Strategic Management - 21496486

Strategic Management - 21496486
UNIVERSITY OF WEST LONDON | 15.09.2021
JD Sports Business Strategic Report
Module: Strategic Management
Student Number: 21496486
Assignment Name: Individual Strategic Management Report (100%)
Lecturer Name: Mr. Rizwan Anise
Word Count: 3761
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Strategic Management - 21496486
Executive Summary
The main goal of this report is to provide a detailed perspective to the board of
directors as to why JD Sports PLC, a UK-based retailer, should expand their business
in an Asian market. It will emphasis on providing the best strategic direction to grow
internationally and developing strategies that will have a positive influence on the
firm and give them a competitive advantage over their competitors. It starts with a
macro (PESTEL) examination of the external environment to identify opportunities
and risks, followed by a micro (Forces Framework) analysis of the industrial structure
and nature of competition. Following that, VRIO is utilized to comprehend the
internal environmental analysis in order to find strengths and shortcomings.
Determine the Competitive Strategies (Porter's Generic Strategies) that are required
for JD Sports' success and how they will affect the business if they build a store in the
Hong Kong financial markets. Furthermore, what current tools do businesses employ
in their UK stores and what they will bring to their Hong Kong stores when they
choose to start a business over there, as well as strategic directions (Markets,
Products, Services) and methods of expansion. Finally, the report summarizes the
research's important findings and gives recommendations to ensure that the company's
decision to open a store in Hong Kong is the appropriate one.
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Strategic Management - 21496486
Table of Contents
Executive Summary.......................................................................................................2
1.0 Introduction..............................................................................................................4
2.0 External Environmental Analysis for identifying opportunities and threats.......5
2.1 Macro Environmental Analysis – PESTEL.....................................................5
2.2 Micro Environmental Analysis – 5 Forces Framework..................................7
3.0 Internal Environmental Analysis for identifying strengths and weaknesses......9
3.1 VRIO Analysis................................................................................................9
4.0 Identification of Competitive Strategies...........................................................12
4.1 Porter’s Generic Strategies............................................................................12
5.0 Strategic Directions & Methods of Expansion..................................................13
5.1 Strategic Direction (Markets, Products, Services)........................................13
5.2 Methods of Expansion...................................................................................14
6.0 Conclusion and Recommendations...................................................................15
7.0 References.........................................................................................................16
Appendix 1 - PESTEL analysis of Hong Kong market for JD Sports Fashion Plc.....20
Appendix 2 - Porters Five Force Analysis of JD Sports Fashion Plc in Hong Kong. .24
Appendix 3 – Staged International Expansion Model for Hong Kong Market...........26
List of Tables
Table 1: Porter’s Five Forces Model for JD Sports Fashion Plc....................................8
List of Figures
Figure 1: PESTEL Analysis Model................................................................................5
Figure 2: Michael Porter’s Five Forces Framework......................................................7
Figure 3: VRIO Framework.........................................................................................10
Figure 4: Generic Strategy Options..............................................................................12
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Strategic Management - 21496486
1.0 Introduction
In today's competitive environment, every company requires certain clear guidelines
in order to grow and produce money from its major assets. Objective setting,
competitive environmental analysis, strategic evaluation, and assuring management
success are all examples of strategic management procedures (Wheelen and Hunger,
2002). JD Sports PLC, a UK-based retailer selling stylish casual and branded
sportswear, has been chosen to perform the strategic management project. Founded in
1983 by John Wardle and David Makin, the company has grown to become the UK's
leading sports and casual clothing brand. JD Sports started off as a single store in
England, and by 1996, it had expanded to 56 sites across the United Kingdom, as well
as over 2420 outlets in 18 countries. The organization's management and leadership
department recently decided to expand its market in the Asian region, and Hong Kong
was chosen as the site of expansion since it is one of the world's most compactly
inhabited areas and the world's third-largest international financial hub, benefiting
from cheap taxation and free trade while having the greatest per-capita income.
Sports goods and services retailing has a strong presence in the UK apparel market,
and the business is likely to grow even more in the coming years. Sports Direct and
JD Sports, two of the most well-known retail businesses in the United Kingdom, are
both in the sports fashion market. By the end of 2023, the UK sportswear market is
expected to have grown by over 20.9 percent, reaching €6.7 billion. Even after the
current pandemic, when most organizations are unable to make as much cash as they
would like, the organization has been fairly profitable. Internal and external analysis
of the company will be portrayed in the assignment from the standpoint of their
market expansion plan in Hong Kong. Finally, the company's competitive strategies
and strategic directions will be discussed.
Key challenges faced by JD Sports Fashion Plc.
 JD has not given the rent for its 390 stores established in the UK because of
the covid-19 outbreak (Kollewe, 2020).
 JD has come under criticism because of the “worse than prison” situation at its
warehouse (Independent, 2020).
 Shoppers are complaining about poor consumer service facilities (Butler-
Young, 2020).
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Strategic Management - 21496486
2.0External Environmental Analysis for identifying opportunities
and threats
Understanding the environment in which your organization operates is an important
component of planning because it allows you to identify the opportunities and dangers
that are unique to your industry (Wheelen and Hunger, 2010). An external study
examines the larger business environment in which your company operates.
2.1 Macro Environmental Analysis – PESTEL
PESTEL analysis is a strategic method for analyzing external factors that affect JD
Sports. These external aspects will aid them in comprehending the market and
preparing the organization with a market-specific strategy (Smith and Zook, 2011).
Figure 1: PESTEL Analysis Model
Source: (Professional Academy, 2018)
 Political factors: Obtaining official approval is the first step in entering a new
country and beginning a new business (Kotler and Armstrong, 2014). In a
political setting, issues such as political stability, changing legislation,
governance, and taxation, among others, have a vital influence in defining the
factors that may affect JD Sports' ability to operate in the Hong Kong fashion
industry (Kolios and Read, 2013). According to Appendix 1, Hong Kong's
political stability occasionally has a detrimental influence on businesses due to
shifting trade restrictions. However, due to its low taxes of high-net-worth
individuals and businesses, the city-state remains one of the world's biggest
tax havens.
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PESTEL
Economic
Social
Technological
Enviornmental
Legal
Political

Strategic Management - 21496486
 Economic factors: Employment opportunities, fiscal consequences, and
material costs are recognized as PESTEL economic elements (“Oxford
College”, 2016). As a result, economic issues such as foreign
exchange/interest rates, labor market conditions, inflation, and savings rates,
among others, are crucial for JD Sports Fashion Plc to understand, as these
factors influence the country's global fiscal environment (Hill and Jones,
1995). According to a deep understanding of the Hong Kong economic
environment (Appendix 1), JD Sports Fashion Plc's business practices will be
influenced by the current economic structure, which will provide a wide range
of growth opportunities. Similarly, it's critical to understand the stage of an
industry's life cycle, as mature sectors might be more difficult to break into
due to market saturation than businesses in the early stages. Beyond the
current difficulties and uncertainties, the Hong Kong economy has a positive
medium-term prognosis.
 Social factors: Cultural conventions, values, and trends have a significant
impact on organizational culture (Armstrong et al., 2012). JD Sports Fashion
Plc can use demographic trends, power structures, customer buying patterns
(Ferrel et al., 2011), and shared values to develop effective marketing
messages and fulfill organizational objectives, as illustrated in Appendix 1.
For instance, JD Sports Fashion Plc can identify the appropriate market
segment/segments with great development potential by studying changes in
demographic patterns such as the aging population, migration trends, and
socio-economic features. Similarly, foreign marketing executives consider
culture to be crucial. Each community has its own set of values and norms that
influence consumer behavior (Samson and Richard, 2012). As a result,
personal contacts at JD Sports are critical to doing business in Hong Kong
successfully.
 Technological factors: Appendix 1 is a broad study of the technical
environment that can help JD Sports Fashion Plc capture technological trends
and acquire key business advantages like greater profitability, swift revolution,
and enhanced operational productivity. The evolution of information and
communication technologies has resulted in the use of innovative marketing
tactics to encourage consumer collaboration. JD Sports Fashion Plc should
closely evaluate continuing technical improvements in Hong Kong to stay
ahead of the competition. JD Sports, for example, has used TrueRating
technology throughout its locations, allowing the company to receive real-time
data on customer experiences (Fashionnetwork, 2020). Such technological
advancements have the potential to rewrite market success criteria and
transform the industry (Ferrel et al., 2011). As a result, JD Sports may take
advantage of these technical capabilities to gain a foothold in the Hong Kong
market.
 Environmental factors: Greater environmental awareness and changing
circumstances has made environmental analysis a critical component of the
PESTEL study. Environmental norms, laws, and regulations fluctuate
depending on the market. The international presence of JD Sports Fashion Plc
needs careful analysis of these differences in order to avoid undesirable
scenarios. According to Appendix 1 analysis, changes in weather and climatic
conditions can have an impact on business efficiency. Furthermore, regulatory
agencies' emphasis on ensuring environmental compliance is altering product
innovation aims. As a result, JD Sports must focus on selling the
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