Strategic Management: JD Sports' Entry into the UK Real Estate Market

This strategic management report examines JD Sports' potential entry into the UK real estate market. It includes external analysis using PESTLE and Porter's Five Forces, identifying opportunities and threats within the political, economic, social, technological, environmental, and legal landscapes, as well as competitive forces. Internal analysis employs the VRIO framework to assess JD Sports' core competencies, focusing on product quality, product range, marketing, manufacturing, customer experience, digital advantage, technology innovation, HRM and culture, and brand image. The report further explores competitive strategies and strategic directions for JD Sports to achieve a sustainable competitive advantage in the real estate sector. Ultimately, the analysis aims to provide recommendations for JD Sports to navigate the challenges and capitalize on opportunities in this new market venture.

STRATEGIC
MANAGEMENT REPORT

EXECUTIVE SUMMARY
Strategic Management means the proper management of the available resources of the
organisation that are helpful in achieving the desired goals and the objectives. In this report it has
been analysed that there are some external as well as the internal factors that direct affect the
activities and also the performance of the JD sports. However, it has been also analysed that JD
sports can achieve the competitive advantage by properly examining the current market
situations, demands of the customers and the new competitors enters in the market. All these
factors affect the JD sports in the new market.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
2.0 External analysis........................................................................................................................4
2.1 Pestel Analysis.......................................................................................................................5
5 Force analysis............................................................................................................................6
3.0 Internal analysis.........................................................................................................................7
4.0 Competitive Strategies.............................................................................................................10
5.0 Strategic directions...................................................................................................................11
CONCLUSION AND RECOMMENDATIONS..........................................................................13
REFERENCES..............................................................................................................................14
APPENDIX 1 ................................................................................................................................16
APPENDIX 2.................................................................................................................................16

INTRODUCTION
Strategic management refers to the management of the resources of an organization in
order to achieve the desired goals and the objectives. It includes the setting of the objectives,
analysing the internal as well as the external environment, evaluating the strategies, analysing the
competitive environment, etc (Fuertes, and et.al., 2020). Strategic management is very important
as it provides the overall direction to the firm by developing and establishing the required plans
and policies in order to achieve objectives. It is also helpful in allocating the resources to
implement the plans successfully. JD sports is one of the leading sports fashion retail company in
Bury, Greater Manchester, England, UK. The company was established in 1981 by John Wardle
and David Makin. It has its branches in UK, the United States, Europe, Asia, New Zealand,
Canada and Australia. Approx 34,885 are working with JD sports and the net income of the firm
is £250.7 million. Currently it is working in retail industry.
Sportswear industry includes clothing, footwear, worn for the physical or sport exercise.
The sportswear industry was started in 1920. There are various key players that are operating in
the sportswear industry such as Nike Inc., Adidas AG, Fila Inc., LI- NING company Ltd., Puma
SE, Anta sports Product Ltd., etc. The market size of the global sportswear was estimated at
USD 239.78 billion in 2018 and the expected CAGR from 2019 to 2025 is 10.4% (Sportswear
Market Size, Share & Trends Analysis Report By Product (Shoes, Clothes), By End User (Men,
Women, Kids), By Distribution Channel (Online, Retail), By Region, And Segment Forecasts,
2019 - 2025). The current challenges faced by JD sports because of the covid- 19 pandemic
situation is the widespread strain on international logistics and the problem related to the supply
chain of the products. The two main factors that are posing threats to JD sports are shortage of
the skilled and talented workforce in the global market and the intense competition in the
sportswear industry. Some other challenges faced by the company is that the demand of the
highly profitable products is seasonal that directly impact the profitability of the firm. JD sports
is planning to invest in Real Estate Market in UK so this report shows the external analysis that
includes the micro and the macro analysis of the environment. In this report the internal analysis,
competitive strategies and the strategic direction that have to be made by the firm will also be
discussed.
2.0 External analysis
PESTLE analysis

For evaluating the external environment of the business, PESTLE is a strategic
framework. Political, Economic, Social, Technological, Environmental and Legal factors are
included in PESTLE. For identifying the advantages and disadvantages of a business strategy, it
can be an effective framework that can be used for Effective Strategic Planning.
Porter 5 force
For analysing the competitive environment of a company, it is a framework which is
used. The 5 forces are Threat of substitutes, Threat of new entrants, competitive rivalry,
bargaining power of suppliers and bargaining power of customers.
2.1 Pestel Analysis
Political factors :
Political Factors is related with the intervention of the government in the economy. Brexit
means when the United Kingdom withdraws its membership from the European Union . Political
policies are the courses of action which are pursued and adopted by ruler, government or any
political party. An election manifestos are the list of the policies which will be enacted by the
political parties if the party says that they will be going to vote at an office during general
election (Shtal and et.al., 2018). Long term sustainability and profitability of JD sports is affected
by the political factors. Interference of government in Retail Industry and bureaucracy also affect
the JD sports.
Economic factors:
Economic factors include growth of economy, rate of exchange, rate of inflation and rate
of interest. These factors can also affect the operations of the business. The costs of the JD
sports will be mainly impacted by the economic factors such as inflation, unemployment rate and
GDP. The costs of the JD sports will be impacted if there is an inflation. If the interest rates are
higher than it will lead to deterioration of JD sports.
Social factors :
Social factors refers to those factors which are related with distribution of health,
different aspects of the culture, career attitudes and it also on health consciousness. For better
planning the marketing analytics and strategy, these factors are very helpful. The social factors
which affects the JD sports will be different cultural practices which are embraced by different
societies. The factors can also enable the JD sports to anticipate with the threats of the future

business. Population growth will help the company in understanding the target market and right
product should be reached to the right consumer , marketing message by the company will also
be designed accordingly.
Technological factors:
Technological factors includes different aspects of the technology which includes the
activities related with research and development, changes in the technology. JD sports has to go
through the various technological changes for manufacturing and supplying the product. New
technology adopted by the company, can help in increasing the profitability and consumer
satisfaction. By adopting new technologies, it will also impact the finances of the company.
Legal Factors :
Legal factors are related with different types of laws such as law related with
employment, law related with health and safety, law related with discrimination, law related with
consumer. Cost of the company, operation of the company and demand for the products of a
company are also affected by these factors. For surviving in different types of market, it is very
essential that different legal factors such as laws related with employment, laws related with
labour should be understood by the company (Frue, 2020). To do the business without legal
hindrance, it will help the JD sports a lot.
Environmental factors :
Environmental factors include the aspects which are ecological and environmental such
as changes in the climate, weather, by which the industries which are related with insurance,
tourism and farming are especially affected. There will be different impact on the profitability of
JD sports, as markets vary from one another. The company JD sports will face different
environmental regulations as it has invested in different countries. The changes in the climate
should also be looked by the company, because it has direct impact on its performance.
5 Force analysis
Competitive Rivalry :
The competitive rivalry describes that what is the capability and number of competitors
in the market. This is the force which describes how many rivalries a company have and who are
those rivalries. This force is high in JD sports because it brings innovation in the industry and

puts the pressure on the company and provide the propositions of new value to the customers.
Because of this, the sales of the company will be affected (Bruijl, 2018).
Supplier power :
Supplier power means a company has how many suppliers and how prices can be easily
increased by the suppliers it can be easily determined with this power. The supplier power is low
for the JD sports because there many suppliers by which a company can buy their raw materials.
The suppliers can decrease the margin of the company which in turns helps the company to earn
the profit.
Buyer Power:
When there are more suppliers in the industry, as compared with the buyers than it is
known as buyer power. As the buyer power is high of the JD sports company, it has an ability to
seek discounts and offers which are increasing. As the customer base of the company is smaller
and powerful, it will affect the profitability of the company in the long run.
Threat of Substitution :
Threat of substitution means different ways are found by the customers of doing the
things what they want to do actually. Threat Of Substitution for the JD Company will be high
because when the customer needs are met in a different way for a new product or service it will
affect the profitability of the company (Irfan and et.al., 2019). As the present offerings of the
company will be completely different in respect of markets, which will further impact the sales
and profitability of the company.
Threat of New Entry:
Threat of new entry means how the position of the company can be affected if the new
company enters the market. Threat of new entry of JD sports is high because of presence of low
entry barriers, due to these, there will be more competitors in the market, that will further affect
the sales and profitability of the JD company.
3.0 Internal analysis
JD sports is one of the leading sports brand in UK and its main competitor is Foot
Locker. The firm has a large range of products and also the strong marketing and sales
capabilities. It also has a strong base of the customers.

VRIO Analysis is a acronym that stands for Valuable, rare, inimitable and organised.
This model examines or analysis the link between the internal characteristics and the the
performance of the company (Buzatu and et.al., 2019). These four properties of the core
competencies can help the firm in order to gain a secure and the sustainable competitive
advantage. The core competencies includes the resources and the capabilities that are owned by
the company.
VRIO analysis of JD sports
Core
competencies
Valuable Rare Imitable Organized Competitive
advantage
Product
Quality
Yes Yes Yes Yes Competitive
advantage
Product Range Yes Yes No Yes Temporary
advantage
Marketing Yes Yes No Yes Temporary
advantage
Manufacturing Yes Yes No Yes Temporary
advantage
Customer
experience
Yes Yes Yes Yes Competitive
advantage
Digital
Technology
Yes Yes No Yes Temporary
advantage
Innovation Yes Yes Yes Yes Competitive
advantage
HRM &
Culture
Yes Yes Yes Yes Competitive
advantage
Brand Image Yes Yes Yes Yes Competitive
advantage

Product Quality
The quality of the product is one of the main and the important driver of the company's
competitive advantage. It is helpful in generating the higher popularity and the brand loyalty in
the market. JD sports invested in the quality products in order to maintain its position in the
market and also for the competitive strengths. The firm also put efforts in building the top quality
manufacturing processes. It provides best quality products to the customers and this will help the
organization to achieve the faster growth and the sustainable competitive advantage (Ariyani and
Daryanto, 2018). This will also help the JD sports in order to build a good public image in the
new market.
Product Range
The JD sports company sells a wide range of products to its customers as it is a key
source of the competitive advantage. It sells its products in diverse price segments and the wide
range and quality of the products attract more and more customers. The firm mainly targets the
young generation but also facilitates the customers of age group of 45 to 65 years. JD sports only
offers the temporary advantage so the firm should invest for the development of the product
range. Product innovation help the company to build trust in the customers that will assist the
firm to attract the new customers in the new market.
Marketing
It is one of the significant element in the business and also act as a key source for the
brands in various industries. It played a vital role in facilitating the companies to increase the
growth and the development and is also helpful in enhancing the sales and the profitability. JD
sports use both traditional and modern channels for the marketing of its products. This will help
the company to generate the higher sales and also in strengthening the competitive edge.
However, the other competitors in the market like the Nike and Foot locker excels its marketing
strategies. JD sports has not be able to generate the same advantages as its competitors have. As
a result the competitive position of the organization is weak as compared to the other companies.
This will directly affect the firm in the new market so it should plan effective marketing
strategies to build the brand image.
Manufacturing

The effective and the strong manufacturing and the supply chain management can help
the firm to achieve the competitive position in the industry. In order to keep its production costs
competitive the JD sports have outsourced its manufacturing to external manufacturers. It select
or choose its manufacturing partners carefully to make the production simple. This will help the
company to focus on the other aspects like product design and marketing (Ariwibowo, Saputro
and Haryanto, 2021).
Customer experience
JD sports is investing in marketing, innovation and the product quality to maintain the
loyalty and the trust of the customers. The company also put efforts in order to attract more and
customers by providing them best quality products and by maintaining the customer
relationships. The strong customer base will also help the JD sports to establish the new business
in the market.
4.0 Competitive Strategies
Porter's generic strategies can be defined as across its chosen market scope, how a
competitive advantage can be pursued by the company. It is the framework which is used by the
organization which helps the organization in identifying potential niche and by which a
competitive advantage can be gained in any industry. There are four competitive strategies and
they are:
The cost leadership strategy:
By having the lowest cost of operation in the industry, cost leadership is establishing a
competitive advantage. There are mainly two ways by which this strategy can be achieved.
Firstly, by reducing the costs, increase the profits. Secondly, by charging lower prices, increase
the share of the market. It is exactly the strategy which involves being the leader in terms of
industry or market (Firoz Suleman, Rashidirad and Firoz Suleman, 2019). Companies which
achieve successful cost leadership will have the logistics which is very efficient , there is access
to the capital which is needed for investing in the technology which will bring down the costs.
There is a great risk in pursuing this strategy because the sources which are used for reducing the
cost is not unique.

Differentiation strategy :
It is the strategy in which the company has to make the products and services which are
unique and different and attractive from its competitors. For making differentiation strategy to be
succeeded, the company needed development , innovation and research which is good. The
company must have an ability by which it can deliver the products and services of high quality.
For understanding the benefits which are offered by the differentiated offerings, the market
should understand the sales and marketing.
The Focus Strategy
The companies which are using focus strategy focuses on markets which belongs to
particular niche. It is a method which is used for marketing, selling and developing the products
to a niche market. This type of strategy serves their customers in the market very uniquely, and
they also built strong brand loyalty among its customers. There are two types of focus strategy,
cost focus strategy and differentiation focus strategy. The cost focus strategy will focus on the
cost of the products and differentiation focus strategy will deal with the differentiated products in
the market.
The company will choose the differentiation strategy because the company is looking for
evaluating the position in its market and it will also enhance the experience of the customer by
developing new relationships (Bel, 2018). The company can develop and exploit the overall
range of the product. And as the company will use differentiation strategy, it will also help the
company in exploring and introducing the new products in the market. If differentiated strategy
will be used by the company it will also attract the new customers in the market. This strategy
will also allows the JD Company to compete in the market with the things which is other than
lowering the prices.
5.0 Strategic directions
Ansoff Matrix
This is also known as the product or the market expansion grid. Ansoff Matrix refers to a
tool that can be used by a firm to examine, analyse and plan the strategies for the growth and the
development. It mainly includes four strategies that help the organization to grow and also

identifies the risk associated with each strategy (Zanjani and et.al., 2020). The four strategies of
Ansoff Matrix are as follows-
1. Market penetration- In this type of strategy company uses its products in the existing
market. The main aim of the company is to increase its market share within a market
penetration strategy. The firm can implement this strategy by decreasing the prices of the
products to attract customers and also by increasing promotion activities and distribution
efforts.
2. Product development- According to this strategy a firm develops and introduce new
products in the existing market. It involves research and development and also the
expansion of the product range. An organization can implement this strategy by investing
in the research and development to develop new products in the market and also by
acquiring a competitors product and the merging resources (Weiwei, 2021). By forming
strategic partnership with the other firms.
3. Market development- In this type of strategy a firm enters in the new market with its
existing products. According to this strategy a firm can expanding into new markets, new
geographic region, customer segment, etc. It involves various approaches such as catering
to a different customer segment, entering into a new domestic market and the new foreign
market.
4. Diversification- In this strategy a company enters in a new market along with the new
product. It is one of the riskiest strategy as both product as well as the market
development is required for the successful implementation of this strategy. It offers a
great potential for increased revenues and the profits as it opens the new streams for the
firm. There are two types of diversification such as Related diversification and Unrelated
diversification. In related diversification there are potential collaboration to be understand
between the existing business and the new market whereas in unrelated diversification
there are no potential synergies (Prasetyo, and Rahman, 2018).
From the above discussion, it can be said that JD sports should use the diversification
strategy in order to enter in the new market of Real Estate. According to this strategy the firm
has to develop the product and the market for the growth in the new market. JD sports can
develop its products by properly analysing the current market situations of the new market. It
should also put efforts in order to acquire the competitive products and make effective use of the