Business Strategy Report: Analysis of Footlocker Inc.'s Operations

This report provides a comprehensive analysis of Footlocker Inc.'s business strategy. It begins with an assessment of the company's mission, vision, goals, and core competencies. The report then delves into the factors involved in developing a strategic plan, including communication, organizational culture, and environmental factors. It evaluates the effectiveness of various techniques, such as the BCG and SPACE matrices, for strategic planning. The analysis includes organizational and environmental audits using SWOT and PEST analyses, respectively. Stakeholder analysis is examined for its significance in formulating a new business strategy. The report proposes a new business strategy based on the organizational audit and stakeholder analysis, justifying the selection of the chosen strategy. The report also explores alternative business strategies, evaluates the roles and responsibilities of personnel in strategic implementation, and analyzes the estimated resource requirements. It also emphasizes the contribution of SMART targets in strategy implementation, concluding with recommendations for Footlocker Inc.'s strategic development. The report uses Ansoff matrix to assess the market penetration, market development, product development and diversification strategies for Footlocker Inc.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................2
1.1 Assessing the business mission, vision, goals, objectives and core competencies..........2
1.2 Factors involved in developing a strategic plan...............................................................2
1.3 Effectiveness of techniques for developing a strategic plan............................................3
TASK 2............................................................................................................................................5
2.1 Conducting an organizational audit..................................................................................5
2.2 Carrying out an environmental audit................................................................................6
2.3 Significance of stakeholder analysis when formulating a new strategy...........................7
2.4 New business strategy based on organisational audit and stakeholder analysis..............7
TASK 3............................................................................................................................................8
3.1 Appropriateness of alternative business strategies...........................................................8
3.2 Justify the selection of new strategy.................................................................................8
TASK 4............................................................................................................................................9
4.1 Roles and responsibilities of a personnel involved in strategic implementation..............9
4.2 Analysing the estimated resource requirements to implement new strategy...................9
4.3 Contribution of SMART targets in strategy implementation.........................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic planning is one of the important tasks for every business organization which
provides direction to all working activities and operations so that firms can easily achieve set
goals and objectives. Business strategies contribute towards the organizational effectiveness by
providing satisfaction to personnel. It gets managers into habit of thinking and make them
proactive and more conscious about the business environment (Annabi and McGann, 2013).
While formulating any business strategy, it is essential for managers to analyse all internal and
external factors that can hamper all working activities in the organizational environment.
Footlocker Inc. is the chosen organisation in present report where its mission, vision, goals and
objectives will be described. Also, there will be discussion on factors that should be considered
while formulating a strategic plan. Footlocker Inc. can use different techniques so as to formulate
the strategic business plan. Readers will also come to know about alternative strategies which are
concerned with the market entry as well as substantive and limited growth. Roles and
responsibilities of personnel who are involved in strategic planning process would also be
studied here.
Footlocker Inc. is the chosen organization in this report. It is an American footwear and
sportswear company that currently operates in 28 countries. There are over 3300 stores of
Footlocker worldwide. The firm was established in 1974 by F.W. Woolworth and Santiago
Lopez and found as a separate company in 1998. These are different brands of Footlocker Inc.
such as Eastbay, Champs sports, Sidestep, Footaction, etc. The overall revenue of company is
US$ 7.151 billion and its total net income is US$ 520 million. Besides this, approximately 45000
employees are currently working with it. During 1990s, flagship departmental store chain of the
firm fell into decline, then its owners were decided to continue the aggressive expansion into
athletic business in following years. Afterwards, in 1997, Woolworth Corporation acquired
Eastbay that is the largest athletic catalogue retailer store. In 2004, Footlocker declared quarterly
profit that raise by 19% and helped in higher sales. At this time, the firm also adopted a USA
brand, i.e. Footaction and opened 350 stores by investing $450 million.
Apart from this, in 2011, Footlocker was joined Dosomething.Org for the scholar
athlete’s events that honour high athletes in order to demonstrate academic excellence in local
communities. In 2013, this manufacturing firm adopted a German Retailer i.e. Runners Point
group. On the other hand, vision statement of company is to become a leading global retailer of
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athletic inspired shoes and apparels. In order to achieve its vision statement, business
organization is always focused on providing qualitative and innovative products to customers so
as to attain and retain them for long period of time. In 2014, Footlocker Inc. conducted a market
research by investing £400 so as to gain more knowledge from customers; the firm also invests
in advertise and promotional activities so as to reach large group of people. Footlocker has
recorded a turnover of 7.150 billion dollars at the end of fiscal years. It is located in almost 21
developing countries like Asia, United States, Europe, Canada, etc. 70% of its products are from
Nike.
TASK 1
1.1 Assessing the business mission, vision, goals, objectives and core competencies
Vision The vision statement of Footlocker Inc. is to be a leading global retailer
of athletically inspired shoes and apparel.
Mission The mission statement of Footlocker is to create a clear customer focus in
order to drive performance in core athletic banner.
Goals Goals are general guidelines which represents visions of the company.
For example- the major goal of Footlocker is to deliver exceptional
growth in high potential business segments and aggressively pursue brand
expansion opportunities.
Objectives The objectives of Footlocker is to increase the productivity of all assets
and build their industry leading retail team.
Core competencies The core values of the company are – integrity, leadership, service
quality, excellence, team work and innovations. It helps the industry to
achieve its goals and objectives.
1.2 Factors involved in developing a strategic plan
Strategic planning is a process that is carried by management in order to set priorities,
strengthen operations and identify enginery as well as resources. It ensures that staff members
and stakeholders are working towards common goals and objectives. Therefore, these are the
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common factors that should considered in strategic planning process of Footlocker Inc., such are
stated as under: - Communication – The process of strategic planning can be successful only if managers
will used top down and bottom up communication approach. It states free flow of
communication between all levels of workers as they can understand everything that is
involved in strategic planning process (Auzair, 2011). In this, managers and employees
both can share their ideas with each other. Organisational Cultural – An effective or healthy organisational cultural aids in
attaining and retaining staff members for long term period. If there is failure to determine
organisational cultural then it leads occurrence of developing values. Basically, it
involves attitudes, behaviour, values, beliefs and morale of employees.
 Environmental factors – Internal and external environmental factors also have to be
involved in formulation of strategic plans. Although, it is essential for managers to
anticipate, understand and deal with environmental changes.
1.3 Effectiveness of techniques for developing a strategic plan
There are different types of tools are used in developing strategic business plans. It
provides strengthen to all working activities and helps company to achieve its goals in an
effective manner. In this perspective, Footlocker Inc., used BCG and SPACE matrix.
BCG matrix – It is also known as growth share matrix that relies on product life cycle
theory. BCG matrix helps in determining what priorities would be given to product line of a
business unit. Along with this, BCG matrix plays an imperative in strategic planning process; it
has four cells, such are:
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(Source: BCG Matrix, Product Portfolio Management, 2016)
 Stars – It contains high amount of cash and these products are the leaders of the business.
Star products are frequently roughly in balance on net cash flow. Cash cows – These products generates high profits and because of their low growth cash
cows products does not need higher investments (Boies, Lvina and Martens, 2011). Dogs – It requires higher amount of investment otherwise liquidate. It is advised to
companies to avoid the number of dogs.
 Question Marks – It requires high market growth and low market share.
Another tool is SPACE matrix that can be implement by companies to determine which
kind of strategy should be used. The strategic position & action evaluation matrix (SPACE
matrix) is divided into four quadrants, such as- aggressive, conservative, competitive and
defensive. The matrix identifies four area, such as-
Internal strategic dimensions
 Financial strength
 Competitive advantage
External strategic dimensions
 Industry strength
 Environmental stability
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Illustration 1: BCG matrix

TASK 2
2.1 Conducting an organizational audit
Organisational audit is one of the significant tool that analyse all internal factors which
can affect business activities. Therefore, managers of Footlocker are required to conduct an
organisational audit so as to determine such elements. It can be done through SWOT analysis of
the company.
SWOT analysis of Footlocker Inc.
STRENGTHS
 The major strength of Footlocker is it
has strong ties with Nike. By 1904, its
stores are increasing rapidly,
 Now, it has become widely trading
company with 600 stores nationwide.
 Footlocker Inc., is a great seller of
sportswear; it also sellers its products
through mail and this permitted it to
proffer a superior assortment of
sportswear and clothing.
WEAKNESSES
 In 1953, firm's wages were hit a five
year low of $29 million.
 Bad reviews of customers
 Ineffective advertisements and
promotional activities
OPPORTUNITIES
 Emerging market trends
 Enhancement of online markets
 Financial leverage.
 Recently, firm has launched some
valuable products so as to extend their
market share.
THREATS
 New entrants and competitors
 Threat of political instability
 Substitute products and volatile costs.
Ansoff matrix: - The strategy helps an organisation to decide its products as well as
market growth strategy through which firm will achieve high competitive edge. Ansoff matrix is
classified into four parts that are defined as under: -
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 Market penetration – In this growth strategy, firms can service its products and services
by market penetration. It means increasing sales revenue and profitability by promoting
the existing products and repositioning the brand (Butler, 2012). Market development - The intensive growth strategy emphasis on serving existing
products range into new market. It means, product remain same and targeted new
audiences. For example- Footlocker can select several geographical markets by adopting
different pricing policies with an aim of increasing sales. Product development – In this, companies are trying to produce new products for existing
customers in order to attain and retain them for long term period.
 Diversification – In this, there is completely new products are served to new customers.
Diversification strategy also involves higher risk.
2.2 Carrying out an environmental audit
Environmental audit is conducted so as to analyse all external factors which can be affect
working activities. Although, environmental audit can be done through PEST analysis. Below
describe PEST analysis of Footlocker Inc.:
Political factors – There are several political factors that can hamper Footlocker Inc.'s
profitability and productivity. The firm is operating in textile and footwear industry in dozen
nations. In order to explore itself at global level, it is essential for the firm to follow all
governmental rules and policies of different nations.
Economic factors – It includes inflation rates, interest rates, foreign exchange rates and
economic cycle so as to demonstrate of accurate demand of products in an economy (Campbell,
Edgar and Stonehouse, 2011). For example- if the economic condition of the country is not so
good then there people are not required to consume luxury products. It can affect sales and
profitability of business organisations.
Social factors – A society's cultural and values also affect Footlocker working activities
and the way of doing things. In addition, shared attitudes and beliefs helps an organisation to
understand the given market scenario. Social factors also analyse demographics, skills level of
people, class structure, hierarchy and power structure within society.
Technological factors – In this modern era, there are developing several tools and
techniques which helps a company to reach across the globe. For example- Footlocker Inc., starts
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its online store for increasing sales and higher profitability. Therefore, technological
developments also helps company from competitors.
Legal factors – Legal framework of organisations not only enough for it to preserved
intellectual property right. It is essential for business units to carefully analyse these all legal
aspects of a country in which it is going to be performed so as to get high competitive edge.
Environmental factors – Weather, climate changes, recycling, waste management, air
and water pollution etc. are the major environmental aspects that must be evaluated by
Footlocker Inc.
2.3 Significance of stakeholder analysis when formulating a new strategy
Stakeholders of a company are the people who can affect organisation's actions, policies
and objectives. The main stakeholders of Footlockers Inc., are – directors, creditors, employees,
government, suppliers, unions, customers, shareholders, management, local community etc.
Apart from this, stakeholder’s analysis is a procedure that aids in determining the effectiveness
of key people that will put a significant impact on overall planning process and take initiatives to
participate in decision making (Köseoglu and et al., 2013). Therefore, it is essential for
Footlocker Inc., to know the interest of stakeholders while making any variations in business
strategies and policies. For example- customers are the main stakeholders for companies thus
managers have to find out the needs and demands of buyers before introducing any product in
market. On the other hand, management also have to recognise employees' issues and queries so
as to attain and retain them for long term period.
2.4 New business strategy based on organisational audit and stakeholder analysis
In order to explore business and achieve goals and objectives, Footlocker Inc., uses new
market entry strategy. It would help company to obtain high competitive advantage and also get
rid out from financial burden.
Joint venture – It consists with business arrangement in which two or more corporate
bodies agreed to combine their resources for effectively completion of a specific task or activity.
This task can be related with a new project or new product. Along with this, in joint ventures
each participants are equally responsible for profits, losses and further expenses (Mehta and
Mehta, 2011). For example- Footlocker can join Nike or Puma for launching its new products. In
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this perspective, the firm could examine the actual position of other shoe manufacturing
organisations that are performing well in market for establishment of joint venture.
TASK 3
3.1 Appropriateness of alternative business strategies
Limited market growth strategy – The strategy can be implement if an organisation
wants to gain high market share and achieve competitive advantage in a certain time period.
Footlocker Inc., can regulate market penetration strategy. According to this, business unit can
promote its products and services into existing markets by using innovative and effective
advertisement channels. Its main aim is to getting into touch with customers (Montgomery,
2011). Market penetration requires higher investments and human resources; but it is good
method of increasing market share.
Market entry strategy – It is planned method of delivering goods and services in target
market. When importing or exporting services, market entry strategy refers to establish and
manage contracts in foreign countries. Footlocker Inc., can adopts Franchising as a market entry
strategy in order to get high competitive advantage. In terms of distribution, franchisor is the
supplier who allows franchisee to use suppliers' trademark and sell his goods.
Substantive growth strategy – It contains horizontal and vertical integration that is used
to encourage a business. Substantive growth strategies render advantages of inherent resources
that are used by rivals in order to perform in similar segments. It is all about diversification of
business activities. Along with this, Footlocker Inc., is selling its products into new markets, it
aids an organisation to examine market trends so as to make necessary changes in manufacturing
process of shoes and attaining competitive advantage.
3.2 Justify the selection of new strategy
By considering all those factors that have been assessed through internal and external
market audit of Footlocker Inc. market growth strategy, i.e. Joint Venture strategy proposed by
management. Along with this, implementation of this strategy does not require so many changes
in business functions and employees' policies. New market entry strategy requires low funds for
infrastructure development and also the risk would be low because both organisation share their
resources to continue the contract. Thus, it can be assumed that company will accept the strategy.
Joint venture of Footlocker Inc. will increase production capacity by sharing risk and losses with
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partner bodies. Implementation of new market strategy will provide greater access of available
resources (Murthy, 2012). For example- well skilled and qualified staff enable to perform tasks
by using new technologies.
TASK 4
4.1 Roles and responsibilities of a personnel involved in strategic implementation
There are different types of personnel are charged for strategic formulation process.
These people prepare an outlines and set activities within a time schedule so as to achieve
strategic goals and objectives. Below mentioned roles and responsibilities of several people who
involve in strategic implementation process, such as-
Research and development manager – The person would gather and communicate
information that is concerned with business strategy and other important changes (Parnell, 2016).
R&D manager will assess the overall market as well as strength of existing policies then merge
with it a new plan.
Finance manager – For execution of Joint venture, finance manager of the company is
liable for providing estimation of additional costs which will be occurred in three to four months
of strategic implementation. The person also analyse return on investments by involving efforts
of partnership organisations.
Employees – Staff members of the company follows all directions and guidelines of
managers. They also provides their suggestions and views in order to improve strategies and
policies through which Footlocker Inc., can easily gain high competitive advantage.
4.2 Analysing the estimated resource requirements to implement new strategy
In order to remain competitive, business organisations are required to ensure all resources
for effective implementation of business strategies and policies. There are three types of
resources that must be ensured by Footlocker Inc. These are given as below:
Technical resources – In this modern scenario, several innovative tools and techniques
are gained by the rivals of company (Scholes, 2015). Inventions support the Footlocker Inc. in
accomplishment of vision statement through implementation of joint venture strategy.
Human resources – Business organisations will need specialised human resources for the
execution of business strategy. Working in partnership would change the overall perspective of
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business activities. It also helps in managing the production level and then monitoring it, so that
companies requires human resources.
Financial resources – For starting a joint venture, Footlocker Inc. requires high amount
of funds in order to integrate the communication (Verbeke, 2013). It also helps in the
documentation of licensing activities that is essential in establishment of business strategies.
4.3 Contribution of SMART targets in strategy implementation
It is necessary for Footlocker Inc. to work according to the SMART objectives which are
created for new business strategy. These aim and objectives would be accessible in managing all
operational activities and firm's standards in the target market. It improves the level of
production and increases sales in different areas as well (Torrent-Sellens, 2015). SMART targets
also help company to face all challenges and compete with them in a pervasive manner. Below
described are the SMART targets of Footlocker Inc.: S (Sustainable) – To increase production level to 10% by the end year of 2018. M (Measurable) - To raise profits and sales up to 5% A (Attainable) - To establish enrolment sites in order to meet changing patient
demographics R (Realistic) – To realign staff resources to meet market demands
 T (Time bound) – To optimise efficiency between direct and private sector care markets.
CONCLUSION
From the above report, it can be concluded that formulation of business strategies is one
of the important parts for corporate association. The prime goal and objective of Footlocker Inc.
is to become successful in retail industry by providing qualitative products to customers. Apart
from this, BCG and SPACE matrix should be used by the managers while formulation of
strategic business plan. In addition, SWOT and PESTLE analysis help in analysing certain
factors that will affect business activities in the future. It is essential for Footlocker Inc. to
implement the limited market growth strategy so as to sustain high competitive edge.
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