Strategic Management and Expansion Strategies: JD Sports Fashion

This strategic management report analyzes JD Sports Fashion PLC, utilizing frameworks such as PESTLE, Porter's Five Forces, and VRIO to assess its external and internal environments. The report identifies threats and opportunities, strengths and weaknesses, and competitive strategies employed by JD Sports. It explores potential strategic directions for business expansion, considering factors like political and economic influences, social and technological advancements, and competitive rivalry. The analysis includes recommendations for enhancing JD Sports' market position and achieving sustainable growth, focusing on leveraging strengths, addressing weaknesses, capitalizing on opportunities, and mitigating threats within the dynamic sports and fashion industry. The report concludes by emphasizing the importance of continuous strategic adaptation to maintain a competitive edge.

Strategic Management

EXECUTIVE SUMMARY
Strategic management is a process of setting goals, objectives, strategies of company by
planning monitoring and assessing needs to meet the desired goals. Strategic analysts in the
business use porter's five forces and Michael porter generic strategy as a tool or method to
achieve competitive advantage and also find out about product or service are profitable or not.
These strategies are helpful to identify areas of strengths and what more improvement is needed
such as improving weaknesses in order to avoid mistakes and any uncertainty in the future. For
strategic expansion of business, ansoff matrix tool is used as it helps in planning, analysing,
formulating and evaluating firms growth strategies for future enterprise growth.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................2
2. INTRODUCTION ......................................................................................................................4
3. Discussing External environmental analysis for identifying threats and opportunities..........4
4.Discussing internal environmental analysis for identifying strengths and weaknesses...........8
5. Identification of competitive strategies ................................................................................11
6. Strategic direction for expansion of business. ......................................................................14
Recommendation......................................................................................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

2. INTRODUCTION
Strategic management is the process which provides the directions for setting the goals
for the business. In business strategic management is applied for gaining the advantage over the
competitors. The strategic manager gives the direction related to plans which needs to be
implemented in the corporate organization. These helps in fulfilling the vision and mission of
the enterprise. The JD sports fashion firm is regarded as multichannel retailer in the sports and
fashion industry. The institution is mainly serving products in fashionable clothes, branded
footwear and also the casual sports wear. Operations of the brand has spread across various
countries.
This report will discuss the details about JD sports background. Analysing the external
and internal environment of the sports company. Also, identifying the competitive strategies with
the strategic directions. Lastly, analysing methods of expansion in the real estate market with the
recommendations.
3. Discussing External environmental analysis for identifying threats and opportunities
Macro- PESTEL analysis
PESTLE analysis is a popular method used by company to evaluate the external
environment of any industry's business by braking down the risks and opportunities into various
factors. With the help of this method company can focus on effective frameworks to use in
planning and easily find out the cons and pros of a business strategy.
Source: (Perera, 2017)

Political factors- This factor play a vital role in determining the elements that can impact
JD sports PLC. When studying about these factors, the firm can look at how government policies
and their rules can affect a business such as tariffs, tax policies and trade restrictions. So it is
necessary for JD sports plc to closely follow the rules and regulation made by government which
is related to business. They must have to follow the territories and state policy because they
operate in various countries. Due to election in UK, the firm has to prepare for rapid changing
policies with new government as it will increase service sector priorities. Various factors are also
involves such as price based regulation and labour laws.
Economic factors- economic factors has been taken into account by the firm in order to
look on each area of business which can get impacted by government decisions or other
economic terms. It includes inflation, interest rates, unemployment rates, exchange rates so, the
firm has to focus on these factors. In UK business, Increasing trend in liberalization of trade
policy can be beneficial for JD sports PLC to invest further into the regions. With these factors,
JD sports plc can easily understand the spending pattern of the clients and therefore proper
decision-making process about pricing and product placement can be done. For example- The
firm can decides to change decisions and make proper planning about its debts after an interest
rate has been announced.
Social factors- In today's business environment, each and every society and culture has
its own way of expanding and operating business. These factors can help company to understand
the market trends and customer purchasing behaviour. For example- health and safety attitudes,
norms, traditions and culture (Phan, 2021). With deep understanding of these factors company
can make decisions and also understand the customer preference in service sector. Social media
and other outlets play a vital role in influencing the UK public and their opinion.
Due to growth in media the purchasing behaviour of customers has been changing
rapidly. JD sports fashion needs to have deep knowledge about these trends to better market and
achieve competitive advantages. By doing so, firm can easily position its services and products
in the competitive market. Also, the clients in the UK are giving priority to experiential goods
rather than traditional value propositions in the business sector. Thus, the firm can leverage this
market trends in order to build the awareness about the brand product and also provide enhanced
customer experience. Migration trend is negative in UK, as it can affect the ability of company to
bring managers and international top management team to handle operations in the country.

Technological factors- Due to heavy competition in technology, the companies in UK
has been impacted by fastest growing market trends such as automation and research and
technology. So, it is important for every business to use up to date and latest trends so that it can
be beneficial for company. Not being up to date about the market trends can be harmful to
business operations and may impact the productivity and performance of firm (JD sports fashion
PESTLE analysis, 2021). JD sports plc needs to analyse the technological factors by
understanding about the new technology and its positive or negative impact on business. It can
also be helpful in increasing customer satisfaction and profitability, and the firm can also find out
how much impact these factors will make on the firm finances.
Due to technology and innovation, the suppliers has to make quick decisions in
developing new products or services. This has put pressure on UK industries and their marketing
department to keep the customers and suppliers happy by promoting various ranges of products
with the help of promotion activities like social media (Vardopoulos and et.al., 2021). The
company has to make more investment in research and development to meet the expectations of
market and have to innovate to stay ahead of the business competition. Because of lowering cost
of production trend the firm has to restructure its supply chain and its management in order to
bring in more flexibility to satisfy customer wants.
Micro- 5 forces framework for analysing industry structure
Porter's five forces of competitive position analysis is the most popular method used by
company for evaluating the market position and competitive strength of the business. This
method is based on the various concept which can negatively and positively impact the business
and thus, it helps to identify where power lies in a business situation (Lord and et.al., 2021).
With the help of this method, JD sports can understand the strength of competitive business
position and strength of a position that a company may look to move. By understanding such
concepts company can easily gain competitive advantages and achieve goals.
Managers of the firm use this theory to understand whether new services or goods are
potentially profitable. By doing so, they can make decisions related to business operation and
also improve weaknesses in order to avoid any uncertainty or mistakes. This model is designed
by Michael porter for analysing things on an industry basis. By using this theory company can
make decisions relating to whether to improve capacity, developing competitive strength and
strategies and when to enter industry.

Threat of new entrants- This is the major factor that can impact the business because
new players into an industry can force current company to keep product price down and attract
more new customers. It has been noted that new entry brings pressure on costs and prices thus, it
is necessary to understand this business situation. The company can attract more new customers
by offering them benefits and build brand awareness to access distribution channels and also
follow government policies.
Threat of substitution- Due to heavy competition in business world, the customer
purchasing power and their behaviour is totally depended on substitution. In other words, when a
new service or goods meets the basic requirements in a very different way, company productivity
and profitability suffers. For example- online shopping and home delivery is a substitute for
physical stores which has attracted more new customers nowadays. After pandemic COVID-19
most of the people wants to purchase goods online instead of visiting physical stores. Due to this
business situation, firm profitability suffers and has to make immediate changes in its business
operations.
Bargaining power of buyers- Business success is depended on power of buyers by
understanding how easy it is for customers or buyers to drive product prices down. It includes
number of buyers, cost to the purchaser of switching from one supplier to other, and role and
importance of each buyer to the company (The five forces, 2021). They can play rivals against

each other in the business market especially when the company's product are undifferentiated, it's
inexpensive to switch customer loyalties.
Bargaining power of suppliers- This is the study of how easy it is for market suppliers to
drive up product or service prices. It includes uniqueness of service or product, strength and
switching cost. It has been noted that powerful suppliers in the market can use their negotiating
power to charge high price from industry competition which decrease industry profitability and
performance.
Competitive rivalry- This is the main driver which has been taken into consideration by
company to understand the factors affecting profitability in a specific industry. Here it includes
the capacity of competitors and numbers of players in the market. Nowadays, many competitors
in the market offer undifferentiated services or goods will decrease market attractiveness. In this
situation, exit barriers are high which can impact the firm's goals and objectives.
4.Discussing internal environmental analysis for identifying strengths and weaknesses
VRIO analysis- It is the method used by company which explains competitive advantage
such as value, rare, imitable and organization. In other words, when a company is in a good
market position to differentiate its service or product from its industry competitors, then it is said
to be a competitive advantage. In order to achieve goals and maintain this competitive advantage,
the firm must be able to demonstrate differential value than its market competitors and pass on
that important information or data to its desired target market.
Value- A company's resources and capability should be valuable and must provide
economic value. The major question include in this analysis is does a resource enable a company
to exploit an environmental opportunity and threat?
Rare- A firm's capability and resources should be unique so that it can attract more new
customers and satisfy existing clients. In other words rarity is seen when the company has a
capability that is unique they must have short supply which means the goods must have good life
cycle. For example- JD sports is focusing on international expansion which helps it to build
relationships with people and spread awareness.
Imitable- The major objective of this factor is whether the company with rare and value
resource make it difficult to imitate its services and product by another industry. This capacity is
helpful for company to be a market leader and helps to gain competitive advantage.

Organization- when resources are available in time and economical in nature, then
resource management can be maintained effectively and efficiently. For example- inventory
skills, knowledge, production resources and Information technology. After acquiring rarity,
value, and imitable the next stage is to optimum utilization of its resources in a systematic way.
If done successfully, the organization can achieve goals and period of competitive advantage.
Source: (Ali and Anwar, 2021)
Capabilities
and resources
Valuable Rare Imitate Organization
capable of
exploiting
Performance
implications/
competitive
advantages

Product
innovation
Yes Yes Yes Yes Above normal/
sustained
Technology Yes No No Yes Normal/
sustained
Supply chain
management
Yes No No Yes Normal/
Sustained
Brand image yes yes yes yes Above normal/
Sustained
Innovation and
marketing
Yes Yes Yes Yes Sustainable
competitive
advantage
Financial Yes Yes Yes Yes Sustainable
competitive
advantage
Customer
loyalty
Yes Yes Yes Yes Sustainable
competitive
advantage
HRM &
culture
Yes Yes Yes Yes Competitive
advantage
Manufacturing Yes Yes No Yes Temporary
advantage
Technology- Technology is not an imitable source nor rare and therefore it offers
temporary advantage to industry. This is the reason the firm has to continuously invest in
innovation and digital technology in order to achieve sustainable advantage. The firm is focusing
on its strong supplier and customer relationship which is helpful for them to gain competitive
advantage. COVID-19 pandemic has highlighted the importance and role of digital technology
for business. Technology plays a vital role in the success of business worldwide and gain
competitive advantages. In the sports and fashion industry businesses are investing more in

technology and innovation for growth and development. Digital technology has helped the JD
sports acquire many people. With the help of digital sales channels and other resources the
company has successfully achieve competitive advantage even during the pandemic.
Manufacturing and supply chain management- both are key sources of competitive
advantage for company which can be helpful for them achieve their market position in the
industry. The company has outsourced all of its supply chain to external manufacturers so that
they can keep its production costs competitive. By doing so, they are able to focus on other
aspects related to its business such as marketing, promotional activities and product designing.
5. Identification of competitive strategies
Porter's Generic competitive strategies ( ways of competing)
With the help of this method company can determine whether a firm's profitability is
below or above the industry average level. The company positions itself in the market by
leveraging its strengths which falls into category such as differentiation and cost advantage.
According to Michael porter, It is necessary for company to choose a right course in order to able
to beat the competition.

Cost leadership strategy- In this strategy, a company sets out to become leader of cost
and the low cost producer in a particular industry. It is necessary for company to choose the right
and clear cost strategy by targeting a large demand and market and also provide the low price.
The firm has option of keeping costs of product or service as low as possible and must have a
high market share with average pricing strategy. If the company offers reasonable product or
service will remain profitable for a longer time period (Ngugi and Gitonga, 2021). The best way
to achieve cost advantages are making optimal outsourcing and by improving efficiencies. For
example- if competing firms of JD sports plc are unable to lower their product costs by a similar
amount then the company may be able to achieve competitive advantage based on this strategy.
Company which is following this strategy have efficient distribution channels and access to the
capital required in order to make investment.
Differentiation- when a firm seeks to be unique and provide different facility related to
product or services in its industry that are widely valued by customers then it is known as
differentiation strategy(Kiprono, B. K. and Kinyua, G. M., 2021). For example- JD sports plc
used this strategy, in order to make their service or product as exclusive as possible so that they
can attract more customers as compared to other firm. It is necessary to have deep understanding
about research and development, ability to provide high quality service and innovation. Here, to
beat the competition company must use effective marketing strategy so that the business market
understands the advantage of unique product offered by firm. Firms that succeed in this strategy
often gave the strengths such as highly skilled and knowledge about innovation, creative product
development department , strong and effective team.
Cost focus strategy- This strategy concentrates on a narrow market segment and thus, this
segment attempts to achieve differentiation or cost advantage in order to beat the competition. If
the firm concentrate on this strategy, then they enjoy a high degree of customer loyalty and trust.
Due to narrow market focus, company pursuing a focus strategy have low volumes and thus they
have less bargaining power with their vendors. But if in case when the company pursuing a
differentiation focused strategy then they pass higher cost of product or service to clients.