Strategic Management: Analysis of JD Sports

This report analyzes the strategic management practices of JD Sports, focusing on their external and internal environment. It includes a PESTLE analysis of the Indian market and a VRIO analysis of JD Sports' resources. The report also discusses the competitive forces in the industry and provides recommendations for the organization.

Strategic management

Executive Summary
The report is based on JD Sports, a UK based organisation founded in 1983. The
organisation entered Asian markets in 2016 and till now have successfully opened 5 outlets in
India. The report focuses on different analysis strategies in order to understand the environment
around the business and establish their practices accordingly. Using PESTLE and VRIO analysis
the report focuses on external and internal strengths and weaknesses of the organization.

Table of Contents
Executive Summary.........................................................................................................................1
Introduction .....................................................................................................................................1
Main Body.......................................................................................................................................1
External environmental analysis ................................................................................................1
Macro (PESTEL Analysis) ........................................................................................................2
Micro (5 Forces Framework for analysing industry structure and the nature of competition)...3
Internal environmental analysis for identifying strengths and weaknesses: VRIO analysis ......5
Valuable......................................................................................................................................6
Rare.............................................................................................................................................6
Imitable.......................................................................................................................................6
Organized....................................................................................................................................6
Porter’s Generic Competitive Strategies.....................................................................................7
Strategic directions & methods of expansion .............................................................................9
Conclusion and Recommendations ...............................................................................................10
References......................................................................................................................................11
.......................................................................................................................................................11
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Introduction
Strategic management is a never ending process revolving around planning, organising,
staffing, execution and monitoring all such activities that are important for the organisation. It is
the thread that synchronises all the individual efforts and activities and move them towards
common organisational objectives. The focus of strategic management on planning and
executing such strategies that helps the organisation archive goals and objectives effectively and
efficiently. JD Sports was established in 1983 by John Wardle and David Markin. The
organisation is biggest supplier of sports, casual and fashion wear clothes and accessories. By
2011 the organisation had a well situated market in Ireland, Spain, Germany, Netherlands and
France. The organisation is UK based and entered Asian market in 2016.
Major threats faced by the organisation are Threat of substitution, threat of new
entrances, threat of rivalry, power of supplier and power of customers. There are countless
substitutes available for sports wear fashion in global market, along with introduction of new
businesses entering market with creative strategies to establish a grip over customers. In global
market there is excruciating competition along with the suppliers and customers having the
power to influence the market for the commodity. JD Sports have to use strategic management
practices effectively to overcome these threats.
Main Body
External environmental analysis
Also termed as macro primary analysis, this approach focuses on competitions in macro
environment, analysis of sector the organisation is associated with and the information and data
collected from the same is used on organisational growth. Macro environmental forces deals with
broader concepts that influences the operations of a business within the dimensions of society.
It involves all the external stakeholders like customers, suppliers, investors, etc along with the
market forces that flows freely like demand and supply. External business environment also
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includes political, social and economic units of the market. JD Sports have to analyse the
external environment and design their policies accordingly.
Macro (PESTEL Analysis)
PESTLE analysis is a frame work of how external factors may impact the decision
making and working of a business. PESTLE stands for Political, Economical, Social,
Technological, Legal, Environmental. JD Sports in India uses this method to analyse their
external influences. JD Sports India is an organisation that sells sports apparels and other
product of various multi national brands. They are the retailer for various globally recognized
brands like Nike, Adidas, Puma etc. Their motto is to provide their customers high quality
products all over India. It entered Asian market in 2016 in Asia pacific and now it has opened
more than 5 stores all across India. The PESTLE analysis of JD Sports India gives us the answer
to our various questions like what are the political conditions, how is the economic growth, what
are the latest trends, how much is the technological advancement, what are the legal framework
to be abide within and how is the environment conditions over there.
PESTLE analysis revolves around the following approaches :
Political - Political factor in PESTLE analysis speaks about the political conditions, tax
policy and trade restriction in the country that the organisation may face in India. Political
conditions for JD Sports India is unstable. One factor that can adversely effects the working of
JD Sports is political stability. India is politically unstable country, there are a lot of conflicts in
the politics. So JD Sports India, if they want to expand in India then they have to lookout so that
they don't fall in any of the conflicts.
Economical - Economical factor in PESTLE analysis give us an insight of how the
economic growth, wage rate, inflation etc. in India might affect the company. The economical
factors prevailing for JD sports in India is very bad as the inflation rate in India is 5.5% that is
very high if we compare it with the inflation rate of other countries like USA (1.2%) South
Africa (3.4%) etc. As it is an developing economy so it will help JD Sports India to expand more
and more as compared to other developed countries. The wage rate in this country is low as
compared to other countries like USA, Saudi Arabia etc.
Social - Social factors in PESTLE analysis gives us the information about how the
emerging trends and targeted customers can influence the company's brand name. Today the
latest trend in India and everywhere in the world is to be healthy and be fit. A lot of people or
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youngster like to walk daily, so JD Sports India is providing them with high quality sportswear
and also there are a lot of tweets about them in twitter which is good for increasing the brand
name. The company is also adapting themselves to fit the needs of Gen-x and millennials .
Technological - Technological factors in PESTLE analysis give us the insight of how
changing technology may directly or indirectly influence the brand . As India is a fast
developing country , so as a result of that they are also advancing in technology, so it gives JD
Sports India a technological upper hand over its competitors. As they are advancing in
technology JD Sports can do the research and development slowly but is a stable manner. They
have to do technological analysis regularly so that they don't fall behind their customers.
Legal - Legal factors in PESTLE analysis give us an overview of how Legal and
regulatory environment can affect the policies and decisions of an organisation. JD Sports needs
to operate with abiding to all the rules and regulation set by Indian government for production
and distribution . There are a few laws regarding consumer protection and all the outlets of JD
Sports India has to follow them . They also have to maintain some health and safety standard for
pleasant working condition .
Environmental - Environmental factors in PESTLE analysis give us an idea of how
natural factors may directly or indirectly affect the working of an organisation. JD Sports also
uses fast fashion technique like its competitors which harms the environment, so they have to
make some changes in their strategies. The climatic conditions of India are extreme, so JD Sports
have an opportunity to expand their business by producing clothes and other accessories for all
weather conditions like woollen clothes for winter and cotton clothes for summer.
Micro (5 Forces Framework for analysing industry structure and the nature of competition)
Micro 5 forces framework analysis is an frame to analyse company's competitive
environment . It means to lookout for not only the competitors but other factors that could
impact the business environment and its working . According to this frame work the
competitiveness will not only come from competitors but also from other factors which are the
Micro 5 forces framework. Micro 5 forces framework consist of New Entrant in the Industry,
Power of Customers, Power of Suppliers, Competitors in Market, Threat of Substitute Product.
Micro 5 forces framework analysis will help us to examine what all problem JD Sports will have
to face if they want to compete in Indian Market.
The Micro 5 forces framework analysis for the JD Sports India are as follows :-
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Potential of new entrants in the industry
New entrants when trying to enter have one goal that is to gain market share in that area .
The seriousness of this threat depend on entry barriers in the industry. As India is a developing
country so there they are having less no. of retail sports and casual wear giants. It is easy for new
entrants to enter in this industry because of less capital investments required to establish the
brand name. Although when JD Sports India is trying to compete in this industry they have to
come up with high level of innovation in their products so that they can easily survive the
competitions in the market .
Power of buyers
A lot of individual customers buy one or two but when it comes to sports team they buy
the product in bulk which give them the power to lower the prices little bit as compared to
individual customers. In India the buyers are having strong bargaining power. Increase in
competition in clothing sectors in India have given the customers more power and more option
and they are likely to switch to another brand which offers them a better product at a lower price.
JD Sports India will find it difficult to compete in this sector so they have to come up with offers
that will attract the customers towards them.
Power of suppliers
This tells us about how much power suppliers are having to bargain the price so that they
increase their profit margin. As India is a developing country so there are a lot of people who are
trying to enter in this sector so JD Sports have to keep that in mind that there are large number
of suppliers so the bargaining power of supplier is moderately weak. As most of them are small
players and only few of them are significant in size so the suppliers have to deliver the company
demands. If suppliers want to exert their power they have to come up with new innovations in
their products. They also have to come up with diversity of products to increase their power.
Competition in the industry
This tells us about the number of our existing competitors and their capabilities. Although
in India the competitors of JD Sports are innumerable and competition level between them is
very high. They are all engaged in a fierce competition. They reduce their margin in order to
overpower their competitors. In India where most of the international are not available so JD
Sports have to add them in their list and they have come up with interesting offers so as to
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attract new customers and retain there old customers. The rivalry is between large number of
companies who compete with each other in order to acquire large market share. So JD Sports
have to come up with new brand and innovation so that they can acquire large market share.
Threat of substitution
This threat refers to the chances that your customers is likely to choose a different option
which provides them with better features. In India a lot of people are becoming health conscious
so they prefer to travel by their own cycles so that they could be healthy and fit. The threat of
substitution for JD Sports in India is very high. JD Sports India have to increase the list of
products in their inventory so that they could provide their customers every thing they want.
They have to offer everything best to their customers ,whether it be price or product quality and
if they don't then their customers will switch to different retail brands.
Internal environmental analysis for identifying strengths and weaknesses: VRIO analysis
VRIO analysis is an internal resource analysis. VRIO frame work is a strategic analysis
tool which is designed to help the organisation to discover their competencies and to nurture
them. VRIO consist of 4 things value, rare, imitable, organised . VRIO analysis of JD Sports
will help them in answering problem to their various questions like what makes them special ?
Does their products offer some added value to their customer? Are they organised in each every
manner? This report will give them the answers to their question.
VRIO analysis for JD Sports
Valuable Rare Imitable Organized RESULTS
Marketing YES YES YES YES Long term
competitive
advantage
Workforce YES YES YES NO Unused
competitive
advantage
Management YES YES NO NO Temporary
competitive
advantage
Finance YES NO NO NO Competitive
parity
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According to the data analysed , marketing can give JD Sports India long term
competitive advantage. If they are going to nurture it then it will give them an upper hand over
there competitors in long term. They have to work on their workforce because it can give them
hidden competitive advantage.
Valuable
 JD Sports India every year spend so much time and money to on marketing so
that they can expand their brand in India .
 JD Sports India has sustained in this industry for a long time because of their
well trained workforce which adds value to their customers.
 The competitions in the market are increased so much that big companies are
competing in their management also and JD Sports in India has a management
team that is top notch.
 JD Sports in India up till now has grown this much because their investors or
financiers were very valuable .
Rare
 JD Sports every year spends lot of time and money to get innovative ideas for their
marketing that no other company will be able to do it
 The way JD Sports India trains their employees that no other companies can do that .
 The way APPLE manages its staff and other things is so rare to see in any other
competitors
Imitable
 No other companies other than JD Sports are capable of doing R&D like JD Sports
cause its both time consuming and costly process. It is hard to imitate this lengthy and
costly process.
 The marketing strategies of JD Sports are so innovative that their competitors can't
keep imitate the strategies which are rare.
Organized
 The R&D department of JD Sports is organized in such a manner that every time
JD Sports launches its product in the market it hit top of the charts.
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The strength of JD Sports is their Marketing as it is one of the most efficient long term
resource for the organisation. Their marketing strategies are developed after a critical analysis of
the department in accordance to the personalized audience and their preferences. Using their
marketing strategies the organisation is able to influence all five stages of customer decision
making. Their marketing strategy is a mix of traditional as well as digital marketing strategies
and is their biggest assest
Porter’s Generic Competitive Strategies
In order to analyse and figure out whether the organization is above or below the average
profitability criteria within the industry, relative positioning is used. The prime establishments
for average profitability of JD Sports hold the competitive advantages in long run. There are
only two competitive advantages in a market for long run, cost efficiency and differentiation.
When combined with other operational necessary activities, these two competitive advantages
can be characterised in three categories, cost leadership, differentiation and focus. Focus itself
have two categories, cost focus and differentiation focus. JD Sports have to focus on these
approaches in order to understand macro market more and plan their activities in accordance to
the dynamic forces of external environment.
Cost Leadership – This approach focuses on reducing the cost incurred to purchase or
acquire a product or service. JD Sports have to use low cost production techniques without
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Illustratio
n 1: Porter’s Generic Competitive Strategies

interfering with the overall quality of their products and services. Despite all the advantages and
strengths JD Sports hold in Asian market if the cost incurred in production or acquisition of
goods and services are too high, the organisation will not be able to stand the threats of
substitution and the competition within the market. JD Sports have to sustain the overall cost
leadership in order to survive the risks associated with this marketplace. India have almost all the
globally known sports brands, and everyone of them uses different techniques to attract and
retain customers and therefore cost leadership is a way to withstand against all the factors that
are a threat to the organisation.
Differentiation – In this approach of differentiation, JD Sports have to find a way that
makes it stands out from its major competitors. The organisation have to analyse the market and
find a specific need of customers which and use a mix of different methodologies to produce or
acquire them in a manner that makes it unique from that of competitors. These dimensions in
which JD Sports choose to be unique in should be highly valued by the customers. The
organisation have to uniquely position itself to meet these highly value needs. This approach
makes them stand out from their competitors. These factors results in a premium price for the
customers.
Focus - Porter’s Generic Competitive Strategies lay their focus on a selected narrow
competitive demand of high value. JD Sports have to select a particular section I commodity or a
particular section of new target customers and lay its focus on it. Focus can be further
characterised in two categories:
1. Cost focus – In this variant JD Sports have to lay its focus on acquiring or producing
these specially targeted products at lower costs. They have to find the ways to decrease
the overall costs of these products or services with respect to the organisation without
effecting the overall quality of these goods or services. This variant revolves around the
survival of the organization in a dynamic environment with huge competition as well as
substitute products. India have almost all the major global brands in its market, everyday
the treats of new sellers in the market increases and to withstand all of these threats and
maximize profits in order to achieve overall organizational goals, JD sports have to lay its
focus on cost minimization.
2. Differentiation Focus – This variant of competitive strategy focus on making the product
stand out from those of major competitors in the market. In this approach JD Sports have
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to find a section of market that have increased value to customers and use different mix
of methodologies, in order to stand out from their competitors. These dimensions in
which JD Sports choose to be unique in should be highly valued by the customers. The
organisation have to uniquely position itself to meet these highly value needs. This
approach makes them stand out from their competitors. These special segments hold a
premium price as well. Differentiation focus often turns into USP for the organisation.
Strategic directions & methods of expansion
In order to initiate growth in specific directions JD Sports have to focus on Markets,
Products and Services. The organization have to lay its focus on analysing the different elements
of the markets and understand how market works. JD Sports came to Asian market in 2016 and
till now they have opened 5 stores in India. The policies, ideologies and methodologies adapted
by the organisation helps them in attaining such a strong grip on the market. The organisation
can use the basic growth strategies to plan their further growth in the market. JD Sports can use
market expansion, in this technique the organisation focuses on attaining a grip on the market
first, analyse it and attract more customers from the same market by using different marketing
strategies. Since, JD Sports have so many strengths and opportunities when it comes to Indian
markets, a simple mix of digital and traditional marketing practices can help the organisation to
attract and retain more customers. The organization can use the approach of product
development I order to make their product more compatible with the market and attracting more
reliable target customers. This approach takes care of everything from a minor change in the
product to a major change in the overall qu8ality as well as layout of all products and services.
Products should be specially based on the type of market conditions based on the data collected
on competitors and past trends in order to initiate an outline for future trends. Product
development should keep the price determination in mind, with presence of these many threats in
an enclosed market, the organisation can not afford to lose the focus on cost minimization. JD
Sports also focuses on the idea of diversification, in order to stand out from their competitors, the
organisation can focus on introducing diversification in product and services. The organisation
have establish boundaries on diversification only after analysing the businesses environment
because this approach requires huge cost and if not executed properly can become a threat for the
organisation.
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Conclusion and Recommendations
The report revolves around the strategic management practices by JD sports and ways to
mitigate the risks. The report focuses on different analysis strategies in order to understand the
environment around the business and establish their practices accordingly. The report also sheds
light on Political, Environmental, Social, Technological, Economic and Legal factors that effect
the decision-making process of the organisation. In order to understand the micro environment
better the report use 5 forces that determines the nature of company's competitors. The five
forces are threat of substitution, threat of new entrances, threat of rivalry, power of supplier and
power of customers. In order to analyse internal strength and weaknesses of the organisation the
report uses VRIO analysis as a tool. The report also uses Porter’s Generic Competitive Strategy to
understand the competition for JD Sports in global market and mitigate the threats accordingly.
The report also focuses on markets, products and services as a tool for market expansion.
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