Strategic Management in JD Sports Industry: External and Internal Analysis

This report provides a complete evaluation of the internal and external environment of JD Sports industry along with the analysis of the competitive environment. It includes PESTLE analysis, Porter's five forces analysis, VRIO analysis, and SWOT analysis.

Strategic Management

TABLE OF CONTENT
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
External environmental analysis for identifying opportunities and threats.................................3
Internal environmental analysis...................................................................................................6
Identification of Competitive Strategies......................................................................................9
Strategic directions.....................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

EXECUTIVE SUMMARY
Strategic management refers to setting the effective strategies and procedure in order to
achieve the main goal of the firm. This report will illustrate the concept of strategic management
in the context of JD sports industry. The report will show the complete evaluation of the internal
and external environment of the business along with the analysis of the competitive environment.
INTRODUCTION
Strategic management indicates the ongoing planning; monitoring and all essential needs
which an organization is needed to implement and manage. Strategic management provides and
overall direction to the organization that how will they implement the strategy and manage
accordingly. This report includes the information about the JD sports company and their strategy
by analysing the internal and external environment factor. This retail industry provides
sportswear products and clothing’s goods and services with different designs and with the
application and evaluation of fashion trends and gives services into multiple countries.
Organization strategies refer to include consideration and identification of external and internal
factors for managing goods and services. So this study helpful for the evaluation of external
forces identification of JD sports that which major aspect affects expansion of powerful
management.
MAIN BODY
External environmental analysis for identifying opportunities and threats
PESTLE Analysis of Unilever
PESTLE refers to the political, economic, social, technological, legal and environmental factors
that affects the business (Perera, 2017). This has been considered as the external factors of the
business. The business must have keen observation over these aspects in order to protect the

business from various issues and this further helps in implementing the strategies. In order to
understand this concept with clearance here is the PESTLE Analysis of the JD sports:
Political factors- The company has responsibility to maintain the rules and regulations that
which is develop by government and UK has stable government rules from long term. The
administration has developed the certain rules for the products related to food. And the JD sports
company is producing the different range of clothes. Therefore, it is important to maintain the
rules and regulations. If the firm does not follow this, then there is the risk of getting license
cancelled (Phan, 2021). The JD sports company is effectively following all these rules and
regulations and maintaining all the fashion trend and retail into other country with application of
proper transportation policies. As a result, the company has to face no interference of the
government. On the other hand the wastes of the company manufacturing plant were increasing
and legislation modified to use alternative ways of disposing of the non-hazardous waste. Thus,
recyclable packaging were employed for most of the products.
Economic factors-The major threat of economic factor is that, the consumer likes to buy those
products whose price is less. This term directly influence the revenue of the JD sports. If the
company increases the prices of the products then it results in less selling of the products (Ameen
and Shaker, 2021). Because it provide clothing product and also multiple other company also
selling the same type of products. Less spending by the consumers leads to less generation of the
income and this cycle goes on. Therefore, it is important to maintain the prices of the goods as it
affects the various aspects of the business. It has been found from various studies that, the JD
sports company has been proven effective enough in maintaining the economic stability by
maintaining the demand-supply ratio in the economy with maintaining the prices of the products.
Social factors- The preferences and choice of the customers gets change with the changing pace
of the time and this works as one of the barrier in the growth process of the company. As there is
the threat of losing the customers as the customers gets attracted towards the product of
competitor. In order to solve this issue the company has adopted the policy of studying the
consumer behaviour (Möller, Nenonen and Storbacka, 2020). This enables the firm in terms of
having the effective understanding of the different aspects that leads to change the needs and
wants of the customers. As a result, the company takes those decisions that ensures the
satisfaction level of the customers.

Technological factors- The company has adopted the effective technology in order to produce
the products. The technology is enabling the firm to produce quality products in less time. The
firm often using the technology in order to make products available for their customers. The
company has provided the various online payment method to their customers (Akpoviroro and
Owotutu, 2018). The digital marketing of the company is opening various opportunities for the
firm in order to grab the large number of customers. As a result, this aspect of the PESTLE has
been effectively maintained by the firm and this ensuring the higher growth to the firm.
Legal factors- There are certain laws and legislation has been described by government for those
companies who provide consumer goods. These laws are related to the safety of the consumers.
This also involves the laws related to the consumer protection act. It is important to follow all
these laws. Otherwise, it results in heavy penalties for the business. The JD sports company has
been proven effective enough in performing all these laws and legislation. As a result, the firm
does not have to face the barriers.
Environmental factors- The company is performing the concept of sustainability in order to
ensure the responsibilities towards the environment (Akpoviroro and Owotutu, 2018). It is
important to perform the certain responsibilities towards the nature as the business runs their
operations in the environment. It is the duty of the business to perform certain elements that
ensures the effectiveness of nature. Otherwise, it leads to reducing the goodwill of the firm.
Porter five force:
Porter five force is one of the most used model to identify competition in the market and
help business organization to analyse impact of competition on the business (Almeida and
Santos, 2018). JD sports organization use this model to identify competition in the market, these
five force include:
Rivalry: rivalry means competition and their strategy, every business organization face
competition in the market where they operate. These competitions not only impact the business
and slow down the process but their wide range of product and strategy allow them to be more
effective in the market. JD sports company have being operating in retail industry which is
full of competition, they have to face various market giant which have wide range of product and
their product similarity is quite close to JD sports industry sports clothing products. Although it
has wide range of product which allow them to survive the market and its competition level.

New entry: new entry means new competition, these new competition provide high competition
to the company. These new entry not only affect the business in various ways but this also
become barrier in smooth flow of the business process (Knight, 2017). New entry have great
financial strength which help them to achieve a great market share in no time. JD sports industry
always get affected from these new entry which later become great threat for the business, some
of new entry have used financial power to promote their sales which decreased sale of other
company including this industry. Although JD sports have established brand name which means
these new entry can not greatly impact this company.
Power of supplier: every business organization need supplier who can provide raw material to
the manufacturing unit, without reaching suppliers a business can not arrange resources to meet
the production and manufacturing requirement, allocation of resource provide power to supplier.
JD sports has wide range of products in cloths which means they need supplier, they sometimes
face issue relating to the price demand of these suppliers, they offer high rate for those raw
material which is very essential for business. Although this company do not mainly depend on
one supplier because they know that supplier can greatly impact the business organization in the
market.
Power of customer: customer are the ultimate reason why a business organization is formed,
they are main reason for product and service. Customer carries great power in the market, they
demand new product as per their preference and fulfilling the demand of customer can be very
challenging (Fabbri and Klapper, 2016). JD sports face bargaining power of the customer in the
market which impacts on the business. It has wide range of product but still demand of the
customer push company to be innovative, hence this become challenging. Although this
company have their own customer base and these customers base are loyal to the company in
market.
Threat of substitution: competitors and these new entry try to copy the product and its concept,
Almost every large scale business organization face threat of substitution which means these
competitions try to steal the product concept and sell them in lower rate. JD sports always face
threat of substitution because they provide clothing products and multiple other business also
sale the similar products with easily copied by competition. This company facing serious issue in
substitution as sales of sportswear and other popular products is decreasing day by day because

there are many copies of product which is available in low rate. Although, JD sports has loyal
customer base which allow them to survive in target market.
Internal environmental analysis
Vrio analysis
This is an analytical technique for the better evaluation of the resources and competitive
advantage in the organization. Vrio determine the organizations the vale, rare, imitable,
organization. Basically, Vrio analysation is a complement towards the pestle analysis (Lieu,
2021).
Valuable: this indicates that the resources of the organization add value and create opportunity
for the better understanding of the organization. If the resources of the organization has enough
value to compete their competitor and have courage to defend against the threat. This indicates
those resources as well who cannot meet the condition of the organization and therefore,
organization need to re-evaluate the value of the organization resources. As the JD sports
reputation is valuable and leadership quality of the company is also valuable. This company
should use human capital management as they already are and enhance them by which they are
able to create a more value in organization.
Rare: rareness in the JD sports is the quality and the product which they can sale to their
customer are not rare but the quality and the reputation of the organization is rare across the
various countries. The product which sell by the company are not rare such as clothing goods or
product etc. therefore, they need to develop a competitive environment by increase in the quality
of product. No other company has the diverse range of products and quality like Unilever.
Imitable: the resources which company has to maintain because the product which deals in are
not as much are and there is a lot substitute and copy available that's why organization should
have to maintain their price stability in order to gain the competitive advantage. Management
and deals with ever employee of the organization and diversification is difficult to maintain but
better training enhancers this more and create a good value brand (Sroufe, 2018).
Organization: this indicates the management process and system in the organization by which
they establish and enhance their activity, task in organization for the better recognition. JD sports
has the systematic structure and resources, because it believes in involve educated and essential
employee who has great senses to manage performance of overall business and capabilities by
which they are able to make a brand and recognition in the marker which help the organization to

stand as competitive advantage. Company train heir employee to manage the every division by
cross functional management which helps the organization in order to enhance.
Resources Valuable Rare Imitable Organization Competitive
advantage
Reputation of
organization
yes yes yes yes For long term
competitive
advantage
Leadership yes yes no yes Strong
competitive
advantage
Awareness of
brand
yes yes no yes Sustainable
competitive
advantage
High
customer
rating
yes yes yes yes Realized
sustainable
competitive
SWOT analysis:
Strength: every business organization have strength, this strength allows business to survive in
the market, company's strength lies in uniqueness which they have and value of product which
they have created in the market (GURL, 2017). Strength of JD sports is, its brand name and
reputation, this company is well know for its high quality product and delivering value for
money. JD sports is one of the largest and most successful sportswear clothing retail giant who
tend to rule the market. Another strength of this company lies in the wide range of fashionable
products which allow company to be more effective in the market.
Weakness: the weakness of the JD sports is they face the issue to moving and engaging new
products and services in business because people only consider that this company provide sport
wear and fashionable product in cloths. Local market and create a competitive environment
which affect the organization a lot. Another weakness is that company products easily replaced

by their substitute which can be duplicates also because majorly JD sports deals in cloth
products. These things happen especially in the emerging market such as Asia.
Opportunities: Pay attention to rising markets -the potential to establish the brand efficiently
has rising markets. To develop more brand in Africa and Asia. Diversified products —
organization to increase its option and reputation in the massive opportunity. The sportswear
cloths mainly raise business performance with powerful manner. Expand in emerging markets-
industry is concerned in the whole possess a great potential in the market. The new demands
created in Africa and Asia to explore the emerging markets. Application of new and appropriate
quality of brand with unique design application of fashion trends defiantly get more
opportunities and it raises business performance with higher impressive manner.(Cheng, 2021).
Threat: the demand for the JD sports products are trying to increase in the market share and
minimize. Trade tax-the multiple countries which leads to a huge amount of tariffs is the
outsources of JD sports products from different regions. Intense competition are the different
cloths brands industry from local as well as global brands. Rising labour costs in developed
countries are affect the cost production for the industry some are profitability for the company.
Evolving new trends in fashion cloth design to quick changes as trend keep changing quickly.
The process of changing trends is also played a part of social media. Expand in counterfeits-the
fake brands in the markets are many the demand and value can break the value of designer
brands. Because of the health conscious consumer organization should have to develop a market
opportunity and improve in their existing product for better improvement (Palazzo, and Ferri,
2020).
Identification of Competitive Strategies
Porter generic theory:
Porter generic strategy help business organization to gain competitive advantage in the
market (Islami, Mustafa and Latkovikj, 2020). many business use this method to understand their
behaviour in the market, these four strategies include:
Cost leadership strategy: cost leadership strategy means business try to reduce cost of the
product to win the customer in the market. There are two scenarios in which business

organization use these strategies, at first when they fail in the market, and they try to reduce the
cost of the product to win the customer. Whereas at second they reduce cost to boost sales but in
this business need to add more stakeholder and shareholder to invest in the process. JD Sports
Company uses this strategy when they want to increase sales, they mainly focus on reducing cost
of those products which have failed in the market.
Differentiation strategy: differentiation strategy allow business organization to differentiate
their product from competitors product, they mainly focus to provide something unique to the
customer apart from the competition their product. Sometimes business complete introduce
innovative product which set them apart from their competition and it is very beneficial strategy.
JD sports highly consider and uses this differentiation strategy to stand alone in the market, this
company have wide range of products in cloths with different quality and design which make it
difficult to differentiate each production, JD sports only focus on those products which actually
can be differentiated and have ability to win the market. This strategy provides competitive edge
to the company.
Cost focus strategy: cost focus strategy means business focus on attracting customer on the
basis of price, in this strategy, business only focus to reduce cost until they win the customer in
the market. Sometimes this strategy allow company to set price as low as possible, this strategy
have various negative points because company is only focusing on undercutting the competitor's
price which impact the value of the product. JD sports use this strategy because they do not have
those products which have dynamic price which means they cannot take price as low as they
want. They attract customer by focusing on those products which cost can be reduced at some
point.
Differentiation focus strategy: Differentiation focus strategy means business only focusing on
entering niche market and covering only narrow market share. This is very challenging strategy
because in this business try to set price as high as possible to get ahead of its competitor in the
market. This strategy state that business try to target a special market segment by focusing on
wining those segment, these targets are set according to the demographic consideration which
help company to focus on only those products which can have higher price then before. JD sports
do not mainly uses this strategy because they do have wide range of products in cloths which can
not segmented according to the market.

Strategic directions
Ansoff matrix of Unilever
Ansoff matrix helps the organization to grow and by enter into market or produce a new market
which help the organization in enhancing their business and create a roadmap to achieve success.
Four quadrant which help the organization in order to make recognition in the market.
Market development: this includes the factor by which organization expand their business and
enter into new market with their existing product as the JD sports did when they globalize their
business. Marker development is risky factor for the organization because enter into a new
market and understand their culture, behaviour of the consumer are difficult and risky that what
if the community does not accept them and competitor get offend. Company create their brand
name in the customer by which they enhance their business. This company has the major market
is Europe, America and many more.
Product development: This indicates the product which firms launches into existing market as a
new concept. With the help of research and development organization development of the new
product according to the preference of their consumer and their taste. Organization develops a
strategy regarding the product development but for that they have to develop a strategy for the
betterment and advancement of the organization. Product development include the research and
development for making innovation in the exiting market and also to compete with the
competitor of the organization by develop a new product. This strategy of product development
is only held when the organization has complete control over the current market of the
organization. JD sports launches the unique cloths of sports cloths and in UK they are the
sportswear products selling brand (Lawrence, Rasche, and Kenny, 2019).
Market penetration- This element of this tool focuses on creating the existing market share of
the firm along with adding the new customers. This feature of the Ansoff matrix focuses on
increasing the market share so, the consumer base can be increased and this result increasing the
profit of the firm. JD sports use this element in effective manner and this ensuring the growth of
the company. In order to increase the share in the market the company has adopted the strategy
of affordable price. This results in attracting the large number of customers in the favour of the

firm. Along with this, the company has increased its promotional activities so, more number of
consumers can become aware about the products of the company.
Diversification: In diversification factor organization refer to the new product in new market
for the betterment of the organization as well as the beneficial for the market advancement with
innovation. This type of strategy is risky for the implementation of the new product into new
market before doing this organization need to survey and make the recognition for the betterment
of the organization. The diversification is mainly held in the new start up or the company which
is going to expand their business internationally. The organization always try to expand their
business and make them more effective by the promoting and make innovation in the new
market by advancement in the international market. Diversification mainly related and unrelated
which is those type of product in which organization is already working, for example; JD sports
diversify their business in Europe, Asia, US, Canada with launch new product on the basis or
their culture identification (As, 2020).
CONCLUSION
From the above report it has been concluded that, the strategic management plays the
vital role in implementing the effective strategy for the organization. This concept enables the
firm to have the better understanding regarding the different aspects that affects the business.
Understanding, analysing and monitoring the business environment is the important part of the
strategic management. An effective understanding of the internal and external business
environment along with the competitive scenario enables the organization in terms of
implementing the strategies. The report revolves around the JD sports company. The
organization has been proven effective enough in analysing and monitoring their business
environment. This further enabling the company in terms of implementing the effective
strategies on the basis of observation. The different analysing tools proves that the company has
adopted the efficient strategy in order to face the competition in the market. As a result, the firm
is touching the higher rate of growth. The company has highly effective position in the market
and the organization is maintaining the position in efficient manner.

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