Successful yet Cost Efficient Managerial Structure?


This week in regards to Chapter 6, the NBA has implemented a u-form structure when it comes to functional organizational structure in relation to cost leadership. It is a very interesting structure. The NBA has done a brilliant job of keeping managerial cost and confusion down.  If you look at the structure of the NBA hierarchy as provided in the above link, there is the NBA commissioner who acts the CEO. The commissioner person with the broad multifunctional perspective. The commissioner oversees multiple people that are in management that all report to him. He has functional specialist such as the deputy commissioner, CIO, CFO, and etc. that oversee all other workers below the management structure.  The COO (deputy commissioner) helps the C00 in NBA china. The COO helps the developmental league president and so. The functional specialists such as the CIO and COO then report to the commissioner (CEO). It is a simple yet effective strategy to keep cost down. A small staff with a wide variety of purposes as you can see by the C00 example. As you look at the chart, notice the brilliance behind the current NBA organizational structure. They use a short list of highly skilled people to which enables them to be able to perform a variety tasks keeping the number of managers needed down to a minimum due to the high level of skill. The question to keep in mind that the NBA has realized is: Why hire a slew of managers with minimal capabilities, when you can just hire high skilled people with greater capabilities and knowledge to complete the work of several managers?



David Stern passing down the job of NBA Commissioner to his successor Adam Silver recently




Resources Determine Team Success

Chapter 5 discusses evaluating firm strengths and weakness via the resource-based view. Resource categories can go a long way in determining whether a team has strengths or weaknesses in the NBA.

 Financial Capital is the most important resource regarding the NBA. How much money a team possesses can determine the amount of success a team will be able to have. For example, in order to capitalize and be the first mover on big name free agents, it is required for a team to have the necessary funds in order to make a wealthy offer in order to entice that free agent into signing with their prospective teams. If you are a team in financial distress then you will not be able to obtain the big name players, which in turn has a negative effect on the success of that team. You have to be able to provide the capital to obtain the best is the key here. That’s just one example. Another example would be when it comes to employee salary such as coach salaries. If one team has more to offer a particular coach, then that coach will be more inclined to sign with that team. Money makes everything happen in the NBA.

Physical Capital is also important regarding the NBA when it comes down to the success of a team. A team’s geographic location may determine how much exposure one team has over another, which may lead to one team having more exposure due to its bigger market size. For instance, the Los Angeles Lakers has superior physical capital compared to let’s say the Charlotte Bobcats due to its prime location which provides access to a larger fan base. A larger fan base leads to larger revenue.

Human capital is a big determining factor when it comes to the success of NBA teams. What individuals you have on the court will decide how successful you are during the NBA season. Players such as Kevin Durant, Serge Ibaka, and Russell Westbrook in Oklahoma City allows them to have an advantage against other teams who have less talent such as the Cleveland Cavaliers. The individual attributes of the three OKC players outweigh any individual player attributes that the Cleveland Cavalier team may possess.

Organizational capital is legitimate resource when it comes to the success of teams in the NBA, also. The managers (coaches and other management personnel) making the decisions on what players are on the team and who is playing on any given night determines the success a team will have on the court. If you don’t have the best managers that make the best decisions for that team, then that will not have much success. Managers must keep human capital vast in order for a team to have success. Remember that the next time you see a fan blaming a player for the wrongs they have committed on the court.


You have to have the proper resources in tact in order to succeed in the NBA. Image


Who Moves First Determines Who Finishes First

Chapter 4 talks more about evaluating environmental opportunities. One topic in Chapter 4 was first mover advantages. First mover advantages are advantages that come to firms that make strategic and technological decisions early. I would like to give a brief insight on how first mover advantages plays a role in determining which team has the competitive advantage.

First mover advantages in the NBA often arise from which team is able to obtain big free agent stars in the offseason and which team is awarded high draft picks for the annual NBA draft, which is the draft of college basketball players by their prospective NBA teams.

 How first mover advantage works in correlation with big name free agents during the offseason is because what team a player chooses is usually the team that makes an offer first. The team that makes the first offer has the advantage due to the fact that they set all of the standards for other clubs to go by, which gives them the option to “bid up” on a big name free agent in order to deter other teams. In return, signing that big name free agent produces a competitive advantage due the fact they now have a player that is popular with the NBA’s fan base, which in turn gives the team the advantage of adding new fans to their base and decreasing other teams who have lost the big name free agent. Thus, increasing the first moving team revenue and popularity.

How first mover advantage works in correlation with the NBA draft is in regards to which team has the top picks. The teams with the top picks apply the first mover advantage due to fact that they are allowed choice of the best players in college basketball before teams later in the draft have a chance at them. Keep in mind, there is usually a vast difference in the amount of talent a top 5 pick possesses and the amount of talent late pick possesses. Thus, the teams picking early have the advantage of getting to select the best players in the draft first. The competitive advantage arises due to the fact that teams that pick early have the advantage of using these players who are picked early to increase revenue through fan buzz. Fans will lean more towards the teams who picked early and have the exciting talented young players they want to see, thus leaving teams that pick late with a disadvantage. The increase in fan buzz can lead increases in revenue due to the increase in the number of fans for that team.

In professional sports, it’s all about who strikes first and not who waits around. They reap the most benefits and in turn have more success. Image


NBA Threats? Five Force Model – NBA Edition

Chapter 3 is all about evaluating environmental threats. The five forces model is an important part of the evaluation of environmental threats, which is key to a firm seeking a competitive advantage. An environmental threat is an outside firm that seeks to enter an industry and reduce the performance of other firms already in the industry.

Today’s discussion will be about  the five force model and how it pertains to the NBA. A study from Pepperdine University discusses in detail how the five forces model is defined when it comes to the NBA.

Brief Overview:

Success in the industry of professional basketball hinges on three key factors. The first is really a matter of luck. Teams located in large metropolitan areas are given a tremendous opportunity to exploit fans in such large populations, whereas teams located in smaller markets are faced with a potential threat to overcome and must work harder to cultivate a dedicated fan base. Second, brand is of critical importance. Customers reward highly differentiated teams with higher royalty fees, larger corporate sponsorships and higher ticket prices. Third, the trick to gaining market share is to capture the casual fan who has many substitute entertainment Image

Please read the interesting article I have provided to obtain detailed insight:


What should our team do next? Tacit Knowledge-The strategy to obtaining a competitive advantage

Chapter 2 talks about competitive advantage. I then researched how the NBA maintains a competitive advantage over all other professional leagues. The NBA uses tacit knowledge to sustain a competitive advantage. Tacit knowledge can be defined as unwritten, unspoken, and hidden vast storehouse of knowledge held by practically every normal human being, based on his or her emotions, experiences, insights, intuition, observations and internalized information. Tacit knowledge is integral to the entirety of a person’s consciousness, is acquired largely through association with other people, and requires joint or shared activities to be imparted from on to another. As Julie Foster, professor at University of Washington, explained, tacit knowledge as it pertains to the NBA is “It’s a combination of training and experience; it’s inherent. It’s knowing which development team is most likely to slip a deadline, which executive is most successful in dealing with the media, or what part of a product is most likely to break, and when. Tacit knowledge is nearly impossible to capture”.  Tacit knowledge being nearly impossible to capture also makes it nearly impossible to study.  

Charles W. Hill wrote an article on the use of tacit knowledge in the NBA and how it correlates to competitive advantage. Hill used shared team experience—the amount of time spent playing the sport with the same members of the same team as a proxy for the accumulation of tacit knowledge.  Professor Foster, who I mentioned earlier, gave a perfect example of how Hill is thinking in his article. She states that “How a basketball player makes a split-second decision on what pass to use or who to go to could be correlated, for example, to the decision an executive might make in choosing which team member to assign a mission critical project”. In simpler terms, how an NBA player performs in late game situations, could determine whether the team resigns the NBA player as their star who carries the team, give the role to another teammate, or bring in a free agent that can produce what the team is desiring.  Shared knowledge/experience is what a team learns over the season through statistics such as how a player plays while on the court with other players to their shooting percentages. Losing teams with shared knowledge perform better the next year. Bottom line: knowledge, as measured by shared experience, is an important competitive advantage.  A team or company can use tacit knowledge to decide how to create an advantage.  Attached is a link to the article that discusses tacit knowledge in great detail and how the NBA uses it to create a competitive advantage:



Who is He?

Just to show you all I’m no fake lol. I’m blogging from real perspectives and realities inspired by my intellectual thoughts concerning the NBA.

Who is He?