Business Strategy - Macro Environmental Analysis

Running Head: BUSINESS STRATEGY
BUSINESS STRATEGY
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Table of Contents
Introduction......................................................................................................................................2
Section 1: Macro environmental analysis........................................................................................2
1.1 Mission statement and long term goals.................................................................................2
1.2 Macro environment analysis..................................................................................................3
Section 2: Capability........................................................................................................................5
2.1 McKinsey 7s framework........................................................................................................5
2.2 TOWS matrix.........................................................................................................................6
Section 3: Competitive analysis.......................................................................................................9
3.1 Porter’s five force model.......................................................................................................9
3.2 Strategic positioning of JD Sports.......................................................................................10
3.2.1 Ansoff matrix................................................................................................................10
3.2.2 Porter generic strategy..................................................................................................11
Section 4: Strategic plan................................................................................................................12
Strategic objectives....................................................................................................................13
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................14
Appendices....................................................................................................................................17
Appendix 1.................................................................................................................................17
Appendix 2.................................................................................................................................18
Appendix 3.................................................................................................................................18
Appendix 4.................................................................................................................................19

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Introduction
JD Sports Fashion Plc. also known as JD Sports, is a UK based sports fashion retail. The
company is a Lancashire based company with its stores throughout UK, Asia and Australia. The
company was established in 1981 by John Wardle and David Makin who were trading from their
single shop in Bury. Gradually the company started expanding its business further and by 2001
the company opened more than 200 stores with a significant acquisition of First Sport from
Blacks Leisure Group (Jdplc.com 2020). The current CEO of JD Sports is Peter Cowgill. Due to
his dynamic leadership practice the organisation successfully dominates the UK market with a
revenue generation of £ 4,717 million in the financial year of 2019. The net income of JD Sports
is £ 264 million (Jdplc.com 2020). The total workforce of the company is also estimated more
than 32 thousands. It proves the success and effective market capitalisation of JD Sports.
The current report is going to analyse the outlook for the strategic direction of JD Sports
for the next 5 years by investigating the macro and micro environment and the competitive
analysis of the organisation. Based on this analysis, a strategic plan will also be provided for the
future success and sustainability of JD Sports.
Section 1: Macro environmental analysis
1.1 Mission statement and long term goals
As far as the mission statement of JD Sports is concerned, it can be stated that the
organisation is very much interested in becoming the leading and best known sports fashion
retailers in UK. The high competitiveness in the market and fluctuating demands of the

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customers lead the organisation to set a customer centric strategy where JD Sports is entitled to
meet all the demands and desires of the customers.
The long term goal of the organisation is associated with leading the international sports
fashion retail market successfully. Therefore, the CEO statement reflects the same goal by
stating acquisition of Blacks in 2012 paves the way for the organisation to expand its business
largely in support with the retail proposition and the benefits to the strategic standpoint of the JD
Sports (Jdplc.com 2020).
1.2 Macro environment analysis
Factors Explanation
Political  The political stability in UK is moderate and it is getting vulnerable. In refer
to appendix 1, it can be stated that the political stability in the country was at
0.33 point in 2017 and it dropped down to 0.05 in 2018. It is because of the
Brexit tension that costs huge for the political scenario in UK.
 Government effectiveness in the country is also at a verge where it is
consecutively declined since 2015. In 2015, it was 1.74 point and by the end
of 2018, the government effectiveness point decreases to 1.34 (Referred to
Appendix 2). As a result of that it can provide challenges for JD Sports to
expand its market further in the UK market only.
Economic  From the economic perspective, it can be stated that the prevalence of open
market helps the organisation to expand its business effectively. The UK
market witnesses a business freedom of 94.7% which is huge and lucrative
for business companies (Refer to Appendix 3). Therefore, for JD Sports also

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there are some benefits that can be incurred from the UK market.
 According to The Guardian report, it is confirmed that the Brexit issue hit
hard to the retail sectors of UK. There is a downfall in the sales growth to
0.5% in 2019 in compare to the 2018 growth percentage of 1.6% (Partington
2019). This is not a good news for JD Sports as the organisation interested to
capitalise the UK market more extensively.
Social  As a developed country, the purchasing power parity among the people help
to gain more customers. Therefore, it will not be a problem for JD Sports to
get target customers effectively.
 Despite of the opportunity, the COVID19 outbreak creates a negative impact
over the organisation where home quarantine and lock down make it
impossible for the retail companies to continue business without any
problem. The global statistics on the UK retail industry forecasted that there
is a decrease in sales by 70% and a loss of nearly £ 30 billion during the
novel corona virus outbreak (alvarezandmarsal.com 2020). Therefore, it is
not effective for JD Sports to continue its strategy effectively due to the
global pandemic.
Technological  Technologically, there are still some opportunities for JD Sports to continue
its strategy of acquisition for long term benefits. It can be stated that the
organisation is focusing on introducing new technologies in manufacturing
and delivery.
 Furthermore, the government endorsement towards introducing and using
different technology will definitely help the retail companies to get success in

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business. Therefore, it is also an opportunity for JD Sports to follow its long
term goals.
Legal  There are Companies Act 2006, Insolvency Act 1986 and the UK Corporate
Governance Code that the business organisations have to follow. The
government imposes strict monitoring over the business activities and highly
intolerant towards bad business.
 However, the Brexit situation makes it worse for the UK retail sectors
because the changing tariff and duties create severe difficulties for the retail
suppliers. Moreover, retail companies are also facing challenges to expand
business in European region due to clashes with the European Union.
Environmental  The UK government strictly enacts some guidelines for the business
companies to follow in order to protect the environment. The Environmental
Protection Act of 1974, Energy Act 2020 and Climate Change Act 2008 have
to be followed by the business companies.
Section 2: Capability
2.1 McKinsey 7s framework
Factors Explanation
Strategy The basic strategy of JD Sports is associated with its consumer centric approach. The
organisation focuses on its quality and innovative sports fashion products and influences
the customers to purchase it. A competitive pricing strategy involving manufacturing to
supply and distribution department helps JD Sports to gain strategic advantage in the

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competitive market of UK.
Structure A centralised structure of operation has been seen in JD Sports where the senior
management is responsible to set all the strategies and decision making and passes it to
the respective departments. It fits the strategy of the organisation as well in terms of
monitoring and controlling the price, quality of manufacturing and innovation process.
System The business system of JD Sports is well and sound where each of the departments
know their specific roles and responsibilities that are mentioned in the long term goals
of the organisation.
Shared values JD Sports considers the value and benefits of the employees. Therefore, the
organisational aims and objectives encompasses a long range of efforts to meet the
interests of the organisation and at the same time fulfil the needs and demands of the
employees as well. Therefore, a shared value practice can be seen within the
organisation of JD Sports.
Skills JD Sports particularly emphasises on the skills of its employees. The organisation
values creativity and innovation in its operation and delivery practice as JD Sports
believes that both creativity and innovation are essential driving force for gaining
competitive edge in the domestic and international market. Henceforth, emphasising on
the skills and development of the employees is highly pertinent for the organisation.
Style The iconic style of JD Sports helps the organisation to gain competitive edge in the
market. The sports fashion products of the organisation specially reflect the style of the
company.
Staff The staff portfolio of JD Sports incorporates both the contractual employees and the
permanent staffs. It helps the organisation to make a transparent staff profiling and gain
trusts of the employees as well.

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2.2 TOWS matrix
Internal factors

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External factors
Strengths (S)
 The competitive
pricing strategy of
JD Sports helps to
maximise
customers.
 The strong
financial position
with consecutive
profits for five
years is a strength
of the
organisation.
 Skilled labour
force helps the
organisation to
incorporate
creativity and
innovation in
product
manufacturing and
effective
distribution
service.
Weaknesses (W)
 Lack of
diversification
creates problem for
its global
expansion strategy.
 High employee
turnover rates in
JD Sports is also a
threat to establish
strong
organisational
practices.
 The centralised
decision making
process creates
obstacles in
flexible decision
making practice
and it is very time
consuming.

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Opportunities (O)
 Technological
developments will
help JD Sports to
gain enough
competitive
advantage in the
new markets.
 High market
demands of the
sports fashion
encourages JD
Sports to expand
its market further.
 The use of e-
commerce and
social media
integration in
marketing can
create potential
opportunities for
JD Sports.
SO
 The integration of
employee skills
and technological
advancement helps
JD Sports to
expand its market
in new regions.
 The competitive
pricing strategy
with high demand
in the market can
be a great
opportunity to
promote JD Sports
with social media
marketing
practice.
WO
 High market
demand can push
JD Sports to
diversify its
product line.
 The increasing
market opportunity
can be relevant for
JD Sports to
introduce diversity
in workplace. It
will also reduce the
high employee
turnover.
Threats (T)
 Instable
ST
 The Brexit issue
WT
 As per the World

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government is
considered to be a
threat for JD
Sports to expand
its business.
 The Brexit issue
creates a tension in
the European
business of JD
Sports.
 The impact of
novel Corona virus
ushers a global
recession for the
international retail
sector.
can damage the
financial stability
of JD Sports.
Therefore,
penetrating in new
market is very
important for the
organisation.
 The political
situation in Britain
is not well enough
so that finds out
alternate market
can provide
strategic
advantage to the
organisation.
Bank report, a
global recession
due to Corona
attack can curtails
the employment
opportunities.
Therefore, it is
imperative for JD
Spots to retain its
skilled labour by
any means.
 Expanding the
business in
alternative market
cam be significant
measure for JD
Sports.
Section 3: Competitive analysis
3.1 Porter’s five force model
Factors Explanation
Threat of new entrants The threat of new entrant into the UK retail sports fashion market is high as it

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is still growing and booming explicitly. Therefore, it is pertinent for JD Sports
to plan properly and gain competitive edge by executing effective plans.
Power of supplier Moderate power of the suppliers is a challenge for JD Sports. Due to the Brexit
event, the European suppliers are no longer able to supply raw materials so that
the organisation has to rely on the local suppliers.
Power of customer High customer power is a key characteristics of the sports fashion retail market
of UK. JD Sports also sets its goals accordingly to meet the demands and
desires of the customer on top priority.
Threat of substitution Low threat of substitution can be seen in the UK sports fashion retail market
because the existing companies are already offers various ranges of products to
the customers.
Competitive rivalry The competitive rivalry in the market is high as a number of companies are
operated in the UK sports fashion retail market such as Nike, Reebok.
Therefore, JD Sports faces severe challenges from those organisations.

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3.2 Strategic positioning of JD Sports
3.2.1 Ansoff matrix
Image 1: Ansoff Matrix
The Ansoff matrix is identified as the product and market expansion grid that enables the
organisation to choose the right option of market and product expansion as per the resources and
needs (Dawes 2018). It is important to note that there are four different strategies that a business
company can follow in association with the strategic goals and objectives (Alkasim et al. 2018).
It is important to note that for JD Sports, it is imperative for the organisation to follow the market
development strategy. It enables the organisation to penetrate into the new market with its
existing products (Gardiner and Scott 2018). As a result of that the company can get an
alternative market in association with developing a strong brand image.

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3.2.2 Porter generic strategy
Image 2: Porter’s generic model
The Porter’s generic strategy is used for choosing the right plan to survive in a market
(Kurt and Zehir 2016). The market can be an existing or a new one but it is important for the
organisation to choose the right strategy in order to gain competitive edge in the market (Eva et
al. 2018). The Porter’s generic strategy is highly influenced by the existing market situation.
Therefore, it will be pertinent for the business companies to take great care of the market before
choosing the right porter’s generic strategy (Suryanto and Anggraini 2020). Based on the
analysis of the market and the feasibility of JD Sports, the cost leadership practice will be taken
for entering into the new market. The cost leadership approach will help the organisation to

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adjust the price with a low pricing strategy so that it can gain competitive edge for JD Sports to
encapsulate the new market effectively.
Section 4: Strategic plan
Based on the understanding, it can be stated that there are several threats in the existing
UK market of JD Sports both externally and internally. In the external environment, vulnerability
in the UK government stability and the hit of Brexit create huge downfall in the UK fashion
retail market. Moreover, the impact of Corona outbreak is also fatal for JD Sports as the country
is severely suffered with this pandemic outbreak. At this juncture, it is pertinent for JD Sports to
enter in the new market apart from UK and Europe. The Asian market will be the right choice for
JD Sports to gain more customers and a stable cash inflow.
In response to this, JD Sports must follow the market development strategy as per the
Ansoff matrix strategy. It can help the organisation to penetrate into the new market with its
existing products (Grünig and Kühn 2018). There are various ranges of products that JD Sports
offers to its customers. Therefore, focusing on the market development will provide a strategic
direction for JD Sports for the next 5 years (Tonysheva and Kuzmina 2018). In addition to this, it
is also pertinent for the organisation to focus on the pricing strategy of the organisation.
Generally, JD Sports follows the competitive pricing strategy in the existing market. However,
the organisation must reconsider its pricing strategy as per the new market demands and trends
(Mohamed, Ndinya and Ogada 2019). Therefore, with the help of the Porter’s generic model
emphasising on the cost leadership pricing strategy in the new market can be a pragmatic
approach for JD Sports to set its products’ price very slow so that maximum number of

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customers in the new market can get attracted and convinced enough to purchase the JD Sports
products (Wada 2018).
Strategic objectives
Specific To increase the profit by 20% within next 5 years
Measurable To maximise the percentage of customers by 15% by years
Attainable To expand the market in 2 new market by 4 years
Rational To use cost leadership practice in the new market
Time frame The entire process will be completed by 5 yearas
Conclusion
Based on the above discussion, it can be stated that the report intends to elucidate the
strategic measures that JD Sports must follow in course of establishing an effective
organisational practice. It is important to note that there are significant threats that the
organisation is facing in its existing UK market. Therefore, it is pertinent for the organisation to
expand its market globally. The alternative market opportunities will help to get continuous cash
flow and a stable business profitability. Therefore, by using the Porter’s generic model and
Ansoff matrix, it is decided to implement a market development in the new regions with a focus
on the cost leadership approach. Therefore, it can be concluded that the strategic plan will help
JD Sports to get competitive edge for at least next five years.

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Reference
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Appendices
Appendix 1
Image 3: Political stability in UK
(TheGlobalEconomy.com 2020)

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Appendix 2
Image 4: Government effectiveness in UK
(TheGlobalEconomy.com 2020)
Appendix 3
Image 5: Business freedom in UK

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(Heritage.org 2020)
Appendix 4
Image 6: Impact of COVID19 on UK retail sector
(alvarezandmarsal.com 2020)