Bidding Document: Madrid’s bid to Host the 2020 Summer Olympics Games

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Table of Contents

Introduction
Proposal Aim & Objectives
Overview/Background Information
Analysis of the Internal Strengths & Weaknesses of the Olympics Games
External Analysis of the Bidding City
A Critical Review of the Key Success Factors for the Event
An Analysis of Strategic Options available to Ensure Successful Hosting
Recommendations to Strategy Approach
Conclusion
List of References

Introduction

Research demonstrate that major international events, or simply mega-events, are commonly associated with the accrual of economic opportunities, infrastructural development, tourism development, and identity and image building for host countries or cities (Andranovick et al, 2001).

Indeed, there is growing recognition these events have incredible reach and global marketing potential (Swart & Bob, 2004). It is this recognition that has touched the raw nerves of various committees and stakeholders in Spain, and aided to bring them together to lay the groundwork for hosting a one-of-a-kind mega event in the form of the 2020 Summer Olympics Games.

Although it is well understood that bidding for a mega-event of this magnitude takes place in an increasingly complex global stage that is extremely contested (Nauright, 2004), organizers have left no stone unturned in a spirited effort aimed at ensuring that the 2020 games comes to Madrid.

Proposal Aim & Objectives

As part of its unfolding strategy to make Madrid a global city and bring more international trade and investment into the city (Europe-Cities, 2012), the Madrid City Council, in conjunction with various stakeholders such as the Spain Olympic Committee, aim to successfully bid for the rights to host 2020 Summer Olympics Games.

The objectives are to double the number of tourists and investors visiting the country in general and Madrid City in particular, while displaying an idyllic sporting experience aimed at selling Madrid as an international brand – in line with other global cities such as London, Paris, Tokyo and Washington DC.

Overview/Background Information

This section aims to provide an overview to the Olympics Games, the International Olympic Committee (IOC), as well as the bidding city – Madrid.

The Olympics Games

The Olympics Games, as noted by Kaplanidou & Karadakis (2010), “…is the world’s largest and most complex sporting event to host and manage” (p. 110).

The Olympic Games have a long and rich history, having commenced at Olympia in ancient Greece in 776 BC. From the onset, the games at Olympia not only served to reinforce a strong bond between Greeks but also a sense of national pride. The games were internationalised in 2nd century AD, when the Roman citizenship was extended to other citizens residing within the Roman Empire (Bosworth, 2010).

The Olympics Games are now offered in two subsets – the Winter and the Summer Olympics Games. To sample some recent history of the two subsets, it can be well remembered that the 2010 Winter Olympic Games were held in Vancouver, Canada, where over 80 nations and in excess of 5,000 athletes participated in 86 events.

Equally, the 2008 Summer Olympic Games were held in Beijing, China, where over 10,500 athletes competed in over 302 events (Bosworth, 2010). However, the Beijing Olympics were marred by the March Tibetan riots (Wonjun & Chang, 2011).

Although hosting the Olympic Games is perceived as a high-risk strategy by many cities around the world (Andranovich et al, 2001), Madrid city is ready to take that risk and capitalize on effective event planning strategies with the view to use the event as an instrument for urban planning, infrastructural development, and local social and economic development (Smith, 2010).

The International Olympic Committee

The ultimate authority of the modern Winter and Summer Olympic Games, particularly in terms of the development of the games, governance issues, supervising the organizers of different Olympic Games and selection of winning bidders, is vested in the International Olympic Committee (IOC).

Founded in Paris in 1894 by the Baron Pierre de Coubertin, the organisation’s modern-day headquarters are in Lausanne, Switzerland (Cleary, 2011). Each nation sending players to either the Winter or Summer Olympic Games must have its own National Olympic Committee, and currently there are 199 National Olympic Committees, up from a membership of 14 Committees in 1894 (Cleary, 2011).

The Bidding City – Madrid

Madrid is the capital and largest city of Spain, having a population of 5.762 million (CIA Fact Book, n.d.). Although about 17% of Madrid’s censured population are immigrants, mainly from Ecuador, Colombia, Peru and Romania, the central characteristic that unites these people is their love to socialize.

Madrid is known for its expansive infrastructural developments, cultural sites, exquisite landscapes and major tourist attractions (Hone, 2011). These characteristics are critical to the attainment of a ‘world class city’ status, as well as attracting tourists and investors into the city.

Research and practice have demonstrated that competitive bidding to host mega-events, such as the Olympics Games, is a broadly applied competitive strategy by numerous cities around the world who want to position themselves as world class cities (Swart, 2005). Madrid bid’s hosting concept, which is aligned to Madrid’s urban development agenda, as well as Spain’s national development strategy, presents a fresh approach to event operationalization and legacy.

Analysis of the Internal Strengths & Weaknesses of the Olympics Games

Strengths

A report published by the Vancouver 2010 Organizing Committee for the recently concluded Winter Olympics revealed that these games: increased tourism in Vancouver in particular and Canada in general; built sports participation; assisted Canada’s top high performance athletes to achieve their full potential; attracted major sports companies to locate there, and; encouraged local children to excel in sport and other areas of life (Kaplanidou & Karadakis, 2010).

These key factors are ultimately the internal strengths of the Olympics Games since not only occasion local economic and social development, but enhance the image of the city/country and stimulate job opportunities for the local population by virtue of the fact that sporting companies relocate to hosting cities to market their products, thus the need for local human capital.

Researchers and practitioners have demonstrated that hosting Olympics plays a critical “…role in promoting a host country through increased tourism, sales of event-related merchandise and event-related employment” (Wonjun & Chang, 2011 p. 282).

Weaknesses

The Olympics, as is the case with other high-ranking international sporting events, has its own dark side. Cities that have previously hosted the mega-event bear witness to the fact that the games are intrinsically linked with huge public spending in terms of development of facilities and infrastructure, urban restoration and other revival objectives.

These undertakings may occasion unfavourable ramifications for public stakeholders in the absence of strategic planning for the event (Kaplanidou & Karadakis, 2010).

Research has also demonstrated that some organizers of major international events give little attention “…to longer-run economic consequences on host locations and on long-term infrastructure use ex post” (Collins et al, 2007 p. 459).

Still, an event of such scale and magnitude as the Olympics is likely to occasion negative environmental consequences, particularly in terms of the visitors travel, their food and consumption patterns, the noise generated, and the waste produced by the visitors. Lastly, the security arrangements for the thousands of athletes, coaches, and sponsors participating in the Olympic Games may occasion a substantial strain on the financial and manpower resources of event organizers (Andranovich et al, 2001).

External Analysis of the Bidding City

This section aims to critically analyze the external factors that could influence Madrid’s bid to host the 2020 Summer Olympic Games. Through the adoption of PESTLE strategic planning toolkit, factors associated with the political, economic, social, technological, legal and environmental landscape of Madrid City will be evaluated.

Afterwards, a SWOT assessment will be commenced to establish the opportunities and threats to Madrid’s bid to be given the rights to host the 2020 games. Lastly, the Porter 5 forces analysis will be done to determine the competitive structure of Madrid’s bid to host the games.

PESTLE Analysis

PESTLE analysis is basically an assessment of a firm’s external influences or factors with the view to use information generated from such analysis to guide strategic planning and decision-making (Henry, 2008).

The basic premise of this framework lies on the understanding that if an organization is capable of assessing its current environment, as well as effectively evaluating potential shifts in the environment, it will be better placed than its competitors to respond to these shifts, hence maintain competitive advantage.

A strand of existing literature (e.g. Swart, 2005; Ma et al, 2011; Preuss, 2007) have elaborated the need for cities and nations to employ strategic planning faculties, not only to win the bids to hold mega-events such as the Olympics Games, but also to enable them reap maximum benefits, economically, socially, and through image branding, from the events.

To help make decisions and to plan for the 2020 Summer Olympics Games, Madrid City has gone an extra mile in understanding the broader micro-economic and macro-economic environments in which it operates (Ma et al, 2011). Consequently, the following intersections reports Madrid’s external Analysis with the aim to underline its capability to host the 2020 Olympics Games.

Political

Madrid is not only the capital and largest city in Spain, but it is an administrative, financial & transportation centre (CIA, n.d.). According to Nauright (2004), the political economy of a city or region is always a key ingredient in successful bidding of international events; Madrid therefore benefits directly from the political element by virtue of its capacity as the administrative centre of Spain.

Madrid is the globalization hub of Europe, implying that the political temperatures there are right for sustained social and economic development. The Spanish integration into the European Union means expanded markets for investors who would like to invest in Madrid, as well as Spaniards who would like to invest in other EU member countries (Fontella & Fuente, 2004).

The Data monitor report on Spain reports that the government has already initiated measures aimed at improving the efficiency of the public administration (DATAMONITOR, 2010). This streamlining is important as bids to hold such mega-events as the Olympic Games are often won through effective public-private partnerships (Martins & Serra, 2011).

Economic

Madrid City and the wider Madrid metropolitan area is generating new job opportunities due to sustained economic growth witnessed in recent years after emerging from a recession that affected almost every member of the European Union.

The demographic pattern of Madrid is changing mainly as a result of large numbers of skilled immigrants arriving from Ecuador, Columbia, Peru and Romania, among other countries (Fontella & Fuente, 2004). Skilled cheap labour in the form of the immigrants implies that the city will have the capacity to build the necessary amenities and expand infrastructure at minimal cost should Madrid win the bid to hold the 2020 Summer Olympic Games.

Madrid’s economic foresight is dominated by the phenomenon of globalization – a key factor when it comes to holding international events such as the Olympics (Martins & Serra, 2011). According to a Data monitor report on Spain, the Spanish government has already set out proposals to provide more loans to small enterprises and to revitalize the country’s energy strategy (DATAMONITOR, 2010).

Social

Madrid is commonly referred to as the ‘European Capital of Culture’ due to its “…seemingly endless feast of bullfights, charming paths to stroll, rich history and music tradition, and a remarkable art scene” (Europe-Cities, 2012). Madrid is also renowned for its active night street life, outdoor cafes and wide boulevards.

These factors are likely to act to the advantage of Madrid as tourists would definitely like to sample some of these presentations as they watch the games. The City of Madrid has a high literacy rate, which stands at 99%. According to Smith (2009), the quality of education, along with literacy levels, offered by a city, region or country may either positively or negatively influence the social development and reputation of that area. High literacy rate for Madrid, therefore, directly translates into high chances of securing the bid.

Although Madrid city has continued to maintain a high quality of life (Fontella & Fuente, 2004), the high occurrence of petty crime, such as street thieves (Foreign & Commonwealth Office, 2012), may soil the city’s opportunities to host the 2020 Olympic Games.

The 2004 Madrid train bombings also dampen the city’s bid to host the 2020 Olympics, but the country has been effective in putting in place measures to counter any form of terrorism. Finally, Madrid may be disadvantaged by its overdependence of the Spanish language as the official language of communication.

Technology

Technology-wise, Madrid is predominantly influenced by the knowledge society (Fontella & Fuente, 2004), implying that Madrid is known for its creativity and innovativeness in developing, sharing and using knowledge for the prosperity and well-being of its people. According to available statistics, 62% of the 5 million people residing in Madrid used the internet in 2010 (Vicente & Lopez, 2011).

This is good news for Madrid because the internet has brought fourth social networking sites that could be effectively applied to form a solid support for the bid, as well as promote the event should Madrid eventually win the bid.

Internet access could also be effectively used to develop sports tourism and eco tourism – events that have also been highly associated with international sporting events due to the high number of audiences they are able to pull into a city or country (Ma et al, 2011; Coleman & Girish, 2010).

Legal

According to DATAMONITOR (2010), “…Spanish law permits foreign investment of up to 100% of equity, and capital movements are completely liberalized” (p. 4). This legal statute means that travellers can use the event to identify ventures and invest in them or even start their own businesses.

On entry requirements, British citizens or British subjects with Right of Abode in the UK do not necessarily require a Visa to enter Spain (Foreign & Commonwealth Office, 2012), making it easier for sporting fans of British origin to enter Spain and enjoy the 2020 Summer Olympic Games.

Environmental

According to Fontella & Fuente (2004), Madrid enjoys a favourable atmosphere, with temperature ranging from 4 to 24. The favourable weather is a strong point for Madrid as it translates into the fact that no game will have to be rescheduled due to harsh weather conditions.

The TV rights will not be affected in anyway should Madrid win the bid to host the 2020 Summer Olympic Games as the time-zone for Spain is similar to other many other European countries and not so different with other continents, such as Africa and Mid-Atlantic countries. Such corresponding time-zones only means more TV audiences should Madrid become successful in bidding for the 2020 Olympic Games.

SWOT Analysis

A SWOT analysis is basically a strategic tool for organizations to evaluate their internal strengths and weaknesses, as well as opportunities and threats existing in the external environment, with a view to develop effective strategies to remain competitive (Henry, 2008).

Ma et al (2011) note that organizers of mega-events can use the SWOT framework to know the extent of the opportunities and threats that they may face during the bidding process, as well as to develop strategic approaches aimed at ensuring that host cities and countries reap immense benefits from the events. This section analyses the opportunities and threats (external analysis) facing Madrid as it goes ahead with its bid to host the 2020 Summer Olympic Games.

Opportunities for Madrid

Madrid City boasts of five critical opportunities that could enhance its success to host the 2020 Olympic Games. The first two, the most important, can be described in terms of Madrid’s labelling as a leading knowledge society, as well as its regional competitiveness. As noted by Fontella & Fuente (2004), the tag ‘knowledge society’ is a relevant opportunity for Madrid since “…the tradition of regions as producers of goods is shifting to regions as accumulators of knowledge” (p. 2).

Madrid is at the forefront as a knowledge society and all what is now needed is to capitalize on the knowledge gained to vigorously market the city in social media platforms and blog spots as a city that is equal to the task of hosting a momentous 2020 Olympics Games. Madrid is also regionally competitive.

The competitiveness of Madrid in the region is a window of opportunity because regions are perceived as “…immense economic agents that compete like enterprises, offering tangible and intangible services to the productive sector” (Fontella & Fuente, 2004 p. 2). Additionally, Madrid has a well establish relationship marketing facilities, enjoys a good brand image due to constant communication and exposure, and has existing facilities that could be used to host the games.

Threats for Madrid

The city’s administration needs to deal with the threats of insecurity, perceived terrorist activities in the region and language barriers. They need to come up with educational initiatives that will enable more students enrol into English-related courses. Equally, Madrid must also ensure that its web-based marketing initiatives are not only done in Spanish, but also in English.

This way, they will be able to attract a wider audience base, which may only be too happy to provide the needed support and impetus for Madrid to succeed in its bid to hold the 2020 Summer Olympics Games.

Porter’s Five Forces Analysis of the Chosen Event Industry

The Porter’s Five Forces model is the most prominent analytical framework for evaluating the nature of competition in an industry with a view to understand the dynamics of the competitive structure in a particular industry.

The five forces that determine the competitive nature and long term profitability of the industry include: ‘the threat of market entry of new entrants; the threat of alternatives; the bargaining power of buyers; the bargaining power of suppliers, and; the level of rivalry between existing competitors’ (Henry, 2008).

It is impossible to analyze the IOC using Porter’s Five Forces Analysis since it operates as a monopoly in the management of Olympic Games affairs; however, it is possible to analyze the companies that do business under the Olympic flagship or in the sports business environment.

In rivalry among competing firms, for instance, we all know that “…Nike, Adidas-Reebok, Puma, and Fila are rivals in the athletic footwear industry” (Lussier & Kimball, n.d. para. 2). Athletics are the mainstay of the Olympic Games, and hence of the IOC.

Using Porter’s model, therefore, it could be suggested that the four competing companies not only need to anticipate the moves of their competitors, but also need to be conscious of new entrants into the competition such as Under Armou.

These new entrants may be flooding the market with substitutes, bringing the profitability of the original competitors down because of the relative price and performance of the substitute. These dynamics will ultimately influence the competitive nature of the sports business environment, of which the IOC forms a critical component.

A Critical Review of the Key Success Factors for the Event

Based on the above evaluation, seven key success factors are identified: political support; infrastructure; online relationship marketing; regional competitiveness; knowledge society; communication and exposure, and; existing facilities.

In political support, not only has this analysis demonstrated that Madrid is the administrative seat of Spain, but also how government agencies are attempting to streamline public/private partnerships, which are seen as key to winning the bid. In terms of infrastructure, this analysis has demonstrated that Madrid has an expansive infrastructure and other amenities that are needed to hold an event of this magnitude.

According to Swart & Bob (2004), “…the event promoter needs to be convinced that the city has the necessary infrastructure to host a successful event” (p. 1321).

The other success factor for Madrid’s bid is the capacity to undertake online relationship marketing. The prevalent use of internet services in Madrid implies that the bid committee can use social networking sites, blog spots and other mediums to garner support and influence key decision makers.

Madrid is a regional powerhouse, implying that it looked upon by other cities in Europe as a leader, mainly through its diverse cultural activities and splendid street night life.

This is definitely a strong point for Madrid as tourists may want to come to the city to watch the games as they sample its diverse cultural activities and nightlife. Another success factor is that Madrid is a knowledge society, implying that the city is known for its creativity and innovativeness in developing, sharing and employing knowledge for the well-being of its people.

The strength of a city’s brand image is fundamental to attracting tourists and audiences to the event, hence communication and exposure is another critical success factor for Madrid City. Madrid is a well known destination by many IOC members unlike other bidding cities such as Doha and Baku. Such exposure will definitely play to the advantage of Madrid. The last success factor comes from the fact Madrid have existing quality facilities arising from hosting previous hallmark events such as international cultural festivals.

An Analysis of Strategic Options available to Ensure Successful Hosting

This section aims to take a strategic perspective for hosting the 2020 Olympics Games after evaluating the internal and external factors presented above, and which are thought to influence Madrid’s bid to be successful. The Porter’s generic strategy framework will be utilized to arrive at the innovative strategic options available for Madrid.

Porter’s Generic Strategy Framework

The three generic strategies advocated by Porter as constituting to an organization’s response to the industry structure include “…cost leadership, differentiation, and focus” (Henry, 2008 p. 131).

Based on the evaluations done above, the options available for Madrid City is to follow the ‘differentiation’ and ‘focus’ generic strategies with a view to obtain a sustainable competitive advantage over other candidate cities. Consequently, the IOC is justified to give Madrid the rights to hold the 2020 Summer Olympic Games based on the following

Madrid is capable of using its unique characteristics, such as its regional leadership role, leading knowledge economy, well established relationship marketing facilities and good brand image, to provide packages that will be valued more by tourists and investors intending to watch the Olympic Games. These unique characteristics, along with the political support and the allocation of substantial resources towards the hosting of the 2020 games, will ensure tourists and investors get value for the money spent watching the event, while Madrid get’s the international recognition and investment injections sought for. This is inline with the ‘differentiation’ generic strategy of the paradigm.
Inline with the ‘focus-based’ strategy, no other candidate city for 2020 Olympics games can possibly match what Madrid has on offer interms of outstanding night street-life, history-making cultural sites, and exquisite landscapes spread all over the region. Madrid is more likely to receive the least amount of competition from other bidding cities for the 2020 Olympics Games when factors such as major tourist attractions, infrastructural development and the availability of ready facilities are put into consideration. It is these factors that Madrid needs to capitalize on since they are the very areas where Madrid can receive the least amount of competition from other candidate cities.

Recommendations to Strategy Approach

The PESTLE and SWOT analyses to Madrid’s bidding processes exposed some weaknesses that need to be addressed to strengthen Madrid’s bid to stage the 2020 Summer Olympic Games. First, the Madrid Olympic Committee members need to come up with a strong media campaign detailing the measures they intend to take to prevent recurrent terrorist activities such as the 2004 Madrid train bombings.

Available literature perused by the author shows that the terrorist bombings seriously dented the image and reputation of the city. A comprehensive media briefing in major TV stations across the world about the measures Madrid is taking to counter terrorism activities would be a step in the right direction.

Madrid has been excellent in developing relationship marketing strategies to market its image international, and hence bolster its chances of winning the bid to stage the games. However, it has been noted that much relationship marketing content has been done in Spanish. To cast the net wider, a change of tact is needed to enable those contracted by the various agencies supporting the bid to do their content in English.

Although Madrid has a 62% internet usage level, the organizers of the various strategies aimed at supporting the bid are yet to utilize the full potential provided by social networking sites, such as Facebook and Tweeter, to rally support for the bid and to consolidate the achievements already made.

It is recommended that these organizers make use of technology, not only to rally Madrid behind the bid but the whole country as well. What’s more, the social networking sites have higher penetration rate and are less costly. Organizers should consider taking advantage of these sites to rally support for Madrid’s bid behind a common identifiable philosophy.

Conclusion

It has been revealed that competition to bid and host international events such as the Olympics has been on upward trend, especially after the realization that these events are commonly associated with the accrual of economic opportunities, related infrastructural development, sustainable development, and identity and image building for host countries or cities (Swat & Bob, 2004).

This bidding document has also underlined the need for cities and countries bidding for international sporting events to employ strategic planning and decision-making in the management of the bids and in the management of the actual games or risk negative economic, socio-cultural, and environmental consequences (Coleman & Girish, 2010; Rabinovich & Cheon, 2011).

This analysis concludes that Madrid City is the favourite to be accorded the rights by IOC to host the 2020 Summer Olympic Games. The justification for this conclusion derives from Madrid’s critical success factors to hold the games.

It is believed that some success factors, such as expansive infrastructural development, regional competitiveness, communication and exposure, and availability of existing facilities prior to the announcement of the bids are unique only to Madrid and not to any other city which is bidding. Consequently, there exists a strong possibility that Madrid City will win the bid to host the 2020 Summer Olympic Games.

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