentioned above, one changing external environmental factor is the increasing demand for better and more humanized service. In our normal understanding, beside the ticket price, we may refuse to watch the match in the stadium because of the weather is bad or because of the worrying that it may rain later, with the most updated information about the weather outside the stadium as well as the real time traffic information, fans of the team could control their visiting with more flexibility. For example, in the end of the game, the fans may decide to stay for a longer period of time for a coffee if the weather outside is too bad.

Thirdly, with the increasing popularity of the mobile phone (smart phone), hand phone support has become a major success in the new stadium of Yankees, the availability of the various resource online as well as the network support within the stadium ensure that the fans could at anytime access to the needed information about the game as well an information about the team.

Conclusion

To conclude the analysis above, as suggested by Efraim Turban (2006) in the face of these dramatic changes and environmental pressures, business firm can no longer depend merely on the traditional activities in form of lowering costs and pay more for the print ads. Integrated computerized decision making process which helps the company to better understand the demand and the data they have collected will better help the company to make decisions that achieve desired overall customer satisfaction by meeting their changing demands.

 

Reference

Duffy, V. G. 2009. Digital Human Modeling. Germany: Springer-Verlag Berlin Heidlberg.

Haverkamp, D. J. 2007, Environmental Management In The Dutch Food And Beverage Industry. The Netherlands: Wageningen Academic Publishers. p. 59

Turban, E. 2006. Electronic commerce 2006: a managerial perspective. New Jersey: Pearson Prentice Hall

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