Business Strategy Analysis of JD Sports: A Detailed Report

This report provides a comprehensive business strategy analysis of JD Sports plc, a UK-based sports fashion retailer. It begins with an introduction to business strategy and JD Sports' mission statement. The report then delves into the macro-environment using PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors impacting the company. Next, the internal environment is assessed using the McKinsey 7S framework and TOWS matrix to identify strengths, weaknesses, opportunities, and threats. The report further analyzes the competitive position of JD Sports using Porter's Five Forces model. Finally, the report culminates in a strategic management plan for the next 5 years, offering direction, objectives, and tactical actions to enhance market share and revenue. The analysis covers various aspects of the business and provides valuable insights into the company's current standing and future prospects.

Business Strategy

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Applying appropriate frameworks to analyse the impact and influence of the macro
environment on a given organisation and its strategies...............................................................1
P2 Analysis of the internal environment and capabilities of the given organisation using
appropriate frameworks...............................................................................................................3
P3 Application of frameworks and models to understand the competitive position and
influence of market forces in the industry on the organisation in the industry...........................5
P4 A strategic management plan for the organisation based on above analysis which provides
valid direction, objectives and tactical actions for the next 5 years of the organisation.............7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business strategy refers to the plan and policies adopted by the management to carry out the
future operations of the company to achieve orgaisational goals and objectives. JD sports plc is a
retail organisation in the sport fashion industry based out of England, UK and the company
operates in many countries around the world. The company is listed on the London Stock
Exchange and generated a revenue of 471.78 crores GBP in the year 2019. This report aims at
macro environment and competitve postion of the company is analysed to understand the current
positon of the company (Schawel and Billing, 2012). A detailed anaylsis of Ansoff’s matrix is
being attempted to identify the future business strategy of the company. At last, the report aims
at developing a business strategy for the company for the next 5 years to increase the market
share and revenue.
TASK 1
P1 Applying appropriate frameworks to analyse the impact and influence of the macro
environment on a given organisation and its strategies.
Mission statement of an organisation represents the long term goal of an organisation and
identifies the existence of the organisation and what product does the organisation sells. Mission
Statement of JD Sports is "To be UK’s best-known sports fashion retailer. To provide customers
with a huge range of products, a secure shopping experience, quality and services on huge ranges
of men's, women's and kid's trainers and footwear that 80% exclusive to only JD." The mission
statement of the company shows the plans and strategy of the organisation for the market
positioning and penetration (Sarsby, 2016). The company aims to be the best sports fashion
retailer in the domestic market of UK along with a good internal reputation. For the purpose, the
company has been investing hugely in research programme for quality development with cost
reduction. By providing latest fashion trends in sports industry with best quality, the company
aims to realise its mission or vision for the organisation to be the best retailer in sport industry of
UK.
PESTLE Analysis of JD Sports Fashion Plc:
PESTLE analysis is a business tool which helps the management of any organisation to
examine and determine the impact of key changes in the business environment of a company
(Lin, 2012). Here is a brief analysis of macro environment for JD Sports plc:
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Political factors: Political factors includes elements such as political stability in a
country, government policies etcetera. All these factors affect the decision-making of a company
and future operations. JD sports operates in many countries all around the world each having its
own political conditions. Political stability in a country helps the organisation to operate
smoothly without much intervention from the government hence the management should focus
on entering those markets where political stability exists and low taxes might help the company
to increase the profitability of the organisation.
Economic factors: Economic factors such as the national income, employment levels,
import-export taxes, rate of interest affect the decision making of these organisations
significantly. Operating in many countries makes JD Sports Plc vulnerable to all the economic
changes in these areas. High rate of interest in the capital market of UK has opened up new
growth opportunities for the company with a raise in investment (Johnson, 2016). Although,
Brexit has had some impact on the disposable income of the consumers which results in a
slightly decreased demand for the company but the management need to strategically tackle
these issues in light of the company’s long term mission of being the best sport fashion retailer in
the industry. At such a time, the company can focus on deriving more revenue form its
operations in international markets.
Social factors: Due to an increase in the trends and customer preference towards a
healthy and fit lifestyle, the demand for goods and products related to the sports and fitness
industry has increase massively in the domestic market of UK over the last decade. The
management of the company should exploit this opportunity and make policies which helps in
attraction of more customers and increasing the spectrum.
Technological factors: Rapid technological changes and developments has opened up a
new sales channel for every business organisation which is online sales and the management of
the JD sports has planned effectively to take its operations online and has started adapting to
these changes quickly. The lifecycle of product development has also shortened which is the
reason why new products are being brought into the market quite frequently by business
organisations and it is imperative for the JD sports to diversify into more product lines with wide
range of alternatives.
Legal factors: JD sports plc operates in many countries around the world which makes it difficult
for the organisation to get the legal implications right because each country has its own set of
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rules and regulations. With the increasing labour laws, it is important for the management to
provide its employees a safe and healthy working environment (Verbeke, 2013). It is very
important for the company to deploy considerable resource into a team for scanning legal
horizon and understanding its implications on the organisational operations.
Environmental factors: This factor of macro environment concerned with ecological
balance and emission of greenhouse gases has come up front in the last few years which has put
the onus on companies like JD sports plc to decrease their carbon footprints and greenhouse
gases emission. JD Sports plc has been considering its sustainability standing and taking
measures to improve its eco-friendliness which provides an opportunity for the company to
improve its goodwill and public image.
P2 Analysis of the internal environment and capabilities of the given organisation using
appropriate frameworks.
McKinsey 7s framework for JD Sports plc:
The 7s model by McKinsey is an important framework which helps the management of
any organisation to review the internal capabilities of the organisation. It helps the management
to assess the changes which are required in the organisation (Islam and Mamun, 2017). Here is
what the model consists of:
Strategy: It defines the key approaches which are being used by the organisation to
achieve its goals. The management of JD sports plc focuses on delivery quality goods to achieve
its long term objective of capturing the largest market share in UK domestic markets.
Structure: It determines the resource organisation within an organisation into groups and
teams. The management of JD sports plc uses specialisation model for structuring the
organisational resources.
Systems: Systems refer to the technology and the machinery and various platforms used
by the organisation for conversion of resources, the management of JD sports plc uses systems
which are sustainable and environment friendly along with the maximum productivity.
Staff: It defines the employee, human resource and remuneration and every aspect related
to it. Lack of inspiration is witnessed in the employees of the organisation and the management
should take up strategies to increase employee motivation.
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Skills: It refers to the capabilities of different members of the organisation to execute
different tasks and jobs. Employees of the JD sports plc have different skillset matching to their
job requirements and job specification.
Style: It describes the culture of the organisation and the type of communication and
interaction between the members and the various stakeholders of the organisation. Leadership
style of JD sports plc is autocratic which doesn’t involve a direct and open communication which
might hinder the employee productivity.
Shared values: It refers to the collective effort and participation of the employees in the
achievement of the organisation goals and objectives. Leaders are under a responsibility to get
employee belief in the mission and vision of the organisation. As a result of the poor
implementation of shared values by the leaders of the organisation, JD sports plc is witnessed to
be struggling in terms of culture in its organisation and warehouse. The management needs to get
employee coordination and align individual interest with the organisational interest.
TOWS Matrix:
SWOT or TOWS matrix is a business tool which assists the management in determining
the internal strength and weakness of the company and take better future decisions in order to
make the most out of upcoming opportunities and prevent the organisation from the threats
(Gürel and Tat, 2017). Here is TOWS matrix analysis of JD sports plc:
Strength: The compan
has enabled the company and the management to overcome any hurdle or bottleneck of supply
chain. The company has shown expertise in entering new markets and getting success in those
endeavours. High level of customer satisfaction and brand loyalty enables the company to
generate high revenues. These are some of the most important strength of the company.
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STRENGTHS WEAKNESS
Reliable suppliers, strong
distribution network, strong cash
flow.
Poor financial planning, low investment in
new technology, low profitability ratio.
OPPORTUNITIES THREATS
Increasing disposable income and
purchasing power, business growth
and expansion.
Increasing competition in the industry and
increasing legal restrictions in various
countries.

Weakness: One of the most threating weakness of the company is poor and ineffective
management of financial resources and funds of the organisation. This has also resulted in a
profitability ratio which is lower than the average in the industry. The company also needs some
new investment in technology in its operation to remain competitive in its productivity and
efficiency.
Opportunities: Good cash flows enables the company to invest in new technology and
product segments which is a huge opportunity for the company to focus on business growth and
expansion. Increasing disposable income of the consumers over the years has also provided an
opportunity for the management of the JD sports plc to increase its market share and revenue.
Threats: Increasing amount of competition in the industry is one of the major threat for
the company which is further increased due to low profitability because company is not under a
position to offer additional discounts unlike the competitors to attract more customers and
remain competitive. Legal rules and regulations in different countries also pose a threat to the
company due to the dynamic nature of these laws.
P3 Application of frameworks and models to understand the competitive position and influence
of market forces in the industry on the organisation in the industry.
Porter’s five force analysis for JD Sports plc:
Porter’s five force model is a business and economic tool used by the management of
every organisation to understand and determine the competitive position of an organisation in
any industry by evaluation of the impact of five market forces on the business operations and
decision-making (Comino and Ferretti, 2016). Here is a porter’s five force analysis for JD sports
plc ltd:
Threat of new entrants: Threat of new entrants is moderate to high for JD Sports plc. The
initial cost of investment is high and its particularly difficult to gather a customer base very
quickly. However, it is very easy to access the local distribution network by which the new
entrants can easily set up the distribution channels and enter into the business industry.
Bargaining power of suppliers: Due to an existence of a large number of suppliers and
low switching costs, the bargaining power for suppliers is low which puts the management of the
JD sports plc in a strong and dominant position. It enables the company to procure the materials
at very competitive prices and escape any exploitation from the suppliers.
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Bargaining power of consumers: A large number of firms exist in the industry and the
switching costs is very low for the consumers which increase the bargaining power of consumers
for JD sports plc. The company is under no position to increase its profit margins because even
the slightest of changes in price would result in a negative implication on the sales and revenue.
Threat of substitutes: Threat of substitutes is low for the JD sports plc due to a limited
number of alternatives. This makes the threat of substitutes a weaker force for the organisation in
the industry. Though, there are some products of better quality which are being offered by some
companies but these products are very expensive which is not a threat for the JD sports plc.
Competitive rivalry: Competitive rivalry is a weaker to moderate force for JD sports plc
in the industry. Though, there are a number of firms which are existent in the market but these
firms have very low market share which is not threating for the company. There are only a few
firms which operate at a large scale with a high market share. So there is a moderate competition
between existing firms in the industry.
This shows that there are many forces in the competitive environment of JD sports plc
which are operating in the favour of the company. The management should plan strategically to
leverage these forces and increase the competitive position of the company in the industry and
mitigate the influence of forces which not in favour of the organisation.
Ansoff’s Matrix:
Ansoff matrix is a tool which identifies four different strategy for any organisation to
increase its operations and revenue (Alshaher, 2013). The strategies are market penretration
which focuses on increasing sales by using promotional tools, the next strategy is market
development which involves entering into a new market and the next strategy is product
development which involves offering a new product in the existing market and the last strategy is
of diversififcation which refers to entering into a nrw market with an entire range of new
products. Risk increases with the transition from one strategy to another strategy.
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MARKET PENETRATION MARKET DEVELOPMENT
PRODUCT DEVELOPMENT DIVERSIFICATION

The management of the JD sports plc is advised to adopt the strategy of product
development to achieve the company’s vision and objectives by entering into a existing market
with new products for attracting more consumers and generating high revenues.
P4 A strategic management plan for the organisation based on above analysis which provides
valid direction, objectives and tactical actions for the next 5 years of the organisation.
Strategic Management Plan:
Direction:
The company is advised to aim at product development by launching new products
frequently into the existing market to achieve the mission of the company to be the largest
retailer in sport fashion industry in the UK. This provides a clear direction to the management to
direct the efforts and resources of the organisation into. It is also in alignment with the
company’s long term goals and objectives.
Objectives:
 Increasing the number of products sold in the domestic markets of UK 5% every year.
 Achieve profitability within new products and ranges within a time period of 6 months.
 Shorten the life cycle of product development.
 To bring in a new product range within every 12 months.
Action plans:
 The company should focus on use of promotional tools for introducting the new product
into existing markets.
 Need assesment of the potential customers should be done to design the product as per
the requirements.
 The company should clearly identify different target customers for various product
ranges and adopt marketing strategies relevant for attracting those consumer groups.
 The company needs investment into new technology and machinery for bringing products
which have the best quality at very competitive prices.
 The strong cash flow of the company can help the management to heavily invest in the
new product range and technology which will help in reduction of costs for new products.
 The company should make use of the strong distribution network for launching products.
 A proper feedback and control system should be installed to track the effectiveness of a
marketing strategy used for any product launch.
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This management plan can be used by the company to plan their operations for the coming 5
years to achieve the company’s mission and vision with the help of product development and
expanding customer bases for multiple product ranges.
CONCLUSION
It can be concluded from the above report that macro environment of the JD sports plc
consists of many factors which affects the decision-making process of the company. There are
various strenghts such as high cash flow and reliable supplier base which helps the company to
gain a competitive position in the industry (Abbott, 2015). The McKinsey’s 7s model shows that
the company is struglling in culture of the warehouse due to low shared value by the leaders of
the organisation. It can also be concluded that the competitve postion of the company is strong in
the industry. As per the Ansoff’s matrix, product development is considered to be the best
strategy for the company in light of its future objectives. At last, the report presents a plan for the
product development which can be implemented to achieve the objectives of the company.
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REFERENCES
Books and Journals
Abbott, R.J., 2015. Pestle Analysis for Students.
Alshaher, A.A.F., 2013. The McKinsey 7S model framework for e-learning system readiness
assessment. International Journal of Advances in Engineering & Technology. 6(5).
p.1948.
Comino, E. and Ferretti, V., 2016. Indicators-based spatial SWOT analysis: Supporting the
strategic planning and management of complex territorial systems. Ecological
Indicators. 60. pp.1104-1117.
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International
Social Research. 10(51).
Islam, F.R. and Mamun, K.A., 2017. Possibilities and challenges of implementing renewable
energy in the light of PESTLE & SWOT analyses for island countries. In Smart Energy
Grid Design for Island Countries (pp. 1-19). Springer, Cham.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Lin, S., 2012. Diversity Breakthrough of Hidden Champion's Development Ceiling——
Enlightenment from View of" Ansoff matrix". Journal of Industrial Technological
Economics. (4). p.17.
Sarsby, A., 2016. SWOT analysis. Lulu. com.
Schawel, C. and Billing, F., 2012. Ansoff-Matrix. In Top 100 Management Tools (pp. 22-24).
Gabler Verlag, Wiesbaden.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
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