The History Of Interplay Sports

Published Date: 02 Nov 2017

Interplay Sports Holland is facing increased competition on the Dutch market, and the company acknowledges that in order to safeguard its long-term success it will have to expand to another market. After preliminary analysis of several markets, the Singaporean market has been chosen for further exploration because it experiences remarkable economic growth and provides lots of opportunities which match the competencies of Interplay Sports Holland. The outcome of this research identifies how Interplay Sports Holland can shape their services and marketing to capture value from this industry.

The analysis showed that in terms of demand there are lots opportunities in the sports industry. Most competitors were identified to be focusing on the professional sports market, while especially on the amateur sports market lots of opportunities are emerging. Interplay Sports Holland is specifically focused on the amateur sports market, and hereby manages to differentiate from its competitors.

From the confrontation matrix various strategic options were derived in order to further shape their strategy to capture revenue from this industry. Interplay Sports Holland can compete with their current strategy on the Singaporean market, but should focus slightly more on service than it is doing in Holland. Consequently their prices might become a bit more expensive, but this approach is expected to provide more value to the customer, and hence allows Interplay Sports Holland to capture more revenue from its clients.

Finally the strategy was chosen that Interplay Sports Holland should rely on its own competences to enter the Singaporean market. Although this means that Interplay Sports Holland can probably not grow as quickly as in a joint venture, the company is expected to retain more profits this way.

1 Introduction

This intermediate report describes the research and analysis that was conducted for a thesis project focusing on export to Asia. The thesis project is conducted for Interplay Sports Holland B.V, a company in the business of selling video-analysing software to sport clubs on the Dutch market. The company acknowledges that the Dutch market is quite saturated, and therefore wishes to expand their business abroad. This chapter starts with an introduction of the company. This is followed by an elaboration on the problems that the company is facing. It then carries on to describe the central research question and sub-questions. Finally a short explanation is given on the research design and methodology that was used.

1.1 Company overview

Interplay Sports Holland is in the business of selling video-analysing software to sport clubs on the Dutch market. This software can be used to analyse team sports that are played with 2 goals or baskets, such as soccer or hockey. The software is able to be used on any computer or laptop, and the analysis may be done in real time during the match if it is attached to a camera or a TV, or afterwards from all sorts of video sources (Interplay Sports, 2012). Sport clubs or coaches need this analysing software in order to explain and analyse various situations, and to be able to show players what mistakes they made and how to improve. Video-analysis software is used by both nonprofessional and professional sport clubs, and also some schools or universities use such software for their sport activities.

Interplay Sports Holland B.V was founded in 2005 as a subsidiary of Interplay Sports Norway, and started to offer the Interplay video-analysis software on the Dutch market. The Interplay software was received from their mother company Interplay Sports Norway, which was an already successful and well-known company in Scandinavia; a few of the best football clubs used their software, such as FC Copenhagen and the Portuguese football association (Kluin, 2007). Interplay Sports Norway also managed to successfully penetrate other parts of Europe, and is currently already selling in the following countries: Sweden , United Kingdom, Germany, Austria, Switzerland, Poland, Bulgaria, Romania, Russia and the United States (Interplay Sports, 2012).

Interplay Sports Holland focused on selling to amateur sports clubs, and has been actively involved in marketing and sales of the Interplay software on the Dutch market. It performed quite well and managed to build up a large customer base. In 2010-2011 Interplay Sports Holland started to suffer from competition from other video analysis software suppliers, which were providing higher quality software. Interplay Sports Holland responded to this by investing in product development and adjusting the software to the specific needs of their target group. These investments helped restoring the competitive position of Interplay Sports Holland on the Dutch market. (J. de Jong, personal communication, October 20, 2012) [1] 

The company is owned by three Dutch shareholders and the mother company. The company consists of three permanent employees, namely the current CEO and sales director Schelte Meinsma, the financial and administrative manager Jan de Jong, and a programmer. However, next to them it currently also has a few temporarily workers working for them. (J. de Jong, personal communication, September 18, 2012)

1.2 Problem analysis

Interplay Sports Holland does think that the Dutch market is still profitable for them. However, they do acknowledge that the market is quite saturated and that they will have to eventually expand to other markets in order to expand their business. Interplay Sports Holland would be able to expand their products to nearby countries which are not being served yet, but since Europe in general is quite saturated and there is not much economic growth(CIA, 2012), they do not wish to expand to these other European countries.

Asia on the other hand, is experiencing high economic growth (CIA, 2012), and thus there are many business opportunities arising in Asia. Furthermore, sports are becoming more popular in Asia, and the number of sports that are being practised at local and national level is growing (Sport Business, 2007).This is verified by the statement of the FIFA president: ‘’The future is Asia’’ (FIFA president, 2011).

More people in Asia will start to work out and do sports, and sport clubs and coaches will likely benefit from this trend and receive bigger budgets for training materials. Interplay recognizes the business potential in Asia, but would like to focus first on penetrating only one Asian country. Consequently if business goes well, the waterfall approach might be used to further expand to nearby Asian countries. This approach is an expansion strategy to enter markets incrementally and it suggests to start export to an advanced country, and after that export to less developed countries (Hollensen, 2010).

Interplay Sports Holland would like to focus on entering the Singaporean market first, and expressed this due to a variety of reasons: Singapore is technologically quite advanced, which will make it easier to introduce this software as they are used to technology (Internet World Stats, 2012). It has high economic growth (CIA, 2012), and in Singapore team sports are very popular (Singapore Sports Council, 2012). Also, unlike many other Asian countries, Singapore is a very multicultural country and has English as the official language (CIA, 2012). The employees of Interplay Holland are not able to speak any Asian language. Therefore Interplay Sports Holland is of the opinion that that if they are going to enter Asia, they will likely enter Singapore first.

However, since the research will consume a lot of time and effort, we need to be sure that Singapore really is the right market to enter for Interplay Sports Holland. Therefore a scan of three Asian countries has been done to verify whether Singapore really is the best option.

The country scan was conducted for Singapore, India and Hong Kong. These countries were selected because Interplay Sports Holland has a strong preference to avoid any language barrier, and will be able to manage by just speaking English in these countries. Next to that these countries have quite attractive economies and growth (CIA, 2012).

The market analysis was done by conducting a brief DESTEP-analysis for each of the three countries. This analysis can be found in Appendix A. The DESTEP-model analyses the various dimensions at the macro level, and this provides general knowledge on the situation of the country (Kotler, 2009). The ecological dimension was not analysed as it was not directly related to the product or business of Interplay Sports. Instead the legal dimension was incorporated in the analysis. The result of the analysis was that Singapore appeared to be the best choice out of the three Asian countries for Interplay Sports Holland.

1.3 Research question and sub-questions

Interplay Sports Holland needs to expand to another market to safeguard their long-term business success. Asia seems to be the right choice to expand their business to, and more specifically starting with Singapore. However, expanding the business to a foreign part of the world is a major risk (Johnson, 2012). Hence Interplay wants to have sufficient research conducted to find out what the best market entry strategy is to export to Singapore. The timeframe in which Interplay Sports Holland should have expanded their business to Singapore is determined to be within two years. This is because Interplay Sports Holland is currently investing in product development and needs some time for this before they can focus on any expansion. The company expects that it is possible for them to expand to Singapore within two year. (J. de Jong, personal communication, October 20, 2012)

Thus, the central question of this dissertation project is:

What market entry strategy [2] should Interplay Sports Holland adopt to expand their business to Singapore within two years in order to reach their strategic objectives?

If the company manages to successfully enter the Singaporean market, the company will likely increase their overall revenue due to their expansion in a unsaturated market. In addition, Interplay would be less dependent on the Dutch market. Finally, it might eventually allow the company to expand its products even further to other Asian countries from Singapore.

In order to be able to answer the problem statement, a set of sub-questions have been formulated which are supposed to provide clarity and structure to the thesis:

• What are the strategic objectives of Interplay Sports Holland?

• What is the size of the target market of Interplay Sports Holland in Singapore ?

• How should Interplay Sports Holland protect itself from the threats of piracy when expanding their business to Singapore?

• What are the strengths and weaknesses of Interplay Sports Holland, and what opportunities and threats will the company face in Singapore?

• Which channels should Interplay Sports Holland use in order to effectively reach their target segments in Singapore?

1.4 Research Methodology

Research for the dissertation was mainly done by conducting desk research and referring to secondary information, because most of the research was already conducted by other researchers and available. For secondary data various databases were referred to that my university had access to, including Data monitor, ScienceDirect and ABI/Inform. These databases were used to find academic papers, relevant statistics and articles. Next to databases various publications were used from leading universities, industry associations, government agencies, consulting firms and companies. The literature (Saunders, 2009) was used as primary reference for conducting the research.

However, not all information was available from desk research and therefore field research was conducted in order to find certain specific information. For field research a semi-structured expert interview was conducted with business consultant Anouar El haji, and a semi-structured interview was conducted with Safkat Khan. Zikmund & Babin (2007) was used to conduct both interviews, and a summary of both interviews can be found in Appendix C and D respectively.

Conclusion

In this chapter the company Interplay Sports Holland was introduced together with the current problems that it is facing, it became clear that the company wishes to expand their business, and Asia seemed to be the best choice for expansion. After preliminary analysis of several markets, the Singaporean market was chosen for further exploration because it experiences remarkable economic growth and provides lots of opportunities which match the competencies of Interplay Sports Holland. Finally the research question and sub-questions for this thesis project were described, and the research methodology was briefly explained.

In the next chapter the theoretical and analytical framework for this thesis project will be described. This is followed by chapter three, which will elaborate on the research design and methodology used. It then carries on to analyse the internal and external situation in chapter four and five respectively. Afterwards the swot analysis, confrontation matrix and strategic options will be presented in chapter six. Finally chapter seven will conclude and summarise the findings of this report.

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2 Theoretical and analytical framework

The previous chapter introduced and defined the thesis project. Now that the thesis project is clear, this chapter will continue to describe the theory and analytical models related to this thesis project. The first section describes the theoretical framework, and it starts by elaborating on the theory regarding market entry strategies for software firms, and continues to explain theory related to intellectual property rights. In the second section the analytical model that have been used are explained, and the latest theory on these models are discussed. The primary reference used to produce this chapter was Ciulli & Meents (2012).

2.1 Theoretical framework

Market entry strategy

Market entry strategy can be defined as ‘’the plan developed by a company to enter a new market or sub-market’’ (Littler & Wilson, 1995, p. 50). There are various ways to enter a new market, and in general the distinction can be made between indirect export and direct export. Indirect export means that the company does not sell directly to the customer, but that a domestic firm acts as intermediary to make the sale. Examples of indirectly exporting include a local buying office, piggy back operations [3] and trading houses. Indirect export is relatively less risky and requires less assets of the company, and it is therefore quite attractive for SME’s as first step to enter a foreign market. Contrariwise, direct exporting means that the exporter becomes fully involved in and totally committed to the process of exporting to a certain country. This generates a proactive situation compared with the indirect exporting which is reactive. Direct exporting is often more capital intensive for a firm and has more risks. This is because the exporter becomes involved in the seven P’s of the marketing mix -product; place; promotion; price; process; people; physical aspects –, and naturally this will increase the costs and risks for the exporter. However, the benefit of such an approach is that it provides a lot more control to the firm, and less revenue is lost to intermediaries. Furthermore, the exporting firm can maintain customer relationships and identify new opportunities due to closer contact with its customers. There are lots of different market entry options which are considered to fall under direct exporting, such as the use of agents, concessionaires or joint venture. (Branch, 2005)

Even though terms such as, agent; distributor; licensee; appear to be straightforward when it is related to physical products, it is a lot more complicated when it comes to software. In a study of various exporting software firms it became apparent that even though they might name their partner as agent or distributor, in reality a complex pattern of business solutions are encompassed by these terms (Moen, Gavlen & Endresen, 2004). For instance, in cases where a firm has established a foreign subsidiary, the subsidiary’s role will often mainly consist of assisting a partnering firm with a larger operation in the actual market. In such cases the partner firm would do most of the sales, while the subsidiary would take care of the technical service. That is why Moen, Gavlen & Endresen (2004) concluded that: "because of the special nature of software, a distinction between a distributor, agent, licensee, indirect exporter, and a joint venture is hard to draw.’’ (p. 1244)

When software firms decide on their entry modes, they need to take into consideration whether they are more focused on service or not. If the firm is dealing with customized software it has a larger service component, and thus needs to have close interaction with the final user in order to deliver the service. A study of Canadian software firms showed that the majority focused on the service dimension and they build an infrastructure of support services within their channels that included installation, training, maintenance and upgrades (Mcnaughton, 2002). According to Rao and Klein (cited in Mcnaughton 2002) this approach has generally been successful, as the extent of post-sale service provided by vendors is often a more important criterion in software selection than price. Therefore software firms should consider whether they are more focused on service, and if so they would need to pick an entry mode which helps them to provide such services to their customer. Furthermore, in the software industry channel costs are relatively low, which, along with the additional profits that can be retained by not giving mark-ups to distributors, make direct channels an option for relatively small firms. (Mcnaughton, 2002)

It would even be possible to use multiple export channels. Mcnaughton (2002) claimed that many companies (especially those in knowledge-intensive sectors like software development) find that marketing strategies based on pricing, product differentiation or advertising do not yield long-term sustainable advantages in global markets. Thus channels have become a strategic focus for foreign market entry. For example, industry analysts have expressed concerned that Canadian software exporters are not fulfilling their export potential because of inadequate channel development (industry Canada, cited by Mcnaughton 2002). Mcnaughton (2002) concluded that multiple channels should be considered when targeting more diverse market niches in mature markets where: customer and competitor actions are predictable; little investment in physical asset is required; and knowledge-based assets [4] can be protected by other means than having full control over the channel.

Intellectual property

Intellectual property is defined as "a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, trademark, etc.." (Oxford Dictionaries, 2012). It is important to take measures to protect intellectual property, because with intellectual property there is a risk of piracy. Piracy, is defined as ‘’The unauthorized use or reproduction of another’s work.’’ (Oxford Dictionaries, 2012).

Interplay Sports Holland is selling software, and hence there are piracy threats. Therefore it is necessary to know how Interplay Sports Holland can properly protect its intellectual property.

Intellectual property can be protected by both formal and informal ways. Formal ways include getting patents, trademarks and copyrights. Informal ways include other approaches to protect intellectual property rights such as changing the way business is conducted. According to Kitching & Blackburn (cited in Päällysaho &  Kuusisto 2011) small business owners prefer informal protection practices to formal, legal methods. Päällysaho &  Kuusisto (2011) state that informal protection methods are often simple, easy to control and economical to use. The following section will elaborate on four common used informal protection methods which might be relevant for Interplay Sports Holland.

Technical protection appears to be very important for software businesses, which includes methods such as coding the software, using passwords and firewalls. A study indicated that 78% of software businesses protected their products by technical means (Päällysaho &  Kuusisto ,2011) .

Secrecy might also be relevant, which basically is the approach to ‘’ hide’’ important key information from internals or externals. In a recent study it appeared that 46% of the software business managers reported that they were hiding knowledge or sensitive information very often from their customers (Päällysaho &  Kuusisto ,2011). The negative part about secrecy however, is that it might hurt the innovativeness and the quality of interaction. According to Miles et al. (cited in Päällysaho & Kuusisto 2011) open attitudes allow free information flow between parties and therefore support the innovativeness of the firm.

Restricting the number of people who have access to information might also help in minimizing intellectual property-related risks (Päällysaho & Kuusisto, 2011). For instance, if only a few people in an organization are given the rights to use Interplay software, then it becomes easier to spot if intellectual property is being abused.

Finally, publishing would be a possibility to protect intellectual property. There are companies which publish their entire software or database for free, and hereby protecting intellectual property rights because the developer becomes well known to be the innovator of the product (Päällysaho & Kuusisto, 2011). Taking such an approach in the software business however, would require the company to receive their revenue from other things, such as after-service, premium features or advertisements.

2.2 Analytical framework

Canvas Model

The Canvas model is a tool which helps to map out the entire business model of a company, and hereby allows the possibility to discuss, design and invent new business models. Osterwalder (2010) claimed that an organization’s business model can be described with 9 basic building blocks, which can be seen in Figure 2.1

Figure 2.1 The Business Model Canvas

Note. From ‘’Business Model Generation,’’ by A. Osterwalder et al, 2010, Berne, Self-published

The idea of this model is that the building blocks are connected with other building blocks, and by understanding the relations between them it is possible to identify which changes need to be made in order to become more efficient or effective. (Osterwalder et al., 2010)

7-S Framework

The 7-S framework is a tool to assess and monitor changes in the internal situation of an organization. The theory behind this model is that organization effectiveness is derived from interaction of seven factors, which can be seen in Figure 2.2. Strategy and structure are often thought of, but next to those there are at least five other elements. The 7-S framework suggests that all seven elements need to point in the same way, and that all inconsistencies between elements should be removed. The idea is that it’s difficult to make changes in one area without making progress in other areas as well. (Waterman, Peters & Philips, 1980)

The shape of the 7-S framework is significant. The diagram does not illustrate any hierarchy nor any starting point. This is because any of the elements could be the driving force of a certain company. In some cases the critical variable might be systems, and in others it might be strategy or structure.(Waterman, Peters & Philips, 1980) Figure 2.2 7S framework

Porter’s Five Forces

The Porter’s Five Forces model is designed to evaluate how profitable a certain industry is, and it aims to find out how profitable the average firm will be in a certain industry. The theory is that the financial attractiveness of an industry or market depends largely on five factors that influence profitability, and these can be seen on the next page in Figure 2.3

Figure 2.3 Porter’s Five-Factor Model of Market profitability

Note. From ‘’Competitive Advantage,’’ by M.E. Porters, 1985, New York, The Free Press.

Each of the factors play a role in explaining why some industries are historically more profitable than others. Aaker & McLoughlin (2010) claim that this model can be applied to any industry, and even to markets within an industry. An understanding of this structure can also suggest which key success factors are necessary to cope with the competitive forces.

A common misapplication of the Porter’s Five Forces framework was the perception that the framework is primarily a tool to assess the attractiveness of an industries, and Porter (2008) clarified that the framework is primarily a tool to gain strategic insight as to how a firm can compete more effectively within its industry.

As for the theory on the five factors. The intensity of competition from existing competitors depend on several factors including; the number of competitors, their size and their commitment; whether their product offerings and strategies are similar; the existance of high fixed cost; the size of exit barriers. The threat of potential entrants depends in large part on the size and nature of barriers to entry. If there are large barriers to entry, than it is likely that the threat of entrants is not so big. Substitute products are said to compete with less intensity than do the primary competitors, but they are still relevant because they can influence the profitability of the market and can even be a major threat. The power of suppliers is high when the supplier industry is concentrated and sells to a variety of customers in diverse markets. Another major factor that increases the bargaining power of suppliers is when there are high switching costs involved. (Aaker and McLoughlin, 2010)

Apparently there is no correct order in which the five forces are presented, because Porter himself presented the factors in 2008 in a different order than he did in 1980. Dobbs (2012) suggest to use the order of: competitive rivalry, buyer power, supplier power, new entrants, substitutes. He decided this order based on what people are familiar with in general, and claimed that people are more familiar with competitive rivalry and bargaining power of buyer and seller, rather than with new entrants and substitutes.

There has been some criticism on the Five Competitive Forces model. Dulčić, Gnjidić and Alfirević (2012) stated that the Five Forces model is a static analytical tool which is unable to deal with dynamic industries. In the early 1980s most of the industries were developing stable and predictable, and thus the Porter’s Five Forces model could be used effectively to optimize the firms behaviour in relation to the external competitive environment. However, in today’s time many industries are very dynamic, and the Porter’s Five Forces model does not provide optimal clarity due to that it does not deal with time dynamics. Nevertheless, Porter (2008) specifically stated that common pitfalls included using static analysis that ignores industry trends, and he suggested analysis of recent and likely future changes in each force, both positive and negative.

Another criticism was that M.E. Porter implied that the five factors are exclusively ‘’profit extortionists’’ by calling them competitive forces. From the standpoint of modern business relations it might actually be possible that there are positive interactions between firm and industry environment, but the current model does not have the flexibility to illustrate this. (Dulčić, Gnjidić and Alfirević, 2012)

Although ….Hence, it becomes clear that the Porter’s Five Forces model appears to be an effective analytical tool, but it should be kept in mind that the five factors are not necessarily always negative.

Now that the theoretical and analytical framework have been described, the following chapter will expand on the research design and methodology that were used.

3 Research Design

In the previous chapter the theoretical and analytical framework was discussed. This chapter expands on the research design and methodology used for this thesis project. It starts by explaining what types of desk research and field research was used. This is followed by a separate explanation for each research question on the research methods there were used to answer it.

3.1 Desk research

Research for the dissertation was mainly done by conducting desk research and referring to secondary information, because most of the research was already conducted by other researchers and available. For secondary data various databases were referred to that my university had access to, including Data monitor, ScienceDirect and ABI/Inform. These databases were used to find academic papers, relevant statistics and articles. Next to databases various publications were used from leading universities, industry associations, government agencies, consulting firms and companies. The literature (Saunders, 2009) was used as primary reference for conducting the research.

3.2 Field research

Not all information was available from desk research and therefore field research was conducted in order to find certain specific information. For field research a semi-structured expert interview was conducted with business consultant Anouar El haji, and a semi-structured interview was conducted with Safkat Khan. Zikmund & Babin (2007) was used to conduct both interviews, and a summary of both interviews can be found in Appendix C and D respectively.

3.3 Research methods used for each research question

A brief description is provided on the research methods that will be used for each research sub question, and why these research methods were used:

 What are the strategic objectives of Interplay Sports Holland?

• These objectives were found out by analysing the mission and vision of the company, and by communication with the contact person of Interplay Sports Holland. (J. de Jong, personal communication, October 20, 2012)

 What is the size of the target market of Interplay Sports Holland in Singapore?

• A demand analysis was produced, which was conducted by using marketing concepts such as target segmenting, characteristics of target groups, the total market and key success factors. For the demand analysis two academic marketing books were used, namely: Hollensen (2010) and Aaker & McLoughlin (2010). The data for the demand analysis was collected mainly by using governmental websites, and reports of sport associations in Singapore.

 What are the strengths and weaknesses of Interplay Sports Holland, and what opportunities and threats will the company face in Singapore?

• The internal analysis was analysed by using the 7s-model and Canvas model. The Canvas model was specifically chosen because it provides a clear overview of all the processes in a company, as well as the relationship between various processes. This model was also useful in answering some other research sub-questions. The literature that was used to execute this model properly was Osterwalder et al. (2010). The 7s-model was used because the 7-s model filled up some gaps that are missed by the Canvas model, and goes deeper into the actual internal behaviour of the company. The paper of Waterman, Peters & Philips (1980) was used as primary reference to produce the 7s model.

• The external analysis consisted of a separate environmental analysis, demand analysis and competitor analysis. The competitor analysis was done by using the Porter’s Five Forces model and by producing a competitor array. The Porter’s Five Forces model was chosen because it provides insight on how competitive the industry is, and the literature used for conducting the analysis was Aaker & McLoughlin (2010). The environmental analysis was conducted by using mainly figures of CIA (2012) and next to this other industry organizations. The data collected for the competitor analysis were mainly competitor websites, simply found the use of search engines such as Google.

 How should Interplay Sports Holland protect itself from the threats of piracy when expanding their business to Singapore ?

• Peer-reviewed academic papers were used to answer this question, especially Päällysaho & Kuusisto (2011) was primarily referred to. Next to that the interview with business consultant Anouar provided various tips to minimize intellectual property risks.

 Which channels should Interplay Sports Holland use in order to effectively reach their target segments in Singapore ?

• The theoretical framework expanded on the market entry modes of software firms. Branch (2005) was used for general theory on market entry modes, and the journal articles Mcnaughton (2002) and Moen, Gavlen & Endressen (2004) were used for specific theory on market entry modes of software firms.

• Based on the conclusions of the demand analysis and competitive strategy the marketing mix model will be produced in the implementation plan. This model will provide the knowledge for Interplay Sports Holland to determine which channels should be used. The academic marketing book Hollensen (2010) will be used for the analysis.

Conclusion

To summarize, both desk and field research was conducted for this research and suitable and reliable sources were used. In the following chapter a deeper analysis is provided on the internal situation of the company, which will provide insight into the internal strengths and weaknesses of the company.

4 Internal analysis

This chapter starts by discussing and analysing the competencies of Interplay Sports Holland, after that the business model is analysed with the Canvas model. Finally the 7-S framework is used to finalize the internal analysis. (Osterwalder, 2010) was used as reference for the Canvas model, and the journal article (Waterman, Peters & Philips, 1980) was used to implement the 7-S framework.

4.1 Competencies of Interplay Sports Holland

Interplay Sports Holland has three strengths which allows the company to compete effectively; user-friendly software, competitive prices and their small business size. The main strength of Interplay Sports Holland is their user-friendly software. Interplay Sports Holland has further developed the software to be extremely user-friendly, so that it can be used by a wide variety of non-professional users. This can considered to be a competitive advantage, as most competitors focus on the professional level and thus their software are far more complicated, such as that it is possible to link players to HRM modules or medical data. Furthermore Interplay Sports Holland can offer competitive prices for their software in comparison with market prices of the same quality software. Lastly, due to the small business size of Interplay Sports Holland, they are able to be flexible and attend to the specific needs of clients. (J. de Jong, personal communication, October 20, 2012).

The Interplay software works for the following sports: Soccer, basketball, tennis, volleyball, handball, beach handball, rugby, US football, field hockey, ice hockey, lacrosse, futsal football, korfball and floorball. (Interplay Sports, 2012)

4.2 Interplay business model

The Canvas model was used to map out the entire business model of Interplay sports Holland as can be seen in table 4.1.

Customer segments

• Youth sport clubs and amateur clubs: This segment is currently bringing in most of the revenue. This group can use the software because training sportspeople is their business, and the I software will allow better feedback.

• Sport schools and universities: This target group is involved with team-sports, and could therefore use the Interplay software to give better feedback to students or to teach them how to use analytical software and analyse games.

• Coaches and other interested individuals: The pay per use payment system of Interplay makes it possible that individuals can also use the software now, without being tied to a year license. This makes it interesting for sports fanatics, relatives of sportspeople and other people to analyse matches by themselves.

Value proposition

• Affordable & user-friendly analytical video-analysis software

• Flexibility in payment and licensees

• Software adjusted to the client’s needs

Channels

• Direct Approach: Phone/Visit/Email

• Company website

• Sport events/fairs

Key partners

• Interplay Sports Norway: The mother company is essential for Interplay Sports Holland. It provides Interplay Sports Holland with the latest IPS software.

Key activities

Product development (remove complexity and make software easier to use)

• Adjust Interplay software to the specific needs of clients

• Approach potential clients(Phone/Visit/Email)

• Marketing activities ( Website/ sport events/ other)

Table 4.1 Canvas Model based on Interplay Sports Holland’s current situation

In the Canvas model the nine building blocks of Interplay Sports Holland can be seen. In general it seems that the nine blocks are pointing in the same directions; they need the named key activities, key resources and key partners to provide value for their customer segments.

However, the current business model is not properly dealing with the 3rd target group, because the channels and key activities are not properly approaching that target group. This is because the 3rd target group are consumers and the consumer market is new for Interplay sports Holland, due to that they only recently started to offer a payment method which allows private users to use the software. After interviewing business consultant Anouar el Haji, and explaining the current business model, it became clear that Interplay Sports Holland should start their export in Singapore by only focusing on the B2B market as they lack sufficient experience and insight to target the consumer market.

When linking the Canvas model back to the current competencies of Interplay Sports Holland, it becomes apparent that the business model of Interplay Sports Holland indeed focusses on user-friendly software. In addition the company is flexible and hereby can even adjust the software to specific needs of clients. However, being this flexible does make the costs for Interplay sports Holland larger, which results that they need to charge a higher price. They could make the price of their software even more competitive by removing such services.

Conclusion

The main value that the business model appears to offer is the ease of use of the software. Interplay Sports Holland focuses on user-friendly analytical software, but next to this the company can even customize the software based on preference of the client. Interplay Sports Holland could remove their software customization service in order to compete better on price, or it could even add more services in order to offer more ease of use for the clienty, but less on price.

4.3 The McKinsey 7S Framework

The Internal situation of Interplay Sports Holland was analysed by using the McKinsey 7S Framework. In order to properly conduct the analysis the journal article (Waterman, Peters & Philips, 1980) was used.

Strategy

Interplay Sports Holland tries to primarily compete by focusing on user-friendly software, and thus making sure that the software is usable by non-professionals. Next to this Interplay Sports Holland aims to compete on price.

The mission and vision of Interplay Sports Holland are the following (J. de Jong, personal communication, October 20, 2012):

Mission

To provide sportspeople with affordable software to increase their performance

Vision

A well-known sport-analyse company for amateur sportspeople

Structure

The company is owned by three permanent employees and the mother company. The CEO Schelte Meinsma is managing the company, but due to the small business size of the company the decision making is decentralized, and there is low to no bureaucracy. There is direct communication possible with the CEO, and who also seems to be willing to listen to any ideas that others have.

Systems

The CEO keeps overview of the activities in the company and also monitors and evaluates employees. There is currently no official system in place for the evaluation and it is being done informally, and the company considers this to be acceptable due to their small business size. Interns and temporary workers are training by doing assignments, and also receive direct supervision from permanent employees to make sure that the quality of their work is satisfying.

Shared Values (Superordinate goals)

The team always has had an passion for sports, and this was also one of the reasons that these entrepreneurs decided to invest in the company. The team culture can also be classified as rather energetic, and their working conduct also illustrates that they really like what they are doing. It appears to be their passion to help coaches and sportspeople with their sports and this also seems to be linked with their mission.

Style

The CEO has a rather informal approach towards management of his two permanent employees, and he gives them a lot of freedom and authority in their work. This is because both of them have a lot of experience in the company and thus know what they are doing. However, when it comes to the management of temporary workers the CEO controls them more and provides them with less freedom. This also has to do with the fact that they do not have the same amount of experience functioning in the company as its permanent workers.

Staff

Various specializations are represented within the team; Schelte Meinsma takes care of the marketing and sales affairs, Jan de Jong takes care of all the administrative and financial affairs, and the programmer makes a lot of changes to software. Various temporarily workers are hired to help with programming or marketing and sales efforts.

Skills

The strongest skills represented within the company are marketing and sales skills, and ICT skills. These skills are specifically important because they directly contribute to the cash that is being generated. Whenever skills are missing, or additional hands are needed for a certain job the company uses temporarily workers in order to take care of the job.

Figure 6.1: 7S Model Current Situation Analysis

Conclusion

The shared values of the company are quite consistent with the structure, strategy and systems of the company. Since their values are their passion for sports and helping sportspeople, it is consistent with their mission to provide sportspeople with affordable software to increase their performance. Also since they have a rather energetic work approach, it is understandable that there isn’t really bureaucracy and that the CEO directly evaluates the employees.

When looking at the hard elements there does not seem to be a contradiction, the systems seem to be rather efficient which supports the strategy to compete on price, and the decentralized decision making makes it easier to make adjustments to the software and make it more user-friendly. The soft elements do appear to support the hard elements, and in general the organizational structure appears to be quite consistent.

Now that the internal analysis is known, the following chapter will expand on the external environment.

5 External analysis

In the previous chapter the internal analysis was conducted. Now that the internal situation of the company is known, it is time to find out what external opportunities and threats the company will face in Singapore. Hence this chapter will analyse the external environment, and it consists of a macro environmental analysis and a micro environmental analysis. In section 5.1 the macro environmental analysis will be conducted. Then in section 5.2 the demand analysis will be conducted. Finally section 5.3 will end the chapter with a competitor analysis.

5.1 Environmental analysis

The environment was analysed by conducting a PESTEL-analysis for Singapore, and the literature used to conduct the analysis was (Yeates & Wakefield, 2004). The PESTEL-analysis was chosen over the DESTEP-analysis because it includes the legal dimension which is quite relevant for a software product. Legal problems can come up such as piracy, which is defined as: ‘’The unauthorized use or reproduction of another’s work.’’ (Oxford Dictionaries, 2012). The ecological part was not analysed as it was not directly related to the product or business of Interplay Sports.

Political aspects

Singapore is considered to have a beneficial and stable political system which promotes business. It scored very high on five of the six worldwide governance indicators, as can be seen in appendix B. The only thing that it scored relatively low at is ‘’Voice and accountability’, which measures freedom of expression, free media and the extent to which citizens are able to participate in selecting their government. For any software seller there are piracy threats involved, and as can be seen from the governance indicators, Singapore is effective in government effectiveness, regulatory quality and rule of law.

In the Corruption Perception Index 2010 Singapore was ranked together with Denmark and New Zealand as first out of 178 countries (Transparency International, 2012), which means that worldwide Singapore had the lowest corruption together with Denmark and New Zealand. However, in the Corruption Perception Index 2012 Singapore was ranked as fifth, because apparently it lost a couple of points. (Transparency International, 2012)

Singapore was also ranked fifth on the corruption rank (World Audit, 2012), 71th on the democracy rank and 110th on press freedom rank. This verifies the earlier information from the worldwide governance, in that Singapore has very low corruption, but that freedom of speech and democracy are apparently not well established yet.

All in all it can be said that Singapore has an effective and stable political system free of corruption, but that democracy is not as developed yet as in most western countries. However for Interplay Sports Holland the political system seems to be effective, and the limited freedom of speech has no effect on the business of Interplay Sports Holland.

Economic aspects

The economy in Singapore is exceptionally strong compared to most other countries. The gross domestic product at purchasing power parity per capita for Singapore was around $60.500 in 2011 (CIA, 2012). As for the regular GDP (purchasing power parity) it was $265 billion, $304 billion and $319 billion for 2009, 2010 and 2011 respectively. Next to that the economic growth is also quite impressive, the growth rates were -1%, 14,8% and 4,9% for 2009, 2010 and 2011 respectively. (CIA, 2012)

Singapore had an average economic growth of 6.2% for the past three years, and there does not seem to be any reason why this economic growth would stop. The economic forecasts also verify that the economic growth will continue and these can be seen in figures 5.1, 5.2 and 5.3.

Figure 5.1 Forecasted GDP for Singapore (International Monetary Funds, 2012)

Figure 5.2 Forecasted economic growth rates for Singapore (International Monetary Funds, 2012)

Figure 5.3 Forecasted GDP(PPP) per capita for Singapore (International Monetary Funds, 2012)

Due to the strong economy of Singapore it is expected that potential clients do have the financial capability to afford the Interplay software. As could be seen in Figure 5.3 the GPD at purchasing power parity per capita in Singapore is forecasted to continue with steadily grow, and thus also in the near future the economic situation appears to be attractive for businesses.

Social aspects

The population of Singapore is estimated to approximate 5.353.500 people (CIA, 2012). The age structure is: 0-14 years: 14%, 15-64 years: 78.3%, 65 years and older: 7.8% (CIA, 2012). The entire population is living in urban areas (CIA, 2012). English and Chinese are both official languages in Singapore (CIA, 2012). A majority of the population is Chinese (76,8%), and a minor population of Malay (13,9%), Indian (7,9%) and several other minorities (1,4%) (CIA, 2012).

It is expected that there might be important cultural differences between the Netherlands and Singapore because of the large geographical distance between the two countries. Therefore a small cultural analysis was conducted by using the academic textbook Hofstede (2010). Singapore and the Netherlands have been compared on various dimensions by analysing the country scores of Hofstede, Hofstede & Minkov (2010), as can be seen in Table 5.1.

Dimension

The Netherlands

Singapore

Power Distance

38

74

Individualism

80

20

Masculinity

14

48

Uncertainty Avoidance

53

8

Long-term Orientation

44

48

Table 5.1 Singapore and Netherlands comparison with Hofstede model

There appear to be a few important cultural differences between Singapore and Netherlands. Singapore scores a lot higher on power distance, while it scores a lot lower on individualism. In general a high power distance country has more hierarchy in companies and organizations, and status and positions are more important than in low power distance countries. Whereas a low individualistic culture often has the result that decisions are made in groups rather than by individuals. Hence, these cultural differences should be taken into consideration when approaching potential clients. In order to sell to a potential client, it is expected that the group of top management needs to be convinced rather than individuals or regular coaches. (Hofstede, Hofstede & Minkov, 2010)

Another important difference to consider is the difference in masculinity. The high masculinity in the Singaporean society is quite positive for Interplay Sports Holland, because a higher masculinity often means that the society is more competitive, and Interplay Sports Holland needs competitive sportspeople who wish to improve. (Hofstede, 2001)

Lastly, Singapore appears to be scoring extremely low on uncertainty avoidance. Perhaps this is because Singapore is a relatively new country and it attracts a lot of entrepreneurs due to the beneficial legal climate (World Bank & IFC, 2012). However, this low uncertainty avoidance can be seen as an opportunity for Interplay Sports Holland, because if society has a low uncertainty avoidance they are expected to be willing to try out new things, and thus are more open for changes such as the use of analytical software. (Hofstede, Hofstede & Minkov, 2010)

Technological aspects

Singapore is one of the most technologically developed countries of Asia. In 2012 the number of Singaporeans who regularly used the Internet was 77.8% of the population, and from these 84,7% were daily users (Rock Publicity, 2012). Furthermore, the number of Singaporeans that used social media in 2012 was 68,1% of the population, and it was even forecasted to be 74.0% in 2013 (Rock Publicity, 2012). These number are quite high, especially considering that in Asia the average internet penetration rate is only 27.5% (Internet World Stats, 2012).

Moreover, Singapore is apparently even aiming to develop even further. The Singapore’s Prime Minister stated: ‘’Singapore is aiming to be a high tech, high performance society’’ (Cheney, 2011). He further stated that it was precisely such an environment in Singapore that has attracted high tech companies like Facebook and Groupon to set up their offices in Singapore (Cheney, 2011).

From the statistics stated above, we can conclude that most Singaporeans have experience using computer devices, and therefore it would be safe to assume that the majority of people is able to use basic software. Also based on the statement of the prime minister of Singapore, it is expected that the Singapore will become an even more high tech society.

Legal aspects

The legal environment is very broad and comprises many different legal aspects. It is quite impossible to research all of these aspects, and it also would not make sense as most of them are not very relevant for this thesis project. Therefore only the most relevant legal aspects have been chosen for further exploration. These are the legal aspects to do with business freedom and aspects to do with the protection of intellectual property rights. It is essential to know more about these aspects because if Interplay Sports Holland enters the Singaporean market, it will come in contact with the legal aspects to do with trade and business. It also needs to protect its software from piracy, and it would help if Singapore has a strong legal system for the protection of intellectual property rights.

The business climate and legal environment in Singapore is very attractive for businesses. Singapore was ranked in 2011 as well as 2012 as the country with the most favourable business policies worldwide (World Bank & IFC, 2011, 2012).

Singapore was also ranked second out of 179 countries on the Index of Economic Freedom (Heritage Foundation & Wall Street Journal, 2012). What this means is that Singapore enjoys extremely high levels of investment freedom, financial freedom, property rights, business freedom and labour freedom. Hence the legal climate is very good for businesses in Singapore.

Singapore is a member of the World Trade Organization (WTO), and this organization already has certain standards related to aspects of intellectual property rights. However, next to this Singapore was one of the first countries which signed the ACTA agreement, which is an multinational treaty for the purpose of establishing international standards for intellectual property rights and enforcement. The key elements of ACTA are said to go beyond the standards set by the WTO. In addition the Singaporean ministry stated that Singapore’s IPR regime upholds the high standards established by the ACTA. Hence it is expected that the Interplay software will be properly protected in Singapore. (Singapore pledges, 2011)

Conclusion

The PESTEL analysis showed that Singapore has an effective and stable political system free of corruption, but that democracy is not as well-developed yet as in most western countries. Also, the economy of Singapore is strong and it is expected that the country will continue to experience steady economic growth. However, the population of Singapore is rather small, and there are a number of cultural differences that Interplay Sports Holland needs to take in account. Nevertheless, Singapore is one of the most technologically developed countries of Asia and thus it is expected that Singaporean citizens can use simple software. Lastly, the country has a very attractive and effective legal climate, and it is expected that intellectual property will be protected.

5.2 Demand analysis

The academic marketing book Aaker & McLoughlin (2010) was used as primary reference in order to conduct the demand analysis. The first step in conducting the demand analysis is to identify the target groups which Interplay Sports Holland will focus on. On the Dutch market the company is focusing on the amateur sports clubs, and are providing value to this segment by providing affordable software which is easy to use as well as by providing personal attention to meet the individual needs of clients. Keeping their strengths in mind the target segmentation for the Singaporean market will be presented below.

5.2.1 Market segmentation

The main criterion used for segmenting and deciding on target groups is that the sports conducted should be on amateur level rather than professional level, which is because the company is focused on helping the sports on amateur level. Two target groups have been identified which match the competencies of Interplay Sports Holland, and these are the following:

1. Youth sport clubs and amateur sports clubs: These sport clubs are not playing on professional level yet, and in general most of their revenue earned comes from contributions, and they also receive some financial help from the Singaporean government (MCYS, 2012). With their budget they are able to buy analytical software, as long as the price is somewhat affordable and that the software can indeed add value to them. The software should be easy to use, and many complicated tools such as adding HRM modules or medical data to sportspeople is not necessary, because the skill of amateur league is not on such a level, and it would make the software a lot harder to use. The sport clubs that will be targeted are clubs that do ball sports because the software is designed for such sports.

2. Secondary schools and junior colleges: In Singapore there is an on-going trend that physical education is getting more and more important in schools(TongBao, 2010). Students have to follow a formal physical education curriculum for all primary and secondary schools, and also for many tertiary educations. There is even a secondary school in Singapore focusing specifically on sports, namely the Singapore Sports school. Since the government is actively investing in physical education (MCYS, 2012), it is expected that schools receive substantial budgets for sports materials. Schools could use the software to provide better feedback to their students, but also in some cases to teach students how to use such software. For this target group it is important that the software is easy to use so that it is possible to be used by both teachers and students. Providing feedback and helping students to improve in sports are only part of their activity, and therefore the price should be competitive in order to still allow make it affordable for them.

A third target group was also identified at first hand, namely the supporters and other interested individuals(B2C). This target group was identified because Interplay Sports Holland recently started to offer a pay per use payment system, which would allow the company to sell to also sell the software on the consumers market. These consumers would be supporters, parents, free-lance sport analysts and other individuals. However, after an interview with consultant Anouar it became clear that the risks for Interplay Sports Holland would be far higher if they would also target the consumer market at the same time, especially since it is a new market for Interplay and it is not clear yet whether there really is a demand for such analytical software. Therefore the decision was made that Interplay Sports Holland would not target this segment in Singapore yet.

Now that the target segments are clear it is important to know what the key success factors are to these target groups, so that Interplay Sports Holland can provide such value and capture revenue. Various critical success factors have been identified in order to be successful for these target groups, and these have been identified based on the characteristics of the target segments.

• Ease of use: The targeted customer groups are not professionally involved, so the software should be easy to understand and very practical to use.

• Price: Non-professional sports clubs and schools have limited budget, thus the price itself can be considered to be a key success factor.

• Video capture and storage: Ease and accuracy of video capture and video playing, as well as the possibility to record and analyse at same time. Also the number of features offered such as importing or exporting videos from other software’s.

• Match Analysis tools: Quality of analysis through number of Features and statistics offered. The actual practical insight of what a user can learn by using the software.

5.2.2 Market analysis

As mentioned our target groups are sport clubs who conduct ball sports, secondary schools and junior colleges. The market analysis will be started by analysing the various ball sports conducted in Singapore and by understanding how many sport clubs there are. After that the number secondary schools and junior colleges will be analysed.

In Singapore soccer is the most popular sport, and there are various well known soccer leagues. The two biggest soccer leagues are the S-league, which is a professional competition, and the national football league, which is an amateur competition. Since Interplay Sports Holland is focusing on amateur sports, an elaboration will be provided on the national football league.

The national football league has three divisions (Football Association Singapore, 2012). Division 1 is the highest division in the national football league, and it is possible to get promoted to the S-league if the team is performing well in this division. The number of amateur sport clubs that are participating in the national league appear to be 29 soccer clubs, as can be seen in Appendix E.

Various basketball clubs have been identified in Singapore (Basketball Association of Singapore, 2012), and a total of 26 sport clubs are known which can be seen in Appendix E. It is expected that there are more basketball clubs active in Singapore, and various other names of clubs have been found. However, it was unclear whether the other names found were actually different clubs, or just different teams in the same club. Therefore it is very likely that there are more than 26 basketball sport clubs in Singapore.

There are 35 hockey clubs active in Singapore (Singapore Hockey Federation, 2012). As for tennis, there are 9 tennis centres and all belong to the Singapore Tennis association (STA, 2012).

For rugby there are about 20 sport clubs (Singapore Rugby Union, 2012), and most of these sport clubs have men teams, women teams and youth teams.

Volleyball and Beach volleyball are managed by the volleyball association of Singapore (VAS, 2012). It is unclear how many venues or volley ball sport clubs there are, but the organization has 96 indoor coaches and 6 beach coaches. It also has 31 beach referees and 65 indoor referees. This would indicate that the volleyball is still quite a big sport in Singapore, and thus important for Interplay Sports Holland.

In Singapore there is also a popular league known as Singapore American Football League, and it is said to be the only American football league of Asia (SAFL, 2012). Another version of American football is also played in Singapore, which is named flag football. The research was not able to determine the number of American football clubs and flag football clubs active in Singapore, but it probably aren’t that many. It is estimated that there are about 10 American football and flag football clubs.

Various handball clubs have been identified in Singapore, and these are expected to be seven clubs, which can be seen in Appendix E (HFS, 2012).

From the analysis conducted it s