Business Strategy: Aviva Internal

This report analyzes the impact of macro environment and internal capabilities on Aviva's business strategy. It applies appropriate frameworks to understand the competitive position and influence of market forces. The report also develops a strategic management plan for the next 5 years to increase market share and revenue.

Business Strategy
Aviva: Internal

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Applying appropriate frameworks to analyse the impact and influence ofthe macro
environment on a given organisation and its strategies...............................................................1
P2 Analysis of the internal environment and capabilities of the given organisation using
appropriate frameworks...............................................................................................................4
P3 Application of frameworks and models to understand the competitive position and
influence of market forces in the industry on the organisation in the industry...........................8
P4 A strategic management plan for the organisation based on above analysis which provides
valid direction, objectives and tactical actions for the next 5 years of the organisation...........11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
Aviva: Internal

INTRODUCTION
Business strategy refers to the plan and policies adopted by the management to carry out the
future operations of the company to achieve organisational goals and objectives. JD sports plc is
a retail organisation in the sport fashion industry based out of England, UK and the company
operates in many countries around the world. The company is listed on the London Stock
Exchange and generated a revenue of 471.78 crores GBP in the year 2019. This report aims at
macro environment and competitive position of the company is analysed to understand the
current position of the company (Schawel and Billing, 2012). A detailed analysis of Ansoff’s
matrix is being attempted to identify the future business strategy of the company. At last, the
report aims at developing a business strategy for the company for the next 5 years to increase the
market share and revenue.
TASK 1
P1 Applying appropriate frameworks to analyse the impact and influence ofthe macro
environment on a given organisation and its strategies
Mission statement of an organisation represents the long-term goal of an organisation and
identifies the existence of the organisation and what product does the organisation sells. Mission
Statement of JD Sports is "To be UK’s best-known sports fashion retailer. To provide customers
with a huge range of products, a secure shopping experience, quality and services on huge ranges
of men's, women's and kid's trainers and footwear that 80% exclusive to only JD." The mission
statement of the company shows the plans and strategy of the organisation for the market
positioning and penetration (Sarsby, 2016). The company aims to be the best sports fashion
retailer in the domestic market of UK along with a good internal reputation. For the purpose, the
company has been investing hugely in research programme for quality development with cost
reduction. By providing latest fashion trends in sports industry with best quality, the company
aims to realise its mission or vision for the organisation to be the best retailer in sport industry of
UK.
PESTLE Analysis of JD Sports Fashion Plc:
PESTLE analysis is a business tool which helps the management of any organisation to
examine and determine the impact of key changes in the business environment of a company
(Lin, 2012). Here is a brief analysis of macro environment for JD Sports plc:
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Political factors: Political factors include elements such as political stability in a country,
government policies etcetera. All these factors affect the decision-making of a company and
future operations. JD sports operate in many countries all around the world each having its own
political conditions. Political stability in a country helps the organisation to operate smoothly
without much intervention from the government hence the management should focus on entering
those markets where political stability exists and low taxes might help the company to increase
the profitability of the organisation.
Threat: Existence in several nations could make it difficult for JD Sports to execute their
business activities it is not always possible that political condition in every nation will remain
stable thus it could place major impact over the performance of JD Sports at international scale.
Economic factors: Economic factors such as the national income, employment levels,
import-export taxes, rate of interest affect the decision making of these organisations
significantly. Operating in many countries makes JD Sports Plc vulnerable to all the economic
changes in these areas. High rate of interest in the capital market of UK has opened up new
growth opportunities for the company with a raise in investment (Johnson, 2016). Although,
BREXIT has had some impact on the disposable income of the consumers which results in a
slightly decreased demand for the company but the management need to strategically tackle
these issues in light of the company’s long term mission of being the best sport fashion retailer in
the industry. At such a time, the company can focus on deriving more revenue form its
operations in international markets. On the other hand COVID-19 is emerging issue worldwide
which is directly affecting major businesses operations’ with the motive of maintaining social
distancing.
Threat: Here, influence of COVID- 19 would develop major threat for JD sports as due
to the pandemic disease disposable income of people have declined worldwide which would
directly influence sales performance as well as profitability of the company.
Social factors: Due to an increase in the trends and customer preference towards a
healthy and fit lifestyle, the demand for goods and products related to the sports and fitness
industry has increase massively in the domestic market of UK over the last decade. The
management of the company should exploit this opportunity and make policies which helps in
attraction of more customers and increasing the spectrum.
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Opportunity: After analysing the current situation of COVID-19, JD Sports could
introduce some fitness apparel at several price ranges in order to encourage people to indulge
into exercises’ but only by maintaining social distancing in order to boost up their immune
system and keep themselves away from Corona Virus.
Technological factors: Rapid technological changes and developments has opened up a
new sales channel for every business organisation which is online sales and the management of
the JD sports has planned effectively to take its operations online and has started adapting to
these changes quickly. The lifecycle of product development has also shortened which is the
reason why new products are being brought into the market quite frequently by business
organisations and it is imperative for the JD sports to diversify into more product lines with wide
range of alternatives.
Opportunity: The technologically progressed financial system of UK provides wider
scope to JD Sports to gain higher benefit from the infrastructural and other developments of the
nation.
Legal factors: JD sports plc operates in many countries around the world which makes it difficult
for the organisation to get the legal implications right because each country has its own set of
rules and regulations. With the increasing labour laws, it is important for the management to
provide its employees a safe and healthy working environment (Verbeke, 2013). It is very
important for the company to deploy considerable resource into a team for scanning legal
horizon and understanding its implications on the organisational operations.
Threat: An instance of non adherence to the laws and legislation of country would act as
a significant threat to the functioning of JD Sports in market.
Environmental factors: This factor of macro environment concerned with ecological
balance and emission of greenhouse gases has come up front in the last few years which have put
the onus on companies like JD sports plc to decrease their carbon footprints and greenhouse
gases emission. JD Sports plc has been considering its sustainability standing and taking
measures to improve its eco-friendliness which provides an opportunity for the company to
improve its goodwill and public image.
Threat: Here, non abiding with the norms related to carbon emission might result in the
emission of excessive carbon that would directly place major influence over the environmental
factors.
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P2 Analysis of the internal environment and capabilities of the given organisation using
appropriate frameworks.
McKinsey 7s framework for JD Sports plc:
The 7s model by McKinsey is an important framework which helps the management of
any organisation to review the internal capabilities of the organisation. It helps the management
to assess the changes which are required in the organisation (Islam and Mamun, 2017). With
reference to JD Sports, the top management team of this company focuses on making use of
McKinsey 7s framework with motive of reviewing their internal capabilities. All elements
covered in this framework are stated as below:
Strategy: It defines the key approaches which are being used by the organisation to
achieve its goals. The management of JD sports plc develops the long term strategy of enhancing
their sustainability within UK market for this they believes in delivering quality goods and
services to customers in order to capture the largest market share in UK domestic markets.
Structure: It determines the resource organisation within an organisation into groups and
teams. The management of JD sports plc makes use of functional organisatioanl structure in
order to execute their work.
Systems: Systems refer to the technology and the machinery and various platforms used
by the organisation for conversion of resources, the management of JD sports plc uses systems
which are sustainable and environment friendly along with the maximum productivity.
Staff: It defines the employee, human resource and remuneration and every aspect related
to it. Lack of inspiration is witnessed in the employees of the organisation and the management
should take up strategies to increase employee motivation. JD Sports has staff of approximate
32,125 employees which executes its all the work.
Skills: It refers to the capabilities of different members of the organisation to execute
different tasks and jobs. Employees of the JD sports plc have different skill set matching to their
job requirements and job specification. Also, HR manager of JD Sports conducts training
sessions for employees so that they can enhance their existing skills and learn the new one as per
the requirement of their job.
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Style: It describes the culture of the organisation and the type of communication and
interaction between the members and the various stakeholders of the organisation. JD sports plc
follows autocratic Leadership style which doesn’t involve a direct and open communication
which with the employees that could directly hinder the employees’ productivity and influence
business growth of the company.
Shared values: It refers to the collective effort and participation of the employees in the
achievement of the organisation goals and objectives. Leaders are under a responsibility to get
employee belief in the mission and vision of the organisation. As a result of the poor
implementation of shared values by the leaders of the organisation, JD sports plc is witnessed to
be struggling in terms of culture in its organisation and warehouse. The management needs to get
employee coordination and align individual interest with the organisational interest.
TOWS Matrix:
SWOT or TOWS matrix is a business tool which assists the management in determining
the internal strength and weakness of the company and take better future decisions in order to
make the most out of upcoming opportunities and prevent the organisation from the threats
(Gürel and Tat, 2017). Here is TOWS matrix analysis of JD sports plc:
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TOWS ANALYSIS
JD SPORTS
STRENGTHS (S) WEAKNESSES (W)
 Huge skilled workforce
 Strong global presence
 Product differentiation
 Changing life style of
people influence people
to switch the brand too.
 Weather sensitive
offerings
OPPORTUNITIES
(O)
 Changing
social trends
 Political
stability of
UK
 Technological
progress of
UK
 JD Sports could introduce
new products as per the
requirement of people in
COVID-19.
 Usage of skilled workforce
helps the company in
acquiring latest technology
that further contributes in
enhancing their
sustainability within UK for
longer period of time.
 Here, JD sports can easily
make of advance
technology in order to
develop weather
sensitiveness of products
for its customers.
 By conducting regular
based market research JD
Sports can easily develop
their understanding about
the marketplace and
easily deal with issue
associated with the brand
switching.
THREATS (T)
 BREXIT
 COVID-19
 Excessive
Carbon
Emissions
 Strong market presence
directly creates requirement
of the company take strict
action towards the carbon
emission. This can be
effectively done with the
use of technological trends.
 Increasing carbon
emission could influence
customers to leave the
brand and move to
another one.
 However, now a day’s
customers do not prefer
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 Non
Adherence of
Laws
 Here, COVID-19 and
BREXIT could be easily
dealt with the usage of
product differentiation
strategy as it allows them in
grabbing attention of
maximum number of
customers towards them.
to buy from the
businesses which do not
compliance with laws.
This ultimately leads to
brand switching.
Strength: The company has a strong base of suppliers and a strong distribution network
which has enabled the company and the management to overcome any hurdle or bottleneck of
supply chain. The company has shown expertise in entering new markets and getting success in
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those endeavours. High level of customer satisfaction and brand loyalty enables the company to
generate high revenues. These are some of the most important strength of the company.
Weakness: One of the most threating weakness of the company is poor and ineffective
management of financial resources and funds of the organisation. This has also resulted in a
profitability ratio which is lower than the average in the industry. The company also needs some
new investment in technology in its operation to remain competitive in its productivity and
efficiency.
Opportunities: Good cash flows enables the company to invest in new technology and
product segments which is a huge opportunity for the company to focus on business growth and
expansion. Increasing disposable income of the consumers over the years has also provided an
opportunity for the management of the JD sports plc to increase its market share and revenue.
Threats: Increasing amount of competition in the industry is one of the major threat for
the company which is further increased due to low profitability because company is not under a
position to offer additional discounts unlike the competitors to attract more customers and
remain competitive. Legal rules and regulations in different countries also pose a threat to the
company due to the dynamic nature of these laws.
P3 Application of frameworks and models to understand the competitive position and influence
of market forces in the industry on the organisation in the industry.
Porter’s five force analysis for JD Sports plc:
Porter’s five force model is a business and economic tool used by the management of
every organisation to understand and determine the competitive position of an organisation in
their industry. This evaluation over the impact of five market forces within the industry simply
helps them out developing effective strategy for the future. This ultimately improvises their
business operations as well as decision-making (Comino and Ferretti, 2016). Here, top
management team of JD Sports have used this framework to develop their understanding about
their own industry. All of these five forces are specified as below:
Threat of new entrants: Threat of new entrants is moderate to high for JD Sports plc. The
initial cost of investment is high and its particularly difficult to gather a customer base very
quickly. This clearly shows that it won’t be possible for the new entrants to establish their
business in UK easily and give stiff competition to its JD Sports.
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Bargaining power of suppliers: Due to an existence of a large number of suppliers and
low switching costs, the bargaining power for suppliers is low which puts the management of the
JD sports plc in a strong and dominant position. It enables the company to procure the materials
at very competitive prices and escape themselves from any exploitation from the suppliers. Here,
it can be said that the supplier of JD Sports do not even negotiates a lot with the company as they
cannot afford to lose the client like JD Sports which provides huge orders to them.
Bargaining power of consumers: A large number of firms exists in the industry and the
switching costs is very low for the consumers which increase the bargaining power of consumers
for JD sports plc. The company is under no position to increase its profit margins because even
the slightest of changes in price would result in a negative implication on the sales and revenue.
This is so because, the customers has lots of options within the same market and can easily move
to another company offering similar kind of sports products at affordable prices with fine quality.
In order to maintain interest of customers towards them, the JD Sports is required to provide high
quality sports products to the customers at affordable prices.
Threat of substitutes: Threat of substitutes is low for the JD sports plc due to a limited
number of alternatives. This makes the threat of substitutes a weaker force for the organisation in
the industry. Though, there are some products of better quality which are being offered by some
companies but these products are very expensive which not a threat for the JD sports plc is.
Competitive rivalry: Competitive rivalry is a weaker to moderate force for JD sports plc
in the industry. Though, there are a number of firms which are existent in the market but these
firms have very low market share which is not threaten for the company. There are only a few
firms which operate at a large scale with a high market share. So there is a moderate competition
between existing firms in the industry. Here, even for tackling moderate influence of competitors
it can be said that JD Sports must conduct regular based market research so that they can easily
determine changing demand of the customer. Thus they can provide vast product range to the
customers so that they can remain loyal with the same company for longer period of time.
This shows that there are many forces in the competitive environment of JD sports plc
which are operating in the favour of the company. The management should plan strategically to
leverage these forces and increase the competitive position of the company in the industry and
mitigate the influence of forces which not in favour of the organisation.
Porter Generic Strategies
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This is an effective framework that provides descriptive knowledge on the strategies that
could help company in gaining competitive edge in the near future so that market scope could be
enhance. The main components of this model are stated as below:
Cost leadership: As per this strategy JD Sports must emphasizes on offering low cost
products to its customers with fine quality. In order to apply this effective, the company should
focus on controlling their operating cost so that they can easily enhance their profit margins and
attain competitive edge.
Differentiation: This strategy emphasises on offer high quality products and services to
the customers’ with the unique features in order to influence the interest of the customers
towards them by simply creating value of the company for them. By doing this effective JD
Sports would be able to generate brand loyalty, thereby, creating price inelasticity on the part of
buyers.
Focus: This is the third strategy which could be either cost or a differentiation. Here, at
the time of going for Cost focus strategy JD sports emphasis on developing internal efficiencies
with the motive of reducing the influence of external pressure over them. Whereas, while
acquiring Differentiation Focus, JD Sports would completely focus on differentiating the
products from its rivals so as to gain an edge over competitors in market place.
Ansoff’s Matrix:
Ansoff matrix is a tool which identifies four different growth strategies for any
organisation to increase its operations and revenue (Alshaher, 2013). The strategies are market
penetration, market development, product development and diversification. With reference to the
JD Sports, it has been analysed that the company is wishing to improve their current functioning
and attain growth at marketplace. For this, management team of JD Sports have made use of this
framework in order to develop best strategy with which they can easily grow at marketplace: All
four of them are specified as below:
Market Penetration: According to this strategy businesses are required to offer existing
product within the existing marketplace in order to attain growth. Here, if JD Sports acquires this
strategy then they should find out new customers within the same market so that they can boost
up their sales performance as well as profitability.
Market development: This strategy is also called as market expansion strategy which
focuses entering into a new market with the existing product offering. For acquiring this strategy
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JD Sports should starts expanding their business in those geographical locations where they are
not having access current. With this they would be able to approach more number of customers.
Product Development: Here, main emphasis of this strategy is on offering a new product
in the existing market. In order to use this strategy JD Sports could introduce new product range
for its customers with the motive of raising their sales performance.
Diversification: This strategy mainly refers to entering into a new market with an entire
range of new products. Risk increases with the transition from one strategy to another strategy.
JD Sports must not go with this strategy as it is riskiest among the all one.
Figure 1Ansoff Matrix, 2018.
(Source: Ansoff Matrix, 2018.)
The management of the JD sports plc is advised to adopt the strategy of product
development to achieve the company’s vision and objectives by entering into a existing market
with new products for attracting more consumers and generating high revenues.
P4 A strategic management plan for the organisation based on above analysis which provides
valid direction, objectives and tactical actions for the next 5 years of the organisation.
Strategic Management Plan:
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Direction:
The company is advised to aim at product development by launching new products
frequently into the existing market to achieve the mission of the company to be the largest
retailer in sport fashion industry in the UK. This provides a clear direction to the management to
direct the efforts and resources of the organisation into. It is also in alignment with the
company’s long term goals and objectives.
Objectives:
 Increasing the number of products sold in the domestic markets of UK 5% every year.
 Achieve profitability within new products and ranges within a time period of 6 months.
 Shorten the life cycle of product development.
 To bring in a new product range within every 12 months.
Action plans:
 The company should focus on use of promotional tools for introducting the new product
into existing markets.
 Need assessment of the potential customers should be done to design the product as per
the requirements.
 The company should clearly identify different target customers for various product
ranges and adopt marketing strategies relevant for attracting those consumer groups.
 The company needs investment into new technology and machinery for bringing products
which have the best quality at very competitive prices.
 The strong cash flow of the company can help the management to heavily invest in the
new product range and technology which will help in reduction of costs for new products.
 The company should make use of the strong distribution network for launching products.
 A proper feedback and control system should be installed to track the effectiveness of a
marketing strategy used for any product launch.
This management plan can be used by the company to plan their operations for the coming 5
years to achieve the company’s mission and vision with the help of product development and
expanding customer bases for multiple product ranges.
CONCLUSION
It can be concluded from the above report that macro environment of the JD sports plc
consists of many factors which affects the decision-making process of the company. There are
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various strengths such as high cash flow and reliable supplier base which helps the company to
gain a competitive position in the industry (Abbott, 2015). The McKinsey’s 7s model shows that
the company is struggling in culture of the warehouse due to low shared value by the leaders of
the organisation. It can also be concluded that the competitiveposition of the company is strong
in the industry. As per the Ansoff’s matrix, product development is the best strategy for the
company in light of its future objectives. At last, the report presents a plan for the product
development which can be implemented to achieve the objectives of the company.
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REFERENCES
Books and Journals
Abbott, R.J., 2015. Pestle Analysis for Students.
Alshaher, A.A.F., 2013. The McKinsey 7S model framework for e-learning system readiness
assessment. International Journal of Advances in Engineering & Technology. 6(5).
p.1948.
Comino, E. and Ferretti, V., 2016. Indicators-based spatial SWOT analysis: Supporting the
strategic planning and management of complex territorial systems. Ecological
Indicators. 60. pp.1104-1117.
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International
Social Research. 10(51).
Islam, F.R. and Mamun, K.A., 2017. Possibilities and challenges of implementing renewable
energy in the light of PESTLE & SWOT analyses for island countries. In Smart Energy
Grid Design for Island Countries (pp. 1-19). Springer, Cham.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Lin, S., 2012. Diversity Breakthrough of Hidden Champion's Development Ceiling——
Enlightenment from View of" Ansoff matrix". Journal of Industrial Technological
Economics. (4). p.17.
Sarsby, A., 2016. SWOT analysis. Lulu. com.
Schawel, C. and Billing, F., 2012. Ansoff-Matrix. In Top 100 Management Tools (pp. 22-24).
GablerVerlag, Wiesbaden.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
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