Strategic Management for JD Sports: Analysis, VRIO, and Competitive Strategies

This report analyzes the strategic management of JD Sports, including its external and internal environment, competitive strategies, and VRIO analysis. The report covers PESTLE analysis, Porter's five forces model, and recommendations for the company's expansion and strategic direction.

Strategic Management

Table of Contents
INTRODUCTION .........................................................................................................................2
TASK...............................................................................................................................................2
1.External Environment Analysis....................................................................................................2
PESTLE Analysis........................................................................................................................2
2.Porter's five forces Model........................................................................................................4
3.Internal environmental analysis for strengths and weaknesses .............................................5
4. Identification of competitive strategics .................................................................................7
5.Strategic Directions of products, market and methods of expansion .....................................8
Methods of expansion ................................................................................................................9
Recommendation.......................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
The strategic management is a process of setting organisational objectives, procedure and
goals to make the company more competitive. It recognises and describes those strategies which
are undertaken by the business organisation in order to attain an effective performance and
competitive advantages for their organisation. To improve the beneficial benefits it evaluate, plan
and implement the design at workplace. It looks at the effectively developed staff and resources
for the accomplishment of business goals (Velikorossov and et. al., 2020). The company chosen
in this report is JD sports founded by Wardle and David Makin during 1983. it is a UK expert
retailer of the fashion brand, casual wearing and sports. This brand is official provider and also
sponsor several football player, teams and association. This report will cover the external and
internal factors such as PESTLE analysis SWOT analysis and VRIO analysis, porters generic
strategies, expansion method, strategic directions and recommendation to the organisation.
TASK
1.External Environment Analysis
PESTLE Analysis
The PESTLE analysis is used to determine different factors that can impact the market
environment (Thomas and et. al., 2021). It explain about the operational situation that JD sports
fashion PLC will face that impact the decision making progress of this organisation.
 Political- This competent is related to the government interference that could impact the
firm and administration. The government has made many rule for the security of nation's
citizen and if the firm will not follow government guidelines then it will ban the company
and will shut the business. In context of JD sports, its international presence increase
sensibility of the company because of different alteration in political atmosphere in
different countries. A frequent change in government policies may destroy company's
operational activities by increasing many uncertainness in environment.
 Economical- This element has huge impact on the firm's economic situation in term of
declination or development. Due to the dynamic economic condition, a company get
impacted in a straight way or indirectly. In relation to JD sports, the economic growth
offer it a great level of several opportunities for its development and growth. Global
discussion strategies of the respective company is influenced by financial market place. It
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operate its business in an efficient financial market in this case, it will lead an increment
in order to strengthening company's capability to enter in new market.
 Social- It refers to the company's social situation which can affect the attitude or
knowledge of a customer. Every society has different culture and way of doing business.
The social factors help the business organisation to better understand the method of
business doings and also understand about the customer's preferences (Capobianco and
et. al., 2021). In context of JD sports, by identifying the demographic area such as
gender, migration, age and other etc., will help the company to choose a right market
segment with a high growth potentiality. By using e- commerce and social media
platform the customer get inspired for online shopping.
 Technological- This factor is fast disrupting different industries across the globe. Success
of a company depend on this factor essentially as it play a vital role in organisational
growth. For this, it require an investment in research and development. The technology in
retail industry is still not reached maturity (Casañ, Alier and Llorens, 2021). In cases of
JD Sports, it has to identify the technological elements involved. It can be possible by
understanding that how new or latest technology can be helpful for the respective
company in order to increase customer's satisfaction and profitability and how it can
affect organisational finance.
 Legal- This factor affect both external and internal situation of the organisation as it can
impact company's action plan and their business process. The government has made
many different law and legislation in relation to the employees. Or business organisation
which are essential to follow by the all companies in a country. in context of JD sports,
this framework is not robust sufficient to protect company's intellectual rights. An
organisation should evaluate carefully before entering in a market as it may lead to the
theft of company's secret sauce so the overall beneficial edge. The respective company
should consider discrimination law, health and safety law, anti trust law in the retail
industry and many more.
 Environmental – These factors are related to the outcome of nearly surroundings ad
impact of ecological prospects. The recycling is a fast emerging norm rather the the good
things to to in the economy of United Kingdom (Ricci and et. al., 2021). In relation to JD
Sports, the extreme weather add the organisational cost of this company as it invest in to
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making their supply chain flexible. It need to look in to the environmental elements in its
market. With the analysis of these factors such as pollution, weather, awareness of waste
management and climate change the company can spread a message to its customers and
make them understood or aware about its environmental friendly products.
2.Porter's five forces Model
This model identify and examine competence to study about the competition of
commercial business organisation surrounding and help to raise long term profitability of
company. In context of JD Sports, this framework focus that how the respective company can
build sustainable competitive benefit in the retail industry. It will help the company to explore
the profitable opportunities in the whole consumer services sector. There is a discussion about
the Porter's five forces model in relation to the respective company is given below:
 Threats of new entrants- In retail industry, the new entrants comes with the innovation
and bring new methods of doing things, in relation to JD Sports, the threat of new
entrants is very low in the market, because company required capital for their
establishment in the market, and there is high level of entry barriers this threat put a
pressure on them to reducing cost, lower its pricing strategy and providing the new value
proposition to their customers. The respective company manage these challenges and
also bu8ild an effective barriers to safeguard their competitive edge. To avoid this threat,
the JD Sports, can innovate new services and products as it will help them to attract new
customers and give them a reason that why they should buy its products.
 Bargaining power of buyers- In this, the buyers have ability to demand at low cost and
good quality products. They want to get best product offering a the possible minimum
price. If a company has few powerful buyers then they are often enable to dictate terms
(Wellner and Lakotta, 2020). In context of JD Sports, the bargaining power of buyers is
very high as it put a pressures on its profitability for long run. Smaller and powerful
customer base of the respective company has higher bargaining power and ability to seek
more offer or discounts.
 Bargaining power of suppliers- Mostly companies buy the raw material from different
suppliers to manufacture their products. Power of the suppliers is depend on their
numbers with a company. If the supplier is in a dominant position, then it has ability to
decrease to margin of a company. In context of JD Sports, the level of bargaining power
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is low as it direct bargaining power of its suppliers by modifying their database,
investigate the fresh commodities from different raw material and purchase goods form
the suppliers to provide raw substances to them.
 Threats of substitute- When a company produce similar product of other company then
due to this, the profitability of an industry suffers. If a business manufacture a product for
which there is no close substitute the in that case it has the power to raise product's price.
In case of JD Sports, the of substitution is very medium because small convenience store
are the major threat of large retail chains and the respective company can not be affected
by the small shops. it has the ability to decrease this threat by making more crucial
services and locating them in a manner that customers pay more if they select for an
alternative commodity.
 Rivalry- If rivalry in an industry can drive down the price and also decrease overall
profitability of specific industry with intense. If only few companies are providing the
same product, then they have more opportunities gain profit and growth (Perera,
2020).Threat of rivals is very high in relation to the JD Sports because the market is
saturated and many companies give competition over product, price and promotions. The
respective company operating its business in a high competitive retail industry and this
competition does not take the toll on its overall long term profitability.
3.Internal environmental analysis for strengths and weaknesses
VRIO analysis is a strategic tool which helps in identifying the capabilities and resource which
give a sustainable competitive advantage. It was developed in 1991 by Jay Barney. Usually,
companies has various kind of resources for example human resources, financial resources,
technology, brand Image and human organisation. It is a internal analysis which helps in
determining the quality and usefulness of a company' s resources and capabilities. It stands for
valuable, rare, inimitable and organization. The VRIO Analysis of JD sports Fashion Plc will
focus at each of its internal resources one by one to assess the competitive advantage
(Henderson, 2020).
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Resources Valuable Rare Inimitable Organized
Financial
Resources
Yes - - -
Technology Yes Yes - -
Brand Image Yes Yes Yes -
Human
resources
Yes Yes Yes Yes
Valuable
 Financial Resources- The financial resources of JD Sports are valuable as it helps to
carry out the main operations of the business.
 Technology- Technology is also valuable as JD Sports invests in the mobile application
which allows the customer to use the app to get the extra information about the products,
to scan barcodes which serves as a bridge between brand employees and users.
 Brand Image- JD Sports has been widely recognized for a number of years as the
leading brand of sports fashion apparel and footwear in the UK and Ireland.
 Human Resource- Employees are the valuable resources of the company and the
employees are required to be trained properly which bring more productivity in the
organisation. All of this leads to increase in value for the end users of the JD Sports
Fashion Plc's products (Ariwibowo, Saputro and Haryanto, 2021).
Rare
 Technology- The Technology is rare as they focus on managing their IT and focus on
their efforts on growing their business.
 Brand Image-The brand image of JD Sports are found to be rare as it is only possessed
by the company only.
 Human Resource- Human resources are rare in JD Sports as the staff is highly skilled
and trained which leads to more productive output for the organisation. The work
environment and better compensation ensure that these employees do not switch the
company for other firms.
Inimitable
 Brand Image- Company's brand image is a valuable resource which helps in reaching
out to more and more customers. This also ensures to generate greater revenue for the
company and which is inimitable.
 Human Resource- The skills of employees of JD Sports or any other organisation are
inimitable (Vargas-Hernández, 2021).
Organized
 Human Resource- The employees are properly organised and identified by the company.
The employees are loyal and highly organized which can help in retaining the employees
for the organisation.
Lastly, from the above VRIO Analysis of JD Sports it is clear and identified that the
resources analysed are summarised as to whether they offer sustained competitive
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advantage and has an unused competitive advantage, temporary competitive advantage,
competitive parity or competitive disadvantage.
4. Identification of competitive strategics
This concept was described by Michael Porter in 1980Porter's generic strategics is helpful in
determining the direction of the company and there are three or four generic strategies that is
lower cost, differentiated or focus which can be applied to any size or form of business. The
company can choose as per its requirement and it determines that whether the company is at
profit or not (DEBEBE, 2020).
Cost leadership- Under this strategy, the company is reducing the level of production in order
to compete with the competitors of the market by charging lower prices for their products .
Increasing market share by charging lower prices while still making a reasonable profit on each
sale as the cost is low. JD Sport can make sure that easy access to capital for efficient working
capital which can help in keeping competitors from gaining ground with proper ability to invest
in the production assets.
Differentiation- It involves making the products or services different from the competitors. The
company can use following point to make a successful differentiation strategy-
 The power to deliver good-quality products or services.
 Making sales and marketing in order to understand the advantages of differentiated
offerings.
 Good research, innovation and development.
JD Sports can make its product different from its competitors by offering a unbeatable customer
service and also by taking customers feedback seriously. The company can also treat its
customers like they are unique and important (Subanidjaand et. al., 2020).
Cost Focus- This is a strategy which is used by the company when customers are
attracted on the basis of price. The entity using the cost focus strategy holds the aim of offering
the lowest price possible for the respective products or services in the market and to the chosen
or targeted customer base by undercutting their competitors prices, in order words by offering
the lowest price possible. This strategy can only be applied when the company targets a focused
segment of the market. JD Sports can adopt this strategy as well but the company will be looking
for a respective focused group that is they need to develop their niche market to who the brand
will be useful and can serve effectively. Also, if JD Sports applies the Cost focus strategy then
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the brand also need to make sure to reduce the cost and offer the best to their targeted customer
base in lowest cost. By implementing this strategy company create a loyal customer base that
could contribute to profitability and growth of companies.
Differentiation Focus- It is a main approach to competitive advantage which is followed
by the company to outperform its rivals with the help of offering a product that is perceived by
consumers to be superior top competitors. JD Sports can adopt this differentiation focus by
focusing on the narrow market coverage and by lowering the price in the industry. The chosen
organisation is expanding its products in to new market that is China with some innovations in
existing products. This could also assist company in producing products with unique features
which could develop a large and loyal customer base. It could implement differentiation focus
strategy which could help it in meeting demands of customers and accomplish competitive
advantage in the market over others. This will also help it improving its profitability and growth
in the overall market (Hellström and Olsson, 2017).
5.Strategic Directions of products, market and methods of expansion
The Ansoff Matrix is a tool to analyse the various strategies which are essential for the
purpose of the growth in the market. This tool is useful for all the senior management, marjketers
and executives so that they can make strategies as per the situation of the company. Morrisons
is the fourth largest chain of supermarkets in United Kingdom. The company was founded by
1899 by William Morrison. It is predominantly food and grocery focussed and uniquely. The
Ansoff Matrix strategy is applied and evaluated in context of Morrisons below:
The four strategies of the Ansoff Matrix are-
 Market Penetration : It is said to be the first quadrant of the Ansoff Matrix strategy in
which the risk is low out of the four options. The main target of this is to increase its level
of market share in the market by finding new customers. JD Sports can make use of
market penetration strategy as the risk factor is low and the company already holds loyal
customer base in existing markets. That can be done by reducing the price or by
enhancing the promotional efforts.
 Product Development : It is that strategy which offers new products for its old
marketplace and this process can be risky. Under this strategy, the company can buy the
rights from a company in order to sell the products or partner with another compnies for
the additional product. This strategy can be implemented in many ways like forming
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strategic partnerships with other firms to gain access to each partner's distribution brand
or investing in R&D to develop new products to cater to the existing market. JD Sports
can make use of Product development for either adding new features to current product or
developing new products for the existing market.
 Market Development- It is such a strategy under which the company uses current
products I n order to grow in another market. That can be done by appealing to fpreign
market or making a different segment for the customers. In case of JD Sports this
strategy involves efforts on the part to create new channels and new markets for the
current products. It may also involve entering into new domestic or international market
to drive sales of current products and services. JD Sports can make use of market
development strategy by adding new features to the current products or developing new
products for the existing market. The customers and markets of the product largely
remain the same but the company keeps launching improved version of the products to
target the existing market.
 Diversification : This is the riskiest of four options. The firm enters a new market with a
new product. Although such strategy is the riskiest. There are two types diversification -
related diversification and unrelated diversification. Morrison can use diversification
strategies when both the market and product are new to the firm. It is used when an
organisation sees an opportunity either in a completely different industry or in an
adjacent industry. JD Sports can make use of diversification when the both product and
market is new to the firm. It can be used when they see an opportunity either in a
completely different industry or in an adjacent industry to attract more customers.
In case of JD Sports, Ansoff matrix's diversification strategy is suitable because as the
company will working on moving further with differentiation strategy. When the company
initiates develop innovative products and grab attention of new customer base through changing
product features, changing designs or characteristics it will automatically lead the brand towards
growth and productivity (Dealtry, 2017).
Methods of expansion
There are number of ways possible for business expansion where the business can reach at the
point for growth and seeks out the additional options to generate more profit. If a business does
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not find new market for it products or revamped products, it cannot increase sales or profits. The
different ways of expansion are as follows-
Licensing:
It refers to the business arrangement where the company authorizes another company by issuing
a license for temporarily access its intellectual property rights like brand name, manufacturing
process, trademark, copyright, patent, technology and many others. A fees or royalty is charged
by the licensor to the licensee for the use of intellectual property right. In relation to JD sports
PLC, Young fashion giant JD Sports Fashion has signed a great deal with various sports brand
such as Fila to sell and manufacture the brand in the UK, Ireland and Channel Islands. This
partnership permits them to progress the scheme of delivery good quality, sport style brands to
the consumers so that they can capture the market (Zhu and et. al., 2020).
Franchise:
It is the main method for distributing the products or services involving a franchisor, who owns
the trade-marks and business model to establish the network of brand for the right to do business
under the franchisor's name and system. It is a type of license which provides a franchisee access
to a franchisor's proprietary business knowledge. In relation to JD Sports, franchising can be one
of the method to expand the business in the market as this franchise is a way of distributing the
commodities or services included with a person.
Recommendation
It is recommended from the above project that PESTLE Analysis and porters five forces model
is the best way to recognise the both environment of the firm that is micro and macro
environment. As PESTLE analysis is a framework that can be utilised by the companies to track
the environment in which they are operating and planning to launch a new product, service or
project. Whereas, Porters five forces model helps the organisation to ascertain the level of
profitability in a particular segment of the industry (Zhu and et. al., 2019).
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CONCLUSION
It can be concluded from the above report that strategical management is the planned
procedure of business resources to attain the company's goals and objectives to perform better
and to have a competitive advantage for the company. It is a bundle of decisions taken by a
managers to enhance the results of the company to deal with the both predictable and unfeasible
contingencies.
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