Business Strategy Analysis and Recommendations for JD Sports

This report provides a comprehensive business strategy analysis for JD Sports, a British fashion retail firm. It begins with an introduction outlining the report's objectives, which include devising a new business strategy for JD Sports. The report assesses the macro environment using PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors. It then analyzes JD Sports' internal strengths and capabilities using the McKinsey 7S framework, evaluating strategy, structure, staff, systems, style, skills, and shared values. The industry attractiveness is assessed through Porter's Five Forces, examining the threat of new entrants, substitute products, bargaining power of customers and suppliers, and competitive rivalry. Finally, the Ansoff matrix is applied to formulate a strategic plan, focusing on market penetration, product development, market development, and diversification strategies to enhance JD Sports' market position and achieve sustainable competitive advantage.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Assessment of macro environment........................................................................................1
TASK 2............................................................................................................................................4
P2 Analysis of internal strength and capabilities of organisation...............................................4
TASK 3............................................................................................................................................5
P3 Assessment of industry attractiveness...................................................................................5
TASK 4............................................................................................................................................6
P4 Application of Ansoff matrix to formulate strategy..............................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business strategy is a term implies the building of comprehensive plan of action intended
for attainment of growth and sustainable competitive advantage. JD sports is British fashion
retail firm. It offer fashion accessories with sports category. In this assignment a new business
strategy has been devised for JD sports. The report covers the assessment of macro environment
affecting the company. The report also includes the analysis of strength and capabilities of JD
Sports. The report applies porter's five forces to determine the industry attractiveness. The report
devises a strategic plan for JD sports (Akter, and et. al., 2016).
TASK 1
P1 Assessment of macro environment
JD Sports is one of the most imperative and effective organisations when it comes to the
sports-fashion retail sector within the United Kingdom. Moreover, the firm deals in a diverse
range of sports and fashion related offerings which it distributes all over the company. However,
it is imperative that its macro environment is analysed in ways which are discussed below:
Analysis of Strategic Position
It is imperative to analyse the strategic position of the organisation is analysed which
determine the current industrial hold which the company has access to. Therefore, for this
purpose, below are the firm’s mission statement and long-term goals
 Mission Statement: The firm’s mission statement is developing an industry which leads
in retail business with the best of digital and physical combination of retail providing the
firm with compelling position. It denotes that the firm has entered the market with
exclusivity in its products and adaptability towards future which is a very strong position.
 Long-Term Goals: The firm’s long term goals are to elevate its market position through
higher investment in its digital and physical retail portfolios. Moreover, it also wishes to
strengthen its supplier relationships globally. Therefore, analysing the same provides a
firm with a very strong position globally due to its diverse and high end approach
towards business elevation.
PESTLE Analysis
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It is a model which determine the impact of external factors on the growth and
sustainability of an organisation. The PESTLE analysis of UK with reference to JD sports are
given below:-
Political Factors: UK has a steady politically environment and government intervention
in the business world is not very disrupting. However Brexit has created some uncertainties for
the businesses but country is recovering. Political landscape of the country is not creating any
barrier for the JD Sports company (Higgins, Omer and Phillips, 2015).
Economic Factors: UK has a mixed economy due to which country bear benefits and
limitations of both capitalistic and socialistic economy. UK is 5th largest growing economy in the
world. Purchasing power of local individuals is very high (Economy of United Kingdom UK).
Inflation rate of the country is moderate which ease the accomplishment of financial goal of any
entity. Economy of UK is good for JD sports growth.
Social Factors: Multicultural consumer base exist in the country. Population of the
nation is becoming older still there is a wide scope for growth in sports industry. Literacy rate in
UK is very high. People give priority to education. Obesity in the country increased in recent
years. However people of the country are inclining towards healthy lifestyle. This is great
opportunity for the JD sports in order to excel in the sports industry.
Technological Factors: Internet penetration is the revolutionary phenomenon in the
country. More than 94% of the population have access to internet. Introduction of automation
increase the speed of work but also decrease its cost. However automation is harming the
employment structure of the country. Technological advancement in the country is at boom.
Company can seek the advantages of advance technological development in the country.
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Illustration 1: UK internet penetration: percentage of population using the internet in the United
Kingdom from 2000 to 2017
(Source: UK internet penetration: percentage of population using the internet in the United
Kingdom from 2000 to 2017, 2020)
Legal Factors: Legal landscape of the country is citizen oriented. It safeguard dignity,
health and wealth of the citizens in every aspects. There is many legislation imposed by
government in order to prevent exploitation of employees by employer in workplace. Legal
structure of the nation is not creating any sort of discomfort for citizens as well as the business
(Woerner, and Wixom, 2015).
Environment Factors: Government of UK announced very stiff laws for conservation of
nature. Company is require to comply with the environmental laws enforced by the government.
Pollution free business operations may increase the cost of product but country's population are
financially sound enough to afford the product. It is not matter of concern for a sports company
like JD sports that's why it can stated that environmental factors are favourable for the firm.
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TASK 2
P2 Analysis of internal strength and capabilities of organisation
Every company have some strengths and weakness which are integral part of business.
Perfect match of strength and opportunity give competitive advantage to the country therefore is
essential to identify the strengths and capabilities of an organisation.
McKinsey 7s Framework
It is a model used for the assessment of the key integral components of an organisation
that shaped the structure of organisation. McKinsey 7s framework observes seven key internal
elements of the company to check how much they are contributing the growth of an organisation.
McKinsey 7s framework of JS sports are given below:-
Strategy: JD sports have been adopted multichannel marketing strategy. Company
implement a single strategy in multiple media in order to make the marketing activity highly
interactive (Leonidou, , and et. al., 2017).
Structure: Organisational structure of JD sports is of Divisional type, where divisions
are created according to specific skill set and expertise of employee. This provides the firm with
benefit of expertise and monitoring of its performance in every division and better hold of the
firm’s functions and better integration.
Staff: As JD sports are a retail firm therefore staffs is sales oriented. The focus of this
organisation is towards recruiting individuals with effective communication and customer
management abilities. Moreover, as of their wellbeing, the firm uses on-the-job training method
to ensure their effective growth.
System: JD sports conduct its routine activities in a formal manner. Company's system
comprises of warehousing, manufacturing, finance and retailing. Moreover, these systems are
very well integrated through consistent communication channels.
Style: Company adopts different style according to situations. The leaders are trained
appropriately towards practicing Situational Leadership in an effective manner. This helps them
towards a better application of various tactics towards enhancing the firm’s performance levels.
Skills: As JD sports works in retail industry therefore skills to achieve the desired
objectives are analytical, problem-solving and decision making skills. Without theses skills
organisation cannot succeed in the market (Peng, 2017).
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Shared Values: JD sports focuses of dynamism, high quality and innovation. Company
use dynamic approach that means its operations changes according to the taste and preference of
customers. It emphasis more on providing good quality products to customers. Firms always
work on bringing innovation in the market to change the way living of customers.
TASK 3
P3 Assessment of industry attractiveness
Every industry have some kind pros and cons. If obstacle to entrance in the industry
were low than competition will become high. On the other hand if barrier to new entrants were
low than competition will be low. In practical world, power of being monopoly is not enjoyed
by any entity. No industry is perfect. In order to judge the industry attractiveness the porter five
forces is used (Leonidou, , and et. al., 2015).
Porter five forces model
It is a management tool utilizes to define the power of competitive elements of the
industry. It was introduced by Michael E Porter. Five forces are the elements which determine
the attractiveness of an industry however no industry is perfect in the application of this model.
Porter five forces analysis of retail industry is given below:-
Threat from new entrants: This is the core elements that realise the need to devise
competitive strategy in retail industry. The entrance of new retail companies will be after
thorough research of failed step by existing companies which should not imitated. The new
entrants may arrive with products equipped with innovative and advance technological features.
Moreover, there is already cut throat competition in the retail industry. As a consequence new
entrance can fail to sustain in market. This makes the threat lower for JD Sports.
Threat from substitute’s product: Existence of substitute’s product is major concern
for the companies as it affect the profitability adversely. If substitute product is more feasible
than main product than it shift the direction of customer towards itself. Fashion retail industry is
not prone to threat from substitute because there is no close substitute of clothes. Customers does
not have alternative for fashion accessories. However, where sports offerings are concerned,
there are various different companies which apply innovation towards making the shoes and
other sport related accessories better, more comfortable and durable, which could be presented as
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substitutes against the firm’s current offerings. Therefore, this threat is moderate for JD sports
(Martinez-Simarro, Devece, and Llopis-Albert, 2015).
Bargaining power of customers: Customers are rational in nature. Bargaining power of
customers is very high in retail industry. They want highest quality clothes with least possible
price. This force companies to sacrifice their profit margin. Majority of customers are not loyal
towards a particular brand therefore switch over cost in clothes industry. The reason for this shift
in loyalty is through lower switching cost. Moreover, there are various brands which offer
personalised deals to customers which enhance this power of customers to demand an equal or
better pricing of the products. Therefore, this threat becomes high in context of JD Sports.
Competitive rivalry in the industry: Competition in the fashion retail industry is at
extreme level. There are ample of companies striving to attract customers due to which there is
high intensity of competition in the market. Many brands are offering same kinds of product such
as Nike, Adidas, Puma and so forth. This enhances the power over retail industry over firms like
JD Sports which keep diverse brand collection. Therefore, the existing rivalry within the overall
industry is quite high.
Bargaining power of suppliers: Retail firms are dominant over the suppliers that means
bargaining power of suppliers are low. Retailers can easily change supplier. Suppliers have to
adhere the rules set by retailers. Suppliers are striving to be getting their placed in the shelf of
renowned retail organisation. This give retail companies immense bargaining power.
TASK 4
P4 Application of Ansoff matrix to formulate strategy
When intense competition is prevailing in the market than there is a need of devising new
business strategy. Business strategy is devise in order to accomplish the desired objectives in a
perfect manner (Johnson, 2016).
Ansoff Matrix
Also called product/market expansion grid, Ansoff matrix is a strategical tool used to find
out the most profitable strategy for the company. This strategy has four quadrant on the basis of
market and product. These are product development, market development, market penetration
and diversification. The detail description of all four quadrants of Ansoff matrix is given below:-
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Market Penetration: When company promote existing product in existing market with
more intense marketing activities that this phenomenon is said to be market penetration strategy.
Market penetration is adopted to increase market share of existing product. This are usually
achieve by lower down the price of commodity to the highest level.
Product Development: This strategy is said to be implemented when company introduce
new product in the existing marketplace. Product is usually executed after extensive research on
customer along with expansion of product range. This strategical approach is implemented when
company have good understanding of present marketplace and able their needs with innovative
solution.
Market Development: In market development strategy, firm expand its supply chain and
cater the needs of new marketplace with current product. This strategy is prove to successful
when company have its own patented technology that can be used to attract new profitable
market segment.
Diversification: It refers to the activity of launching new product in new marketplace.
Diversification is of two types- related diversification and unrelated diversification. Related
diversification implies the offering of new product with a link with current product in some way.
Unrelated diversification refers to the introduction of new product with no linkage with existing
product (Moseley III, 2017).
Out of the five discussed strategy, the mos appropriate strategy for the company is
product development strategy. Firm will use product development strategy for business
expansion.
New Marketing Plan
Mission
Mission of JD sports is to become country's largest sports fashion retail company. To
render customer with broad varieties of product.
Vision:
To serve the customers with best quality sports fashion products.
Objectives
To increase market share by 30% within the tenure of one year.
Strategies
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The expansion strategy that company use will be product development strategy. Firm will
launch new product for current market segment. The new and innovative product that company
launch will be Tech infused heated jackets. These jackets will possess the capability of adjusting
the temperature in cold winter month. Sportspersons can use this Jacket in extreme winter in
order to escape from cold (Malerba, and et. al., 2015).
Tactics
The tactic that company use will be endorsement of product in social media with macro
influencer.
Evaluation
After implementation of suitable strategy company is require to check the profitability of
new product. The two major techniques for evaluation of product performance are key
performance indicators and benchmarking. Company will use key performance indicator for
evaluation of product's success. The key performance indicator will be conversion rate in
website. High conversion rate will indicate the success of product and vice versa.
CONCLUSION
From the above report it has been concluded that macro environment is favourable for the
growth of the company. All the six external factors are somewhat perfect for company's growth.
Moreover internal strength and capabilities of organisation are its competent staff, functional
organisational structure, dynamism, innovation. Company adjust its leadership style according to
situations. The report also conclude that there strong competitive forces against the company are
competitive rivalry and bargaining power of customers. The report conclude that the best
strategy for the company are new product development. The new product that company
developed will be tech infused heated jackets. The tactics that company utilize will endorsing
product on social media with macro influencer. The evaluation technique that company use will
be key performance indicators. The key performance indicator will be conversion rate in website.
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REFERENCES
Books and Journals
Akter, S., and et. al., 2016. How to improve firm performance using big data analytics capability
and business strategy alignment?. International Journal of Production Economics. 182.
pp.113-131.
Higgins, D., Omer, T.C. and Phillips, J.D., 2015. The influence of a firm's business strategy on
its tax aggressiveness. Contemporary Accounting Research. 32(2). pp.674-702.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Leonidou, L.C., and et. al., 2015. Environmentally friendly export business strategy: Its
determinants and effects on competitive advantage and performance. International
Business Review. 24(5). pp.798-811.
Leonidou, L.C., and et. al., 2017. Internal drivers and performance consequences of small firm
green business strategy: The moderating role of external forces. Journal of business
ethics. 140(3). pp.585-606.
Malerba, F., and et. al., 2015. Dynamics of knowledge intensive entrepreneurship: Business
strategy and public policy. Routledge.
Martinez-Simarro, D., Devece, C. and Llopis-Albert, C., 2015. How information systems
strategy moderates the relationship between business strategy and performance. Journal
of Business Research. 68(7). pp.1592-1594.
Moseley III, G.B., 2017. Managing health care business strategy. Jones & Bartlett Learning.
Peng, M.W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy. The Blackwell handbook of cross‐cultural
management, pp.52-66.
Woerner, S.L. and Wixom, B.H., 2015. Big data: extending the business strategy
toolbox. Journal of Information Technology. 30(1). pp.60-62.
Online
Economy of United Kingdom UK. 2020 [Online] Available through
<www.globaltenders.com/economy-united-kingdom.htm>./
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