ABA-NBA Merger

In regards to Chapter 14, the only major merger for the National Basketball Association. Without the ABA-NBA merger, the NBA would not be what it is today. The NBA gained 4 new teams: the Denver Nuggets, the San Antonio Spurs, the Indiana Pacers, and what is known as the Brooklyn Nets.  It helped strengthened its hold on it being the worlds premiere basketball league in which it has succeeded in becoming today. They obtained the big markets that the ABA had and combined them with their teams and it has caused the league tremendous success. The NBA today has the biggest and brightest stars available for the world to see.  

http://www.history.com/this-day-in-history/nba-merges-with-aba

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Honesty is A Joke

In regards to Chapter 13, working with honesty is not something that NBA teams and executives focus in on.  NBA teams will coerce a player in anyway it can to either make a player stay or in regard to another team, for a new strategic alliance with a perspective player. The business goal of all NBA teams is to generate revenue and to generate the most fan buzz through strategic alliance with players that are fan favorites. NBA teams will go to any extent to prove to a player it is worthy and these pitches rarely commit to honesty. For instance, teams may lie about a player staying with their team just to get another prospective player to sign. 

Never believe what NBA teams try to portray. They will always stretch the truth for profitable gain. Profit is the ultimate decider of what teams view as being honest.

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Diversification across the NBA

In Chapter 11 as well for Chapter 12, diversification is discussed. Diversification is a key concept when it comes to the ability to sign the top free agents on the market every summer during the free agency period. Players move on to different cities based on how well a team can diversify itself from other competing teams and exhibit that diversity. For instance, a free agent might be intrigued by L.A. because of the celebrity infested population and the fact they sell out every game versus signing with a team such as Milwaukee that doesn’t offer the celebrity population or have sell out games. Diversification reigns supreme here because in this situation, Milwaukee has to find other ways to diversify itself from L.A. 

Diversification is a constant battle to proving worthy of the top free agents every year. If you are a NBA team, you must catch the players eye by diversifying yourself from other teams that are interested. With that being said, implementing a diversification strategy is only effective if what the players desires happen to be what the prospective teams city has to offer. It’s a gamble in the NBA for every team to rely on such a strategy. Only the big market teams will win at the diversity game, so no need for everybody to try and play. They will always be more attractive when it comes to diversity. Image

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Opportunism managed through Vertical Integration in NBA

In relation to Chapter 10, the NBA has managed to fend off opportunism through vertical integration. For example, the NBA allots the same amount of salary cap to every team. This is in place to keep teams with more access to large sums of money from being able to just simply outbid other teams for the stars of their perspective teams. Also another example is how the NBA makes sure that all teams are sponsored by the same company when it comes to team gear which happens to be Adidas. This keeps teams from being able to compete solely on offering a different brand that appeals to the player, thus coercing them into joining a perspective team due to their ties to a certain brand. 

The NBA has done an absolutely amazing job managing opportunism which can’t be said by leagues such as MLB. They need to take a look at the NBA’s model and take notes.

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Strategic Alliances New Fad in the NBA?

Chapter 9 discusses strategic alliances. Strategic alliances are very much so present in the NBA. 

Every since Chris Bosh, Dwyane Wade, and LeBron James combined to dramitically strengthen their chances of winning an NBA championship, all other organizations have followed right behind them trying to mirror “The Big Three”. These strategic alliances between superstar players are becoming the norm. The linking up of star players strengthen the competition among the top teams who are able to acquire the players. Also, it increases the likelihood that those teams can compete and ultimately win a NBA championship.

The current trend of strategic alliances in the NBA has has taken over all strategic thought among executives. The motto is now for players to link up to create a big 3 to compete with all championship competitors. 

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Player Flexibility: A Key Ingredient

Chapter 8 talks about flexibility. You have to be able to change at low cost, quickly within a firm.  I would like to discuss my take on flexibility in relation to the NBA. 

In the NBA, Teams (firms) have to pay close attention to flexibility when it comes to their players and more specifically their star players. This is primarily due to the fact that Players cannot be cheaply fired. Players with higher injury risk shouldn’t be signed or should be signed for minimal amounts due to the uncertainty of whether they will get injured or not. Players that are more flexible and less injury prone should be well compensated.  

In regards to flexibility, I believe it is true that teams with more flexible star players will achieve the most success over any given season. Being a more flexible star player means that you are less susceptible to injury. Also, meaning that the uncertainty of a more a flexible star player is much lower than that of a more injury prone NBA star. Thus, teams can create a competitive advantage by employing the more flexible stars whose availability (# of games played) tend to be far greater. The more star players are on the court and able to play; the better chance their teams have to win. 

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How Do NBA Teams Differentiate Themselves ?

Chapter 7 discusses product differentiation. As stated in the book, product differentiation is a business strategy whereby firms attempt to gain a competitive advantage by increasing the willingness of customers to pay for the products or services.
Product differentiation of firms (teams) in the NBA is comprised of two key elements: star players and NBA championship wins. The more stars a team has, the more appealing that team is to fans aka consumers. This idea is the same involving NBA championship wins. Teams with the most fans are teams who are known for winning. The successfully differentiated teams such as the Los Angeles Lakers and Boston Celtics have gotten repeated business (sellout crowds) through the success they have had via star players.
A quote that I want to leave you with from the five forces analysis of the NBA is “teams are hugely differentiated as manifested by the personality and talent of their rosters of players, the strategy of play advocated by each team’s coaching staff and management, the team’s regional affiliation, and the team history and legacy all elements which enable a team to increase the switching costs for fans.” Teams in such cities as New York, Los Angeles, Chicago, and Miami will always be able to successfully differentiate themselves in the NBA. They have access to the most fans, biggest appeal to star players, better legacies, and ability to sign more talent.

http://gbr.pepperdine.edu/2010/08/5-forces-industry-analysis/

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