JD Sports UK Market Strategy: PESTLE, SWOT & VRIO Analysis Report

This report provides a comprehensive strategic analysis of JD Sports in the UK market. It begins with an introduction to the company, including its founding, global presence, and financial performance. The analysis incorporates a SWOT analysis to identify the company's strengths, weaknesses, oppor...Read More

Human Resource
Management

EXECUTIVE SUMMARY
Business strategy facilitates company with a set of directions and action plans to attain business
aspirations and competitive position in a marketplace. It involves various theories, models and
concepts that serves company a strategic direction. Pestle analysis provides an overview of the
macro environment of business that expose several growth opportunities and threats for the
business. Porter's five force model is useful for the firm to analyse the industry and market. With
an intent to analyse the internal capabilities and resources of the firm VRIO is the suitable
framework. SWOT involves firm's internal and external factors in order to know what a firm can
do best right now and devise a tactful plan for the future.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION ..........................................................................................................................4
MAIN BODY...................................................................................................................................4
External Analysis:-......................................................................................................................6
Internal analysis:.........................................................................................................................8
VRIO Analysis:...........................................................................................................................8
Strategic options:.......................................................................................................................10
Strategic Directions:..................................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES:.............................................................................................................................13
Books and Journals:..................................................................................................................13

INTRODUCTION
The term business environment refers to all the internal and external factor which affect
the functioning of the company in both negative and positive way. Business environment can be
affected by many factor like customer's, employees, technology advancement, government,
social and many more(Urbanniak, 2017) . The following report is based on JD sports company
which is multinational brand of UK. The company was found in 1981 and the founder of the
company is John Wardle and David Makin. The JD sports is a public limited company and the
Headquarters of the company is situated in Bury, Greater Manchester, England, United
Kingdom. The respective company is s British- sports fashion retail company which operates
their business functions or offer their products throughout the United Kingdom, United States,
Europe, Asia, New Zealand and Australia. Company mainly deals in clothing and sports wear
accessories and the executive Chairman of the chosen company is Peter Cowgill. In 2020 the
operating income of the company is 516.9 million Euro, net income of the company is 250.7
million Euro and revenue of the company is 6110.8 million Euro. The owner of the company is
Pentland group which hold around 55 % share of the company along with this, the company
provide employment to around more then 34000 people. The following report is going to cover
the external and internal analysis of the JD sports company which affects functioning of the
company. The overall report is based on the different frameworks and models that help the
company in their decision making process.
MAIN BODY
SWOT Analysis of JD sports:
SWOT analysis may be define as tools and techniques which help the organisation to
make strategies for future uncertainties. SWOT analysis is very helpful for the company to
stands in the competitive market. It is used to assess the four basic aspects of the business:-S-
strength, W-weakness, O-opportunities, T- threats. In context to the JD sports the SWOT
analysis has been discussed below:-
Strengths:
 High level of customer satisfaction: As the customer management team of the JD sports
company is very excellent. With the help of this, company is able to attain the higher
level of customer satisfaction which ultimately image in the market.

 Market exploration:- The company can expand their business all over the globe because
whenever the company enter with the new product in the new market they always achieve
success and this become their one of the most important strength(Lord, 2018).
Weakness:-
 Improper finance:- In the different business functions of the company, the employees of
the JD sports is not able to use the allotted fund in a effective manner. Due to the
availability improper finance they are not able to fulfil the market demand.
 Outdate technology:- in their manufacturing process JD sports use the outdated
technology. As they are expanding their business all over the globe it is very important
for them to shift to the new technology. Due to this they can enjoy the long term
sustainability (Dees and et. al., 2021) .
Opportunities:-
 New market: the expanding of their business or enter into the new emerging market is
being considered as one of the most important opportunity which have been present in
front of the JD sports. Company can sign trade agreement with the government of
different countries to expand their business.
 Youth Trend:- Fitness and fashion has becoming the trends and this trend has been
followed by the immense number of youth. The respective company has an opportunity
in front of them by capturing the youth market(Beaven, 2019).
Threat:-
 Seasonal demands:- seasonable demand of the product is being considered as one of the
most important threat for the company. As most of the company's product are seasonable
due to this JD sports is not able to generate the higher profit.
 Different market different laws: different countries has its own rules and regulations
and due to this company always have to be ready to face the changes in the law from
country to country. This directly affect the strategies of the company made by them.

External Analysis:-
PESTLE analysis are the tools and techniques which are used by an organisation or
company to identify the external factor which effect the functioning of the business. Due to
change in the business techniques it reduces to PEST or some new areas can be added like
'ETHICAL' according to the need of organisation .PESTLE stands for Political , Economical,
Social, Technological, Environmental and Legal factor which effect the working of company .
 Political Factor :- political factor is one of the most important factor which effect the
functioning of the company (Reunanen, 2020). It includes tax rates, political interference,
unemployment rates, economic condition of the country where it is operating. In context
to JD sports, company have to import some of there inventory or goods from outside UK
like china and east Asia. Variable changes in the import duty has been considered as a
threat for them on the other hand the stability of the government of UK is very high due
to this they don't have to make changes in their strategies. This act as strength for the
company.
 Economical Factor:- economic factor is also a very important factor which effect the
operation of the business. It includes wages, cost, demand , profit , prices. In context to
JD sports company, the government of united kingdom increase the minimum wage rate
by 4.4 % in 2018 which leads to increase in the labour cost. This act as a threat for the
company because profit margins of the company has been decreases. On the other hand
diversification and stand in the market strategies can be followed by the company. These
strategies act as a opportunity for the due to this they can achieve successful position in
the market(Rapley, 2017) .
 Social factor :- This is also a very important factor which effect the functioning of the
company includes change in fashion, change in preferences , increase or decrease in
population , religion and social issues. In context to JD sports company, now a days
people having tough schedules, they want everything very quick and at one place. By
opening their online outlet they can spend their business all over the globe. This act as a
opportunity for them. On the other hand company have less availability of resources for
generating the fund. Due to this they are not able to maintain the stock of the products,
this act as a threat for them.

 Technological factor:- technological factor is a very important for the organisation , this
factor brought various opportunities for the company (Symeonides, Loizia and Zorpas,
2019). In context to JD sports company, the development of different online payment
method act as a opportunity for them because person can purchase anything from any
where. Due to the development of technology competition has been increased in the
online market in a very immense manner. This act as a threat for them.
 Environmental factor:- Environmental factor also impact directly on the performance
of company. This factor comprises various laws which are develop by the government of
the nation in order to protect the environment. In context to JD sports, as company goes
online this reduces the consumption of fuel which ultimately good for the environment.
On the other hand as the plastic bags has been ban by the government, different types of
problems has been faced by the company. This act as threat for them.
 Legal Factor:- government rules and regulation, government policies and legislation also
impact directly on the performance of the organisation. Law changes by the ministry of
UK affect the performance of business. In context to JD sports, as the law council of the
UK doesn't make frequent changes in their law. This act as a Opportunity for the
company. On the other hand if the company don't follow the rules which are developed
by the council, they may have to pay the penalties or wind-up their business. This act as a
threat for them(O’Brien and et. al., 2019) .
PORTER'S FIVE FORCES :-
This tool was created by Harvard Business school professor 'MICHAEL PORTER'
which help in analysing the competition and effectiveness of the firm in market. This method is
use to find out the competitive intensity and attractiveness of an industry in terms of its
profitability.
 Threat Of New Entrants:-
There is a low threat of entering new small company in the retail industry of UK because
they are not able to provide high quality product at a lower price to customer. This means that
food retail industry in the UK is unattractive (Ziaee and et. al., 2020).
 Threat Of Substitute:-
There is a high threat of substitution of product in sports market of UK. It is due to because all
the companies in this industries provide same type of product, If organisation increases the price

of product due to some reason the customer can easily switch to same product of another brand.
Which means that the rate of substitution is very high in the sports industry of UK.
 Power Of Buyers:-
The consumer is totally depend on the quality of competitor product and offer renders to
them . If the cost of JD sport's product is high then user will switch to a firm that offers low cost
product. Which simply means that the high bargaining power of buyer allows them to switch to
rival supermarkets.
 POWER Of Supplier:-
The existing number of supplier in UK which are operating in the sports market is very high. So
the power of supplier in this sector is low because company has the option to purchase the goods
from number of supplier (Kaya, 2021) . It implies that JD Sports-fashion has power to buy from
other supplier if the current supplier are not fulfilling needs and demand of the organisation. This
also indicate. A big benefit that franchisees receive when opening a franchise is brand
recognition. that company can influence their distributor and get goods at lower price. The
organisation has to maintain a big list of provider so they change their demand if any malpractice
done by them.
 Competitive Rivalry:-
The sports industry of UK is very big and competitive . The companies are facing high
competition in the market which provide same kind of products. The extreme competition among
the players take them to a level of cutting down the pricing of product which result in decreasing
the profit margin(Cabanes, Ramos, 2020) . This impact negatively on the working and market
share of the organisation . As because of the intense competition in this sector the company has
invented a new method to grow their position in the market is merging. This help in increasing
the market share of the organization which result in high sales and profit margins.
Internal analysis:
VRIO Analysis:
VRIO analysis is a smart technique for summing up all the resources of company and
help in analysing competitive advantages. This tool is used to kept eyes on the resources,
whether they are valuable or not, rare in nature or not, hard to imitate or not and are well
organized or not.

 Valuable-A resource is valuable only when if it permit the firm to get more opportunities
and reduces threats in the company environment(Kim and Makadok, 2021). A firm get
competitive position in the market only when the resources minimize the threat and
explore the more opportunities for firm. According to this analysis:-
◦ Employees are the valuable resource for the JD Sports because the workforce is
highly trained which result in high productive output for the organization .
◦ Cost structure is not valuable for the JD Sports because the process of manufacturing
the goods increases the cost of production which affect the profit of the organisation.
 Rare:-A resource is rare only when if it is not openly possessed by other firms . If an
organisation holds the resources which are not rare in nature then the firm is not able to
get the competitive advantage and if the resources are rare in nature then company get
advantage over the competitive firms(Lagoudakis and et. al., 2020).
◦ Patents are rare resources for the JD sports because these patents are not in the reach
of competitor and not comfortably available for the rivals.
◦ The local food product are not the rare resources for the company because these items
are easily deliver by their competitor in the market.
 Imitable:-A resource is imitable only when if it is easily obtain by another firm or
substitute the resource from something else. If the valuable and rare resources are
imitable then the company will not get the competitive advantage and if the resources are
inimitable then the firm will get competitive advantage as long as close substitute is not
gain by the competitive firm.
◦ The distribution network of JD sports is an inimitable resource for their competitor
because the process which is used by the company is very costly. Rivals of the
company have to invest lots of funds to copy the same distribution way(Barros,
2018).
◦ The employees of the organisation is an imitable resource for their competitor
because other companies can also improve skills of their employees by following the
same strategies of JD sports or can also recruit the employees of respective company.
 Organisation:- The final VIRO is organization which determine whether the resources
which are possessed by the company are well organised or not. If the resources are
assembled in a classified manner then firm can explore more opportunities and get the

competitive advantage which reduces the time and money both and if the resources are
not properly arranged then the company cannot explore more opportunities and get less
productive result.
◦ The financial resources strategy of JD sports is well organised because the company
follow the proper plan to invest the money at right places which result in creating
more opportunities and help in minimizing the threats.
◦ The patents of JD sports are not well organised which result in not utilize these
patents with full capacity and company cannot get the sustainable competitive
advantages.
Strategic options:
Porter's generic strategies:-
This strategy of porter's helps in identifying that how an organisation possess the
competitive advantage and attractiveness across its selected market place. This includes three
kinds of strategies i.e. cost leadership, focus and differentiation . In reference with JD Sports-
fashion these strategies are mentioned below:-
 COST LEADERSHIP :- This simply means that become a boss in low cost production.
By using this strategy, costumer can be easily targeted by decreasing the price of the
products by an organisation. JD Sports - fashion provides product to their consumer at
lower price which help in gaining customer trust and faith(Hamidi and et. al., 2018) .
The company also offer many discount to their reliable customer, due to this the
goodwill of the company is being increased in the market and they will recommanded to
their relatives and friend about the discount of JD sports. This help in increasing the
market share, which results in increasing the sale as well as in profit both.
 DIFFERENTIATION :- By using this strategy, a company provides different product
and services to their customer which help them to differentiate from the competitor
product dealing in the same market. With the help of this strategy, JD sports - fashion
provide new and innovative product to their customer which help them to cover large
market area. This help in managing the sales in an effective manner.
 FOCUS :- This strategy is divided into two parts i.e. cost focus and differentiation focus.
It helps the organisation to focus on a specific market or group of buyer. In cost focus
strategy, the JD Sports - fashion provide those product to their customer at lower price

which are in demand in the market. This increases the number of buyer which result in
increasing the sale. In differentiation focus, the company brings out the new and
innovative products according to the needs & wants of the consumer. The company
offer modern and different items to their consumer so that they can buy them without
budget sensitive(Terol Monreal, 2017).
Strategic Directions:
It is linked to the strategies that need to be executed for a company to process with the details in
order to accomplish its goals and objectives. It ensures that a entrepreneur and the company can
address the value of the employee's efficiency and their betterment to achieve the targets of the
organisation(Gantz, 2020) . In context to JD sports-fashion, the company is situated in the UK
that operates in fashion as well as sports segments which sells various sports, casual wear of
several brands. Market segment of this organisation is known to be collaborative as well very
much cooperative with the other various brand that is the essential for them as it is the main
products of the company. Method of expansion of the company JD sports – fashion is mentioned
below:
 Licensing – It refers to the legal business agreements, in which an organisation lets the
various organisation through providing a legal agreement of temporarily increment for its
rational positioning rights which is production methods of the company, its copyrights,
brand name and several more. In case of the JD sports – fashion, for the purpose of
selling and producing the equipment of sports in UK, the firm has made a agreement with
the sports company Fila, Ireland and Channel island. This collaboration assist to advance
the technique of supplying proper quality sports fashion products to their clients.
 Franchise – Franchising can be one of the essential way for the company JD sports
fashion in order to scale up their organisation in the various parts of the world. This is the
mode of supplying the merchandise or their offering which involves with an individual.
From the above topic it is recommended to the company that they can utilise the strategy
franchising in order to successfully expand in several parts of the world. It can be advantageous
for the firm in order to get is brand recognition at the time of opening a franchise(Cabanes,
Ramos, 2020).

CONCLUSION
From the above report it is concluded that business strategy is one of the most essential
technique which assist the organisation to accomplish its long term goals and objectives. In
addition to the the respective organisation, it is known that growth and success of the firm
basically depends on the strategy of the business. For that matter, it is very much essential that
the growth of the organisation majorly depends on its business strategies. It is also mandatory for
the fir, to evaluate its external as well as internal environmental elements with the support of the
PESTLE and SWOT analysis in order to overcome the threats and weaknesses of the firm and
the optimum use of its strengths by grabbing all the opportunities. VRIO analysis is also very
supportive in order to know the internal abilities of the respective firm. This report has also
covered about the various extent of theories as well as studies like Porter five forces in order to
analyse the competitive situation of the organisation in the market segment. Moreover to this,
Porter's generic method is utilised in accordance to make a proper strategic management plan.

REFERENCES:
Books and Journals:
Urbanniak, B., 2017. Colorful Human Resource Management: What Are We Talking
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Beaven, K., 2019. Strategic Human Resource Management: An HR Professional's Toolkit.
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Reunanen, H.B., 2020. Social Media Development and Sponsorship Groundwork for a
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the framework of circular economy strategy. Environmental Science and Pollution
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Ziaee, A and et. al., 2020. Future drivers of leisure time physical activity in Iran. Physical
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Kaya, D.G., 2021. Views of Sports Sciences Students about Distance Education during COVID-
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Hamidi, M and et. al., 2018. Designing strategic plan for student sport federation of
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Dees, W and et. al., 2021. Sport marketing. Human Kinetics.
Rapley, P., 2017. Case Study: Where Next for Next?. Teaching Business & Economics. 21(1).
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O’Brien, D and et. al., 2019. Strategic management in sport. Routledge.
Cabanes Ramos, I., 2020. The Urban Roosters Technologies Marketing Plan.
Kim, J. and Makadok, R., 2021. Unpacking the “O” in VRIO: The role of workflow
interdependence in the loss and replacement of strategic human capital. Strategic
Management Journal.
Barros, M.B., 2018. Online market-penetration strategies of Josefinas to South Korea (Doctoral
dissertation).
Terol Monreal, J.D., 2017. Business project of" VBF Ltd".