Business Strategy Report: JD Sports - Macro and Internal Analysis

This report provides a comprehensive business strategy analysis of JD Sports, a leading sports fashion retailer. It begins with an introduction to business strategy and an overview of JD Sports. The report then delves into the macro environment using a PESTEL analysis, examining political, economic, social, technological, environmental, and legal factors impacting the company. Next, it explores JD Sports' internal environment and capabilities through the McKinsey 7S model, assessing shared values, strategy, structure, systems, staff, style, and skills. The report also utilizes Porter's Five Forces to evaluate the competitive landscape and employs strategic planning frameworks like TOWS matrix and Porter's generic strategies. Finally, the report concludes with a strategic plan for JD Sports, integrating the findings from the preceding analyses and offering recommendations for future success. The report emphasizes the importance of adapting to the changing retail landscape and leveraging both internal strengths and external opportunities.

BUSINESS
STRATEGY
1

INTRODUCTION...........................................................................................................................4
SECTION 1.....................................................................................................................................4
Impact and influence of macro environment on a given organization and its strategies.............4
SECTION 2.....................................................................................................................................8
Internal environment and capabilities of a given organisation using appropriate frameworks...8
SECTION 3...................................................................................................................................10
Porter Five Force model to evaluate..........................................................................................10
Strategic planning......................................................................................................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................18
2

3

INTRODUCTION
Business strategy is defined as a long term plan of competitive action that assist business
organizations to fulfill corporate goals in a well define manner. In order to develop formative
business strategy it is essential for an entity to evaluate different type of measures and techniques
as to fulfill business objectives and goals (Burlton, 2015). Present report has been made on JD
Sports; entity was founded in the year 1981 and conducts their operations in retail industry. With
having it’s headquartered in United Kingdom this company offer sportswear and clothing
accessories. In this report discussion has been conducted on pestle evaluation. With the help of
this entity can effectively able to evaluate factors that can affect organization operation and can
further develop strategies and measure against it. Along with this report include, McKinsey 7s
framework, TOWS matrix, and Porter’s five Force model and porter generic strategies. All these
models and strategic frameworks allow entity to develop successful measures to gain maximum
opportunity in order to accomplish business objectives. Lastly this report include, business
strategy plan.
SECTION 1
Impact and influence of macro environment on a given organization and its strategies
It has been identified that a business operates its functioning in a business environment that
involve different type of factors and have capability to affect internal and external operations. JD
sports in order to analyze macro environmental factors that can affect business functioning is
required to undertake use of pestle analysis (Teh and Corbitt, 2015). This will benefit company
to gain critical overview of different aspects of pestle like political, social, economical,
environmental, technical and legal in a well-defined manner and develop strong strategies in
order to ensure competitive edge in respective industrial sector.
Mission: Having a mission statement to, be United Kingdom best known sports fashion
retailer this company aim into towards offering consumers with wide range of products in order
to enhance the shopping experience by offering them high quality of product and services.
Vision: Company conduct their business operations with having an ultimate vision which
is to deliver long term sustainable earning growth as to maximize shareholders total return
through share price performance and evidence.
4

It has been evaluated from company Vision and Mission statement that by providing high
quality of services and product to consumer this company effectively set a standard for online
shopping by offering authenticity, quality and vast product commitment to fulfill need of
maximum number of individuals. This company is one of the most trusted company around the
globe and value gratitude, integrity, consumer first, collaboration, team sprit to enhance their
business performance efficiency. Company values innovation, fair play in order to ensure their
continuous development as to conduct their business operations in strong work ethic. Company
is having one of the most important visions which is become a leading Sports Company in
respective industrial sector by offering more and more product and services range with the use of
high technology in order to serve their customers at best.
Ilustration 1: PESTEL Analysis
(Source: PESTEL Analysis, 2019)
Political Factors:
This factor demonstrates the influence of politics upon business organization. It mainly
includes elements like foreign trade policy, political stability, regulations, governmental policies,
taxation rules and labor laws (Schaltegger, Hansen and Lüdeke-Freund, 2016). JD sports operate
their functioning in retail sector and conduct business in Sports segment which is largely affected
5

by political decisions. This makes entity essential to conduct their operations by staying aligned
with present ruling government.
Positive: In United Kingdom there are different type of policies and taxation reliefs that
are being offered by government to industries in retailing sector. Along with this organization
those who conduct their business functioning in sports sector are provided with more tariff
relaxes. With the advantage of this opportunity JD sports can increase their profitability at great
extent.
Negative: Due to brexit retail Industry in UK get severely affected, as it decreases
purchasing power of buyers (Hart, Sharma and Halme, 2016). This political instability can
critically impact upon profit earning capability of JD Sports. In order to overcome this entity is
required to develop strategies through which they can attract customers towards that products
and services by offering them in affordable price range.
Economic Factors:
This factor of pestle analysis include elements that are related to extent of unemployment,
inflation rate, disposable income, economic growth, exchange rate and per capita income of
individual in a country (Scholes, 2015). It is important for JD sports to have understanding of all
the economic factors as to take advantage of economic opportunities that are prevailing in United
Kingdom.
Positive: UK is economically developed nation which is having excellent infrastructure
facilities and offer different type of economic opportunities to entities retailing sector. Retail
industry is most important aspect in United Kingdom as it remarkably contributes in overall GDP
of country. Thus, by taking advantage of economic opportunities that is prevailing within UK,
JD sports can maximize their existing share price in a well define manner.
Negative: This has been identify that brexit increases unemployment rate in United
Kingdom which is acknowledged to be 3.8% as of the quarter July - Sept 2019 (Why is UK
unemployment still low? We are working longer hours, 2019). This can affect JD sports
workforce requirement that makes entity to offer higher wages in order to attract skilled and
6

potential workers. In this JD Sports is required to take use of cost effective measures through of
selection and recruitment.
Social Factors:
Social factor involve elements like age distribution, health consciousness, population,
growth rate, career attitude, consumer lifestyle, safety emphasis, community beliefs etc. It is
essential for an organization to evaluate beliefs and perceptions of individuals in a society in
which they operate their functioning. This factor can largely affect business operations of JD
sports. In this by evaluating emerging trends and patterns of consumers company can satisfy
them with best.
Positive: It has been evaluated that mind set of individuals in United Kingdom is largely
tend towards sports and sporting events. This creates number of opportunities for JD Sports. In
this company by expanding their product range can attract customers with all age groups and can
enhance their consumer base.
Negative: There is stiff competition in United Kingdom in sports segment, along with this
UK population is hyper aware and easily shift their perception towards new trends. Thus, this
adverse shaft in lifestyle and purchasing pattern of customers can impact upon overall sales of
JD sports. In this it is essential for company to constantly conduct marketing research and offer
their products and services as per according to latest trends.
Technological Factors:
This aspect of pestle analysis has elements that are related to technological innovation,
awareness, automation, R&D etc. By taking advantage of this factor company can increase their
competitive edge comparatively to other rivals in marketplace. This is essential for
administration of JD Sports to ensure that organizational structure of company implement latest
technological trends in time effective manner us to ensure high profitability advancements.
Positive: JD sports conduct their functioning in sports sector and operate their
functioning in retail industrial segment which is constantly evolving according to new
7

technological innovation. In order to ensure superiority in marketplace JD Sports by maximizing
business platform in online segment can effectively able to influence large base of customers
from different geographical location. This helps them to increase their overall profitability at
great extent.
Negative: There are other top-notch organizations like Nike that can affect business
profitability of JD Sports. Along with this in order to implement emerging technological trend
there is a need of more capital investments. In this respective entity is requiring undertaking cost-
effective strategies and formulating effective budget in order to fulfill their objectives.
Environmental Factors:
This factor includes elements like environmental, weather, climate policies etc. It is
essential for entity in any industrial segment to evaluate and determine that their business
activities does not affect environment in any way. Being a sports fashion retailer it is essential
for JD Sports to take use of waste management practices in their organizational units. As this has
been evaluated, that many countries placed strict norms in order to protect environment.
Positive: By increasing investment in renewable technology JD can effectively ensure its
long-term sustainability in respective industrial sector and can increase their brand image in
marketplace.
Negative: Negligence of environment aspect can affect profitability and goodwill of JD
sports in adverse manner. Thus, it is essential for entity to take steps as to encourage
environmental friendly initiative in their organizational workplace.
Legal Factors:
This is most important factor of pestle evaluation, it include factors like consumer
protection law, copyright and health and safety law, discrimination and employment legislation,
etc. It is essential for JD sports to comply with all the essential legislations that are being
imposed by UK Government.
8

Positive: JD Sports management is required to ensure that they abide all the essential
legislation and laws like employee protection law, Consumer Protection law, and intellectual
property laws in a well defined manner as to take advantage of Government supporting measures
for retail industry.
Negative: Non compliance any legislation and law can adversely affect JD Sports and
further company may face legal compliances and heavy penalty.
SECTION 2
Internal environment and capabilities of a given organisation using appropriate frameworks
It is essential for an entity to evaluate it’s the internal capabilities in order to increase their
performance and undertake advantage of significant opportunity and more competitive edge. In
this JD sports by taking advantage of McKinsey 7s model can effectively able to demonstrate
expertise, capacity and competence of organization:
McKinsey 7S Model
This model tends to show the link between seven separate elements of an organisation to
enhance its overall effectiveness. These elements are explained in context of JD below
Shared Value: This factor mainly state towards believes and values that company share.
JD sports are having beliefs in maximizing their sophisticated management techniques from
simple production entity in order to increase efficiency of their set standards.
Strategy: This element tends towards methods that organization undertake as an element
of strategic planning in order to fulfill their goals (Pisano, 2015). JD sports take advantage of
different strategy undertaking use of Balanced Scoreboard (BSC) method in order to fulfill
corporate goals.
Structure: This factor describes hierarchy that entity follow. JD Sports believes that
entity just not need a soul leader, instead it is essential for company to have whole group of
employees who effectively work together in a top to down direction in order to fulfill
organizational objectives according to JD strategies.
9

System: This factor significantly demonstrates the procedure and manner upon which
company relies as to perform their daily basis operation. JD sports day use of reform steering
wheel performance appraisal system that only involves six measures through which company
fulfill their pre-determined strategies in order to encourage employee’s performance towards
organizational objectives.
Staff: This factor state towards overall number of Employees Company is having. JD
sports are a leading organization in retail industrial sector and satisfy customers with having
more than 32,125 more than employees.
Style: It is defined as a manner in which company conducts its operation as to fulfill long
as well as short term objectives. By taking advantage of steering wheel system JD sports
accomplish their corporate goals. It mainly have 90 degree Arc in which entity mainly focus on
four main areas that include examined, operations, financial and performance
Skill: The element defines capability of entity or workforce as to fulfill task for project. JD
Sports encourage employees with different training session at periodical time frame in order to
impart efficient knowledge among them as to fulfill company objectives according to set
standards.
VRIN
Valuable – According to vrin, analysis it has been identified that JD sports inventory
management system along with e-commerce operations one of their own sustainable. In addition
it has been evaluated that company consumer data analytics, data and data mining are cannot get
easily match with other competitors.
Rare – It has been evaluated that research and development is JD sports competitive
advantage, however this is not hard for competitions to copy.
Inimitable – It has been evaluated that company partnership and alliances is only a
competitive similarity, as company is having their partnership with different companies that help
10

them to be a leading brand in respective industrial sector, however these relationship can further
turn can turn to be sour this further make this capability turn into valueless.
Non-substitutable - According to this it has been evaluated that JD sports manufacturing
is only there temporary competitive advantage.
TOWS
SO –
 JD Sports falls under financially strong brand and this company is having great capability
to make their investment in product innovation and digitalization, it further aid them to
expand that E-Commerce business in other countries.
 Company is having excellent marketing strategy through which they can assure their
faster growth.
 As company is a financially strong brand thus, it allows them to expand the product and
service range with high quality in order to serve their customers better.
ST –
11

 Since this company is having strong financial position it allows them to keep investing in
HR management marketing and R&D.
 JD Sports is required to take use of innovation and marketing capabilities in order to
overcome aggressive pressure of competition.
 Entity is required to emphasize more upon compliance by taking use of internal
complaints teams in order to have control on regulatory as well as legal pressure.
WO –
 Company can make expansion in a faster rate in international market segment by making
investment in them; it will reduce their dependency on United Kingdom market segment
and further ate them to open new revenue generation.
 With having controlling operational cost allow entity to make them spent on innovation
and digitalization.
WT –
 Having strong control upon operational cost can allow entity to invest more in growth
and marketing of their brand.
 With having efficient control on the dependency on United Kingdom market and
expanding their business services in new market segment allow entity to cut down their
other operational cost.
SECTION 3
Porter Five Force model to evaluate
In order to formulate effective strategies it is essential for an organization to efficiently
consider competitive forces that are prevailing in marketplace. In context with JD sports
administration, by taking use of Porter five forces analysis company can gain proper insight
about the extension of rivalry and influence of factors in retailing industry upon organizational
business functions:
Threat of New Entrants – Low:
12