Strategic Management of JD Sports: Internal and External Factors

This case study analyzes the internal and external factors affecting the business strategy of JD Sports, a shoe line company in the UK. It also covers marketing strategies and provides recommendations for improvement.

Strategic management

EXECUTIVE SUMMARY
The case study is about the internal and external factors affecting the business strategy of JD
Sports which is a shoe line company in UK. It also covers marketing strategies of the company
by analysis of theoretical models. Recommendations have been given in the end for betterment
of marketing strategy.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................5
MAIN BODY...................................................................................................................................5
External environmental analysis..................................................................................................5
VIRO analysis of JD sports-fashion............................................................................................8
Generic forces of Porter.............................................................................................................10
Ansoff matrix fo JD plus............................................................................................................11
Recommendations......................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic management is a current planning, analysis, observation and assessment and other
necessities that are needed by organization to achieve its objectives. Any change in business
environment needed to constant measure their strategies to get success in market (Indartono and
Wibowo, 2017). Strategic management help the business to allocate the required resource that
are needed to implement the plan in management. It leads to make a competition border over the
business competitors. This management has both benefit financial and non-financial, it helps the
organization and the leaders to evaluate the plan for the future survival. JD sports fashion is a
sports-fashion retailer organization and having its store internationally, Provides sports products
to international customers. The organization is found in 1981–82. Having its headquarter in
bury, England . The JD group is continue expanding its business worldwide and focus to capture
young audience to generate long-term faithful consumers. There are various challenges in Asian
market politically the JD sport will face a different laws and policies of customer's and social
challenge is that people are having different preference as compared to UK market. And the JD
sports is also having comparatively high price in Asian market This report will evaluate the
external environment with PESTLE analysis and micro environment with five forces framework
than it will evaluate the internal environment with VRIO (value chain analysis) to find the
strength and weakness of JD sports corporation further it will evaluate the identification of
competitive strategies with approach, strategies direction and ways of expansion (Park and
Mithas, 2020).
MAIN BODY
External environmental analysis
PESTLE: pestle analysis is the tool which is used to analyse the external factors for the
business.
It has six factors which are:
Political factors:
Political factors plays an important role which determine the factors which can impact the
profitability of JD sports Plc. This company is operating in many countries so has faced the
different political risks. Now company is planning to enter in Indian market so company have to
evaluate of the political risks which company can face in India. Company should identify the
political stability and how the retail sector is important in that country. Company can identify the

risk which they can face from military invasion (Rastogi and Trivedi, 2016). Company should
identify the taxation policies of the country. Legal framework should be analysed for contract
enforcement. The business operations influenced by the political factors of India which are the
government policies, views of political parties etc. the taxes which are the income tax, service
tax etc also will affect the company.
Economic factors:
The economic factors include the inflation rate, interest rate, aggregate demand, foreign
exchange rate etc. company should find out that how much government interfere in the free
market. This can be the threat to the company if the government interference will more.
Exchange rates and stability of the country should be identified. In India the labour costs are low
which is the opportunity for the company because if the labour cost is low then company can
reduce their prices which will help them to increase profits. If the interest rate is favourable then
it can be the opportunity for company.
Social factors:
The culture of society can directly influence the culture of the organization as well. JD sports plc
have to understand the behaviour of the customer of Indian market then they have to find out
their beliefs and attitudes towards purchasing. The culture of the consumer affects the spending
power of them. The education level of the target customer also affects the sale. Now people are
more health conscious, so they participate in the sports activity and that demand sports clothing
which increase the sales of the company. JD sports plc manufacture luxury products also so in
that case they target high income customer.
Technological factors:
Technology changes very fast (Lewis, 2017). Company is able in facing the technology change
effectively and adopt that in such a manner that their competition will not get any benefit from
them. If company adopt every technology change then it will help the company to always be
ahead from their competitors. The adoption of new technology is not easy as it is the expensive
process. Company believes that advance technology will help in distribution and manufacturing
of the product which is the biggest opportunity. If company do not work using advanced
technology then they can face reduction in profits which can the threat. In India people are very
flexible towards technology, so they will except innovative products of the company.
Environmental factors:

Every market has different environmental standards which affect the profits of the firm. JD spots
plc have to follow all the environment laws which is given by the Indian government. Weather,
climate change affects the business. India have environment pollution law which company have
to follow. They have to carry the operations in such a manner which does not pollute the
environment. Company even have the policy to recycle the waste, and they even focus on waste
reduction. Company can adopt renewable source of energy which will improve the image of the
company in the eyes of the government and customers.
Legal factors:
Every country have different legal framework and JD sports plc have knowledge about it because
it already has dealt with the legal structures of many countries as it is the multinational company.
Company should evaluate the legal factors properly before they enter in new country
(Christodoulou and Cullinane, 2019). It includes discrimination laws, data protection law, health
and safety law, copyright law, consumer protection law etc. company follow the employment
laws and all other laws which is provided by the Indian government which brings lot of
opportunities for the company. Company believe that data is the very confidential thing so
company never share the data of their employees without their permission.
Porter's five forces framework: this framework is used to identify the competitive position of
the company.
Threats of new entrants:
New entrants can bring threat to the company (Evans, Rees and Edwards, 2017). The new
companies put pressure on JD sports plc to low the prices. Through innovation the company can
fight with the new entrants. Company can come up with new products such sportswear which
have different designs which attract the customer which can be the opportunity. New products
will bring the new customers and also attract the old customers for buying the new products of
the company. Company can build economies of scale so that they can low their fixed costs.
Research and development should be done on market trends.
Bargaining power of suppliers:
If the supplier is dominant then it can reduce the profit margin of the company which is the
biggest threat. Some supplier even have high negotiating power, and they take out higher prices
from the company. JD sports plc should build supply chain with many suppliers. They should
maintain healthy relations with their suppliers (Vallati and Grassi, 2019). Company can even

select or experiment using other raw material so if the old raw material which was used by the
company is not available or its prices rise up then the company can easily shift to another raw
material. Company can even develop the dedicated supplier.
Bargaining power of buyers:
The demand of the buyers changes rapidly. They always want to buy unique products by paying
less price possible. So if JD sports plc want to be in long run then they have to fulfil the demand
of the buyers. If the bargaining power of customer is higher than they will be able to get more
discounts. If company have large customer base then it will be the opportunity for the company
because that will reduce the bargaining power of the customer. Innovation will be also helpful in
reducing the bargaining power. If company launch the new products then their existing
customers will also not shift towards their rival company.
Threat of substitutes:
Under this customer find out the substitute of the products which will satisfy their needs. JD
sports plc adopted new strategy along with providing good quality products they offer good
quality of services also which restrict their customers to go for other options. This is the
opportunity for the company. If the competition is high then customer will easily find out the
substitute products. Company should take feedback from the customer is that they come to know
that what is the demand of the customer and what kind of problems they are facing from the
product. Company should work more on the quality management and at their pricing strategy.
Industry rivalry:
If more rival company is present than that will affect the prices of the company and also reduce
their profits. Company is running in a competitive environment. The massive competition can
take the long term profitability of the company (Perera, 2017). Sustainable differentiation can
help the company in fighting with their rivalry firms. JD sports plc can do collaborations with the
competitor company, so they can increase their market share rather than do competition for the
small share. Rivalry resulting in decline revenues which is the threat for the company. Building
better customer relationship will help the company to minimize the industry rivalry.
VIRO analysis of JD sports-fashion
VIRO is equipment to analysis the internal environment, in this it checks and inspect the
internal resources are providing the competitive benefits (Utama, Siti and Teguh, 2020).
Valuable Rare Imitable organization

Financial
resource
yes Yes Yes Yes
Hunan resource Yes No No No
product Yes Yes No No
Distribution
network
Yes Yes Yes Yes
Valuable: The JD sports India fashion is having their financial resources very valuable because
the finance company have the ability to invest in external environment and also help to find the
extrinsic threats. The VIRO analysis in JD sports India product are valuable because this are
differentiates in the market with its quality (Pham, 2020). The brand is providing a good quality
in indian market and attracting more buyer. The human resource is also valuable part in JD
sports India because they are very well-trained to increase organization productivity and the
employees become more loyal with enterprise. Distribution network is also valuable in this
because it connects more customers, which will lead the JD sport India to earn more profit. The
distribution network assure the promotion activities with introducing different sell because the
product are easily available. The price structure of the JD sports India is not that much valuable
because the techniques which JD sports India is using is more costly than its rivals (Vargas-
Hernández and Garcia, 2019). The research and development is also not valuable because there
cost is much more than their advantage in the JD sports India. The innovation are being very less
than the cost of contribution.
Rare: The finance resources are generally rare in the company because mostly the finance are
rare in every company. The products of JD sports India are not been rare as by distribution
network the product are available at every place as compared to its competitors in the market.
The human resources are generally rare in the company because this is highly trained under
different situation and a good remuneration is offered to employees so that they will stay with
company for long period (Goworek and et.al., 2016). The patents are rarer in the organization
because patents are not available easily by any rival or JD company in India itself. Distribution

network is relatively high because the company is having a good distribution channel and if
some rival wants to compete than it will needed a strong finance to build distribution network
like of JD sports India fashion.
Imitable: the finance is imitated for the JD sport India as the company have acquired by a long
period any fresh rival can not put this much finance resource. The product and commodities are
not imitable in the JD sports India because this product market can be acquired by any other
compete by research and development programs and there is not necessities to spend a long
period for this. The human resource are not imitable because the rivals are also trained their
employee to compete in the market and the competitors can hire the JD sport India employees by
better wages (Yuan and et. al., 2020). The distribution network is relatively costly to imitated
because this network is develop with time it can not build with research or development.
Organization: the financial resource are organized to be captured value as known the resources
are being approachable to contribute at right place. The resources are sustained compete benefits
for HD sport company. The product is costly not organized in the JD sports India as the product
are easily available in the market so there not need to be organized. The patent are also not
fully organize because the brand is not using patent in fully ability. If the JD sports India sell its
patent before it get expire than it will give benefit the JD sports India towards it rivals. The
distribution network of JD sports India fashion is basically organized because as the JD sport
India is having a good network to its potential and new customers they make the thing's
availability to all the sector customers (Kaisar, 2016). The distribution network act as advantage
for the company over its competitors in the market.
With VIRO analysis of JD sports India it has been identified that finance and distribution
network have continuous various advantage to the JD sports India as company having both
resource comparatively good then its rival companies. The patent are generally not used by JD
sports India and when company will make use of it than it will act as advantage for the company
the availability of this resource make competitive benefit for employees, there presence is rivals
state for products offered by the JD sports India. The companies cost structure is expensive so it
is expensive and research and development is also costly for companies so it disadvantages for
company (Yudiono, Wilopo and Iqbal, 2019).

Generic forces of Porter
These three approaches are of generic strategies because they can be applied to products and
services in all industries and to all organisational sizes. These three approaches applied to JD
Sports are as follows:
a)Cost leadership: It is the strategy which involves gaining a competitive advantage by lowering
the cost. JD Sports main target in doing cost leadership is middle class which generally lays
emphasis on pricing and is selective in buying brands which offer quality along with cost saving.
JD Sports focuses on affordability and convenience for customers which leads to high brand
awareness and revenue. Discounts and coupons are also used to achieve sales targets (Pham,
2020).
b) Differentiation: This strategy involves doing product differentiation to differentiate its
products from customers in terms of product packaging. Organisations need good research in
product development to stand out in competition. JD Sports has acquired many brands and
inculcated their techniques of branding and this has helped suit the consumer tastes and habits.
JD Sports has extended its product line after studying the changing interests of consumers
seeking comfort and brand expectation in one product for e.g. the shoe line. The idea has been to
present the customer what he desires (Kaisar, 2016).
c) Focus strategy: This strategy encourages companies to use their resources on narrowly
targeted segments. When companies apply these strategies they serve particular segments and
base their competition advantage on niche marketing. JD Sports adopts the strategy of low cost
and quality as per the expectations of customers. The strategy is adopted by emphasizing over
taste, size and design of the product. Secondly, the product attributes of JD Sports are
continuously branded in such a way that they are differentiated amongst same existing products
of the brand.
Ansoff matrix fo JD plus
Ansoff matrix is a tool of market research to implement changes in strategy for business
expansion and revenue generation. There are times when a company is doing well and reaching
its objectives but still it has to do market research about change in rends and try to apply the
same in its products by verifying the risks beforehand. The matrix discusses four strategies that

can help a firm grow and also analyse the risks associated with the strategy (Goworek and et.al.,
2016).
The four strategies are:
a) Market penetration: This strategy focuses on selling existing products in the existing market
by focusing on price and promotion of the products. The existing product can be better promoted
by improvement in service, giving discounts on products or production of same product with
additional features. JD sports has an international market with Bing merchandises. Recently JD
sports have expanded its market share by distributing products to different fields, customers at
low costs. Though this can generate a price war but it is one of the effective strategies to gain
market share. The organisation also runs several promotional campaigns and offers product in
new packages to achieve sales in the same market. The differentiation of product along with cost
leadership is proving an intensive way for JD plus to mark its growing presence in market
(Pham, 2020).
The differentiation along with product layout in stores of world class retail getup have
further attracted customers and offering of discounts on seasonal periods have worked for JD
Sports.
b) Market development: JD Sports have entered in a new market through bulk production and
services. In market development, firms are required to lay expansion in different markets which
are having customers of same demands. JD sports has increased its number of stores because it
has acquired many stores of sports, scots and blacks. JD sports have acquired foreign brands
from other countries of European Union. JD has opened around 900 outlets around UK and
Europe and it has expanded different products. JD has increased its research and development to
do product differentiation for entering in new markets and studied the consumer liking in the
particular region. Company has also worked on expansion of distribution network and supply
chain as it has increased its acquisition of sports products in various segments. Prices of products
are varied according to responses (Goworek and et.al., 2016).
JD Sports also uses digital platforms in which they cater to the online customers of their
market segment and use digital marketing techniques to wade off the online traffic and get the
customer directly to the product they are searching. They have their own website for product

selling and also use other product selling websites to market their products. JD has balanced the
penetration of online sales with proportion of total sales in a business depending on factors like
customer demographics, geographical reach, technological capability and the functioning of the
wesite.
c) Product development: The process of introducing new product in existing customer
segment is called product development. Companies supply latest products to customers
according to relation with clients and merchants in product development. JD sports have
acquired large trade brands like black leisure, Chau sports etc. This acquisition has
helped the company beat strong competitors. JD also manages to do necessary changes in
the product with assessment of customer's needs (Kaisar, J., 2016).
d) Diversification: The diversification strategy is best to reduce risks and also comes handy
when a company's product is reaching saturation in market. JD Sports have introduced new
segment in candies and many kinds of sunglasses and few supplements are sold by JD Sports. JD
Sports has acquired rugby brands Kooga and Canterbury of South Africa. The company has
increased its sales through diversification strategy. Further recommendations for the strategy as it
can promote daily use products through magazines and leaflets. Acquisitions at an international
level have been favorable for the company because sales of street stores are less costly in
Europe.
Recommendations
JD sports plc can make a division which supply raw materials for the company because the
bargaining power for the company is high. So they have their own manufacturing units then
company will not have to face rapid changes in the price of raw material and also will not face
shortage of raw materials.
Along with sports fashion company can even try in other casual and party wear clothing sector.
So if the sports clothing do not generate sufficient profits then company can earn profits from
other venture. This will also help the company is achieving the diversification.
JD sports plc can also expand in sports cycling business as people are now more health conscious
so they are preferring cycle, this can increase the revenue of the company.

CONCLUSION
Through this report it can be concluded that JD sports plc is the multinational sports wear
company and it is known for the good quality of products. Along with good quality they also
offer good customer service to their customers. This company have a variety of sports fashion
garments. Pestle and porters five forces are used to analyse the external environment of the
company. All the factors are analysed which can influence the company from outside. As it is the
multinational company, so they have experience of dealing with the external factors. Company
also framed the strategy for facing their rival and substitutes. Internal environment of the
company is analysed by using VRIO and porter's generic strategies are used to identify the
competitive strategies. Company do innovation timely so that they can get the competitive
advantage. Innovative products also help the company increasing their customer base. Strategic
direction and methods of expansion are explained by considering markets, products and services.
Company target rich customer for their luxury product segment. To attract the customer
company also provide good discounts and offers and recommendations also given to the
company so that they can generate more revenue. Understanding of internal analysis and external
analysis of the company so that the company can work on their weakness and can increase their
market share.

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