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Competing In Emerging Markets
The NBA Enters Canada
This work is dedicated to the late David Stern.
As an Executive MBA student at the Beedie School of Business at Simon Fraser University, I gave a presentation on competing in emerging markets for Dr. Jing Li's class on International Competitive Strategy. The concept that I connected the course material to was the expansion of the National Basketball Association (NBA) with the Vancouver Grizzlies (now the Memphis Grizzlies) and the Toronto Raptors Basketball Club Inc. in 1995. While it is often cited that the small size of Vancouver's population* was the primary reason for the Grizzlies' eventual departure from the city (most recently in Kat Jayme's excellent film 'The Grizzlie Truth'), the research my team and I conducted refute population size as a critical element and suggest that several other factors were at play.
* A quick google search of Memphis' and Vancouver's populations reveals that Vancouver's population is slightly larger (628,127 vs 675,218).
Here's a video of the presentation:
In our presentation, we delved into the different approaches the two teams took in entering the Canadian market and the challenges and opportunities they faced. This case study aims to provide a more nuanced understanding of the complex factors that can impact a business's success in an emerging market.
In the presentation, I discussed the need for the NBA to expand into a new market, as the popularity of the business had waned due to the retirement of employee 23, Michael Jordan, leading to flat TV ratings for two years.
I defined emerging markets as having some characteristics of a developed market but still needing to meet its standards fully. In the context of the NBA, the players are unionized labour, the games are the product, and the NBA regulates the business's policies. I used examples of the 2008/09 subprime mortgage crisis and the collapse of the FTX cryptocurrency exchange as examples of emerging markets within developed economies.
I examined the approaches the Grizzlies and the Raptors took to enter the Canadian market. The Grizzlies used a joint venture approach, partnering with a Canadian family who owned General Motors Place (now Rogers Communications Arena) and the NBA to bring the team to Canada. However, the team struggled with only 101 wins and 359 losses from 1995-2001, eventually relocating to Memphis. On the other hand, the Raptors received support from the government and established corporations, such as Air Canada, to build the Air Canada Centre. This partnership created a foundation for a long-term relationship and contributed to the team's success, including winning the NBA Championship in 2019.
Finally, we discussed the role of specialized intermediaries and institutional voids. Specialized intermediaries, such as marketing firms and ticket brokers like Ticketmaster and StubHub, facilitate transactions between buyers and sellers. However, when these intermediaries are lacking, institutional voids can be created, requiring businesses to overcome obstacles and find creative solutions.
Overall, this case study is a fascinating example of the unique challenges and opportunities of competing in emerging markets. Thank you to Arezoo Heidarian, M.Eng, P.Eng, PMP, L. Brett Johnson, Toni Dumais, and Jefferey Paling for humouring me on this topic and being such great partners.
Here's the slide deck: