Business Environment Analysis: Decathlon's Expansion Strategy Plan

This report provides a comprehensive analysis of Decathlon's potential expansion plan by examining both external and internal factors affecting the sports retail market. It utilizes PESTLE analysis to identify the positive and negative impacts of macro-environmental factors such as political, economic, social, technological, environmental, and legal aspects on Decathlon's operations. The SWOT analysis explores Decathlon's internal strengths, weaknesses, opportunities, and threats, focusing on areas like brand recognition, technological integration, market saturation, and competition. The report critically assesses whether Decathlon should proceed with its expansion plan, considering factors like market saturation in France, competition from other retailers, and the potential for innovation in emerging markets. Ultimately, it evaluates the interplay between external and internal factors to provide a well-rounded perspective on Decathlon's strategic options.

Unit 1- Business and Business
Environment — Task 2

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Conducting PESTLE analysis in order to identify the positive and negative impacts of external
factors and their influences on sports retail market including “traffic light chart” and
evaluating level of competition, funding activity, legal complexities and investment
opportunities available.................................................................................................................3
Conducting SWOT analysis in order to explore and explain the internal strengths and
weaknesses of Decathlon.............................................................................................................6
Critically analysing both the external and internal factors in order to determine whether
Decathlon should proceed their expansion plan. ........................................................................8
CONCLUSION................................................................................................................................9

INTRODUCTION
Business environment is the surrounding of the business and also the factors both internal and
external which affects the business of the organization. The operations of the business are
affected by the business environment as the changes in the business can influence the
organization which are influenced by the customers, competitors, stakeholders, suppliers,
industrial trends regulations and also other government activities which are social, economical
and technological in development. In this project the chosen organization is Decathlon is France
based sport organization which provides products of all kinds of sports. In this project. For the
analysation of the external factors of this organization this project will use contemporary
examples for the demonstration of both the positive and negative influence and impact of the
macro environment which effects the business operations. This project provides the
determination of the internal strengths and weaknesses of Decathlon and their interrelationship
has been discussed.
MAIN BODY
Conducting PESTLE analysis in order to identify the positive and negative impacts of external
factors and their influences on sports retail market including “traffic light chart” and
evaluating level of competition, funding activity, legal complexities and investment
opportunities available
PESTLE analysis is considered to be a tool to perform analysis of the macro environment of any
organization and bring out the positive and negative factors that affect its profitability. Therefore,
demonstrating pestle analysis to identify positive and negative impacts of external environment
on sports retail market with context to the chosen French sports retailer 'Decathlon'

Changes in macro environment factors may affect the strategy, shape and competitive landscape
of an organization.
Political factors
 Country's political stability has direct influences on its sales and bring a positive impact
as it is a market determinant to provide positive or negative impact on its sales. For
example If France is having sound relationship with other foreign nation they will
provide open market for its products and thus bring a good revenue for the company.
 Tax rates and incentives also have influence on sports retail market as higher taxation
rates will bring a negative impact on the sales and revenue generation of the organization.
Decathlon has been successful in expanding its market in turkey, Malaysia, china etc.
 Providing mandatory benefits to employees may bring a positive impact on them and
gain their trust and motivate them to work more efficiently.
 In 20TH Century people are more allocated towards sports and leisure(Clavio and
Vooris, 2018).
Economic factors
Economic factors of a company lays direct impact on potential attractiveness of the retail market.
Following are some economic factors that Decathlon may consider expanding its market.
 Saving rates, inflation rates, interest rates, economic cycle and foreign exchange rates are
macro economic factors to determine the aggregate investment and aggregate demand in
the economy. Along with it factors like competition norms act as micro economic factors
to lay impact on the competitive advantage to Decathlon.
 The company's market has increased to 30% in china where it has large number of stores
which creates a negative impact on the company's growth to other nations.
 There is stiff competition of Decathlon with its rivals, High inflation also poses a great
threat to cost advantage of the company.
 The business cycle stage such as prosperity, recession and recovery may act as
determining factors to provide positive or negative impact on the revenue of the
organization. Decathlon have gone through this phase successfully.
 Other economic factors such as Rise or fall in interest rates, recession rates,
unemployment rates are also considered as external factors to lay positive or negative
impact on Decathlon's economy time to time.

Social factors are also considered as major determinants that brings direct impact on the sales of
an organization. Considering Decathlon, following social factors may be taken into consideration
to diversify its market.
 Change in social values and trends lays a huge impact on the revenue and sale of
organizations. For example the world has been suffering from pandemic from last 2 years
and people are more concerned towards health and safety. Therefore, the sale of
Decathlon being a luxury retail sports brand may suffers loss, as not all social classes
may afford to buy luxury brand and be more centered towards regulating other factors of
their lifestyle.
 People who are not sports fan also buy these products in order to show that are health and
fitness conscious(Lin and et.al., 2020).
 In the recent times people are more concerned towards health and therefore spend a lot of
time in watching fitness channel. Hence, they may feel motivated for jogging, cycling,
and exercising for which they may invest in gym equipments and sports wear which will
bring a positive impact on its sales.
Technological factors
 Technological factors pays a huge role in expanding the market of sports retail as Gym
are filled with highly equipped machinery which help people in loosing their inches and
maintain a body type. This brings a positive impact on sale of the company as in order to
go to gym they dress up in complete sports attire which benefit the revenue generation of
the company.
 Newly advanced sports technologies such as Footwear technologies and Ex dry-fit
provide great comfort to athletes and fitness freaks and bring positive impact on the
company's sales.
Environmental factors:
 Environment plays a major factor in affecting the break or make of retail market as
higher production brings a negative impact and results in depletion of natural resources.
 The company believes in recycling and manufacture some products like running jackets
where they make use of plastic bottles and utilize them in making their products which
brings positive impact on environment.
Legal factors:

 As Decathlon experiences fast market enlargement in China and Chinese government
tend to provide protection to international bands by different strict policies therefore
decathlon requires making legal decisions to prevent themselves from these threats.
 It follows various safety standards to maintain product value and make use of 'traffic light
chart' to highlight its quality and regulate that the quality fits the customer standards.
Conducting SWOT analysis in order to explore and explain the internal strengths and
weaknesses of Decathlon.
SWOT analysis of decathlon attempts to analyse the internal strengths, weaknesses,
opportunities and threats of the sports retail company.
Strength:
 Decathlon includes 20 brands where each brand focuses on creating innovative
merchandize for specific sports. Currently it is recognized to offer 70 different sports
products of different private labels to gain high brand recollection and the share of
company's own brand is 70-80%
 The focus of company is on customers loyalty and it is proving to be its winning formula.
They have agents which keep track on customers orders and provides regular follow up's.
With their integrated chat feature they attempt to resolve the customers queries and
provide customer satisfaction(Sudha and Sheena, 2017). The company's market has
increased to 30% in china where it has large number of stores which creates a negative
impact on the company's growth to other nations.
 With high integration of technology Decathlon facilitate customers to locate the exact
place of the product they are searching on large stores. Customers may also gain details
of the product and have customers review by scanning the RFID tags.
 They are located in 800 stores throughout the world. Successfully expanded in countries
like china, Malaysia turkey etc.
 Customers may scan the code and make online payment this prevents them to stand in
queues.
Weaknesses:
 The market in France has become saturated with more than 300 stores. As the market is
close to saturation therefore it will be challenging for company to achieve desired goals

of doubling its revenue in 5 years therefore, the company may focus to generate
international market and limit openings in France.
 The brand has gained successful recognition in BRIC countries and parts of Europe but
failed expansion in other parts.
 They do not make use of any famous sportsman for brand Endorsement.
 It is facing rivalry with ASDA in UK and need to improve their strategies for better
revenue generation.
 The company is facing competition with JD fashion as they are performing well in
expanding their international market and other competitors such as early winters and Kit
bag are also giving big competition. In order to out-stand, they need to improve their
strategies and modify them to succeed.
 The company has limited presence on E-retailing but currently it is gaining importance.
Opportunities:
 Decathlon should offer possibilities for innovation in emerging markets like Malaysia,
Turkey and India along with it they need to refine their services according to the local
taste of the customers and provide affordable products suiting to the needs of different
social classes.
 They should change its headquarters in different countries other than France according to
the popular sport of each country's citizens. Like in China is popular therefore
headquarter of badminton should be placed in china.
 They should look for opportunities to tie up or collaborate with emerging teams, players
and clubs.
 They have opportunities on technological front for innovation of new products that please
the customers needs and desires and be first towards creating such opportunities.
 Advertisements play a major part in influencing customers, as they make a psychological
impact on their minds and by using this tactics company make huge
profits((Rajyalakshmi, Kumar and Asadi, 2017)). Therefore, they may create brand
awareness by advertisements using television, social media, radio etc.
Threats:
 People are moving towards e-commerce and social media influencing. Therefore, many
new brands are emerging which provides sports products and there are sellers who sell

copies of branded sport products at cheaper rates. This affect the customer base and
people find cheaper version of products which results in market diversification and is a
emerging threat(Bordner and Wrenn,2021).
 Companies like C discount who sell sports products in France are also recognized as
rivals.
 Persistence of high inflation does not give opportunities of cost advantage in competitive
environment.
 Outside France China is the home to most decathlon stores. There are known to be 214
stores in china which is the highest number in any country after France. The 30%
increased rent cost of china is emerging as a major threat.
Critically analysing both the external and internal factors in order to determine whether
Decathlon should proceed their expansion plan.
After performing the PESTLE and SWOT analysis we came across the external and
internal factors which affects the growth of the organization and came across the fact that
Decathlon has been successfully developed its market base in 800 stores all across the globe and
has come up to be the largest reseller of sporting goods in domestic market(Ramadani and et.al.,
2019). The external factors provide macro level analysis of political, economic, social,
technological, environmental and legal factors that provide growth and opportunities for the
sports retail organization. The organization is largely supported by technological brilliance as the
external factor as company aims at providing the best customer services and attracting the
customers facing race of technology in order to meet customer demands. In the SWOT analysis
while figuring out the opportunities we came across the fact that they provide opportunities to
supply more technical innovation to design new sports goodies. In the political factors we
studied that people in 20th century are more allocated towards sports and leisure It provides
strength to the company in expanding its business. As mentioned in the economic factors that the
company's market has increased to 30% in china where it has large number of stores which
creates a negative impact on the company's growth to other nations. It acts as internal weakness
and becomes threat for company's revenue generation. Thus, above elaborated various macro and
micro economic factors are major influencers for Decathlon's growth and expansion.

CONCLUSION
With the help of this project it can be concluded that the management of the operations of
the organization are considered to be the essential factors which can be used for influencing the
business environment which can be considered to be the most effective for understanding the
business environment. This project has provided the different analysation of the factors which
are both external and internal. The analysation of the external factors in this project has been
made with the help of the pestle analysis which provide the business the analysation of the
factors such as political, social, economical, technological, environmental and also legal. This
project with the help of the SWOT analysis will explain the factors such as the strengths and
weaknesses which can be developed for being used in for the development of strategies of the
business. This business is able to understand the threats and opportunities with the help of this
analysis in this project.

REFERENCES
Books and Journals
References
Bordner, S. and Wrenn, C., 2021. Setting the record straight: a defense of vacating wins
in response to rules violations. Journal of the Philosophy of Sport, pp.1-17.
Clavio, G. and Vooris, R., 2018. ESPN and the hostile media effect. Communication &
Sport. 6(6). pp.728-744.
Kumar, V., Rajan, B., Gupta, S. and Dalla Pozza, I., 2019. Customer engagement in
service. Journal of the Academy of Marketing Science. 47(1). pp.138-160.
Lin, Y.H., and et.al., 2020. Effect of ambush marketing on attitude and purchase intention
in the social media context: misidentification and identification. European Sport Management
Quarterly, pp.1-20.
Rajyalakshmi, K., Kumar, D.P. and Asadi, S.S., 2017. An analitical study for evaluation
of factors influencing the customers to utilization of e-commerce sites. International Journal of
Mechanical Engineering and Technology. 8(12). pp.184-196.
Ramadani, L., and et.al., 2019. The impact of short run distances to the final results of the
decathlon at the 2019 Athletic World Championships. Journal of Education, Health and
Sport. 9(12),. pp.101-109.
Sudha, M. and Sheena, K., 2017. Impact of influencers in consumer decision process: the
fashion industry. SCMS Journal of Indian Management. 14(3). pp.14-30.