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Defining the Purpose for Borussia Dortmund GmbH & Co. KGaA Case Solution

Solution Id Length Case Author Case Publisher
1270 1114 Words (3 Pages) Urs Mueller, Ulrich Linnhoff, Bernhard Pellens European School of Management & Technology : ES1341
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The idea of making a profit for a football club is closely linked with performance on the field. The clubs who implement a clear long term strategy are the one only make a profit in the long run. The clubs which are more oriented towards short term rewarding victory rather than long term plan of action have very volatile benefits. Most of the time, the manager of the football club has a long term strategy but at the very same time, he has to satisfy all the key stakeholders involved in making a meaningful decision. Therefore, Dortmund should take a run for glory by making a relevant strategy. Financial performance will come as a byproduct.

Following questions are answered in this case study solution

  1. In 2009, should BVB put financial performance (including making profits for its shareholders) as its top purpose; or should it instead make another run for glory on the pitch?

  2. Who are BVB’s relevant stakeholders? What are their interests and what is their legitimacy? Which stakeholder group should have the most say in defining the purpose and strategy of the organization?

  3. For most professional soccer clubs, players are the most important and most expensive assets. How important are they as stakeholders and as (actual) financial assets?

Case Analysis for Defining the Purpose for Borussia Dortmund GmbH & Co. KGaA

Who are BVB’s relevant stakeholders? What are their interests and what is their legitimacy? Which stakeholder group should have the most say in defining the purpose and strategy of the organization?

There are multiple stakeholders whose needs vary according to their interest in the football club. For example, fans are a type of stakeholder who wants all the star and world-class players to play for their club and perform to grab the winning titles. Similarly, media is another stakeholder that is also concerned about the individual player’s performances and the performance of the club as a whole. The shareholders who have invested in the club and bought the ownership of the club want their investment to be maximum. Their sole objective is to earn the highest return possible. Moreover, the institution’s desire is that the club fulfills its responsibility to train and develop players so that the young players are promoted and encouraged to join such a noble sport. Lastly, there are unions as well which are made of employees, players, and coaches. They do have a certain impact on the business and can control business activity to some extent.

Above mentioned expectations must be accountable for a while making a strategy for the club. Let’s see in detail what these stakeholders expect in detail which will help the managing directors to design a future strategy accordingly. The most important stakeholder in any football club is fans. In a traditional economy as consumers demand good quality products. This holds for the football fans as well they want players to put up a good show for which they have bought the ticket. The vital most expectation is the team to win for which they want most prominence players to play for their team which comes with a greater cost as they are the most expensive in the world. For a club like Dortmund, has to invest a lot of money on the pitch to get to their expectations. Fans do not only provide physical and mental support which the players and managers need during the match but also provide a source of revenue as well. Many clubs earn more than 30% of their total income from the attendance per match income from fans. Dortmund have pursued the strategy of buying back the stadium, so this aspect of the income will start coming in the near future.

Secondly, shareholders are also key stakeholders as they invest in the clubs, and their motivation is to get benefit from the media exposition of the club or to get entree to games and to see the world-class players. With the shares, comes the ownership and ability to control the strategy of the club. A shareholder who owns more than 50% of the club can control the management and can make key decisions. The shareholders tend to attend the annual general meeting and discuss the important issues of the clubs. Therefore, it is mandatory that for Dortmund to get shareholders on board for every strategy they are going to propose otherwise, they will need to negotiate. 

In any company, employees are the ones who are responsible for the outstanding performance of the company. They expect to be handsomely compensated for the kind of services they provide and expect to be trained. In addition to these expectations, in a football club, the employees want their team to win so that they can feel great about the team they are part of. It is not just on a psychological level, but it is linked with the monetary level as well.

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