1.4 WCW: A New Challenger
Ted Turner owned a cable television empire and broadcasted the WWF programme in his TBS station. Turner wanted to join the business with McMahon but the agreement could not happen, followed by the move away of the WWF from TBS and McMahon sold a territory out. Ted Turner then bought the territory and established the World Championship Wrestling (WCW). The WCW was an out-of-leage competitor at the first, but with capital reserve, cable networks and patience, he turned up to be a dangerous competitor McMahon ever faced. Eric Bischoff was a hero brought the WCW to superior the WWF. Bischoff attcked the weak point of the WWF which, at that time, struggled with the government's investigation of a steroid drug distribution scandal. As a result, many of WWF wrestlers were recruited to the WCW camp, started from former WWF superstars like Hogan and Savage, then stars on the stage like Lex Luger. The competition was getting intense for the WWF when a contract of its greatest wrestler, Bret Hart, was about to expire. McMahon offered an undenieable contract to Bret Hart to keep majority of the WWF's fans. Unfortunately, the outcome of the contract did not pay out. Fans strangely started to like a vilainous wrestler and Hart's popularity was declining. Bret Hart turned not to be as worth as his paid. Hart could be neither a perfect hero nor a horrible villain. McMahon decided to cut the losses by shifting Hart to the WCW. Worse than that, conflicts between Hart and Shawn Michaels got too far to be just scripted. The competition between the WWF and the WCW had points to analyse and learn from it.
2. Case Analyses
2.1 How did vince McMahon Build the WWF?
Wrestling used to be stricted by a gentlemen's agreement that not to invade other promoters' domain. But Vince McMahon was a liberated promoter who started to break the agreement. McMahon took advantages of medias, his weak opponents and his territory was likely giving him better oppotunity.
1. Medias - Firstly, he convinced a regional television station to broadcast his shows. The taped programme is possibly more attractive than live program because the shows is more intense, scenes are selected and exciting point can be replayed, zoom up or even re-filmed to make it better. In addition, almost everyhouse in the U.S. has television. Wrestling can be seen in by every one in the area, as easy as push a remote-control button. McMahon had a vision to use cable network to broadcast the WWF's shows. Cable was not only to extend the WWF's domain to oversea, but also unexpectedly bring back dare-devil wrestler from oversea. In addition, television was common way all over America to enter the other's domain. Regardless of differences in states, American people are likely addicted to television. RAW, a Monday Night programme, was the extended programme from McMahon to tide fans with the WWF.
2. Weak Opponents - McMahon analysed his opponents correctly. Because he had been trained with his father before, this provided him deep understanding of other promotors background. In every competition, well understanding of opponent are crucial in order to defeat rivals. Most of promotors were former wrestler, lack of business experience. Moreover, at that time, wrestling was not the business generate revenues for the promotors so much thus low capital reserve was the other factor reduced endurance to compete in the business. McMahon's opponents might think that it was not worth to compete with big promoter like McMahon for a low-income business, plus, they might not have knowledge to compete.
3. His territory - McMahon had such a resourceful territory where cover major metropolitan on the eastern coast. Firstly, McMahon's income would be relatively higher than other promoters due to a great number of population in the area. Dealing events with large corporates in New York City would give him incredibly greater experience than other promoters to organise business in environment that competition is cruelly intense. McMahon learned to use medias to manipulate market trend as same as other companies in New York do. McMahon had opportunities to learn, try and develop his business strategy. So, with his vision to dominate the business, his position provided him abundant resources to do so.
Innovatively, the WWF presented viewers more than typical wrestling like others. McMahon carefully created fascinasting characters for his wrestlers. Each character has its own distinctive charisma. Wrestlers are clearly seperated into two groups: "babyface" (good guy) and chief "heel" (bad guy). Matches were about competing between good and evil, full of enthusiasm spectators cheered their wrestler. Regardless of the fact that the result of the fight were decided by McMahon, viewers were still keen to watch it because of charmful characters. Costumes also accent the character's personality. And the WWF was not only about wrestlers on the ring any more, but also the WWF wrestlers' lifestyle were broadcasted, showing ordinary people participated in their life to show on TV, helping fans keeptrack of the alliances. This strategy wisely increased enthusiasm in the WWF fans, and create brand loyalty.
McMahon expose wrestlers in his camp variously in other entermaint business such as movies and music. On the other hands, celebrities in these business were brought to present in the WWF's matches opening. The WWF matches provided more exciting shows than others: started with the rock concert, explosions, elevated platforms and breathtaking matches that everyone waiting for. Many wrestlers in the WWF becomes rock stars or movie stars. Hulk Hogan was a famous one and the recent one is "the Rock" who has several movies in Hollywood. Sometimes, the wrestlers were invited to present in talk shows, telling fans about their private life. This marketing strategy is to repeatedly shows the product (the WWF wrestlers) to consumers, generating familarity and increase visibility of product which increase purchasing possibility, in the other words, viewers become the WWF fans.
2.2 How big a threat was Turner Broadcasting's entry to the business?
Ted Turner are completely different from any other competitors McMahon ever fights with. In the past, McMahon could defeat his opponents easily because there are not a real businessman. Ted Turner, on the other hand, has television station, news networks, sport franchises and cable empire. Precisely, Turner seems to already have had everything he need for competing with McMahon. TBS was a endless financial resource for the WCW to compete with the WWF. Despite the WCW had lost for the first 5 years, McMahon couldn't neautralise this threat because of its enomouse capital reserves from TBS. Unlike the defeated promoters, Turner was an exceptional businessman, experienced and had vision. Importantly, as can be seen from McMahon's strategies, television was a major key factor leading the WWF to the top chart of the American entertainment.
Analysing three factors that supported McMahon to succeed the former competition, Turner has none of them. Instead, at this point, Turner was on the side to take advantage over those factors against McMahon's the WWF.
1. Turner own television station, sport franchises and news and cable network which would have accessed Turner to television groups in other states. So, if McMahon used medias in the competition again, Turner would not be inferior McMahon in order to make use of medias. In fact, McMahon was likely inferior in this point.
2. The WCW were not as weak as McMahon's rivals in the past. TBS provided financial and television backing to the WCW which caused the WWF a lot longer to eliminate this die-hard opponent. All of the strategies McMahon used to promote the WWF, Turner could easily duplicate them to promote the WCW.
3. The WCW started in the territory that McMahon founded the business before, and the WCW originally was the WWF wrestlers McMahon abandoned in the Georgia territory. They would be as good as the WWF wrestlers, so, the different of productivity from these two groups would not be a big gap.
To sum up, McMahon was facing the toughest challenge ever, and this competition seemed to be an endless one. In addition, with the stronger financial situation, the WCW could recruit the WWF superstars to join.
2.3 How important was Bret Hart's contract?
Afthe the arise of the WCW, many of the WWF superstars turned back on their camp and join the WCW. Then, the WWF was now inferior in the competition. Wrestlers were the main magnet of fans, these crowd would follow their stars to any where if they moved. The WWF's rating slumped to a crisis. Its superstars were sucked to the rival. The wrestlers left in the camp were not as good as the ones left, of course, they could not attract viewers as much as the WCW's. The white knight who might help the WWF to survive in the competition was Bret "The Hitman" Hart. Despite the fact that Hart was almost 40 years of age which allowed him to stay in the ring only a couple years, the Hitman's popularity was the only one thing left protecting the WWF from being devastated. McMahon could not lose Hart to the WCW, if so, that would be the time for the WWF to accept the defeat.
McMahon offered hart a 20-year contract with the WWF. The contract stipulated three years of wrestling, followed by 17 years' guaranteed work in the front office. These contract seemed to be an undeniable one for a 40 year old star, it will expire when he turned 60. However, this contract was not an unreasonable contract for McMahon to make. During the time that Bret Hart still wrestler for the WWF, McMahon would remain in the competition and had chances to bring back the glory. Taking this risk was much better than being wiped out of the business rather soon. Financially, the WWF could not offered as attractive contract as the WCW could, and McMahon could not lose Hart. So, long term contract was the only one last choice left for him. McMahon was sophisticated, he knew that Hart would rather stay with the WWF than desert McMahon. The relationship between them was another factor ease Hart choose to stay. However, 20-year contract seemed to be too long to for a 40 year old wrestler, especially while the result of the competition was remain unclear.
2.4 Released Bret to the WCW.
Signing contract with Bret seemed to be a poor return bet for McMahon, the situation of the WWF had not changed. McMahon still could not overcome the WCW and Hart was likely less important after the unpredictable rise in popularity of the "Stone Cold", Steve Austin, whose merchandise was quickly sold out of the shelves. Speculators were gone wild when Austin entered arenas. Moreover, the return of Shawn Michaels caused Hart a difficult time to follow scripts arranged by McMahon and Michaels gone too far beyond the line. A conflict between Hart and Michaels stimulated rather juicy story for fans, however, a real fight between two members in McMahon's team would not be rational for his business. Considering this, Bret Hart's existance in the WWF was causing problems rather than helping the situation. McMahon tried to make agreement with Hart to cut down some losses by paying only half of Hart's weekly salary, but Hart declined. With the financially unhealthy condition of the WWF,McMahon seemed to have no choice but cut the biggest expense out of the account and that expense was Bret Hart.
Signing the 20-year contract then proved that McMahon did a mistake. But more important, as soon as the mistake were noticed, an action must be taken to solve the problem. What McMahon did might be unfair for Bret Hart, but the WWF was not in condition to be generous. In addition, informing Hart quickly would be fair for him to sign a new contract with the WCW. If McMahon left this situation longer, the WWF might not be able to pay Hart, and the WCW might no longer want him. So, both the WWF and Bret Hart were better off from McMahon's decision. This showed leadership of McMahon that he dared to make a tough decision on his closed employee to maintain the business and majority of employees benefit.
2.5 Were McMahon and Hart Justified in their action?
Firstly, McMahon insisted that Bret Hart lose final match in Montreal to Shawn Michaels. In term of the WWF's owner, the lost of Hart in Montreal provided several advantages in long term. Bret Hart was a Canadian and the Match was hold in Montreal, his hometown. Majority of speculators would be Canadian who wished Hart's victory. And that would be the great impression of Hart on his fans. McMahon would not want such thing happen to the wrestler who was going to be one of the WCW. Therefore, decreasing Hart's popularity before trade off would be better for the competition.
On the other hand, Bret Hart would desperately want to impress his hometown fans. Especially, the contract with the WCW was just signed, Hart's future to start a role with new supporter depended on the popularity. If Hart wanted to be a hero, the popularity must high enough to get a push. Obviousely, Hart and McMahon could not come across.
In conclusion, McMahon's decision was justified for the organization, but not for his employee. And Bret Hart was justified for himself, however, he was still an employee of McMahon. He should obey to his manager's decision.
3. Strategy for this case
3.1 Rise of the WWF and WCW
McMahon's strategy which achieved the WWF to dominate the sport entertainment business was merely perfect. His use of medias were excellent and effective. His creativity to diversify wrestlers to be more than just an entertainer on the stage was innovative. This because he was trained by his father who had gain experience in major city where competition is intense. Moreover, he had direct experience with manipulating audience while he was a ring announcer. But the biggest mistake of McMahon was that he abandoned the Georgia territory even though he knew that Ted Turner was trying to enter to the business.
From case study of Coca-cola entered Indian softdrink business, Coke failed to be the best seller in Indian market. However, Coca-Cola decided to buy a local manufacturer, Thump up who dominate the market. Even Coke could not take "Thump up" to its back seat, but Coca-Cola could get access to dominate the market and worsen the environment for competitors to enter the market vis-a-vise the remaining of the WWF in the Georgia territory.
Fortunately, McMahon did not do so providing a chance for Turner to establish the WCW. At fist 5 years, the WCW could not succeed the competition despite the funding from TBS. Eric Bischoff was a tough competitor for McMahon. Interestingly, both of them had same background, ring announcer and promoter. Presumably, Bischoff would have well understanding of audiences' wants as well as McMahon. And Bischoff would be able to understand and analyse the strategies McMahon had used to succeed the business before. So, duplicating those strategy would not be a problem. Bischoff could do better than just copy, he smartly attacked the weak point of the WWF. The strength of the WCW was enomouse budget, Bischoff used this to recruit the WWF's superstars who, at that time, struggling with the government's investigation about steroid abuse. The WWF could not offer a better deal to its wrestlers, as a result, superstars gradually desert to the WCW. This might show a vision in Human Resource Management of Ted Turner to properly choose a leader for his business.
3.2 Contract with Bret Hart
Contract with Bret Hart was extremely important for the WWF at that time, however, the condition seemed to be financially underestimated. Only 3 out of 20 years in the contract for Hart to wrestler in the ring was not proportional. After the tenth year out of the ring, Hart would hardly affect fans. Soon or later, this contract would cause financial conflict between Hart and McMahon.
McMahon also changed Hart's character after signing the contract just because of gaining in popularity of Steve Austin. A hero like Hart were forced to be a villain so that Austin can replace McMahon was not a safe plan. Hart was not necessary to be a villain, the WWF can have hero more than one. McMahon could form team Hart and Austin together, creating double popularity. Hart's fans were remained, while a number of fans are increasing by Austin's popularity. But what McMahon did was decreasing Hart's fans and increasing Austin's fans, the number of fans might end up at the same number.
3.3 Release Hart to the WCW
This situation affect the WWF's wrestlers in no small way. Morale of the wrestlers might decrease, doubting that the WWF could no longer compete with the WCW. Then, after their contract expires, the first thing they might consider would be joining the WCW rather than the WWF.
Referrences
Keegan W., 2002, Global Marketing Management, Prentice Hall, New Jersey
Mahoney D., Trigg M., Griffin R. and Pustay M., 2001, International Business: A Managerial Perspective, Prentice Hall, New Jersey
Solomon R. and Stuart E, 2000, Marketing Real People Real Choices, Prentice Hall, New Jersey
Thompson, A.A.Jr. and Strickland A.J., 2003, Strategic Management: Concepts and Cases, McGraw-Hill
Wood, J.M., 1998, Organisational behaviour, John Wiley & Sons, Singapore