Strategic Management Report on JD Sports

This report provides a strategic management analysis of JD Sports, a leading retail company in the UK. It includes an assessment of the external and internal business environment, competitive strategies, and strategic directions for expansion in the Asian market, specifically in Bahrain.

Strategic Management

EXECUTIVE SUMMARY
The report of strategic management is devised on JD Sports which is leading retail having
head offices in Bury, United Kingdom. The higher authority of the retailer are making plans for
expansion in Asian country where they have no official presence. For this, selected Asian
country is Bahrain in which products of the company are lacks awareness and existence. The
report covers diverse strategic management frameworks which guides to the managers for
analysing macro, micro and internal business environment. For this, PEST analysis, Porter’s five
forces and Value chain analysis are conducted. For strategic direction, models such as Porter’s
generic and Ansoff Models are applied in the report. The company is recommended various
strategies including cost leadership as well as market development strategy in order to expand in
Asian country which is Bahrain successfully.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................2
About the company......................................................................................................................2
External environmental analysis to identify opportunities and threats........................................2
Internal environmental analysis to determine strengths and weaknesses....................................5
Identification of competitive strategies.......................................................................................8
Strategic directions......................................................................................................................9
CONCLUSION AND RECOMMENDATION............................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management is continuous planning, organising, directing, monitoring analysing
addition to evaluating all necessities that an establishment requires for the purpose of reaching
successful heights or achieving long term objectives (Aurachman and Mutia Putri, 2020). Within
an enterprise, strategic planning forces on assessment of goals, discharges board responsibility,
provides methodologies to make decisions, enables organisational perspectives and supports
understanding. For the project, JD Sports is considered company. It is an UK based entity that is
popular as retailer of fashionable casual together with branded sportswear. In last couple of
years, the retailer have gained huge fame and recognition in the market, so, its Board of
Members are planning for expansion in Asian Market. For this, the management have decided to
make official presence in Bahrain by opening stores.
The report highlights information about the organisation and industrial background together
with key challenges that are faced by the enterprise. It also covers external environmental
analysis and internal environmental analysis through suitable frameworks. It identifies
competitive strategies addition to strategic directions for expansion in the Asian market.
MAIN BODY
Organisational background
JD Sports is popular retailer in UK which was established in the year 1983 through David
Makin as well as John Wardle. It is specialised for selling fashionable branded, casual addition to
sportswear. The company operates in retail industry since the establishment. The objectives of
retailer entity is to deliver long term sustainable earning growths for increasing total shareholder
returns by share price performances as well as dividends, retaining its financial potentials for
investing in growth and sustainability of propositions. It started as individual shop in Bury and
then further expanded in most of EU that includes Ireland, France, Spain, Germany and many
more (JD Sports, 2020). It is already regarded as most creative and innovative visual
merchandiser of wearable with high quality, most exclusive and best stylish range. To increase
market share and customer base, Board of Directors of the retail business are making decision to
expand into Asian Market by opening physical stores in country of Bahrain. The strengths of JD
Sports are that the company have reliable suppliers that guides managers to overcome all kinds
of bottlenecks. It also have automation of practices that brings consistency in quality of
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commodities and scaling up demand conditions in the market. Moreover, the company have built
reliable distribution network to reach majority of potential market across the globe. Another
strengths of JD Sports is that it have strong portfolio for expanding in new categories.
In last couple of years, JD Sports have went through tough times. The managers have
recognised increasing challenges of powerful comparatives, pertaining economic along with
fiscal threats to expenditure of consumer (JD Sports faces challenges, 2020). Moreover, the
company was also profiled in media amid allegations for mistreatment of warehouse employees
because of forcing them to work day and night to set up a new store.
Analysis of Bahrain
Bahrain is the country in which JD Sports have no official stores. It have been analysed
that people of Bahrain are more focused for sportswear and other retail products that are offered
by the entity. With proper market research of the country, the managers have reached or is
planning to set up the business in Bahrain so to improve its customer size and manage customer
relationship for the purpose of improving high customer satisfaction from prospective customers.
External environmental analysis to identify opportunities and threats
External environment: An environment outside premise of an establishment which
pertains to social, physical, technological and political conditions is defined external
environment (Djuretic and Krasulja, 2019). It involves uncontrollable factors because of which
an entity requires to make necessary changes in strategies and actions as per requirements of
external environment. At the time of identifying existing position of company, managers are
required to ensure that key focus is made towards external environment. In case with JD Sports,
managers evaluates both macro and micro environment so to examine external environment.
Kinds of external environment that are analysed by management of JD Sports are underneath:
Macro environment
The type of situation which occurs in whole economy than in some specific industry or
region is termed to macro environment. It is remote surrounding of a business which is not
controllable and unpredictable to control. Management team of JD Sports are planning for
expansion in Asian market. For this, they are willing for assessing its existing position in the
market through analysing all factor pertaining in macro environment. Through applying PEST
analysis, managers of JD Sports analyses all factors in effective and convenient manner.
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PEST analysis: It is a managerial framework to scan and monitor macro environment of
the country it is operating and where it plans for expansion (van de Wetering, Mikalef and
Krogstie, 2019). In context to JD Sports, managers are required to apply the framework for
determining existing position and exploiting new opportunities with the view of creating more
competitive positions. PEST analysis includes factors which are important to focus while
planning business expansion. The factors are as elaborated:
Political: The elements or factors which are impacted or influenced through government
decision are political factors. This is essential for a company to consider political factor which
are trade restrictions, policies of operations, taxation policies, environmental laws and hence
forth. For JD Sports, managers are required to pay attention towards government regulations,
tariffs and other factors while planning to expand in Asian Country as it impacts potential of
business for being profitable and successful. The management should also look towards local
addition to federal power structure and must discuss anticipated shifts to reach desired position.
Economic: Factors which gauges economic environment through scanning and studying
factors within macro economy are economic factors (Durcan, O'Dwyer and Petri, 2019). With
this factor, an organisation access demand of offerings, costing of product and expansion. It
helps in examining outside issues that are associated with economy which could play significant
role in entrepreneurial success. For the analysis, administrators of JD Sports are required to look
at gross domestic product, exchange rate, credit availability, unemployment, business cycle
addition to fall or rise of middle class. At the time of making plans to expand business in Asian
countries, Board of Directors will be focusing in all the associated economic factors to grab early
opportunities for success.
Social: It guides an entity to gauge potential market size and study demographic together
with target customers. Social factor engrosses study of age distribution, preferences, population
growth, family size, population density and buying habits (Emeagwali and Aljuhamni, 2019).
With social factor, marketers of JD Sports could analyse socio-cultural environment of
pertaining industrial market so to understand the ways consumer demands and choices are
shaped and the influential aspects that brings them to purchase in market of Asian country. With
this, organisational members devises plans to offer expected products to prospects and retaining
them for future.
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Technological: As changes in technology are occurring rapidly and consumers are eager
for adopting new technologies, it is central for company to understand factors that are connected
with technological advancement, innovation, rate of diffusion and automation (Timofeeva,
Akmaeva and Aytpaeva, 2019). Technology plays wider part of company, for example, JD
Sports and impacts on it either negatively or positively. While introducing or launching the
products in Asian country, adoption of updated and advanced technology will assist in producing
in bulk to meet demands promptly. Moreover, adoption of digital technologies inventory
management system, etc will help in managing stocks of inventory and reducing situations of
overstock or understock.
Micro environment
The surrounding involving includes all factors of immediate environment that influence
organisational performance, strategies and operations as these have direct bearing on regular
operations. The immediate environment is termed as micro environment. For analysing micro
environment, management team of JD Sports uses Porter’s five force method that is as applied:
Five forces framework: The strategic tool that analyses industrial attractiveness and
competition is named to Porter’s five force framework which is effort of Michael Porter. It
covers five forces that determines principal competitive influence within the market. In JD
Sports, the framework is applied for micro environmental analysis. Its forces are defined in
relevance to JD Sports underneath:
Competitive rivalry: In an industry, fierce competitive rivalry is largest determinant of
industrial competitiveness (Sahaf, 2019). Having an understanding about the industry
competition is necessary for successfully expansion of business. In retail industry, there are
major players that creates high competitive rivalry. Top competitors of JD Sports comprises Cole
Haan, Foot Locker, Under Armour, etc that are offering undifferentiated commodities. It reflects
high competition level that leads to complexities in future as it loses its customer share and
market share due to competitive rivalry.
Threat of substitute: Substitute product utilises various technology for making attempts
to solve same economic requirements. When some product is replaced by others it is seen as
substitute commodities (Franklin and Harrington, 2019). In retail industry, customers finds
substitutes that meets their requirements or needs in similar manner. As JD Sports works in retail
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industry, it faces high substitution threat as there are multiple substitutes that are customers
purchases from local and convenient shops.
style addition to fashion trends performs important role in the retail industry.
Threat of new entrant: Within an industry, new entrant is termed to the company or
entrepreneur who have set the business to offer innovations. In retail industry, new entrants
brings innovative ideas that pressurises exiting retailers to reduce prices or demit their products
that leads to reducing their market and customer size. With reference to retail industry, JD Sports
is willing to expand into Asian country as new entrant in which it have high chances to face
multiple barriers. Moreover, huge investments are required by the entity to launch itself as new
entrant.
Bargaining power of customers: It is explained as market of result. Customers have
potentials to put an enterprise into pressure that builds high bargaining powers of buyers. In retail
industry, various alternatives are available for customers to buys their necessities. In aspect to JD
Sports, when it will expand into Asian country then it have to operate as per buyers because
buyers have huge numbers of options available. If it fails to meet their needs then have huge
chances of failure. In contrary, there is low bargaining powers with buyers in case then have few
choices.
Bargaining power of suppliers: It is delineated to market of inputs (Galliers, Leidner
and Simeonova, 2020). Within retail industry, all external parties that supply raw material,
labour, services, components, etc to a company are suppliers. If the company once acquires
material from individual supplier then it provides high bargaining powers to suppliers. However,
the industry is very wide and millions of suppliers have relations with retailers, for example, JD
Sports that results in low bargaining power for suppliers as when one of them makes certain
changes in price or quantity then the company have wider chances to make relations with other
parties and manage business successful.
Internal environmental analysis to determine strengths and weaknesses
Internal environment
It is element of business environment that is controlled by managers of organisation. This
includes machines, management practices, culture, climate, work processes and events which
influence or can be influenced through activities, preferences addition to decision making. All
kinds of establishments analyses or examine their internal environment for the purpose of
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determining resources and capabilities which are its key strength to handle competition
(Golensky and Hager, 2020). In case of JD Sports, administrators have choice of Porter’s Value
Chain to analyse the internal environment and recognise its capabilities that helps in achieving
competitive advantage. Porter’s Value Chain is defined below for JD Sports:
Porter’s Value Chain Analysis: Business analysis framework which breaks activities of
company in to strategically associated pieces is known as Value Chain Analysis that is
propounded by Michael Porter who says that value chain is assemblage of activities which are
performed for creating values for customers (Rendon and Snider, 2019). In strategic planning or
internal environment analysis, managers uses the framework for devising powerful and meaning
decisions. It includes primary and supporting activities that are as analysed for JD Sports:
Primary activity: The value chain ranging from inbound material to operations of production
to outbound commodities, distribution, customer care as well as after sales is said to primary
activity. In JD Sports, primary value chain activities are associated to production and selling
commodities to target audiences. To expand in Asian country that is Bahrain, the company is
required to work on following primary activities:
 Inbound logistics: Processes that are part of receiving, warehousing along with internal
distribution of basic ingredients along with raw materials of product are inbound logistics
(Gupta and Nair, 2020). For retailer such as JD Sports, it is essential for developing
stronger relations with external stakeholders that supply materials and support in
acquiring, storing and distribution of its all kinds of wearable. The activity requires
proper analysis for emphasising on all aspects to convert materials into valuable finished
outcomes to expand business.
 Operations: An activity which comprises translation of raw materials and using factors
for production of valuable commodity is known as operation. All related principles of
operations guides the company to create valuables. In the activity, operations department
of JD Sports manufactures or produces variants of products through machining, packing,
assembling together with testing.
 Outbound logistics: It comprises activities which leads to delivery of finished products
to customers via passing through multiple intermediaries. Certain outbound activities
with the help of which JD Sports will achieve success in expanding into Asian country
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that is Bahrain includes handling of material, scheduling, managing inventory in
warehouses, transporting, delivering, etc to final locations.
 Marketing and sales: Herein, an organisation highlights advantages together with
differentiation elements of offerings so to influence customers for buying and building
brand image (Kerzner, 2019). For JD Sports, it is essential to use suitable marketing
strategies for enhancing sales of offerings such as clothing and sportswear accessories to
drive maximum sales in Asian country. Services: In an organisation, pre and post related sales services are essential for
developing loyalty among prospects and potentials. For JD Sports, it is necessary to
provide pre sales and post sales services as modern customers rely more on these and it
helps in avoiding any kind of negative publicity that has chances to damage reputation of
the brand in other market such as Asian country.
Supporting activity: Activities which coordinates and facilitates working of primary
activities is termed to supporting activities (Pettit and Crossan, 2020). Some supporting activities
that JD Sports is required to carry out for expansion in Asian country which is Bahrain are
underneath:
 Firm infrastructure: It is venture’s structure addition to its management, accounting,
quality controlling mechanisms and legal matters handling. For JD Sports, it is significant
to manage infrastructure of new premise that will be opened in Asian country for the
purpose of optimising value of whole chain.
 Technology development: All activities of company are dependent on support of
technology in modern world. Technological integration in manufacturing, management,
distribution, marketing and many more is essential for JD Sports to install developed or
advanced technology to enlarge business in the new country.
 Procurement: It represents buying inputs that comprises machinery, supplies, equipment
and other items that are key to produce end product (Kunc, 2019). Business such as JD
Sports is required to focus on procurement activity with the view of optimising inbound
operations addition to outbound value chain in Asian country.
 Human resource management: The activity shows how people are managed for
attaining better performances. In JD Sports, managers are required to examine its human
resource management through evaluating aspects of HR that are workforce planning,
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recruitment, hiring, compensation, performance management, rewards and others.
Effective HRM has chances to reduce competitive pressure to expand in Asian country
on the basis of commitment, motivation, set of skills and engagement of employees.
Identification of competitive strategies
Porter’s generic framework: It defines the ways an organisation can pursue towards
competitive advantage within market scope. It was efforts of Michael Porter so to assist
organisational people to determine strategies for achieving competitiveness. By using the
framework, it becomes easy for managers of JD Sports to devise effective strategy for expansion
in Asian country which is Bahrain. Mentioned below includes elements of the model in
relevance to JD Sports:
Cost leadership strategy: With this, an establishment sets low prices of offerings for being
recognised as low cost producer in an industry. Sources related to cost benefit are varied addition
to depend on industrial structure (Kundu, Mor and Gahlawat, 2020). In case with JD Sports, the
strategy could be opted to expand in Asian country as lower cost manufacturer in retail industry
that will help in attaining and sustaining cost leadership to command on the industry.
Differentiation strategy: The aim of differentiation strategy is to help business to provide
something unique in the market with certain dimensions which are highly valued by purchasers.
By using it, a company chooses one or many attributes which various are perceived by wider
audiences. In respect to JD Sports, expansion in Asian country could be done through
differentiation strategy as it can position the business as unique that meets essential needs with
premium price.
Focus strategy: The strategy have two variants, one is cost focus and other is differentiation
focus to rest towards varieties of tapered competitive opportunity in the industry (O'brien, 2019).
Main consideration of cost focus is to exploit differences within behaviour of cost in certain
segments of industry, while differentiation focus assist in exploiting special requirements in the
target segments. In JD Sports, cost focus could be selected for seeking cost advantage in segment
which is targeted. Similarly, adoption of differentiation focus can be used so to seek uniqueness
in niche market.
As per explanation of the Porter’s generic strategies, Board of Directors of JD Sports must
go with cost leadership strategy to expand in Asian country that is Bahrain as this will enhance
options for the business to be recognised as market leader that offers products at low cost with
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high quality. It will benefit the company to gain attention of larger customers and sustainable
position in Asian country that is Bahrain.
Strategic directions
Ansoff framework: The framework is also popular with the name of Product/Market
Expansion Grid which is utilised by entities for analysing together with planning strategies for
further expansion or growth is termed to Ansoff Matrix (Meglio and Park, 2019). It involves four
strategies which help business in growth and determining risks concerned with each strategy. In
JD Sports, purpose of using Ansoff Matrix is to recognise which overarching strategy can be
opted for further development of business. The strategies of the model in relevance to JD Sports
are as defined:
Market penetration: Within this, an establishment puts more concentration towards
improving sales volume of present offerings to current target market. In an organisation,
managers while planning to execute the strategy they adopts ways like decreasing product prices
for attracting customers, acquiring competitor in same market and enhancing distribution efforts.
Within JD Sports, the strategy can be implemented by administrators to expand in Asian country
as it will strengthen its position and attract more customers in the industry.
Product development: In it, new products are manufactured or developed for meetings
requirements of existing market (Mitsakis, 2019). This strategy requires intense research to
develop product for expanding product range of business. In JD Sports, the strategy can be
employed for expansion in Asian country so to have understanding of present audience and
providing them with innovations that satisfy their choices in market.
Market development: With this strategy, new market is targeted for entrance with current
products. Expansion in new market means entering into new geographic regions or customer
segment. For JD Sports, market development strategy could be opted while planning to enter into
Asian country successfully as it leverages new market and increasing customers from different
places.
Diversification: Launching a new commodity in totally new geographical area is known as
diversification. It offers huge potentials to business for enhancing revenues and accessing wider
market size (Obeng, 2019). While planning expansion in Asian country through opening physical
stores, managers can consider diversification as it can help in opening up new revenue stream.
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From the explained Ansoff strategies, it is suggested to Board of Directors of JD Sports that
they can expand into Asian country that is Bahrain through market development strategy wherein
the business have opportunities for introducing its offerings in new market wherein it do not
have any official presence. The strategy will help in targeting non buying customers in existing
target segments to increase market size and customer base.
CONCLUSION AND RECOMMENDATION
From the information presented, it is concluded that changes within environment wherein
business operate requires constant assess towards strategies for growth and success. External
environment is classified into two types that includes macro environment and micro
environment. To analyses changes in macro environment, PEST framework is selected by the
company and for macro environment, Porter’s five force method is suitable. Determination of
organisation strengths and weaknesses is done with application of Porter’s value chain analysis.
For expansion purpose, managers of the company are recommended to use cost leadership
strategy and market development strategy as these both assist in exposing products of entity to
wider audience. This results in higher profits, improves sales and strong brand image.
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Online:
JD Sports. 2020. [Online]. Available through: < https://www.jdplc.com/>
JD Sports faces challenges. 2020. [Online]. Available through:
<https://www.walesonline.co.uk/business/business-news/jd-sports-faces-challenges-
despite-1923816>
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