1. Who controls (captures) the value from IMG’s relationships with its talent? Is it the agents? IMG? Someone else? Explain your answer. 

The relationship between talent and IMG brings value to its clients, whether corporate clients or individuals, and to IMG as a whole. On the other hand, while IMG does employ roughly 3,000 people, it seems as though these agents capture relatively little value, given that the company has had trouble retaining employees.
IMG has been successful in creating mutually beneficial relationships with clients, where it helps athletes to negotiate attractive deals to increase their personal value in exchange for a commission. IMG has brought many individual clients enormous wealth. For example, in the two years after signing with IMG, Arnold Palmer’s salary from endorsements increased from $59,000 to more than $500,000.
Clients and IMG also derive value from IMG’s training academies for athletes. Athletes benefit from the skills that they learned at these academies and IMG receives average annual revenues of $20,000 per student in return. The training academies also give IMG the advantage of being able to scope out promising athletes at a young age, increasing its chances of signing them over competitors. Many athletes that graduated from IMG Academies went on to be extremely successful, such as Derek Jeter and Andre Agassi.
Over time, IMG has developed new ways to create value for itself and clients. For example, its money management division has proved to be very helpful for clients who are not educated on how to invest their money. It has also enabled IMG to be a one-stop shop for many of its clients’ needs, creating convenience for clients and profits for IMG. Through its corporate consulting arm, IMG has brought value to corporate clients by helping them to create and manage their worldwide brand and consumer-driven events, sports, and entertainment marketing strategies. IMG’s expertise is undoubtedly a valuable resource for companies because it is utilized by many of the world’s largest and most profitable corporations.
Though limited, IMG’s relationships with clients do bring some value to the company’s agents. As IMG has expanded the range of services it provided clients, it has often chosen not to hire new employees to fill newly created roles, but rather to allocate the responsibilities to existing employees. This increases employees’ skill variety and task significance. It also allowed IMG to cut down on overhead costs. However, IMG’s compensation techniques limit the value that its client relationships create for individual agents. In some cases, agents have left to open their own agencies, often bringing some of IMG’s clients with them.
Some of the value that IMG creates resides elsewhere in the economy as well. IMG successfully made sports more popular, which has benefitted a great deal of society. It has made sports better commercial vehicles for companies to sell their products, bringing value to both sellers and customers. By hosting events and opening stadiums, IMG has been able to bring value to those who attend the events as well as all of the companies and cities that benefit indirectly from the increased traffic and notoriety.
2. Evaluate IMG’s decisions to enter new areas or lines of business. Which businesses do you consider most sensible, and which are least compelling? 

I think that IMG made many smart strategic decisions to enter new lines of business. I think that their first move to expand into other individual sports beyond golf was definitely a sensible move because its current practices could be easily paralleled to deal with these new clients. I also believe that their venture into event management and ownership of events and stadiums was a good idea. It provided the company with a steady income without the same level of reliance on individual clients. This business helped IMG to gain control over the entire sports industry. Owning facilities allowed them to bypass the rules and schedules of facility owners and provided cost savings because it no longer had to pay a percentage of ticket sales to promotion owners. Starting the Licensing Division also proved to be a very valuable move for the company, although it originally seemed risky.
Two other areas I think were very sensible for IMG to delve into were consulting services and financial planning. IMG already had the knowledge and capacity necessary to offer consulting services, so it was very logical to leverage this expertise into a profit generating service. Existing IMG employees also had the potential to advise clients on their investment decisions, so offering this service was a smart way to attract clients as well as earn additional revenues.
I think that it was somewhat less compelling for IMG to enter industries in which it had less expertise, such as the music industry and modeling. Although representing these individuals may require many of the same skills as representing athletes, I believe that IMG may have been exploiting its power at the expense of smaller, specialty firms when it entered these arenas. For this reason, I do not think entering these industries were very compelling, despite the fact that they generated revenues for the company. I believe that entering the television business may have also been a move that increased IMG’s power too greatly, bring about the potential for conflicts of interest. For example, the same year IMG signed a television deal with the Yankees, Derek Jeter re-signed with the Yankees for an amount of money that was significantly lower than what he could have gotten from another team. This caused people to scrutinize IMG’s practices and question whether or not IMG was manipulating its power.
3. What are the biggest challenges in structuring an organization like IMG? 
How might these difficulties be overcome?
I believe that structuring an organization with the scale and diversity of operations of IMG is extremely difficult. It would be very hard to monitor all employees to ensure that they uphold the necessary standards for quality and service. Another challenge would be getting all employees to work toward a common goal. IMG offers many services to clients, which means that people from different divisions of the company are dealing with the same clients. Employees from different divisions may also be working on a project together, such as organizing an event. In order for this to be successful, each division must work together cooperatively. At the same time, each division should be held accountable for the work that they do and the profits that they bring in for the firm. Having autonomous profit centers and yet requiring divisions to work together creates a very difficult balance for the firm. This is likely to result in internal conflicts amongst employees and different profit centers, which could result in an overall decrease in profits and efficiency for the firm.
In order to overcome these difficulties, the firm’s management must align employee incentives with the company’s best interest. One way this could be done is by evaluating each project individually and thus, giving bonuses to all employees involved in the project if it is successful (regardless of division). It could also be beneficial to write down exactly what each employee’s role is and what is expected of him or her. This way, the company has hard values to use to measure and report employee performance. In the case of IMG, I think that increasing the percentage of IMG’s fees that agents received for their services would have improved employee motivation. Also, I think that bonuses should have been determined on an individual basis. Deciding bonus payments on the basis of an entire business unit’s performance induces free riding, which may reduce the overall productivity of the firm.