Strategic Management Report for JD Sports: Expanding into Real Estate Industry

This report discusses the strategic management strategies that JD Sports can use to expand its business in the real estate industry. It includes external and internal analysis, competitive strategies, and strategic directions for running the business effectively and efficiently. The report also highlights the challenges faced by JD Sports and the opportunities available in the real estate market.

Individual Strategic
Management Report
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EXECUTIVE SUMMARY
The project highlight about strategic management strategies which must be used by
company in order to develop their business in new market. For this report, the chosen
organisation is JD Sports. The brand is focusing on expanding its business in real estate company
in order to increase its customer base and profitability of business. It also covers various
strategies for running the business in effective and efficient manner.
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Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
Company Background.................................................................................................................4
Industry Background...................................................................................................................4
Key challenges faced by JD Sports.............................................................................................5
External analysis .............................................................................................................................5
Macro (PESTEL Analysis).........................................................................................................5
Micro (5 Forces Analysis)...........................................................................................................7
Internal Analysis..............................................................................................................................9
Competitive Strategies (Identification of Competitive Strategies)................................................10
Strategic directions ........................................................................................................................11
Markets, Products, Services......................................................................................................13
Expansion strategies..................................................................................................................13
Conclusion and Recommendations ...............................................................................................14
REFERENCES..............................................................................................................................15
APPENDIX....................................................................................................................................16
Pestle analysis: JD Sports..........................................................................................................16
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INTRODUCTION
The report is based on strategic management in which the knowledge of relevant strategic
framework is determined. It also covers external and internal analysis by identifying the key
issues which is faced by organisation while working. Strategic management is a framework that
sets goals, objective and procedures for making company more competitive in market. It helps in
providing direction to organisation by framing plans and policies in order to achieve the goals
and objective of business (Tonelli and Cristoni, 2018). The main aim of strategic management is
to help company so that they can meet their objectives. Strategic management is important for
organisation as it helps in identifying the opportunities and also makes business prepare for the
future.
Company Background
The chosen company for accomplishing this report is JD Sports, it is a sports fashion
retail company which was founded in 1981 by David Makin and John Wardle. JD Sports is a
public limited company having headquarter in Bury, England, UK. The brand mainly deals in
clothing and sports accessories. JD Sports have huge number of stores in United Kingdom and
Republic of Ireland. Asia Pacific, US and Europe. There are approx 34,885 employees in
company that helps in increasing the profitability and growth of brand. JD Sports generally deals
in Retail industry. In 2020, they have generated £6,110.8 million revenue and also the net
income of company is £250.7 million.
Industry Background
In UK, sportswear market is growing rapidly as its consumers mainly focus on leisure
and wellness that supports growth. Customers in sportswear industry prefer to wear sportswear
clothes as compare to casual clothes. The biggest brand in sportswear industry is Nike and
Adidas. Sportswear industry was invented when British John Redfern has designed the tailored
garments for women so that they can wear, play tennis, went for yachting and do archery.
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From the above graph, it is being identified that sportswear companies have its strong
presence in different countries. In UK, Adidas have 32% active presence in market whereas Nike
covers 30% of market. It is being identified that H&M also have strong presence in market by
29%. Calvin Klein also deals in sportswear and have 17% presence in UK market.
Key challenges faced by JD Sports
The key challenges which is faced by JD Sports due to pandemic is reduce in
profitability and level of performance in market. They are facing issues related to sales and
profitability of business. Due to COVID 19, government imposed lock-down which influence all
types of industry. The pandemic has laid sportswear industry in drastic situation as all sports
activities are banned due to spread of disease. Other issue which is faced by JD Sports is that
most of its outlet is closing due to influence of pandemic.
Post pandemic, JD Sports is planning to invest in Real Estate market in UK in order to
increase its profitability and growth.
External analysis
Macro (PESTEL Analysis)
Pestle analysis is conducted to identify the external environmental factors that could
affect the performance and profitability of business.
Political Factor:
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(Illustration 1: Sportswear in different countries, 2019)

JD Sports have presence in various countries due to which they might face huge political
risk. Due to Brexit, the performance and profitability of company decreases as it becomes
difficult to attract workforce. The brand have to attract more and more highly skilled employees
across different region so that they can contribute their best efforts in increasing the profitability
and productivity of employees (Wan and et. al., 2019). Through Brexit, company can also gain
opportunity they can invest in existing staff in order to improve their skills and knowledge so
that they can deal in real estate market effectively.
Economic Factor:
The inflation rate of UK market can create a huge impact on the performance and
profitability of business. It is important for JD Sports to identify the GDP growth rate of UK
market so that they can plan long term growth strategy. As JD Sports is focusing on investing in
real estate market (Bonsu, 2019). Inflation generally increases the price of properties and rent,
wages and stock. If price increases, the real estate investors can earn income from rental
properties with short-term lease structure which helps in increasing the profitability of JD Sports.
Social Factor:
Social media factors also influence the performance of company. JD Sports must focus
on creating strong social media presence as it helps in increasing customer base and attracting
more and more people towards the brand. They must understand the online shopping behaviour
of customer by considering the generational differences in real estate market. It also helps in
enhancing the profitability of business by creating strong social media presence on different
channels.
Technological Factor:
Technological factor creates a great impact on the performance and productivity of
business. In order to remain competitive in real estate market, it is important to implement new
and latest technology so that they can attract maximum customer towards the brand. JD Sports
must focus on implementing Artificial intelligence in order to run the business in smooth and
effective manner (Manyaeva, Piskunov and Fomin, 2016). They must focus on launching new
application of real estate properties so that they can provide relevant information related to real
estate market.
Environmental Factor:
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For running business in real estate market, it is essential to focus on reducing global
warming as it can negatively effect the environment. COVID 19 also create a huge impact on
environment as it directly effects on water, soil pollution and air by enhancing the rate of
municipal waste. By reducing the negative impact from environment, company can gain
competitive advantage in real estate industry and also create strong brand image in market.
Legal Factor:
Legal factors influences the profitability and growth of company, it is important to
consider the legal laws and legislation while running business so that JD Sports can remain stay
away from any legal conflicts and issues. By implementing various laws and legislation,
company can stay ahead in competition and also attract highly skilled employees towards the
brand (Mazouz and et. al, 2016). They must focus on implementing employee protection laws,
consumer protection laws and intellectual laws.
Micro (5 Forces Analysis)
In order to conduct Micro analysis, the suitable model which is implemented is Porter's
five forces. This model is used to evaluate the strength and competency of organisation through
its profitability.
Bargaining power of buyers:
The bargaining power of buyer in real estate market is low as there are various factors
which can create an impact on price from customer's perspective such as availability of
information, experience of customer and ability to use that information to negotiate better price.
Due to low bargaining power of buyers, company can increase its sale and also attract more and
more people towards JD Sports. In order to overcome the impact of bargaining power of buyers,
JD Sports must increase and diversify their customer base and also offer excellent customer
experience
Bargaining power of suppliers:
Bargaining power of suppliers in real estate market is high due to which they can
fluctuate the price of its raw materials. The high bargaining power of suppliers generally
influence the profitability and growth of company. For tackling the bargaining power of
suppliers, JD Sports can develop strong relationship with various suppliers and so improve its
supply chain efficiency (Nerur, Rasheed and Pandey, 2016).
Threat of substitute products:
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The threat of substitute products in real estate industry is low as there are many real estate
companies in UK market that offers different properties to consumers at different price. When
the threat of substitute product in real estate industry is low, it can increase the profitability of JD
Sports and also enhance the customer base of company. In order to tackle the threat of substitute
product, JD Sports can offer product and services at low cost and also focus on providing better
experiences to customer.
Threat of new entrant:
The threat of new entrant in real estate industry is low as it requires huge investment in
order to establish new business in industry. It is also difficult for new company to run the
business in effective and efficient manner with existing players. For handling the issue of new
entrant, JD Sports can develop brand loyalty by focusing on customer relationship management.
Rivalry among existing competitors:
In real estate market, there are huge competitors who contribute their best efforts in
attracting more and more customer towards the brand. The threat of rivalry among existing
competitors is high in real estate market which influence the performance and profit margin of
business (Akyuz and Gursoy, 2019). In order to tackle the issues related to rivalry among
existing firms, JD Sports can focus on identifying the need and expectation of consumers for
increasing customer base.
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Internal Analysis
For conducting internal analysis, the chosen model is VRIO analysis. Through this
model, company can improve their performance and gain competitive advantage in market.
Valuable:
Financial resources of JD Sports is valuable as they invest in business with their revenue
and profit margin. The brand also focuses on investing in external opportunities that arise in
order to expand their business and improve its profit margin. Employees of JD sports are
valuable as company invest huge amount in order to improve the skills and knowledge of
employees. Distribution network of JD Sports is considered as valuable resource due to which
they can reach to maximum number of people.
Rare:
The financial resource of company is considered as rare as they have strong financial
resources due to which they can compete in market for long run and gain competitive advantage
in market (Wudhikarn, 2016). Employees of JD Sports are rare as company focus on providing
training opportunity to staff so that they can give productive outcomes in achieving the goals and
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(Illustration 2: Porter's five forces model, 2019)

objective of business. The distribution network of JD Sports is rare resource as in order to
establish same distribution network competitors requires huge investment and time to build
better distribution network as compare to JD Sports.
Imitable:
The financial resources of JD Sports is costly to imitate as these resources are acquired
by organisation through prolonged profit. Competitors and new entrant in real estate industry
requires huge investment in order to compete with JD Sports. Employees of JD Sports are not
costly to imitate as competitors also provide training opportunity to employees in order to
improve their skills and knowledge. The distribution network of company is very costly to
imitate as they develop distribution channel over several years. For imitating the distribution
channel, competitors requires huge investment if they imitate similar distribution channel.
Organised:
The financial resource of JD Sports is organised as they they invest in right place and also
focus on investing in right opportunities in order to expand their business. Through these
resources, JD Sports can gain competitive advantage in real estate market. The employees of JD
Sports are not so organised as they hire the staff on the basis of experience and qualification.
They also face issues related to high turnover of employees due to which they are not organised.
The distribution network of JD Sports is organised as they focus on using this network in order
to reach more and more customer with high quality of real estate services.
Resource
Capabilities
Valuable Rare Inimitable Organisable
Employees of the
organisation
YES YES No YES
Distribution
Network
YES YES YES NO
Financial
resources
YES YES NO YES
Competitive Strategies (Identification of Competitive Strategies)
Porter’s Generic Strategies
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Porters' generic strategies is used to evaluate the attractiveness of industry in order to gain
competitive edge and enhance their long term profitability. There are mainly four strategies such
as cost leadership strategy, differentiation strategy, cost focus strategy and differentiation focus
strategy.
Cost leadership strategy:
While entering into real estate industry, JD Sports must focus on implementing cost
leadership strategy by offering them services at low cost. By implementing cost leadership
strategy, company can attract their customer by offering low cost services which helps in
attracting more and more consumers towards the brand and also increases the profitability of
business (Eisner, Lumpkin and Dess, 2016). This strategy helps in increasing market share and
profit margin of JD Sports. It also increases business sustainability and reduces the competition
in market as there are many competitors who offer real estate services at high cost.
Differentiation Strategy:
Differentiation strategy is another strategy which can be implemented by company in
order to compete in market and gain competitive edge. JD Sports is entering into real estate
industry so it is important for company to offer unique and different services to their consumers
so that they become loyal towards the brand and develop strong customer base (Novikova,
2018). For offering different services to customer, company can implement latest technology so
that they can provide easy and convenient information about the properties and rental services
provided by JD Sports.
Cost focus strategy:
Cost focus strategy is other strategy which must be implemented by JD Sports in order to
attract UK market in real estate industry. While completing cost leadership strategy, JD Sports
have to target narrow market by offering low cost products and services in real estate industry
rather than focusing on wide industry. By implementing this strategy, JD Sports can increase its
profitability in particular segment and also create more capital which they can use for growth.
Differentiation focused strategy:
It is another strategy which can be used by JD Sports in order to increase its customer
base and profitability of business. By implementing differentiation focused strategy, JD Sports
have to target particular group of people and offer them unique products and services in real
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estate industry. Differentiation focused strategy helps in increasing the productivity of business
and also attract large number of people towards the real estate company.
JD Sports must focus on implementing, cost leadership strategy in order to become
competitive in real estate industry. The cost leadership strategy focuses on reducing the cost of
products and services which enhances the brand image of company and also crate strong
presence in market.
Strategic directions
Ansoff Matrix
Ansoff Matrix is one of the strategic management tool which helps in facilitating and
guiding the company to grow its business.
Market development:
Market development strategy mainly focus on entering into new market with existing
products and services. By implementing market development strategy, JD Sports can enter into
new market other than UK by offering same real estate services. This strategy helps in increasing
the profitability and customer base of company (Wirtz, Müller and Weyerer, 2021). It allows JD
Sports to grow their business and also gain decisive edge over its competitors.
Product development:
Product development strategy mainly focus on introducing new products and services to
its customers in existing market. JD Sports can bring innovation in their real estate application so
that they can reach to maximum number of audience and provide relevant information about the
services they offer to customers. This strategy helps in managing and measuring the success in
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(Illustration 3: Ansoff Matrix, 2019)

real estate industry and also improve the reputation of JD Sports for delivering better quality of
services to customer.
Market penetration:
Market penetration strategy is one of the strategy in which company have to sell its
existing products into current market by focusing on promotion and price of its products and
services in real estate industry (Allison, 2018). By implementing this strategy, company ave to
offer its real estate services to UK market by increasing its promotion. Through using this
strategy, JD Sports can increase provide better services to its customer by focusing on improving
its service quality and reducing the price of its services.
Diversification:
Diversification strategy is another strategy which helps in increasing the performance and
growth of company. Through implementing diversification strategy, company have to focus on
launching new product and services in new market (Kunz, Siebert and Mütterlein, 2016). This
strategy provide access to new market and also enhances the profitability of business.
Diversification strategy helps in minimising the risk of loss and also safeguards against adverse
market cycles.
JD Sports must focus on implementing Market penetration strategy as it helps in
increasing customer base and also attract existing or new people towards the brand. Through
implementing market penetration strategy, company sell its existing real estate services in UK
market by making some changes in the quality and price of the services.
Markets, Products, Services
JD Sports is going to expand their business in real estate market, they are targeting UK
Market in order to deliver services related to real estate such as selling properties or offering land
on rent.
Expansion strategies
There are various types of expansion strategy which can be used by JD Sports for
expanding their business in real estate market. The few expansion strategy which can be
implemented by company are mergers, acquisition, alliances, organic growth and forming
partnership.
Merger:
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It is one of the method through which organisation can expand their business in market.
Merger is a method in which two companies comes into existence with equal terms and form
new legal entity. By expanding business with merger method, JD Sports can increase its market
share and also reduce the cots of operation as the cost is divided by both the parties (Desai,
2019).
Alliances:
Alliances is another method which can be implemented by JD Sports in order to expand
their business in real estate industry. Generally, it is being considered that real estate industry is
complex industry which requires huge knowledge of market and properties. Through this method
company can gain new client base and also create different source of additional income. It also
helps in building valuable intellectual capital and also reduce the risk of company while entering
into real estate industry.
Partnership:
Partnership is also a method through which organisation can expand their business and
enter into real estate industry. It is an formal agreement which is formed between tow or more
parties in order to run the business in effective and efficient manner. Through using partnership
method, JD Sports can easily start their business in real estate industry and also share the burden
with other parties (Tereshchenko and et. al., 2019). They can also make better decision and avail
better knowledge, skills and experience.
JD Sports must focus on using alliance method in order to expand their business in real
estate company as it helps in sharing the profit and operational activity of real estate business.
Alliance also helps in gaining the knowledge and experience in market and enhance its efficiency
in market.
Conclusion and Recommendations
It is being concluded from the above information that organisation must focus on
implementing right strategy in order to increase the growth and profitability of business.
Strategic management helps in providing direction to company due to which they can gain
competitive edge and remain competitive in market. Through strategic management, company
can develop plan and policies and implement in effective manner in order to achieve the goals
and objective of business.
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From the above information it is being recommended that organisation must focus on
implementing cost leadership strategy in order to attract customers by offering the low cost
services as compare to its competitors. In order to expand the business, JD Sports must focus on
using alliance method as it helps in sharing the profitability and risk equally. They can also focus
on implementing market penetration strategy for attracting existing or new customer in UK
market.
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REFERENCES
Books and Journals
Akyuz, G. A. and Gursoy, G., 2019. Strategic management perspectives on supply
chain. Management Review Quarterly, pp.1-29.
Allison, J., 2018. Values statements: The missing link between organizational culture, strategic
management and strategic communication. International Journal of Organizational
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Marketing and Management. 10(2). pp.20-44.
Desai, C., 2019. Strategy and strategic management. In Management for Scientists. Emerald
Publishing Limited.
Eisner, A., Lumpkin, G. and Dess, G. G., 2016. Strategic Management: Text and Cases.
Mcgraw-hill Education-Europe.
Kunz, R. E., Siebert, J. and Mütterlein, J., 2016. Combining value‐focused thinking and balanced
scorecard to improve decision‐making in strategic management. Journal of Multi‐
Criteria Decision Analysis. 23(5-6). pp.225-241.
Manyaeva, V., Piskunov, V. and Fomin, V., 2016. Strategic management accounting of company
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Mazouz, B and et. al, 2016. Strategic management in public administrations: a results-based
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Nerur, S., Rasheed, A. A. and Pandey, A., 2016. Citation footprints on the sands of time: An
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journal. 37(6). pp.1065-1084.
Novikova, I. V., 2018. Strategic management of labor resources. Russian Journal of Industrial
Economics.
Tereshchenko, D and et. al., 2019. Combining strategic management and transformation
processes in the environment of international companies. Academy of Strategic
Management Journal. 18. pp.1-6.
Tonelli, M. and Cristoni, N., 2018. Strategic management and the circular economy. Routledge.
Wan, W. M .K .F. B and et. al., 2019. Strategic management in fatwa-making process. Academy
of Strategic Management Journal, 18(4), pp.1-6.
Wirtz, B. W., Müller, W. M. and Weyerer, J. C., 2021. Digital pandemic response systems: a
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Administration. 44(11-12). pp.896-906.
Wudhikarn, R., 2016. An efficient resource allocation in strategic management using a novel
hybrid method. Management Decision.
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APPENDIX
Pestle analysis: JD Sports
Political Economical Social Technological Legal Environmental
Brexit Inflation Social media Artificial
intelligence
Equality Act
2010
Global
warming
Political
instability
GDP Consumer
buying
behaviour
New methods Minimum
wage law
COVID 19
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