Business Strategy - Macro Environmental Analysis

Running Head: BUSINESS STRATEGY
BUSINESS STRATEGY
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1BUSINESS STRATEGY
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.
Technologica
l
 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.
Environment
al
 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