Strategic Management: Analysis of JD Sports Plc & Recommendations

This project provides a comprehensive strategic management analysis of JD Sports Plc, utilizing various frameworks and tools. It begins by outlining the external business environment through PESTEL analysis to assess macro factors and Porter's Five Forces to evaluate the micro-environment. The internal environment is then analyzed using the VRIO framework to understand the company's competitive resources. The report identifies competitive strategies with the help of the Ansoff Matrix and discusses strategic decisions related to international business expansion. Key factors influencing JD Sports' competitive position within the industry are highlighted, and the project concludes with recommendations for sustaining and improving the company's strategic approach. Desklib provides students access to this and other solved assignments and past papers.

STRATEGIC
MANAGEMENT

EXECUTIVE SUMMARY
This project will be helpful in understanding the concepts of strategic management
followed by a business. The report will outline the external and internal business environment
with the required tools and frameworks which are PESTEL analysis to understand the macro
external business environment and porter five forces to evaluate the micro external
environment. Therefore, to analyze the internal environment of JD Sports will be done
through VRIO analysis which will be helpful in understanding the competitive resources of
the organization. The study will highlight different factors with the help of Ansoff Matrix
which can be helpful in evaluating the competitive position of the company with the industry
with the help of appropriate framework. The project will also discuss about the strategic
actions and decision formed by the company while expanding their business into international
markets.

Table of Contents
EXECUTIVE SUMMARY......................................................................................................2
INTRODUCTION....................................................................................................................4
External environmental analysis............................................................................................5
Internal environmental analysis.............................................................................................9
Identification of competitive strategies................................................................................10
Strategic decisions................................................................................................................12
CONCLUSION AND RECOMMENDATIONS.................................................................14
REFERENCES.......................................................................................................................15

INTRODUCTION
Strategic management is the process that creates a sense of direction for a business.
Strategic management focuses on objectives, planning, organizing, developing plans policies,
and programs, establishing goals, and formulating strategies to meet the planned objectives.
The process of strategic management is the approach that helps an organization to manage
their resources through which they can make optimum utilization of available resources and
achieve the desired objectives (Agwu, 2018). Strategic management is a tool for internal and
external communication that encourages businesses to meet their objectives. The process of
strategic management focuses on understanding competitive business environment,
evaluating internal organization, planning tactics, setting objectives, formulating plans and
policies, and making sure that all strategies are performed as per the desired standard and
procedure.
JD Sports PLC is a sports company which is operating in retail industry. The British
company was founded by John Wardle and David Makin in the year 1981. JD Sports is a fast-
fashion company which is operating with 850 stores in 19 territories worldwide. The
multichannel retail brand is offering sports and casual wear. The name of the company has
been derived from the initial names of founders John and David.
The global pandemic, COVID-19 has made businesses face various challenges and
due to pandemic, this has created a serious impact on the revenues and profitability of a
business. Due to the global pandemic, the profitability, competitive position, and sales have
suffered and have been a challenge for the company to sustain for a longer time within the
industry (Bell and et.al, 2018). The product portfolio of JD Sports is entirely based on
seasonal demands. Moreover, bargaining power of suppliers is another issue as this can
increase the pricing strategy of the company, as this creates negative impact on the profit
margin of JD Sports Plc.
This project will analyze the external business environment where micro and macro
factors will be evaluated with the help of different models and frameworks. This project will
also analyze the internal business environment with the help of the VRIO model and will
identify the competitive position of the company with the help of the Porter Generic Strategy.
This report will outline the strategic decisions and method of business expansion which has
been taken by the company to grow their business in international markets and will list some
required suggestions.

TASK
External environmental analysis
External environment analysis is the process half evaluating uncertainty and changes
in the external environment of a business which can create an impact on day-to-day
operations performed by an organization. The external business environment comprises of
macro and micro factors and to evaluate the changes, these are observed with the help of
PESTEL and Porter Five Forces which is addressed below:
Macro-environment- PESTEL Analysis
PESTEL analysis is the technique of eternal business environment which is used in
evaluating the macro external business environment which helps in analyzing the macro
business environment. In case of JD Sports Plc, a comprehensive study of macro environment
through PESTEL analysis of the sports fashion brand is addressed below:
Source: PESTEL analysis, 2022
Political factors- To expand the business in the international market, JD Sports is
required to take permission from the government and authorities which can create differences
in opinions and the labor law, military coupe exposure can influence the business functions of
JD Sports Plc (Bogers and et.al, 2019). The incline in political stability is helpful to create a
favorable and stable business scenario that can improve the organizational performance of JD
Sports plc in the industry. Due to incline in an unstable business environment, this can
hamper the potential development of JD Sports. The other political factor, such as-
bureaucracy, corruption, trading policies and restrictions, taxation policies, intellectual
property rights are the some of the other political factors that are responsible to manipulate
the profit margin of the fashion brand.

Economic factors- Due to economic development, this can bring various growth
opportunities which can enhance and increase the profitability of JD Sports. Due to the
incline in the unemployment rate, there are a greater number of surplus laborers who are
ready to work at a lower salary which can bring advantage and enhance labor productivity for
the company. The business model of JD Sports plc is influenced by an economic structure
such as oligopolistic and monopolistic structures (Chen, Delmas and Lieberman, 2015). The
financial market efficiency is responsible to create an impact on the development strategy of
the company.
Social factors- Social factors such as change in demographic trends, power, distance
and quality are some of the factors which influence the daily operations of the business. The
social factors which influence JD Sports plc. Internet purchasing societal conventions and
consumer buying habits. Migration is also responsible to create an impact on marketing
techniques which are followed by a business which can also create an impact on the capacity
of business to operate and maintain their competitive position in the international market. The
power of social media and use of e-commerce platforms has been the reason behind the
influence on the purchasing pattern of consumers which has encouraged consumers to use
online shopping mediums.
Technological factors- The rapid development in technology, information and
communication encourages the organization to make use of modern technology through
which the fashion sports company can ensure effective performance and manage to face
competition in dynamic business environment. The usage of social media platforms and
digitalization among business has been rapidly taking place which helps brands in connecting
with a greater number of customers and enhance their business performance. With the help of
social media platforms, an organization can promote its products and services by organizing
campaigns that can attract customer attention (Chen and Silva, 2016). Companies can invest
in technological innovation through which they can increase their market share, ensure use of
updated software’s and techniques, enhance organizational proficiency, ensure workplace
diversity and develop flexibility. This will assist the brand in creating a strong commercial
relationship with their shareholders such as- value chain partners and buyers.
Environmental factors- The environmental factors such as- renewable technology,
waste management practices, climate conditions, eco- friendly products, weather and rules
and regulations related to environment are some of the factors which influence the operations

of JD Sports PLC. Due to the brand's excessive resource depletion, such elements may cause
a negative response from the media, jeopardizing the company's brand image. The sports
brand can optimize their chances by supplying eco-friendly products, which can be
accomplished by using green business practices, which will aid in winning the confidence of
stakeholders and increasing their position in the sector. Green practices can also assist
businesses in gaining more customers. The firm may profit from investing in renewable
technology, which will ensure long-term sustainability and will allow them to extend their
client base owing to improved brand image.
Legal factors- To maintain labor safety at the workplace, JD Sports Fashion Plc must
adopt employee health and safety legislation. The firm must provide a safe working
environment by emphasizing employee protection regulations, which may aid in recruiting
and maintaining top talent inside the brand (Demir, Wennberg and McKelvie, 2017). JD
Sports Plc must incorporate data protection regulations which will support them in securing
consumer data and maintain compliance with consumer protection legislation. The lack of
competence of to safeguard intellectual property rights can make the sports brand face risk
and shatter their competitive position in the industry among their other rivalry companies in
the same industry which will also negatively affect the company's profitability.
Microenvironment- Porter Five Forces
Porter Five Forces is a tool that helps in evaluating the competitive position of a
company within an industry. This framework was proposed by Michael E. Porter in the year
1979 which is the medium of analyzing the profit potential of organizations, their business
strategy and planning strategies for maximizing business profitability (Dzhandzhugazova and
et.al, 2015). The five forces of this framework are used to evaluate the competitive position
of an organization in an industry. In the context of JD Sports Plc, a descriptive Porter 5
Forces Framework has been discussed below:

Source: Porter Five Forces, 2019
The threat of substitution- The customers cannot get a similar quality of products
and services in comparison to JD Sports Plc. As the company is operating within a
competitive business environment, the company is offering their products a lower price
through which they can meet the demands of their consumers. Therefore, the force of
substitution is a weak force that does not hamper the products and services and profitability
of the organization.
The threat of new entrants- This force of porter five forces is a weak force for the
sports fashion brand. As it is not easier for new entrants to make investment of such massive
amounts which makes such force weak for the existing companies. The differentiation of
product range has been a strong force for JD Sports which has been due to its differentiated
range of products. The capital for establishing a business is basic requirement whereas the
cost of research has been a weakness for the company. However, the incline in psychological
switching cost can support in creating a loyal customer base which will limit the threat of
new entrants.
Competitive rivalry- Competitive rivalry is a strong force that is a responsible factor
that can restrict the growth of any business (Evans, 2015). JD Sports Plc is functioning in a
competitive industry which decreases the profit margin of the company and can bring the
threat of competitors which can hamper their brand image in the industry.
Power of suppliers- Due to the strong potential of suppliers, this can decrease the
profitability of JD Sports PLC. Suppliers can use their strong bargaining powers through
which they can demand a hike in prices which can be more profitable. To manage, the
bargaining power of suppliers, JD Sports expand the list of their suppliers, experiment with
new items by using a diversified range of raw materials.
Power of buyers- JD Sports Plc places a high value on supplier negotiations. Buyers'
power is important because the company's products are also available at lower prices through
other brands. The bargaining power of JD Sports Fashion Plc is moderate which is the
outcome of their limited number of suppliers, strong product differentiation and low buyer
income within the industry (Gans and Ryall, 2017). The long-term profitability of the
company- JD Sports is influenced by potential buyers of the brand. The incline in demands
for discounts and offers of customers will lead to low power of consumers.

Internal environmental analysis
VRIO Analysis
VRIO analysis is such a way to determine internal capabilities. This evaluation will
establish whether the internal concerns can be addressed. VRIO is defined by four elements:
value, rarity, imitable, and organization. A brief VRIO analysis of the sprots fashion
compant, JD Sports Fashion Plc is explained below:
RESOURCES VALUE RARE IMITABLE ORGANIZATION ADVANTAGE
Global
presence
√ √ × √ Sustainable
competitive
Financial
resources
√ √ × √ Sustainable
competitive
Brand image √ √ √ √ Competitive
Some of the resources and internal capabilities of JD Sports Plc. depicted above are
further discussed below:
 Global presence- With strong global brand image and online awareness of the brand
bring various advantages to the brand. This creates a positive impact on the revenue, and
market share and profitability of the sports company. Therefore, by creating a global
brand image and presence among customers, this helps in benefiting the new and existing
customers. JD Sports Fashion Plc is a huge multinational conglomerate (Georgiev, 2017).
Apart from being a multinational brand, the company has strengthened their brand image
and goodwill in the industry or their quality and value of products. In terms of quality and
consistency of the products and services offered by the sports brand, no other competitor
company can offer similar products and services as of JD Sports Fashion Plc's and this
has supported the brand in creating a large global footprint which can be managed
through massive amount of money and assets.
 Financial resources- JD Sports' financial resources are attracting more and more
attention since they allow it to engage in outside initiatives. JD Sports Fashion Plc's
financial resources are unusual, as just a few companies in the sector have such large
amounts of capital. The financial resources of JD Sports are difficult to replicate as the
company has gathered these resources over time which ensured success of business. The

financial resources of the sports fashion brand supports the organization in creating a
unique brand image and value of organization which helps in facing competition and
manage their position in uncertain business environment. JD Sports Fashion Plc's
financial resources are organized to capture the value and are correctly allocated to invest
in the right locations, capitalizing on opportunities while avoiding risks.
 Brand image- the customers of JD sports will create a bond with the brand by
appreciating and feeling connected with the organization by availing their products and
services. By offering quality customer services and quality products range helps JD
Sports in creating a strong brand image and loyal customer base with the consumers
through which they can sustain their competitive position within the industry and this
assist the company in strengthening and increasing their profit margin (Goldfarb and
King, 2016). This further benefits the company in gaining a valuable asset which is strong
and loyal customer base which will support the brand in creating a good brand image in
the industry. JD Sports Fashion Plc is a high-end brand that is affluent, knowledgeable,
and energetic. Most other firms and competing brands do not offer the same level of
quality and packaging as JD Sports Fashion Plc does to entice customers to engage in the
same way.
Identification of competitive strategies
Porter Generic Strategy
The competitive strategies of JD Sports can be influenced by different factors how’s
the companies engaged in performing variety of functions which can assist them in managing
their competitive capabilities. With the help of porter generic strategy, JD Sports PLC will
strategically analyze and form strategic decisions through which innovative and effective
approaches can be planned and executed in order to obtain long term competitive advantage
for the organization.
The company will also analyze the market through which they can understand the
competitive advantage which an organization can gain in the dynamic and competitive
business environment (Grant and Baden-Fuller, 2018). In accordance to different theories and
approaches, Porter's Generic Strategy is one of the most successful and efficient strategies
which assist business may ensuring competitive advantage for the organization. The
following is a detailed study of the Porter Generic strategy that is followed by JD Sports Plc:

Source: Porter Generic Strategies, 2021
Cost leadership strategy- this factor of Porter generic strategy assist companies in
expanding their market share in industry take UAE and other countries like Asia. By
following cost leadership strategy this will support JD Sports PLC in increasing their market
share in UE and Asian marketplace. However, incline in market share in such countries will
not be helpful in generating higher financial resources then anticipated which can be the
reason off limited sales potential due to their cutting cost cutting approach which is followed
by the sports brand. The company must focus on maintaining effective balance sheet through
which they can offer low-cost product and services through which customers in organization
can gain various benefits and increase profitability.
Differentiation strategy- The differentiation strategy followed by JD Sports will help
in gaining competitive advantage for the organization. By enforcing differentiation strategy,
this will support JD Sports in creating a unique brand image and position in the industry as
the company can differentiate their product portfolio and services which will attract greater
number of customers and support the brand in standing out of the competition (Holloway,
2018). A good R&D and innovation process is necessary for the business to design a
differentiation strategy. By implementing effective sales and marketing tactics, it will also
supports the sports fashion brand in creating a strong differentiation strategy through which
they can differentiate their products and services from rivalry companies and differentiate
their brand image in the competitive industry. is also part of the product differentiation
strategy.
Focus strategy- JD Sports uses the focus strategy to create more affordable, higher-
quality products. JD Sports should concentrate on this because every buyer prefers low-cost

goods. The company can generate higher revenues by offering products which can be helpful
in easily targeting customers.
Strategic decisions
Ansoff Matrix
In order to expand business globally, companies must perform market research and
bring required changes which will be helpful in increasing the sales and profitability of the
organization. The four aspects/ stages which are determined with the help of Ansoff matrix
are- Market penetration, market development, product development, and diversification.
In case of JD Sports Fashion Plc, the following is a detailed study of Ansoff matrix
which will be outlining the different stages of the strategy:
Source: Ansoff matrix, 2022
Market penetration- JD Sports PLC acquired a strong gold on substantial market
share by offering products but low cost through which greater number of customers can be
targeted. The market penetration strategy is an effective approach to get strong market share
which can result into price war between rivalry companies (Priem, 2018). This improved the
manufacturing capacity of JD Sports where they can target more customers within the
existing market which can be managed through controlled overhead expenditures.
Market development- JD Sports developed their market share by acquiring the other
companies where acquisition of sports skirts and other business supported in expanding the
number of stores of JD Sports. Some of the foreign companies such as Sprinter from Spain,
Chau Sport from France, and Champion Sports from Ireland have also been bought by JD